<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): NOVEMBER 6, 1998
----------------
MED/WASTE, INC..
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-22294 65-0297759
- ---------------------------------------------- --------------------- ---------------------------------
(State or other jurisdiction of incorporation) (Commission File No.) (IRS Employer Identification No.)
</TABLE>
6175 N.W. 153rd Street, Suite 324, Miami Lakes, Florida 33014
- -------------------------------------------------------------------------------
(Address of principal executive office and Zip Code)
Registrant's telephone number, including area code: (305) 819-8877
--------------
NOT APPLICABLE
-------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit Index on Page 8
<PAGE> 2
Item 5. Other Events.
On November 5, 1998, the Board of Directors of Med/Waste, Inc.
(the "Company") declared a dividend distribution of one Right for each
outstanding share of common stock, $.001 par value (the "Common Stock"), of the
Company to shareholders of record at the close of business on November 6, 1998
(the "Record Date") and authorized the issuance of one Right with respect to
each share of Common Stock that becomes outstanding between the Record Date and
November 6, 2008 or such earlier time as the Rights are redeemed. Except as
described below, each Right, when exercisable, entitles the registered holder
to purchase from the Company one one-hundredth of a share of Series B Junior
Participating Preferred Stock, $.001 par value (the "Preferred Stock"), at a
price of $25 per one one-hundredth of a share (the "Purchase Price"), subject
to adjustment. The terms of the Rights are set forth in a Rights Agreement (the
"Rights Plan") between the Company and Continental Stock Transfer and Trust
Company, as Rights Agent, included as an exhibit to this Current Report on Form
8-K. The description of the Rights set forth below does not purport to be
complete and is qualified in its entirety by reference to the Rights Plan.
Initially, the Rights will be attached to all certificates
representing Common Stock then outstanding and no separate Rights Certificates
would be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of:
(a) ten (10) days following a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person"),has
acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the outstanding Common Shares, the date of such announcement being the
"Share Acquisition Date";
(b) ten (10) business days (or such later date as the Board
shall determine) 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 of 20% or more of such outstanding Common
Shares; or
(c) a determination by the Board of Directors of the Company
(the "Board") that a person or group is an "Adverse Person."
The Rights Plan contains an exemption from the definition of
Acquiring Person for any issuance of Common Stock by the Company directly to
any person (for example, in a private placement or an acquisition by the
Company in which Common Stock is used as consideration), even if that person
would become the beneficial owner of 20% or more of the Common Stock, provided
that such person does not acquire any additional shares of Common Stock.
A person may be declared an Adverse Person upon (a) a
determination that such person, alone or together with its affiliates and
associates, has become, or has expressed an intention to become, the owner of
an amount of Common Shares which the Board determines to be substantial (which
may not be less than 10% of the Common Shares then outstanding) and (b) a
determination by at least a majority of the Board who are not officers of the
Company and are not representatives or associates of the Acquiring Person or
Adverse Persons ("Independent Directors") after reasonable inquiry and
investigation, that such ownership (i) is intended to cause the Company to
repurchase the Common Shares owned by such person or to cause the Company to
take actions or enter into transactions which are intended to provide such
person with a short term financial gain and which are
-2-
<PAGE> 3
not in the best long term interests of the Company and its stockholders or (ii)
is causing, or is reasonably likely to cause, a material adverse impact on the
Company.
Until the Distribution Date, (i) the Rights would be evidenced
by the Common Stock Certificates and would be transferred with and only with
such Common Stock Certificates, (ii) new Common Stock Certificates received
after the Record Date will contain a notation incorporating the Rights
Agreement by reference, and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
Pursuant to the Rights Agreement, the Company reserves the right to require
prior to the occurrence of a Triggering Event (as defined below) that, upon any
exercise of Rights, a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued.
Each whole share of Preferred Stock will have a minimum
preferential quarterly dividend rate equal to the greater of $100 per share or,
subject to anti-dilution adjustment, 100 times the dividend declared on the
Common Stock. In the event of liquidation, no distribution will be made to the
holders of Common Stock unless, prior thereto, the holders of the Preferred
Stock have received a liquidation preference of $100 per share, plus accrued
and unpaid dividends. Holders of the Preferred Stock will be entitled to notice
of and to vote at any meeting of the Company's shareholders. Each whole share
of Preferred Stock is entitled to one vote. Such shares do not have cumulative
voting rights. The Preferred Stock, together with the issued and outstanding
shares of the other preferred stocks of the Company, will be expressly
entitled, as one class, to elect a majority of directors (the Common Stock
electing the minority) whenever dividends on any of the preferred stocks shall
be in default in the amount of four quarterly payments and thereafter until all
such dividends in default shall have been paid. In the event of any merger,
consolidation, or other transaction in which shares of Common Stock are
exchanged for or converted into other securities and/or property, each whole
share of Preferred Stock will be entitled to receive, subject to anti-dilution
adjustment, 100 times the amount into which or for which each share of Common
Stock is so exchanged or converted. The shares of Preferred Stock are not
redeemable by the Company.
The Rights are not exercisable until the Distribution Date and
will expire on November 6, 2008, unless earlier redeemed by the Company as
described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to all holders of record of Common Stock at the
close of business on the Distribution Date. Thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board, only Common Shares issued prior to the Distribution Date will be
issued with Rights.
The Purchase Price payable, and the number of shares of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for Preferred Stock
or convertible securities at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends out of retained earnings) or of subscription rights or warrants
(other than those referred to above. With certain exceptions, no adjustment in
the Purchase Price will be required until cumulative adjustments amount to at
least 1% of the Purchase Price. No fractional shares will be issued and,
-3-
<PAGE> 4
in lieu thereof, cash payments will be made based on the market price of the
Preferred Stock on the last trading day prior to the date of exercise.
In the event:
(a) the Company is the surviving corporation in a merger with an
Acquiring Person or Adverse Person and its Common Shares are not changed or
exchanged,
(b) a Person becomes an Acquiring Person (except pursuant to an
offer for all outstanding Common Shares which a majority of the Independent
Directors determined to be fair to, and otherwise in the best interest of the
Company, and its Stockholders (a "Fair Offer"),
(c) an Acquiring Person or Adverse Person engages in one or more
"self dealing" transactions set forth in the Rights Agreement, or
(d) a Person is determined to be an Adverse Person,
(a "Triggering Event") then each holder of a Right will thereafter have the
Right to receive, upon exercise, Common Shares (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. Notwithstanding any of the foregoing,
following the occurrence of a Triggering Event set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were beneficially owned by an Acquiring Person or Adverse Person
will be null and void. Moreover, Rights are not exercisable following the
occurrence of either of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $25.00 per Right, each
Right not owned by an Acquiring Person or Adverse Person (or certain related
parties) following an event set forth in the preceding paragraph could entitle
the holder to purchase $50.00 worth of Common Shares (or other consideration as
noted above) for the $25.00 Purchase Price. Assuming that the Common Shares
have a per share value of $10.00 at such time, the holder of each valid Right
would be entitled to purchase five (5) Common Shares for $25.00.
In the event that at any time after a Share Acquisition Date:
(a) the Company is acquired in a merger or other business
combination transaction (other than a merger described in the second preceding
paragraph or a merger which followed a Fair Offer); or
(b) more than 50% of its assets or earning power were sold or
transferred,
then 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, the
common stock, or the equivalent equity securities, of the acquiring company
which have a value equal to two times the exercise price of the Right. (The
events set forth in this paragraph and in the second preceding paragraph are
referred to as "Triggering Events").
-4-
<PAGE> 5
In general, the Company may redeem the Rights in whole, but not
in part, at any time until a determination that a person is an Adverse Person
and until ten (10) days following the Share Acquisition Date at a price of
$.001 per Right (payable in cash, Common Shares or other consideration deemed
appropriate by the Board). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority
of the Continuing Directors. Immediately upon the action of the Board, ordering
the Rights to be redeemed (with where specifically required, the concurrence of
the Continuing Directors), the Rights will terminate and the only right of the
holders of Rights will be to receive the $.001 Redemption Price.
The term "Continuing Directors" means any member of the Board
who was a member of the Board prior to the execution of the Rights Agreement,
and any person who is subsequently elected to the Board, if such person is
recommended or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person, Adverse Person or an Affiliate or Associate of
the Acquiring Person or Adverse Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company (other than such rights as a
holder of Common Shares), including, without limitation, the right to vote or
to receive dividends. While the distribution of the Rights will not be taxable
to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights becomes
exercisable for Common Shares (or other consideration) of the Company or common
stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by the Board (in
certain circumstances, with the concurrence of the Continuing Directors) in
order to cure any ambiguity, to make changes which do not adversely affect the
interest of holders of Rights (excluding the interests of any Acquiring Person
or Adverse Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at any time as the Rights are not
redeemable.
As of November 6, 1998, there were 6,665,966 shares of Common
Stock outstanding. Each share of Common Stock outstanding on and after November
6, 1998 will receive one Right. An aggregate of 200,000 shares of Preferred
Stock will be reserved for issuance in the event of 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 without conditioning the offer on the Rights being redeemed or a
substantial number of Rights being acquired, and under certain circumstances
the Rights beneficially owned by such a person or group may become void. The
Rights should not interfere with any merger or other business combination
approved by the Board of Directors because, if the Rights would become
exercisable as a result of such merger or business combination, the Board of
Directors may, at its option, at any time prior to the time that any Person
becomes an Acquiring Person, redeem all (but not less than all) of the then
outstanding Rights at the Redemption Price.
-5-
<PAGE> 6
Item 7. Financial Statements and Exhibits:
(a) Financial Statements
None
(b) Exhibits
4.1 Rights Agreement dated as of November 6, 1998 by and
between Med/Waste, Inc. and Continental Stock Transfer
and Trust Company, as Rights Agent.
99.1 Text of Press Release relating to the declaration of the
Rights dated November 6, 1998.
- 6 -
<PAGE> 7
SIGNATURES
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.
MED/WASTE, INC., a Delaware corporation
DATE: NOVEMBER 6, 1998 By: /s/ DANIEL A. STAUBER
---------------- -----------------------------------
DANIEL A. STAUBER
President/Chief Executive Officer
- 7 -
<PAGE> 8
EXHIBIT LIST
Exhibit
No. Description
4.1 Agreement, dated as of November 6, 1998, between Med/Waste,
Inc. and Continental Stock Transfer Company, as Rights Agent,
including the form of Certificate of Designation, Preferences
and Rights of Series B Junior Participating Preferred Stock
as Exhibit A, the form of Right Certificate as Exhibit B and
the Summary of Rights to Purchase Preferred Stock as Exhibit
C.
99.1 Text of Press Release relating to the declaration of the
Rights dated November 6, 1998.
- 8 -
<PAGE> 1
Exhibit 4.1
- -------------------------------------------------------------------------------
MED/WASTE, INC.
AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF NOVEMBER 6, 1998
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
1. Definitions..............................................................1
2. Appointment of Rights Agent..............................................4
3. Issuance of Rights Certificates..........................................4
4. Form of Rights Certificates..............................................6
5. Countersignature and Registration. .....................................7
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates..................8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights............8
8. Cancellation and Destruction of Right Certificates......................10
9. Reservation and Availability of Preferred Stock.........................10
10. Preferred Stock Record Date.............................................11
11. Adjustment of Purchase Price; Number of Shares or Number of Rights......12
12. Certificate of Adjusted Purchase Price or Number of Shares..............21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power....21
14. Fractional Rights and Fractional Shares.................................23
15. Rights of Action........................................................24
16. Agreement of Rights Holders.............................................25
17. Rights Certificate Holder Not Deemed a Stockholder......................25
18. Matters Concerning the Rights Agent.....................................25
19. Merger or Consolidation or Change of Name of Rights Agent...............26
20. Duties of Rights Agent..................................................26
21. Change of Rights Agent..................................................28
22. Issuance of New Rights Certificates.....................................28
23. Redemption..............................................................29
- i -
<PAGE> 3
SECTION PAGE
- ------- ----
24. Notice of Certain Events................................................30
25. Notices.................................................................31
26. Supplements and Amendments..............................................31
27. Successors..............................................................32
28. Benefits of this Agreement..............................................32
29. Determinations and Actions by the Board.................................32
30. Severability............................................................32
31. Governing Law...........................................................33
32. Counterparts............................................................33
33. Descriptive Headings....................................................33
EXHIBITS
EXHIBIT
Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock............................A
Form of Rights Certificate....................................................B
Summary of Rights Plan....................................................... C
- ii -
<PAGE> 4
RIGHTS AGREEMENT
THIS AGREEMENT, dated as of November 6, 1998, between MED/WASTE, INC.,
a Delaware corporation (the "Company"), and CONTINENTAL STOCK TRANSFER AND
TRUST COMPANY, a New York corporation (the "Rights Agent").
R E C I T A L S:
- - - - - - - -
A. On November 5, 1998, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each Common Share (as defined herein) outstanding at the close of
business on the Record Date (as hereinafter defined).
B. The Company has authorized the issuance of one Right with respect
to each Common Share that shall become outstanding between the Record Date
(whether originally issued or delivered from the Company's treasury) and the
earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined), each Right representing the right to purchase one
one-hundredth (1/100) of a share of Preferred Stock (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of Common Shares then outstanding
entitling such person to cast twenty (20%) percent or more of the votes that
may be cast generally in an election of Directors of the Company. However, the
term "Acquiring Person" shall not include (i) the Company; (ii) any Subsidiary
of the Company; (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company; (iv) an entity holding Common Shares for or pursuant
to the terms of any such plan; (v) any Person who becomes an Acquiring Person
solely as a result of a reduction in the number of Common Shares outstanding
due to a repurchase of Voting Securities by the Company; and (vi) any Person
who acquires newly issued Common Shares directly from the Company (it being
understood that a purchase from a underwriter or other intermediary is not a
purchase from the Company); provided, however, that if a Person shall become
the Beneficial Owner of 20% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company or the receipt of newly
issued Common Shares directly from the Company and shall, after such share
purchases or direct issuance by the Company, become the Beneficial Owner of any
additional Common Shares, then such Person shall thereafter be deemed an
"Acquiring Person," provided further, however that any transferee from such
Person who becomes a Beneficial Owner of 20% or more of the Shares then
outstanding shall nevertheless be deemed to be an "Acquiring Person".
(b) "ACT" shall mean the Securities Act of 1933, as amended.
(c) "ADJUSTMENT SHARES" shall have the meaning as set forth
in Section 11(a) hereof.
(d) "ADVERSE PERSON" shall mean any person declared to be an
adverse person by the Board of Directors upon determination that the criteria
set forth in Section 11(a)(ii)(c) applies to such person.
(e) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
(f) "AGREEMENT" means this Rights Agreement as originally
executed or as it may from time to time be supplemented or amended pursuant to
the applicable provisions hereof.
<PAGE> 5
(g) 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 may Beneficially Own, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own:
(A) 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,
(B) securities issued upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or
(C) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event or securities
issued pursuant to Section 11(a)(ii) hereof in connection
with an adjustment made with respect to any Original Rights;
(iii) which such Person or any of such Person's Affiliates or
Associates directly or indirectly has the right to vote or dispose of
or has Beneficial Ownership pursuant to Rule 13d-3 of the Exchange
Act, including pursuant to any agreement, arrangement or
understanding, whether or not in writing; PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to
vote such security:
(A) 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
(B) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor
report); or
(iv) which are Beneficially Owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except to the extent
permitted by section (iii)(B) of this paragraph (g) or disposing of
any securities of the Company; PROVIDED, HOWEVER, that nothing in this
paragraph shall cause a person engaged in the business as an
underwriter of securities to be the Beneficial Owner of or to
Beneficially Own securities acquired through such person's
participation in good faith in a firm commitment underwriting, until
the expiration of forty days after the date of such acquisition.
(h) "BOARD" shall mean the Board of Directors of the Company.
(i) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State in which the Rights
Agent is located are authorized, or obligated, by law or executive order to
close.
- 2 -
<PAGE> 6
(j) "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.
(k) "COMMON SHARES" when used with reference to the Company
shall mean the shares of common stock, par value $.001 per share, of the
Company. "Common Shares" when used with reference to any Person, other than the
Company, shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first mentioned
Person.
(l) "COMMON STOCK EQUIVALENT" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(m) "COMPANY" shall mean Med/Waste, Inc., a Delaware
corporation until a successor corporation shall have become such, or until a
Principal Party shall assume, and thereafter be liable for, all obligations and
duties of the Company hereunder, pursuant to the applicable provisions of this
Agreement, and thereafter "Company" shall mean such successor corporation or
Principal Party.
(n) "CONTINUING DIRECTOR" shall mean (i) any member of the
Board, while such Person is a member of the Board, who is not an Acquiring
Person, or Adverse Person or an Affiliate or Associate of an Acquiring Person
or Adverse Person or a representative of an Acquiring Person or Adverse Person
of any such Affiliate or Associate, and was a member of the Board prior to the
date of this Agreement or (ii) any Person who subsequently becomes a member of
the Board, while such person is a member of the Board, who is not an Acquiring
Person, Adverse Person, an Affiliate or Associate of an Acquiring Person or
Adverse Person or a representative of an Acquiring Person, Adverse Person or an
Affiliate or Associate of such, if such Person's nomination for election, or
election to the Board is recommended or approved by a majority of the
Continuing Directors.
(o) "CURRENT MARKET PRICE" shall have the meaning set forth
in Section 11(d) hereof.
(p) "CURRENT VALUE" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(q) "DISTRIBUTION DATE" shall have the meaning set forth in
Section 3(a) hereof.
(r) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended and in effect on the date of this Agreement.
(s) "EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(t) "FINAL EXPIRATION DATE" shall mean the close of business
on November 6, 2008.
(u) "ORIGINAL RIGHTS" shall mean the Rights acquired by such
person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Sections 3(a) or 22 hereof.
(v) "PERSON" shall mean any individual, firm, corporation or
other entity, and shall include without limitation an unincorporated group of
persons who, by formal or informal agreement have embarked on a common purpose
or act, and shall also include any successor (by merger or otherwise) of such
entity.
(w) "PREFERRED STOCK" shall mean shares of Preferred Stock,
$.01 par value of the Company, designated the Series B Junior Participating
Preferred Stock and having the rights, and preferences set forth in the Form of
Certificate of Designation, Preferences and Rights of Series B Junior
Participating Preferred Stock attached to this Agreement as Exhibit "B".
(x) "PRINCIPAL PARTY" shall have the meaning set forth in
Section 13(b) hereof.
- 3 -
<PAGE> 7
(y) "PURCHASE PRICE" shall have the meaning set forth in
Section 4(a) hereof.
(z) "RECORD DATE" shall mean November 6, 1998.
(aa) "REDEMPTION PRICE" shall have the meaning set forth in
Section 23(a) hereof.
(bb) "RIGHTS" shall have the meaning set forth in Recital B
at the beginning of this Agreement.
(cc) "RIGHTS AGENT" shall mean the Continental Stock Transfer
and Trust Company, until a successor Rights Agent shall be appointed pursuant
to the applicable provisions hereof and thereafter Rights Agent shall mean such
successor Rights Agent.
(dd) "RIGHTS CERTIFICATE" shall have the meaning set forth in
Section 3(a) herein.
(ee) "RIGHTS DIVIDEND DECLARATION DATE" shall mean November
6, 1998.
(ff) "SHARE ACQUISITION DATE" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(gg) "SUBSIDIARY" of any Person shall mean any corporation or
other entities of which a majority of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such
Person.
(hh) "TRIGGERING EVENT" shall mean any event described in
Section 11(a)(ii) or Section 13(a) hereafter
(ii) "VOTING SECURITIES" shall mean any securities of the
Company entitling the holder thereof to vote generally in the election of the
Directors of the Company.
Any determination or interpretation required in connection with any of the
definitions contained in this Section 2 shall be made by the Board in its good
faith judgment, which determination shall be final and binding on the Rights
Agent and the holders of Rights.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall, prior to the Distribution
Date, also be the holders of the Common Shares) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the earlier of:
(i) the Close of Business on the tenth day after the Share
Acquisition Date;
or
(ii) the Close of Business on the tenth day after the date of
the commencement of, or first public announcement of the intent of any
Person (other than the Company, any wholly-owned Subsidiary of the
Company or any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would result in beneficial
ownership by a Person of 20% or more of the outstanding Common Stock
or any Voting Securities (including any such date which is after the
date of this Agreement and prior to the issuance of the Right); or
- 4 -
<PAGE> 8
(iii) a determination by the Board pursuant to the criteria
set forth in Section 11(a)(ii)(c) hereof that a Person is an Adverse
Person (the earliest of (i), (ii) or (iii) being herein referred to as
the "Distribution Date"),
then:
(A) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section (3)) by the
certificates for Common Shares registered in the names of the
holders of the Common Shares (which certificates for Common
Shares shall also be deemed to be Rights Certificates) and
not by separate Rights Certificates, and,
(B) The Rights will be transferable only in
connection with the transfer of Common Shares (including a
transfer to the Company).
As soon as practicable after the Distribution Date, the Rights Agent will send,
by first-class, insured, postage prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more Rights
Certificates, in substantially the form of Exhibit "B" hereto, evidencing one
Right for each Common Share so held subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per Common Share has
been made pursuant to Section 11(p) hereof, at the time of distribution of
Rights Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights Plan, 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 Record Date until the Distribution Date, the Rights will be evidenced by
such certificates for Common Shares and the registered holders of the Common
Shares shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date, the Expiration Date or Final Expiration Date,
the surrender for transfer of any certificate for Common Shares with respect to
which Rights have been issued shall also constitute the transfer of the Rights
associated with the Common Shares.
(c) Rights shall be issued in respect of all Common Shares
which are issued (whether originally issued or from the Company's treasury)
after the Record Date, but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates for Common Shares issued after the Record Date,
but prior to the earlier of the Distribution Date or the Expiration Date, shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Med/Waste, Inc. (the "Company") and Continental Stock
Transfer and Trust Company (the "Rights Agreement"), dated as
of November 6, 1998 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of the
Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge
- 5 -
<PAGE> 9
upon receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights
issued to or held by any Person who is, was or becomes an
Acquiring Person, Adverse Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement)
may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of:
(i) the Distribution Date, or
(ii) the Expiration Date,
the Rights associated with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and the surrender for transfer
of any such certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Stock after the Record Date, but prior
to the Distribution Date, any Rights associated with such Common Shares shall
be deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which are no longer
outstanding.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Sections
11 and 22 hereof, the Rights Certificates, whenever issued, shall be dated as
of the Record Date, and on their face shall entitle the holders thereof to
purchase such number of one one-hundredth (1/00) of a share of Preferred Stock
as shall be set forth therein at the price per one one-hundredth (1/100) of a
share set forth therein (the "Purchase Price"), but the number of such shares
and the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificates issued pursuant to Sections 3(a)
or Section 22 hereof, that represents Rights which are Beneficially Owned by:
(i) an Acquiring Person, an Adverse Person or any Affiliate
or Associate of such Acquiring Person or Adverse Person,
(ii) a transferee of an Acquiring Person or an Adverse Person
(or of any Affiliate or Associate) who becomes a transferee after the
Acquiring Person or Adverse Person becomes such or
(iii) a transferee of an Acquiring Person or an Adverse
Person (or of any of their Affiliates or Associates) who becomes a
transferee prior to or concurrently with the Acquiring Person or the
Adverse Person becoming such and receives such Rights pursuant to
either:
(A) a transfer (whether or not for consideration)
from the Acquiring Person or Adverse Person to holders of
equity interests in such Acquiring Person or the Adverse
Person or to any Person with whom such Acquiring Person or
Adverse Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or
- 6 -
<PAGE> 10
(B) a transfer which the Board has
determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section
7(e) hereof, and any Rights Certificate issued pursuant to
Sections 6 or 11 hereof,
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this Section 4(b), shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person, an Adverse Person or an Affiliate or Associate of an
Acquiring Person or Adverse Person (as such terms are defined
in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null
and void under the circumstances specified in Section 7(e) of
the Rights Agreement.
The provisions of Section 7(e) shall apply whether or not a Rights Certificate
actually contains the foregoing legend.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect
as though the person who signed such Rights Certificates had not ceased to be
such officer of the Company; and any Rights Certificate may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal offices designated as the
appropriate place for surrender (by execution or transfer) of Rights
Certificates, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights evidenced
on its face by each of the Rights Certificates and the date of each of the
Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e) and 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 Expiration Date or
the Final Expiration Date, any Rights Certificates may be transferred, split
up, combined or exchanged for another Rights Certificates, entitling the
registered holder to purchase a like number of Shares of Preferred Stock (or
following a Triggering Event, Common Shares or other securities or property, as
the case may be) as the Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificates, to
be
- 7 -
<PAGE> 11
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificates until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner as the Company shall reasonably request.
Thereupon, the Rights Agent shall subject to Section 4 and Section 7 thereof,
countersign and deliver to the person entitled thereto a Rights Certificates,
as so requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will make and
deliver a new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) herein, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including without limitation, the restriction on
exercisability set forth in Sections 9(c), 11(a)(ii) and 23(a) herein) in
whole, or in part, at any time after the Distribution Date, upon surrender of
the Rights Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-hundredth (1/100)
of a share of Preferred Stock (or Common Shares, or other securities or
property as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of:
(i) the Final Expiration Date, or
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date") (such earlier time in (i)
and (ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth (1/100) of
a share of Preferred Stock pursuant to the exercise of a Right shall initially
be $25.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph 7(c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price to be purchased and an amount
equal to any applicable transfer tax in cash, or by certified check or Company
draft payable to the order of the Company, the Rights Agent shall thereupon
promptly:
(i) requisition from any transfer agent of the Preferred
Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests;
(ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14;
- 8 -
<PAGE> 12
(iii) promptly after receipt of such certificates, cause the
same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be
designated by such holder; and
(iv) when appropriate, after receipt promptly deliver such
cash to or upon the order of the registered holder of such Rights
Certificate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by:
(i) an Acquiring Person, Adverse Person or an Affiliate or
Associate of an Acquiring Person or Adverse Person,
(ii) a transferee of any such Acquiring Person or Adverse
Person (or of any such Affiliate or Associate) who becomes a
transferee after such Acquiring Person or Adverse Person becomes such,
or
(iii) a transferee of any such Acquiring Person or Adverse
Person (or of any such Affiliate or Associate) who becomes a
transferee prior to or concurrently with such Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to
either
(A) a transfer (whether or not for consideration)
from such Acquiring Person or Adverse Person to holders of
equity interests in such Acquiring Person or Adverse Person
or to any person with whom such Acquiring Person or Adverse
Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or
(B) a transfer which the Board has determined is
part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights under this
Agreement or otherwise from and after the occurrence of a Triggering Event. The
Company shall use reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but the Company and the
Rights Agent shall have no liability to any holder of Rights Certificates or
other Person as a result of the Company's failure to make any determinations
with respect to an Acquiring Person or Adverse Person or any of their
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent, nor the Company, shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7, unless such registered
holder shall have:
(i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise,
(ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof, as the Company reasonably requests, and
- 9 -
<PAGE> 13
(iii) paid the Purchase Price in the form and amount as
required pursuant to this Agreement.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or ex-change shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof, except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Stock
(and following the occurrence of a Triggering Event, Common Shares and/or other
securities), the number of shares of Preferred Stock (and following the
occurrences of a Triggering Event, Common Shares and/or other securities) that
will be sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the Preferred Stock (and following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable and deliverable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to:
(i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(iii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been delivered in accordance with Section 11(a)(iii)
herein, a registration statement under 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 registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the earlier of:
(A) the date as of which the Rights are no longer
exercisable for such securities, and
(B) the Expiration Date 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
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 Section 9(c),
the exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in
- 10 -
<PAGE> 14
effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or a registration statement shall not have been
declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and following a Triggering 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.
(e) 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 Rights
Certificates or of any shares of Preferred Stock (or Common Shares or other
securities) as the case may be upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a person other
than, or the issuance or delivery of certificates for the Preferred Stock (or
Common Shares or other securities as the case may be), in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates for Common
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each person in whose name any
certificate for Preferred Stock (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 such securities represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Shares and/or other securities) transfer books of
the Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding business day on which the Preferred Stock (or Common Shares and/or
other securities) transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, holders of Rights Certificates shall not be
entitled to any rights of a stockholder of the Company with respect to
Preferred Stock (or Common Shares and/or other securities) for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE; NUMBER OF SHARES OR NUMBER
OF RIGHTS. The Purchase Price, the number of shares of Preferred Stock covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement:
(A) declare a dividend on the Preferred Stock
payable in Preferred Stock;
(B) subdivide the outstanding Preferred Stock;
- 11 -
<PAGE> 15
(C) combine the outstanding Preferred Stock into a
smaller number of shares, or
(D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a) and Section 7(e) herein,
the Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, split, combination or
reclassification, and the number and kind of shares of 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 Stock 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(a)(i) and Section 11(a)(ii), adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) In the event:
(A) any Acquiring Person, Adverse Person or any
Associate or Affiliate of any Acquiring Person or Adverse
Person, at any time after the date of this Agreement,
directly or indirectly,
(1) shall merge into the Company or
otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of
such merger or combination and the Common Shares of
the Company shall remain outstanding and unchanged,
(2) shall, in one transaction or a series
of transactions, transfer any assets to the Company
or any of its Subsidiaries in exchange (in whole or
in part) for shares of any class of capital stock of
the Company or any of its Subsidiaries or for
securities exercisable for or convertible into
shares of any class of capital stock of the Company
(Common Shares or otherwise) or otherwise obtain
from the Company (with or without consideration),
any additional shares of any class of capital stock
of the Company or securities exercisable for or
convertible into shares of any class of capital
stock of the Company (other than pursuant to a pro
rata distribution to all holders of Common Shares),
(3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or
dispose of (in one transaction or a series of
transactions), to, from or with (as the case may
be), the Company or any of its Subsidiaries, assets,
on terms and conditions less favorable to the
Company than the Company would be able to obtain in
arm's-length negotiation with an unaffiliated third
party other than pursuant to a transaction set forth
in Section 13(a) hereof,
(4) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or
dispose of in one transaction or a series of
transactions to, from or with (as the case may be)
the Company or any of its Subsidiaries (other than
incidental lines of business if any, engaged
- 12 -
<PAGE> 16
in as of the date hereof between the Company and
such Acquiring Person, Adverse Person or Affiliate
or Associate) assets having an aggregate fair market
value of more than $1,000,000 other than pursuant to
a transaction set forth in Section 13(a) hereof,
(5) shall receive any compensation from the
Company or any of its Subsidiaries other than
compensation for full-time employment as a regular
employee at rates in accordance with the Company's
(or its Subsidiaries') past practices, or
(6) shall receive the benefit, directly or
indirectly (except proportionately as a stockholder
and except if resulting from a requirement of law or
governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance or
any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries, or
(B) Any Person (other than the Company, any Company
Subsidiary, any employee benefit plan of the Company or of
its Subsidiaries or any Person, or entity organized,
appointed or established by the Company for or pursuant to
the terms of any such plan), shall at any time after the
Rights Dividend Declaration Date, become an Acquiring Person,
unless the event causing such person to become an Acquiring
Person is
(1) a transaction set forth in Section
13(a) hereof, or
(2) the acquisition of Common Shares
pursuant to a tender offer or an exchange offer for
all outstanding Common Shares at a price and on
terms determined by at least a majority of the
members of the Board who are not officers of the
Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, or
Adverse Person, after receiving advice from one or
more investment banking firms, to be:
(x) at a price which is fair to
stockholders (taking into account all
factors which such members of the Board
deem relevant including without limitation,
prices which could reasonably be achieved
if the Company or its assets were sold on
an orderly basis designed to realize
maximum value), and
(y) otherwise in the best
interests of the Company and its
stockholders; or
(C) The Board shall declare any Person to be an
Adverse Person, upon:
(1) a determination that such Person, alone
or together with its Affiliates and Associates has,
at any time after the Rights Dividend Declaration
Date, become or has expressed an intention,
privately or publicly, to become the Beneficial
Owner of an amount of Common Shares which the Board
determines to be substantial (which amount shall in
any event be no less than 10% of the Common Shares
then outstanding); and
(2) a determination by at least a majority
of the Board who are not officers of the Company and
who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person or any Adverse
- 13 -
<PAGE> 17
Person, after reasonable inquiry and investigation,
including consultation with such persons as such
directors shall deem appropriate, that:
(x) such Beneficial Ownership by
such Person is intended to cause the
Company to repurchase the Common Shares
beneficially owned by such Person or to
cause pressure on the Company to take
action or enter into a transaction or
series of transactions intended to provide
such Person with short-term financial gain
under circumstances where the Board
determines that the best long-term interest
of the Company and its shareholders would
not be served by taking such action or
entering into such transactions or series
of transactions at that time, or
(y) such Beneficial Ownership is
causing or is reasonably likely to cause, a
material adverse impact (including, but not
limited to, impairment of the Company's
ability to maintain its competitive
position or impairment of the Company's
business reputation or ability to deal with
government agencies) or the business or
prospects of the Company (it being
understood that a finding of qualification,
suitability or the like by any regulatory
body shall not preclude the Board from
declaring such Person to be an Adverse
Person,
then, promptly following five (5) days after the date of
occurrence of an event described in Section 11(a)(ii)(B) and
promptly following the occurrence of an event described in
Section 11(a)(ii)(A) or 11(a)(ii)(C) hereof, proper provision
shall be made so that each holder of a Right, except as
provided below and in Section 7(e) hereof, shall thereafter
have a right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-hundredth (1/100)
of a share of Preferred Stock, 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
one-hundredth (1/100) of a share of
Preferred Stock for which a Right was
exercisable immediately prior to the first
occurrence of a Triggering Event and
dividing that product (which following such
first occurrence of a Triggering Event
shall thereafter be referred to as the
"Purchase Price" for each Right and for all
purposes of this Agreement) by
(y) 50% of the Current Market
Price per Common Share on the date of such
first occurrence (such number of shares
being referred to as the "Adjustment
Shares").
(iii) In the event that the number of Common Shares which are
authorized by the Company's Articles of Incorporation, but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights, is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii)
of this Section 11(a), the Company shall;
(A) Determine the excess of
(1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current
Value") over
- 14 -
<PAGE> 18
(2) the Purchase Price (such excess being
referred to as 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, the following:
(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, or preferred
stock which the Board has deemed to have the same
value as shares of common Stock (such shares being
referred to as "Common Stock Equivalents")),
(4) debt securities of the Company,
(5) other assets, or
(6) any combination of the foregoing,
having an aggregate value equal to the Current
Value, where such aggregate value has been
determined by the Board based upon the advice of a
nationally recognized investment Banking firm
selected by the Board;
PROVIDED, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of:
(x) the first occurrence of a
Triggering Event and
(y) the date on which the
Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and
(y) being referred to herein as the
"Section 11(a)(ii) Trigger Date"),
then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring
payment of the Purchase Price, Common Shares (to the extent
available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the
Board shall determine in good faith that it is likely that
sufficient additional Common Share could be authorized for
issuance upon exercise in full of the Rights, the thirty (30)
day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the
Triggering Event, in order that the Company may seek
stockholder approval for the authorization of such additional
shares (such period, as it may be extended being referred to
herein as the "Substitution Period"). To the extent that the
Company determines that some action need be taken pursuant to
the first and/or second sentences of this Section 11(a)(iii),
the Company
(x) shall provide, subject to
Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights,
and
(y) may suspend the exercisability
of the Rights until the Expiration of the
Substitution Period in order to seek any
authorization of additional shares and/or
to decide the appropriate form of
distribution to be made pursuant to such
first sentence and to determine the value
thereof.
- 15 -
<PAGE> 19
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is
no longer in effect. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the Current Market Price per share of the Common Shares
on the Section 11(a)(ii) Trigger Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the Common Shares on such
date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Stock (or shares having the same
rights, privileges and preference as the shares of Preferred Stock ("Equivalent
Preferred Stock") or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price per share of the Preferred Stock on such record
date) the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date plus the number of
Preferred Stock which the aggregate offering price of the total number of
Preferred Stock so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such Current
Market Price and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of additional
shares of Preferred Stock and/or Preferred Stock Equivalents 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 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 Rights. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or cash (other than a regular periodic cash dividend paid out of
the earnings or retained earnings of the Company or a dividend payable in
Preferred Stock), or assets or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by the Board of
the Company, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preferred Stock and the denominator of which shall
be such Current Market Price per share of the Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"Current Market Price" per share of any security on any date shall be deemed to
be the average of the daily closing prices per share of such security for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the Current
Market Price per share
- 16 -
<PAGE> 20
of the Common Shares is determined during a period following the announcement
by the issuer of such Common Shares of (A) a dividend or distribution on such
Common Shares payable in such Common Shares or securities convertible into such
Common Shares; or (B) any subdivision, combination or reclassification of such
Common Shares, and prior to the expiration of 30 Trading Days after the ex-
dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"Current Market Price" shall be appropriately adjusted to take into account ex
dividend trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
the Common Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Common Shares are listed or admitted to trading or, if
the Common Shares are not listed or admitted to trading on any national
securities exchange, the Closing Sale Price as reported on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")
National Market System or the NASDAQ Small Cap Market as the case may be or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. or such other system then in use, or, if on any such date the
Common Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Shares selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the Common
Shares, the fair value of such shares on such date as determined in good faith
by the Board of Directors of the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the Common Shares are listed or admitted to trading is open for the transaction
of business or, if the Common Shares are not listed or admitted to trading on
any national securities exchange, a Monday, Tuesday, Wednesday, Thursday or
Friday on which Banking institutions in the State of New York are not
authorized or obligated by law or executive order to close. If the Common
Shares are not publicly held or not so listed or traded, "Current Market Price"
per share shall mean the fair value per share as determined in good faith by
the Board of the Company, whose determination shall be described in a statement
filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
shares of Preferred Stock are not publicly traded, the "Current Market
Value" of the Preferred Stock shall be conclusively deemed to be the
Current Market Value of the Common Shares as determined pursuant to
Section 11(d)(i) (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. If neither the Common Shares or
Preferred Stock are publicly held or so listed or traded, Current
Market Value shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a
statement to the Rights Agent.
(e) Notwithstanding anything hereunto the contrary, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of:
(i) three years from the date of the transaction which
requires such adjustment, or
- 17 -
<PAGE> 21
(ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Sections
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other
than Preferred Stock (or Common Shares as the case may be), 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 shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock (or Common Shares as the case may be) shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredth
(1/100) of a share of Preferred Stock purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredth (1/100) of a share of Preferred Stock (calculated to the
nearest one one-millionth of a share of Preferred Stock) obtained by:
(i) multiplying
(A) the number of one one-hundredth (1/100) of a
share covered by a Right immediately prior to this
adjustment, by
(B) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-hundredth (1/100) of a share of Preferred
Stock 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 one-hundredth (1/100) of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued, shall be at
least ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date, Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the 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
- 18 -
<PAGE> 22
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record
of Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredth (1/100) of a share of Preferred Stock
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per share and
the number of shares which were expressed in the initial Rights Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Preferred
Stock 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 Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
PROVIDED, HOWEVER, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the
contrary, 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:
(i) any consolidation or subdivision of the Preferred Stock,
(ii) an issuance wholly for cash of any of the Preferred
Stock at less than the Current Market Price,
(iii) an issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable
for Common Shares,
(iv) stock dividends, or
(v) issuance of rights, options or warrants referred to
herein above in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date:
(i) consolidate with any other Person (other than a Company
subsidiary in a transaction which complies with Section II(o) hereof,
(ii) merge with or into any other Person (other than a
Company subsidiary in a transaction which complies with Section II(o)
hereof, or
- 19 -
<PAGE> 23
(iii) sell or transfer (or permit any Company subsidiary to
sell or transfer) in one transaction or in a series of related
transactions, assets or earning power aggregating more than 50% of its
assets or earning power to any other Person or Persons if:
(A) at the time of or immediately after such
consolidation, merger or sale, there are any rights,
warrants, or other instruments or securities outstanding or
agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by
the Rights, or
(B) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholder of
the Person who constitutes, or would constitute the
"Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by
such Person or any of its affiliates or associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23 or 26
hereof, take (or permit any of its subsidiaries to take), any action if at the
time such action is taken, it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights;
(p) Notwithstanding anything in this Agreement to the
contrary, in the event that the Company shall at any time after the Rights
Dividend Distribution Date and prior to the Distribution Date:
(i) declare a dividend in the outstanding Common Shares
payable in Common Shares,
(ii) subdivide the outstanding Common Shares, or
(iii) combine the outstanding Common Shares into a smaller
number of shares, the number of Rights associated with each Common
Share following any such event shall equal the result obtained by
multiplying the number of Rights associated with each Common Shares
immediately prior to such event by the fraction, the numerator of
which should 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.
(q) The failure by the Board of Directors to declare a Person
to be an Adverse Person following such Person becoming or expressing an
intention to become the beneficial owner of 10% or more of the outstanding
Common Shares shall not imply that such Person is not an Adverse Person, or
limit the Board's right at any time in the future to declare such Person to be
an Adverse Person.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall:
(a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each
transfer agent for the Preferred Stock or Common Shares a copy of such
certificate and
(c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained.
- 20 -
<PAGE> 24
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that following the Share Acquisition Date,
directly or indirectly:
(i) the Company shall consolidate with, or merge with and
into, any other Person (other than a Company Subsidiary) and the
Company shall not be the continuing or surviving corporation,
(ii) any Person shall consolidate with the Company, or merge
with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such
consolidation or merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person,
then, and in each such case (except as may be contemplated by Section 13(d)
hereof), proper provision shall be made so that:
(A) each holder of a Right (except as otherwise
provided in Section 7(e) herein) shall thereafter have the
right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued,
fully paid, non-assessable and fully tradeable Common Shares
of the Principal Party, not subject to any liens,
encumbrances, rights of first refusal or other adverse
matters as shall be equal to the result obtained by:
(1) multiplying the then current Purchase
Price by the number of one one-hundredth of a share
of Preferred Stock for which a Right is then
exercisable (or, if such Right is not then
exercisable for a number of one one-hundredth of a
share of Preferred Stock, the number of such
fractional shares for which it was exercisable
immediately prior to an event described under
Section 11(a)(ii) hereof) and dividing that product
by
(2) 50% of the then Current Market Price of
the Common Stock of such Principal Party (determined
pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or
transfer;
(B) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, or otherwise, all the obligations
and duties of the Company pursuant to this Agreement;
(C) the term "Company" shall thereafter be deemed to
refer to such Principal Party it being specifically intended
that the provisions of Section 11 hereof shall apply only to
such Principal Party following the first occurrence of a
Section 13 Event; and
(D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its shares of Common Stock in connection
with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be,
- 21 -
<PAGE> 25
in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights.
(E) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of and Section
13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (A) or
(B) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which Common Shares are converted in
such merger or consolidation, and if no securities are issued, the
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in Clause (C)
of the first sentence of Section 13(a) the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
Provided, however, that in any such case:
(A) if the Common Shares of such Person is not at
such time, and has not been continuously over the proceeding
twelve (12) months registered, under Section 12 of the
Exchange Act, and such Person is a direct or indirect
subsidiary of another Person, the Common Shares of which is
and has been so registered, Principal Party shall refer to
such other Person; and
(B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, and have been so
registered, Principal Party shall refer to whichever of such
Persons is the issuer of the common stock with the greatest
aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party 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 Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraph (a) and (b) of Section 13 and
further providing that as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to
(A) become effective as soon as practicable after
such filing; and
(B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration
Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party, and each of its
affiliates, which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provision of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Triggering Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
- 22 -
<PAGE> 26
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Rights
would other wise be issuable, an amount in cash equal to the same fraction of
the Current Market Value of a whole Right. For the purpose of this Section
14(a), the Current Market Value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the Closing Sale Price as reported on the
NASDAQ National Market System or the NASDAQ Small Cap Market as the case may be
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of 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 the Company shall be used.
(b) The Company shall not be required to issue fractions of a
share of Preferred Stock (other than fractions which are integral multiples of
the one one-hundredth (1/100) of a share of Preferred Stock) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred
Stock. In lieu of fractional shares, fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth (1/100) of a share of Preferred
Stock, 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 Market Value of one one-hundredth (1/100)
of a share of Preferred Stock. For purposes of this Section 14(b), the Current
Market Value of one one-hundredth (1/100) of a share of Preferred Stock shall
be one one-hundredth (1/100) of the closing price of a Preferred Stock (as
determined pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of a Common Share 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
Market Value of one Common Share. For purposes of this Section 14(c), the
Current Market Value of one Common Share shall be the closing price of one
Common Share (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder
- 23 -
<PAGE> 27
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) Subject to Sections 6(a) and 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notation of ownership or writing on the
Rights Certificates or the associated Common Shares certificate made by anyone
other than Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent (subject to the last sentence of
Section 7(e) hereof shall be required to be affected by any notice to the
contrary; and
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or rule making issued by a court of
competent jurisdiction or by a governmental regulatory or administrative agency
or commission or any statute, rule, regulation, or executive order promulgated
or enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company shall use its
best efforts to have any such order, decree or ruling lifted, or otherwise
overturned, as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. MATTERS CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and
- 24 -
<PAGE> 28
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the Premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of
the Board, the President, a Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full
- 25 -
<PAGE> 29
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except as to its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Sections 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any such adjust ment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares to be
issued pursuant to this Agreement or any Rights Certificate or as to whether
any Common Shares will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any one of the Chairman of the Board, the President, any Vice President,
the Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided however reasonable care was
exercised in the selection and continued employment thereof.
(j) no provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
- 26 -
<PAGE> 30
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be has either
not been completed or indicated an affirmative response to clause (1) and/or
(2) thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' written notice mailed to the Company and to each
transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' written notice,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Shares by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the 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 Rights Certificate (who shall, with such notice, submit
his Rights Certificate for inspection by the Company), then the registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any other state of the United States:
(a) so long as such corporation is authorized to do business
as a Transfer Agent under the Exchange Act; or
(b) so long as such corporation is authorized to do business
as a banking institution which is authorized under such laws to exercise
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 $50,000,000; or
(c) an affiliate of a corporation described in Clauses (a) or
(b) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as 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 mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board to reflect any adjustment or change
in the Purchase Price per share and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company:
- 27 -
<PAGE> 31
(a) shall, with respect to Common Shares so issued or sold
pursuant to the exercise of stock options whether or not under any employee
plan or arrangement, granted or awarded as of the Distribution Date, or upon
the exercise, conversion or exchange of securities hereinafter issues by the
Company, and
(b) may in any other case it deems necessary or appropriate
by the Board, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or role; provided, however, that:
(i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights
Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to
the extent that appropriate adjustment shall otherwise have been made
in lieu of the issuance thereof.
Section 23. REDEMPTION.
(a) The Board of the Company may, at its option, at any time
prior to the earlier of:
(i) the Close of Business on the tenth day following the
Share Acquisition Date (or if the Share Acquisition Date shall have
accrued prior to the Record Date, the close of business on the tenth
day following the Record Date;
(ii) a determination by the Board that a Person is an Adverse
Person; or
(iii) the Final Expiration Date,
direct the Company to, and if so directed, the Company shall redeem, all but
not less than all the then outstanding Rights at a redemption price of $.001
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"); provided, however, if
the Board authorizes redemption of the Rights in either of the circumstances
set forth in clauses (A) or (B) below, then there must be Continuing Directors
then in office and such authorization shall require the concurrence of a
majority of the Continuing Directors:
(A) if such authorization occurs on or after the
time a Person become an Acquiring Person; or
(B) if such authorization occurs in or after the
date of a change (resulting from a proxy or consent
solicitation) in a majority of the directors in office at the
commencement of such solicitation if any person who is a
participant in such solicitation has stated (or if upon the
commencement of such solicitation a majority of the Board has
determined in good faith) that such Person (or any of its
Affiliates and Associates) intends to take, or may consider
taking, any action which would result in such Person becoming
an Acquiring Person or an Adverse Person, or which would
cause the occurrence of a Triggering Event unless, concurrent
with such solicitation, such Person (or one or more of its
Affiliates or Associates) is making a cash tender offer
pursuant to a Schedule 14D-1 (or any successor form) filed
with the Securities and Exchange Commission for all
outstanding Common Shares not beneficially owned by such
Person (or its Affiliates or Associates). Notwithstanding
anything in this Agreement to the contrary, the Rights shall
not be exercisable after the first
- 28 -
<PAGE> 32
occurrence of a Triggering Event until such time as the
Company's right of redemption hereunder has expired. The
Company may, at its option, pay the Redemption Price in cash,
Common Shares (based on the Current Market Value of the
Common Shares at the time of redemption), or any other form
of consideration deemed appropriate by the Board.
(b) Immediately upon the action of the Board ordering the
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent 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. Promptly after the
action of the Board ordering the redemption of the Rights, the Company shall
give notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses-as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the older receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be made.
Section 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose at any time after the
Distribution Date:
(i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular periodic cash
dividend out of earnings or retained earnings of the Company);
(ii) to offer to the holders of Preferred Stock, rights or
warrants to subscribe for or to purchase any additional Preferred
Stock or shares of stock of any class or any other securities, rights
or options;
(iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of
outstanding Preferred Stock);
(iv) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person;
or
(v) to effect the liquidation, dissolution or winding up of
the Company,
then, in each such case, the Company shall give to each holder of a Rights
Certificate, in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least 20 days prior to the record date for determining
holders of the Preferred Stock 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 Stock, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
of this Agreement shall occur, then, in any such case, the Company shall, as
soon as practicable thereafter, give to each holder of a Rights Certificate, to
the extent feasible, and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof.
- 29 -
<PAGE> 33
Section 25. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Med/Waste, Inc.
6175 N.W. 153rd Street, Suite 324
Miami Lakes, Florida 33014
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Continental Stock Transfer and Trust Company
2 Broadway
New York, New York 10004
Attention: Compliance Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the pertinent sentences of this Section 26, the Company and the
Rights Agent shall, if the Board so directs, supplement or amend any provision
of this Agreement without the approval of any holders of Rights Certificates;
provided, however, such supplement or Amendment shall be effective only if
there are Continuing Directors and shall require the concurrence of a majority
of such Continuing Directors from and after the Distribution Date and subject
to the pertinent sentence of this Section 26, the Company and the Rights Agent
shall if the Board so directs or amends this Agreement without the approval of
the holders of Rights Certificates in order:
(a) to cure any ambiguity,
(b) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other Person,
(c) to shorten or lengthen any time period hereunder (which
shortening or lengthening shall be effective only if there are Continuing
Directors and shall require the concurrence of a majority of the Continuing
Directors, or
(d) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holder of Rights Certificates (other than
an Acquiring Person, Adverse Person or other affiliates and associates provided
however, this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (c) of this sentence:
(i) a term period relating to when the Rights may be redeemed
at such time as the Rights are not then redeemable, or
(ii) any other time periods unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of
and/or the benefits to holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states
that the
- 30 -
<PAGE> 34
proposed supplement or amendment is in compliance with this Section
26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption
Price, the Expiration Date, the Purchase Price or the number of Common
Shares for which a Right is exercisable. Prior to the Distribution
Date, the intent of the holders of Rights shall be deemed coincident
with the rest of the holders of Common Shares.
Section 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Rights Certificates (and,
prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD. For all purposes
of this Agreement, any calculation of the number of Preferred Stock, Common
Stock or Voting Securities outstanding at any particular time, including for
purposes of determining the particular percentages of such outstanding Common
Shares or Voting Securities 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 (and where
specifically required herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and
to exercise all rights and powers specifically granted to the Board (and where
specifically required herein, the concurrence of the Continuing Directors) or
to the Company or as may be necessary or advisable in the administration of
this Agreement, including without limitation, the right and power to
(a) interpret the provisions of this Agreement; and
(b) make all the determinations deemed necessary or advisable
for the administration of this Agreement (including a determination to redeem
or not redeem the rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations (including
for purposes of clause (ii) below, all omissions with respect to the foregoing)
which are done or made by the Board (and where specifically required herein,
the concurrence of the Continuing Directors) in good faith shall:
(i) be final, conclusive and binding on the Company the
Rights Agent, the holders of the Rights and all other parties; and
(ii) not subject the Board or the Continuing Directors to any
liability to the holders of the Rights.
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board
determines in good faith that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such
determination by the Board.
- 31 -
<PAGE> 35
Section 31. GOVERNING LAW. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
MED/WASTE, INC., a Delaware corporation
By:
-------------------------------------
DANIEL A. STAUBER, President
Attest:
---------------------------------
Assistant Secretary
CONTINENTAL STOCK TRANSFER AND
TRANSFER COMPANY
By: By:
----------------------------- -------------------------------------
Assistant Secretary
Name:
-----------------------------------
Title:
----------------------------------
- 32 -
<PAGE> 36
EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
MED/WASTE, INC.
MED/WASTE, INC., a corporation organized and existing under the law of
the State of Delaware, in accordance with the provisions of The General
Corporation Laws of the State of Delaware, hereby certifies:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Corporation's Board
of Directors on November 5, 1998, adopted the following resolution creating a
series of 200,000 shares of Preferred Stock designated as Series B Junior
Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
SECTION 1. DESIGNATION AND AMOUNT. There is hereby created a series of
Preferred Stock which shall be designated as the "Series B Junior Participating
Preferred Stock" (the "Series B Stock") and the number of shares constituting
such series shall be 200,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors and by the filing of a
certificate pursuant to the provisions of The General Corporation Laws of the
State of Delaware stating that such increase or decrease has been so
authorized, provided however, that no decrease shall reduce the number of
shares of Series B Stock to a number less than that of the shares then
outstanding, plus the number of shares of Series B Stock issuable upon exercise
of outstanding rights, options of warrants or upon conversion of outstanding
securities issued by the Company.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series B Stock with respect to dividends, the holders of shares of
Series B Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last 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 B
Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $10.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstand ing shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, par
value $.001 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series B Stock. In the event the Corporation shall at
any time after November 6, 1998 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series B 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.
<PAGE> 37
(B) The Corporation shall declare a dividend or distribution on the
Series B Stock as provided in paragraph (A) above immediately after it declares
a dividend or distribution on the Common Stock (other than a dividend payable
in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10.00 per share on the Series B Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series B Stock, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series B Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series B Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series B Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
SECTION 3. VOTING RIGHTS. The holders of shares of Series B Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series B Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series B Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series B Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series B Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Stock;
- 2 -
<PAGE> 38
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series B Stock, except dividends paid ratably on the Series B Stock
and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series B Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding
up) to the Series B Stock;
(iv) purchase or otherwise acquire for consideration any
shares of Series B Stock, or any shares of stock ranking on a parity
with the Series B Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series B Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Stock unless, prior thereto, the
holders of shares of Series B 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 "Series B Liquidation
Preference").
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series B Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series B Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series B Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case
- 3 -
<PAGE> 39
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 (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series B
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
SECTION 8. NO REDEMPTION. The shares of Series B Stock shall not be
redeemable by the Corporation. The preceding sentence shall not limit the
ability of the Corporation to purchase or otherwise deal in such shares of
stock to the extent permitted by law.
SECTION 9. RANKING. The Series B Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.
SECTION 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series B 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 B Stock, voting separately
as a class.
SECTION 11. FRACTIONAL SHARES. Series B Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holders fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties' of perjury this ____
day of November, 1998.
-----------------------------
President
Attest:
- -----------------------------
Assistant Secretary
- 4 -
<PAGE> 40
EXHIBIT "B"
[Form of Right Certificate]
Certificate No. R-____ ____RIGHTS
NOT EXERCISABLE AFTER NOVEMBER __, 2008 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. IF THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE
OR WERE ISSUED TO A PERSON WHO OR BECAME WAS AN ACQUIRING PERSON
OR AN ADVERSE PERSON OR AN ASSOCIATE OR AFFILIATE OF AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS WERE
DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(E) OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
MED/WASTE, 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 November 6, 1998 (the "Rights Agreement")
between MED/WASTE, INC., a Delaware corporation (the "Company"), and
CONTINENTAL STOCK TRANSFER AND TRUST COMPANY (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M. (New York City time) on
November 6, 2008 the principal office of the Rights Agent, or its successors as
Rights Agent, one one-hundredth (1/100) of a fully paid, non-assessable share
of the Series B Junior Participating Preferred Stock (the "Preferred Stock") of
the Company, at a purchase price of $25.00 per one one-hundredth (1/100) of a
share of Preferred Stock (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above, are the number and Purchase
Price as of November 6, 1998, based on the Preferred Stock as constituted at
such date.
Upon the occurrence of a Triggering Event (as such time is defined in
the Rights Agreement) if the Rights evidenced by this Rights Certificates are
Beneficially Owned by:
(i) an Acquiring Person or an Adverse Person or an Affiliate
or Associate of any such Person;
(ii) a transferee of any such Acquiring Person, Adverse
Person, Associate or Affiliate who becomes a transferee after such
Acquiring Person, Adverse Person or Affiliate or Associate becomes
such; or
<PAGE> 41
(iii) under certain circumstances specified in the Rights
Agreement a transfer of any such Acquiring Person, Adverse Person,
Affiliate or Associate who becomes a transferee prior to or
concurrently with such Acquiring Person or Adverse Person becoming
such;
such Rights shall become null and void and no Acquiring Person, Adverse Person,
Affiliate or Associate thereof holder hereof shall have any rights with respect
to such Rights from and after the occurrence of such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock which may be purchased upon the exercise of the
Rights evidenced by this Rights Ce rtificate are subject to modification and
adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged
for another Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of Preferred
Stock as the Rights evidenced by the Rights Certificate(s) surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate(s) for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right at any time prior to the earlier of the
close of business on:
(a) the tenth day following the Share Acquisition Date (as
such time period may be extended pursuant to the Rights Agreement),
(b) a determination by the Board that a Person is an Adverse
Person, or
(c) the Final Expiration Date.
Under certain circumstance set forth in the Rights Agreement the decision to
redeem shall require the concurrence of a majority of the Continuing Directors.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-hundredth of a share of Preferred Stock), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give 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 Rights
Certificate shall have been exercised as provided in the Rights Agreement.
- 2 -
<PAGE> 42
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of
------------
Attest: MED/WASTE, INC.
By: By:
- ----------------------- -----------------------------
Assistant Secretary DANIEL A. STAUBER, President
Countersigned:
CONTINENTAL STOCK TRANSFER AND
TRUST COMPANY
By:
-----------------------------
Authorized Signature
- 3 -
<PAGE> 43
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the RIGHTS CERTIFICATES.)
FOR VALUE RECEIVED hereby sells, assigns and transfers
-----------------
unto
--------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
----------------------------
Attorney, to transfer the within Rights Certificate on the books of the within
named Company, with full power of substitution.
Dated:
---------- -----------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies, by checking the appropriate boxes,
that:
(a) This Rights Certificate |_| is |_| is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person,
Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined in the Rights Agreement);
(b) After due inquiry and to the best knowledge of the undersigned it
|_| did |_| did not acquire the Rights evidenced by this Rights Certificate
from any person who is, was or subsequently became an Acquiring Person, Adverse
Person or an Affiliate or Associate of any such Person.
Dated:
---------- -----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 44
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the RIGHTS CERTIFICATE)
To: MED/WASTE, INC.
The undersigned hereby irrevocably elects to exercise
----------------
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exer cise of such 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
Rights Certificate, a new Rights 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 must conform in all
respects to name of holder as
specified on the face of this
RIGHTS CERTIFICATE)
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(a) This Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person,
Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined in the Rights Agreement);
(b) After due inquiry and to the best knowledge of the undersigned it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any person who is, was or subsequently became an Acquiring Person, Adverse
Person or an Affiliate or Associate of any such Person.
Dated:
---------- -----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 45
EXHIBIT "C"
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On November 5, 1998, the Board of Directors of MED/WASTE, INC. (the
"Company") declared a dividend distribution of one "Right" for each outstanding
share of the Company's common stock, par value $.001 per share (the "Common
Stock") to stockholders of record at the close of business on November 6, 1998
(the "Record Date") and authorized the issuance of one Right with respect to
each share of Common Stock that becomes outstanding between the Record Date and
November 6, 2008 or such earlier time as the Rights are redeemed. Except as
described below, each Right, when exercisable, entitles the registered holder
to purchase from the Company one one-hundredth (1/100) of a share of Series B
Junior Participating Preferred Stock, $.01 par value (the "Preferred Stock"),
at a price of $25.00 per one one-hundredth (1/100) share (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the Company and
Continental Stock Transfer and Trust Company, as Rights Agent.
Initially, the Rights will be attached to all certificates
representing Common Stock then outstanding and no separate Rights Certificates
would be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of:
(c) ten (10) days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person"),has acquired,
or obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding Common Shares, the date of such announcement being the "Share
Acquisition Date";
(d) ten (10) business days (or such later date as the Board shall
determine) 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 of 20% or more of such outstanding Common
Shares; or
(e) a determination by the Board of Directors of the Company (the
"Board") that a person or group is an "Adverse Person."
The Rights Plan contains an exemption from the definition of Acquiring
Person for any issuance of Common Stock by the Company directly to any person
(for example, in a private placement or an acquisition by the Company in which
Common Stock is used as consideration), even if that person would become the
beneficial owner of 20% or more of the Common Stock, provided that such person
does not acquire any additional shares of Common Stock.
A person may be declared an Adverse Person upon (a) a determination
that such person, alone or together with its affiliates and associates, has
become, or has expressed an intention to become, the owner of an amount of
Common Shares which the Board determines to be substantial (which may not be
less than 10% of the Common Shares then outstanding) and (b) a determination by
at least a majority of the Board who are not officers of the Company and are
not representatives or associates of the Acquiring Person or Adverse Persons
("Independent Directors") after reasonable inquiry and investigation, that such
ownership (i) is intended to cause the Company to repurchase the Common Shares
owned by such person or to cause the Company to take actions or enter into
transactions which are intended to provide such person with a short term
financial gain and which are not in the best long term interests of the Company
and its stockholders or (ii) is causing, or is reasonably likely to cause, a
material adverse impact on the Company.
Until the Distribution Date, (i) the Rights would be evidenced by the
Common Stock Certificates and would be transferred with and only with such
Common Stock Certificates, (ii) new Common Stock Certificates received after
the Record Date will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will constitute the transfer of the Rights associated with
the Common Stock represented
<PAGE> 46
by such certificate. Pursuant to the Rights Agreement, the Company reserves the
right to require prior to the occurrence of a Triggering Event (as defined
below) that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will
expire on November 6, 2008, unless earlier redeemed by the Company as described
below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to all holders of record of Common Stock at the
close of business on the Distribution Date. Thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board, only Common Shares issued prior to the Distribution Date will be
issued with Rights.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends out of
retained earnings) or of sub scription rights or warrants (other than those
referred to above. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional shares will be issued and, in lieu thereof, cash
payments will be made based on the market price of the Preferred Stock on the
last trading day prior to the date of exercise.
In the event:
(a) the Company is the surviving corporation in a merger with an
Acquiring Person or Adverse Person and its Common Shares are not changed or
exchanged,
(b) a Person becomes an Acquiring Person (except pursuant to an offer
for all outstanding Common Shares which a majority of the Independent Directors
determined to be fair to, and otherwise in the best interest of the Company,
and its Stockholders (a "Fair Offer"),
(c) an Acquiring Person or Adverse Person engages in one or more "self
dealing" transactions set forth in the Rights Agreement, or
(d) a Person is determined to be an Adverse Person,
(a "Triggering Event") then each holder of a Right will thereafter have the
Right to receive, upon exercise, Common Shares (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. Notwithstanding any of the foregoing,
following the occurrence of a Triggering Event set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were beneficially owned by an Acquiring Person or Adverse Person
will be null and void. Moreover, Rights are not exercisable following the
occurrence of either of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $25.00 per Right, each Right not
owned by an Acquiring Person or Adverse Person (or certain related parties)
following an event set forth in the preceding paragraph could entitle the
holder to purchase $50.00 worth of Common Shares (or other consideration as
noted above) for the $25.00 Purchase Price. Assuming that the Common Shares
have a per share value of $10.00 at such time, the holder of each valid Right
would be entitled to purchase five (5) Common Shares for $25.00.
In the event that at any time after a Share Acquisition Date:
- 2 -
<PAGE> 47
(a) the Company is acquired in a merger or other business combination
transaction (other than a merger described in the second preceding paragraph or
a merger which followed a Fair Offer); or
(b) more than 50% of its assets or earning power were sold or
transferred, then 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, the common stock, or the equivalent equity securities, of the
acquiring company which have a value equal to two times the exercise price of
the Right. (The events set forth in this paragraph and in the second preceding
paragraph are referred to as "Triggering Events").
In general, the Company may redeem the Rights in whole, but not in
part, at any time until a determination that a person is an Adverse Person and
until ten (10) days following the Share Acquisition Date at a price of $.001
per Right (payable in cash, Common Shares or other consideration deemed
appropriate by the Board). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority
of the Continuing Directors. Immediately upon the action of the Board, ordering
the Rights to be redeemed (with where specifically required, the concurrence of
the Continuing Directors), the Rights will terminate and the only right of the
holders of Rights will be to receive the $.001 Redemption Price.
The term "Continuing Directors" means any member of the Board who was
a member of the Board prior to the execution of the Rights Agreement, and any
person who is subsequently elected to the Board, if such person is recommended
or approved by a majority of the Continuing Directors, but shall not include an
Acquiring Person, Adverse Person or an Affiliate or Associate of the Acquiring
Person or Adverse Person, or any representative of the foregoing entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company (other than such rights as a holder of
Common Shares), including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights becomes
exercisable for Common Shares (or other consideration) of the Company or common
stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board (in certain
circumstances, with the concurrence of the Continuing Directors) in order to
cure any ambiguity, to make changes which do not adversely affect the interest
of holders of Rights (excluding the interests of any Acquiring Person or
Adverse Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at any time as the Rights are not
redeemable.
As of the Record Date, there were 6,665,628 shares of Common Stock
outstanding. Each share of Common Stock outstanding on and after the Record
Date, will receive one Right. An aggregate of 200,000 shares of Preferred Stock
will be reserved for issuance in the event of 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
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired, and under certain circumstances the Rights
beneficially owned by such a person or group may become void. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors because, if the Rights would become exercisable as a result
of such merger or business combination, the Board
- 3 -
<PAGE> 48
of Directors may, at its option, at any time prior to the time that any Person
becomes an Acquiring Person, redeem all (but not less than all) of the then
outstanding Rights at the Redemption Price.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A dated
November 6, 1998. A copy of the Rights Agreement is available free of charge
from the Company or the Rights Agent. This Summary Description of the Rights
does not purport to be complete and is qualified in its entirety by reference
to the Rights Agreement, which is incorporated herein by reference.
- 4 -
<PAGE> 1
Exhibit 99.1
MED/WASTE, INC. DECLARES DIVIDEND
DISTRIBUTION OF PREFERRED STOCK PURCHASE RIGHTS
MIAMI LAKES, FLORIDA, November 6, 1998 (Nasdaq:MWDS) -- The Board
of Directors of Med/Waste, Inc. (the "Company") yesterday declared a dividend
distribution of one Preferred Stock Purchase Right on each outstanding share of
Med/Waste, Inc. common stock to all stockholders of record as of the close of
business on November 6, 1998. Each Right will entitle shareholders to purchase
one one-hundredth (1/100) of a share of the Company's new Series B Junior
Participating Preferred Stock at an exercise price of $25.00. The Rights will
be exercisable only if (i) a person or group acquires 20% or more of the
Company's common stock, (ii) a person announces a tender offer for 20% or more
of the common stock, or (iii) the Company's Board of directors makes a
determination that a person is an "Adverse Person." The Company will be entitled
to redeem the Rights at $.001 per Right at any time before a 20% position has
been actually acquired.
The Rights are not being granted in response to any effort by a
third party to acquire control of the Company and the Board is not aware of any
such effort. The Rights are designed to assure that all Med/Waste, Inc.
shareholders receive fair and equal treatment in the event of any proposed
takeover of the Company and to guard against partial tender offers and other
abusive tactics to gain control of the Company without paying all shareholders a
control premium.
If (1) the Company is the surviving corporation in a merger or
other business combination, (2) a person or group acquires 20% or more of the
Company's Common Stock, or (3) the Board determines such a person or group is an
Adverse Person (as defined in the Plan), each Right will entitle the Company's
shareholders to purchase at the Right's then current exercise price, a number of
shares of the Company's common stock having a market value at that time of twice
the Right's exercise price.
If the Company is acquired in a merger or other business
combination transaction, 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 also provide for protection against self-dealing transactions by a
control shareholder.
"The Rights are intended to enable all Med/Waste, Inc.
shareholders to realize the long-term value of their investment in Med/Waste,
Inc. They do not prevent a takeover, but should encourage anyone seeking to
acquire the Company to negotiate with the Board prior to attempting a takeover,"
said Daniel A. Stauber, Med/Waste, Inc.'s President, Chief Executive Officer.
The dividend distribution will be made on November 9, 1998,
payable to shareholders of record on November 6, 1998. The Rights will expire,
if not previously exercised ten years later on November 6, 2008. The Rights
distribution is not taxable to shareholders.
Details of the Rights distribution are contained in a Summary,
which is being mailed to all Med/Waste, Inc. shareholders and is also included
in a registration statement on form 8-A being filed with the Securities and
Exchange Commission on November 6, 1998.
Med/Waste, Inc. provides medical waste management services to
more than 20,000 healthcare facilities for customers throughout the Eastern
United States. Such services include collection, treatment through incineration
or autoclaving, and disposal, as well as reusable sharps containers for medical
and special waste.
The statements in this press release that are not historical
facts constitute "forward-looking statements" that involve risks, uncertainties
and other facts which may cause actual results to be materially different from
those set forth in the forward-looking statements. Such factors include but are
not limited to, the following: general economic and business conditions;
competition; the ability to implement and the effectiveness of business
strategy and development plans; quality of management; business abilities and
judgment of personnel; availability of qualified personnel; labor and employee
benefit costs; and availability and cost of raw materials and supplies.
Med/Waste, Inc. will not undertake and specifically declines any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
Company Contact:
Med/Waste, Inc., Miami Lakes
Daniel A. Stauber, President & CEO 305/819-8877
or
Financial Communications Contact:
Lippert/Heilshorn & Associates, Inc. New York
Lisa Lettieri, Vice President, 212/838-3777
www.lhai.com or [email protected]
