EXHIBIT 4.1
NATIONAL SERVICE INDUSTRIES, INC.
and
WACHOVIA BANK, N.A.
Rights Agent
AMENDED AND RESTATED
RIGHTS AGREEMENT
Dated as of December 17, 1997
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Rights Certificates 8
Section 4. Form of Rights Certificates 10
Section 5. Countersignature and Registration 11
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates 12
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 13
Section 8. Cancellation and Destruction of Rights
Certificates 17
Section 9. Reservation and Availability of Preferred Stock 17
Section 10. Preferred Stock Record Date 19
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights 20
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares 32
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 32
Section 14. Additional Covenants 36
Section 15. Fractional Rights and Fractional Shares 37
Section 16. Rights of Action 39
Section 17. Agreement of Rights Holders 40
Section 18. Rights Certificate Holder Not Deemed a
Stockholder 41
Section 19. Concerning the Rights Agent 41
Section 20. Merger or Consolidation or Change of Name of
Rights Agent 42
Section 21. Duties of Rights Agent 43
Section 22. Change of Rights Agent 46
Section 23. Issuance of New Rights Certificates 48
Section 24. Redemption and Termination 48
Section 25. Exchange 51
Section 26. Notice of Certain Events 53
Section 27. Notices 54
Section 28. Supplements and Amendments 55
Section 29. Determination and Actions by the Board of
Directors, etc. 57
Section 30. Successors 58
Section 31. Benefits of this Agreement 58
Section 32. Severability 58
Section 33. Governing Law 58
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Section 34. Counterparts 58
Section 35. Descriptive Headings 58
Exhibit A - Form of Amended Certificate of Designation of
Series A Participating Preferred Stock A-1
Exhibit B - Form of Rights Certificate B-1
Exhibit C - Form of Summary of Rights C-1
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DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person Section 1(a)
Act Section 1(b)
Adjusted Number of Shares Section 11(a)(iii)
Adjusted Purchase Price Section 11(a)(iii)
Adjustment Shares Section 11(a)(ii)
Affiliate Section 1(c)
Appointment of Rights Agent Section 2
Associate Section 1(c)
Beneficial Owner Section 1(d)
Beneficially Own Section 1(d)(ii)
Business Day Section 1(e)
Capital Stock Equivalent Section 11(a)(iii)
Close of Business Section 1(f)
Common Stock Section 1(g)
Company Preface
Current Market Price Section 11(d)(i)
Disinterested Director Section 1(h)
Distribution Date Section 3(a)
Equivalent Preferred Stock Section 11(b)
Exchange Act Section 1(c)
Exchange Ratio Section 25(a)
Expiration Date Section 7(a)
Final Expiration Date Section 7(a)
Permitted Offer Section 1(k)
Person Section 1(l)
Pre-Amendment Right Preface
Preferred Stock Section 1(m)
Principal Party Section 13(b)(ii)
Prior Rights Agreement Preface
Proration Factor Section 11(a)(iii)
Purchase Price Section 4(a)
Record Date Preface
iii
Redemption Date Section 7(a)
Redemption Price Section 24(a)
Right Preface
Rights Agent Preface
Rights Agreement Section 3(c)
Rights Certificate Section 3(a)
Section 11(a)(ii) Event Section 1(p)
Section 13 Event Section 1(q)
Security Section 11(d)(i)
Stock Acquisition Date Section 1(r)
Subsidiary Section 1(s)
Summary of Rights Section 3(b)
Then Outstanding Section 1(d)(iii)
Trading Day Section 11(d)(i)
Transaction Section 1(t)
Transaction Person Section 1(u)
Triggering Event Section 1(v)
Voting Power Section 1(w)
iv
AMENDED AND RESTATED RIGHTS AGREEMENT
This Amended and Restated Rights Agreement, dated as of
December 17, 1997, between National Service Industries, Inc., a
Delaware corporation (the "Company"), and Wachovia Bank, N.A.
(the "Rights Agent").
W I T N E S S E T H
WHEREAS, on May 9, 1988, the Board of Directors of the
Company authorized and declared a dividend distribution of one
right (a "Pre-Amendment Right") for each share of Common Stock,
$1.00 par value per share, of the Company (the "Common Stock")
outstanding on May 19, 1988 (the "Record Date"), and contemplated
the issuance of one right for each share of Common Stock of the
Company issued between the Record Date and the earliest of the
Distribution Date and, the Expiration Date (as such terms are
hereinafter defined), each Pre-Amendment Right representing the
right to purchase one one-hundredth of a share of Series A
Participating Preferred Stock of the Company having the rights,
powers and preferences set forth in the form of Certificate of
Designation attached as Exhibit A to the Rights Agreement dated
May 9, 1988 between the Company and the Rights Agent (the "Prior
Rights Agreement"), upon the terms and subject to the conditions
set forth therein;
WHEREAS, on December 17, 1997, the Board of Directors of the
Company determined that it is advisable and in the best interests
of the Company and its stockholders to amend and restate in its
entirety the Prior Rights Agreement as set forth herein and the
Pre-Amendment Rights shall henceforth be governed by the terms
and subject to the conditions set forth herein and that each Pre-
Amendment Right shall hereafter be referred to as one Right (a
"Right") and each Right shall represent the right to purchase one
one-thousandth of a share of Series A Participating Preferred
Stock of the
Company having the rights, powers and preferences set forth in
the form of Amended Certificate of Designation attached hereto as
Exhibit A, upon the terms and subject to the conditions set forth
herein; and
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto hereby
agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates (as such term is hereinafter defined) and Associates
(as such term is hereinafter defined) of such Person without the
prior approval of at least a majority of the Disinterested
Directors shall be the Beneficial Owner (as such term is
hereinafter defined) of securities representing 15% or more of
the shares of Common Stock then outstanding (other than as a
result of a Permitted Offer (as hereinafter defined)) or who was
such a Beneficial Owner at any time after the date hereof,
whether or not such Person continues to be the Beneficial Owner
of securities representing 15% or more of the outstanding shares
of Common Stock. Notwithstanding the foregoing, (A) the term
Acquiring Person shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary of the Company or (iv) any Person or entity organized,
appointed or established by the Company or any Subsidiary of the
Company for or pursuant to the terms of any such plan and (B) no
Person shall become an "Acquiring Person" (i) as a result of the
acquisition of shares of Common Stock by the Company which, by
reducing the number of shares of Common Stock outstanding,
increases the proportional number of shares beneficially owned by
such Person together with all Affiliates and Associates of such
Person, provided, that if (1) a Person would become an Acquiring
Person (but for the operation of this subclause (i)) as a result
of the acquisition of shares of Common Stock by the Company, and
2
(2) after such share acquisition by the Company, such Person, or
an Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional shares of Common Stock (except as the
result of a stock split, stock dividend, recapitalization or
similar transaction), then such Person shall be deemed an
Acquiring Person or; (ii) if (1) within five Business Days after
such Person would otherwise have become an Acquiring Person (but
for the operation of this subclause (ii)), such Person notifies
the Board of Directors that such Person did so inadvertently, and
(2) within two Business Days after such notification (or such
greater period of time as may be determined by action of the
Board of Directors, but in no event greater than five Business
Days), such Person divests itself of a sufficient number of
shares of Common Stock so that such Person is the Beneficial
Owner of less than 15% of the outstanding shares of Common Stock.
(b) "Act" shall mean the Securities Act of 1933, as
amended and as in effect on the date of this Agreement.
(c) "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 and in effect on the date of this Agreement
(the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right or obligation to
acquire (whether such right or obligation is exercisable or
effective 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 the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the "Beneficial
3
Owner" of, or to "beneficially own," securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B)
the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," any security if the agreement, arrangement
or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable by
such person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), or with which such
Person or any of such Person's Affiliates have otherwise formed a
group, related to the acquisition, holding, voting (except
pursuant to a revocable proxy or consent as described in clause
(B) of subparagraph (ii) of this paragraph (d)) or disposing of
any securities of the Company (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities).
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
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(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
State of Georgia or North Carolina are authorized or obligated by
law or executive order to close.
(f) "Close of business" on any given date shall mean
5:00 P.M., Eastern Standard Time ("E.S.T."), on such date;
provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., E.S.T., on the next succeeding Business
Day.
(g) "Common Stock" when used with reference to the
Company shall mean the Common Stock, $1.00 par value, of the
Company, or, in the event of a subdivision, combination or
consolidation with respect to such shares of Common Stock, the
shares of Common Stock resulting from such subdivision,
combination or consolidation. "Common Stock" when used with
reference to any Person other than the Company shall mean the
capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or
direct the management, of such Person or, if such Person is a
subsidiary of another Person, of the Person or Persons which
ultimately control such first-mentioned Person.
(h) "Disinterested Director" means any director of the
Board of Directors of the Company who is not (a) an officer or
employee of the Company, (b) an Acquiring Person, an Affiliate or
Associate of an Acquiring Person, or a Person acting directly or
indirectly on behalf of, or as a representative of, or in concert
with, an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person or (c) any Person who was directly or indirectly
proposed or nominated as a director of the Company by a
Transaction Person.
(i) "Distribution Date" shall have the meaning set
forth in Section 3 hereof.
(j) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
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(k) "Permitted Offer" shall mean a tender or exchange
offer for all outstanding shares of Common Stock at a price and
on terms determined, prior to the purchase of shares under such
tender or exchange offer, by at least a majority of the
Disinterested Directors to be adequate and otherwise in the best
interests of the Company and its shareholders (other than the
Person or any Affiliate or Associate thereof on whose behalf the
offer is being made) taking into account all factors that such
directors may deem relevant.
(l) "Person" shall mean any individual, firm,
corporation, partnership, joint venture, association, trust,
limited liability company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(m) "Preferred Stock" shall mean the Series A
Participating Preferred Stock, $0.05 stated value, of the
Company.
(n) "Purchase Price" shall have the meaning set forth
in Section 4 hereof. As set forth in Section 7(b) hereof, the
Purchase Price shall initially be $160, subject to adjustment as
provided herein.
(o) "Record Date" shall mean May 19, 1988.
(p) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) hereof.
(q) "Section 13 Event" shall mean any event described
in clause (x), (y) or (z) of Section 13(a) hereof.
(r) "Stock Acquisition Date" shall mean the first date
of public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to the
Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such; provided, that if such Person
is determined not to have become an Acquiring Person pursuant to
Section 1(a) hereof, then no Stock Acquisition Date shall be
deemed to have occurred.
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(s) "Subsidiary" of any Person shall mean any
corporation or other Person of which a majority of the voting
power of the voting equity securities or equity interests is
owned, directly or indirectly, by such Person, or which is
otherwise controlled by such Person.
(t) "Transaction" shall mean any merger, consolidation
or sale of assets described in Section 13(a) hereof or any
acquisition of Common Stock of the Company which would result in
a Person becoming a Transaction Person.
(u) "Transaction Person" with respect to a Transaction
shall mean (i) any Person who (A) is or will become an Acquiring
Person or a Principal Party (as such term is defined in Section
13(b) hereof) if the Transaction were to be consummated and (B)
directly or indirectly proposed or nominated a director of the
Company which director is in office at the time of consideration
of the Transaction (a Person shall be deemed to have indirectly
nominated a director if it has proposed becoming or indicated an
intention to become an Acquiring Person or a Principal Party and
a third party proposes, nominates or appoints a director for the
purpose of facilitating a Transaction with such Person), or
(ii) an Affiliate or Associate of such a Person.
(v) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
(w) "Voting Power" shall mean the voting power of all
securities of the Company then outstanding and generally entitled
to vote for the election of directors of the Company.
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 Stock) 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. In the event the Company
7
appoints one or more Co-Rights Agents, the respective duties of
the Rights Agents and any Co-Rights Agents shall be as the
Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Stock Acquisition
Date, (ii) the close of business on the tenth Business Day after
the date of the commencement of, or first public announcement of
the intention of any Person (other than the Company, any
Subsidiary of the Company, or any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person or
entity organized, appointed or established by the Company or of
any Subsidiary of the Company for or pursuant to the terms of any
such plan) to commence (which intention to commence remains in
effect for five Business Days after such announcement), a tender
or exchange offer the consummation of which would result in any
Person becoming an Acquiring Person, unless such date is extended
by the Board of Directors of the Company which date shall not be
later than the earlier of the dates specified in (i) and (iii) or
(iii) twenty business days prior to the date on which a
Transaction is reasonably expected to become effective or be
consummated (the earliest of such dates being herein referred to
as the "Distribution Date"), (x) the Rights shall be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by
the certificates for Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock
shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights (and the right to
receive certificates therefor) shall be transferable only in
connection with the transfer of the underlying shares of Common
Stock (including a transfer to the Company); provided, however,
that if a tender offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a
result of such tender offer. As soon as practicable after the
Distribution Date, the Rights Agent shall send by first-class,
insured, postage prepaid mail, to each record holder of the
Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the
Company, a
8
certificate for Rights, in substantially the form of Exhibit B
hereto (the "Rights Certificates"), evidencing one Right for each
share of Common Stock so held. As of and after the Distribution
Date, the Rights shall be evidenced solely by such Rights
Certificates.
(b) With respect to certificates for the Common Stock
outstanding as of the date of this Agreement, until the
Distribution Date (or earlier redemption, expiration or
termination of the Rights), the Rights shall be evidenced by such
certificates for the Common Stock and the registered holders of
the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or earlier
redemption, expiration or termination of the Rights), the
surrender for transfer of any of the certificates for the Common
Stock outstanding on or after the Record Date shall also
constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. Upon the request of the
holder of any shares of Common Stock or, after the Distribution
Date, the holder of any Rights, the Company shall, at its
expense, provide a copy of a Summary of Rights, in substantially
the form attached hereto as Exhibit C (the "Summary of Rights").
(c) Certificates issued for shares of Common Stock
(including, without limitation, certificates issued upon transfer
or exchange of Common Stock or reacquired shares of Common Stock
referred to in the last sentence of this paragraph (c) or shares
which become outstanding) after the date of this Agreement, but
prior to the earlier of the Distribution Date or the Expiration
Date (as such term is hereinafter defined), shall be deemed also
to be certificates for Rights, and shall have impressed, printed,
stamped, written or otherwise affixed onto them the following
legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the
Amended and Restated Rights Agreement between
National Service Industries, Inc. and Wachovia Bank,
N.A. and any amendment or restatement thereof (the
"Rights Agent") dated as of
9
December 17, 1997 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by
reference and a copy of which is on file at the
principal offices of National Service Industries,
Inc. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed,
may expire, or may be evidenced by separate
certificates and will no longer be evidenced by this
certificate. National Service Industries, Inc. will
mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a
written request therefor. Under certain
circumstances set forth in the Rights Agreement,
Rights issued to or held by any Person who is, was
or becomes an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights
Agreement) and certain related persons whether
currently held by or on behalf of such Person or by
any subsequent holder of such Rights may become null
and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Stock represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificate. In the event that the Company
purchases or acquires any shares of Common Stock prior to the
Distribution Date, any Rights associated with such shares of
Common Stock shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated
with the shares of Common Stock which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election
to purchase shares and of assignment to be printed on the reverse
thereof) shall each 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
10
which the Rights may from time to time be listed, or to conform
to usage. Subject to the provisions of Section 11 and Section 23
hereof, the Rights Certificates, whenever distributed, on their
face shall entitle the holders thereof to purchase such number of
one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share of
Preferred Stock set forth therein (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section
3(a) or Section 23 hereof that represents Rights which are null
and void pursuant to Section 7(e) of this Agreement and any
Rights Certificates issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was
or became an Acquiring Person, a Transaction Person
or an Affiliate or an Associate of an Acquiring
Person or a Transaction Person (as such terms are
defined in the Rights Agreement) or certain related
Persons. Accordingly, this Rights Certificate and
the Rights represented hereby are null and void.
The provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any
such Rights Certificate.
Section 5. Countersignature and Registration. The
Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, any Vice Chairman of the Board, its
President, its Chief Executive Officer or any Vice President, or
its Treasurer, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be 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
11
signed any of the Rights Certificates shall cease to be such
officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same
force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company;
and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such
an officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at the offices designated by the Rights
Agent, 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 certificate number and the
date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates. Subject to the provisions of Section 4(b),
Section 7(e) and Section 15 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the
close of business on the Expiration Date, any Rights Certificate
or Rights Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates,
entitling the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or, following a
Triggering Event, other securities, as the case may be) as the
Rights Certificate or Rights Certificates surrendered then
entitled such holder (or former holder in the case of a transfer)
to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights
12
Certificate or Rights Certificates to be 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 Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 15
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
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 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 shall execute and deliver a
new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder 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) hereof, the registered
holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole
or in part at any time after the Distribution Date upon surrender
of the Rights Certificate, with the appropriate form of election
to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the
13
Rights Agent, together with payment of the Purchase Price for the
total number of one one-thousandths of a share of Preferred Stock
(or other securities, as the case may be) as to which such
surrendered Rights are exercised, at or prior to the earliest of
(i) the close of business on May 19, 2008 (the "Final Expiration
Date"), or (ii) the time at which the Rights are redeemed as
provided in Section 24 hereof (the "Redemption Date"), or
(iii) the time at which the Rights are exchanged as provided in
Section 25 hereof, or (iv) the consummation of a transaction
contemplated by Section 13(d) hereof (such earliest time being
herein referred to as the "Expiration Date"). Notwithstanding
any other provision of this Agreement, any Person who prior to
the Distribution Date becomes a record holder of shares of Common
Stock may exercise all of the rights of a registered holder of a
Rights Certificate with respect to the Rights associated with
such shares of Common Stock in accordance with and subject to the
provisions of this Agreement, including the provisions of Section
7(e) hereof, as of the date such Person becomes a record holder
of shares of Common Stock.
(b) The Purchase Price for each one one-thousandth
share of Preferred Stock pursuant to the exercise of a Right
shall initially be $160, shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof and shall be
payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the appropriate form of election to
purchase and the certificate duly executed, accompanied by
payment of the Purchase Price for the shares (or other
securities, as the case may be) to be purchased and an amount
equal to any applicable transfer tax required to be paid by the
holder of such Rights Certificate in accordance with Section 6
hereof by certified check or cashier's check or money order
payable to the order of the Company, the Rights Agent shall,
subject to Section 21(k), thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights
14
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, or (B) if the Company, in its sole discretion, shall
have elected to deposit the shares of Preferred Stock issuable
upon exercise of the Rights hereunder into a depositary,
requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company shall direct the depositary
agent to comply with such requests, (ii) when appropriate,
requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with
Section 15, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt promptly deliver
such cash to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated
to issue other securities (including shares of Common Stock) of
the Company pursuant to Section 11(a), the Company shall make all
arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when
appropriate. In addition, in the case of an exercise of the
Rights by a holder pursuant to Section 11(a)(ii), the Rights
Agent shall return such Rights Certificate to the registered
holder thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Rights Certificate no
longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement and if less than all the Rights represented by
such Rights Certificate were so exercised, the Rights Agent shall
indicate on the Rights Certificate the number of Rights
represented thereby which continue to include the rights provided
by Section 11(a)(ii).
15
(d) In case the registered holder of any Rights
Certificate shall exercise (except pursuant to Section 11(a)(ii))
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 15
hereof, or the Rights Agent shall place an appropriate notation
on the Rights Certificate with respect to those Rights exercised.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the time an Acquiring Person or a
Transaction Person first becomes such, any Rights beneficially
owned by (i) an Acquiring Person, a Transaction Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person or a Transaction Person (or of any
Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person or a Transaction Person (or of any Affiliate or
Associate thereof) who becomes a transferee prior to or
concurrently with the Acquiring Person or a Transaction Person
becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring
Person or a Transaction Person to holders of equity interests in
such Acquiring Person or a Transaction Person or to any Person
with whom the Acquiring Person or a Transaction Person has a
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of this Section 7(e) shall become null and void without
any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights whether under any
provision of this Agreement or otherwise. The Company shall use
all reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall
have
16
no liability to any holder of Rights Certificates or other Person
as a result of its failure to make any determinations with
respect to an Acquiring Person, a Transaction Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless the certificate contained in the
appropriate form of election to purchase set forth on the reverse
side of the Rights Certificate surrendered for such exercise
shall have been properly completed and duly executed by the
registered holder thereof and the Company shall have been
provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise (other than a partial exercise), transfer,
split up, combination or exchange shall, if surrendered to the
Company or any of its agents, be delivered to the Rights Agent
for cancellation or in cancelled form, or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any
other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred
Stock.
(a) The Company covenants and agrees that at all times
prior to the occurrence of a Section 11(a)(ii) Event it will
cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock, or any authorized and issued
17
shares of Preferred Stock held in its treasury, the number of
shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights and, after the
occurrence of a Section 11(a)(ii) Event, shall, to the extent
reasonably practicable, so reserve and keep available a
sufficient number of shares of Common Stock (and/or other
securities) which may be required to permit the exercise in full
of the Rights pursuant to this Agreement.
(b) So long as the shares of Preferred Stock (and,
after the occurrence of a Section 11(a)(ii) Event, shares of
Common Stock or other securities) issuable upon the exercise of
the 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 (or other
securities) reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it shall
take all such action as may be necessary to ensure that all
shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid
and nonassessable shares or securities.
(d) The Company further covenants and agrees that it
shall 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
certificates for shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a person other than, or in
respect of the issuance or delivery of certificates or depositary
receipts for the shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in a name other than
that of, the registered
18
holder of the Rights Certificates evidencing Rights surrendered
for exercise, or to issue or deliver any certificates or
depositary receipts for shares of Preferred Stock, (or Common
Stock and/or other securities, as the case may be) 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.
(e) The Company shall use its best efforts to (i)
file, as soon as practicable following the Stock Acquisition Date
(or, if required by law, at such earlier time following the
Distribution Date as so required), 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 and the rules and regulations thereunder)
until the date of the expiration of the rights provided by
Section 11(a)(ii). The Company will also take such action as may
be appropriate under the blue sky laws of the various states.
Section 10. Preferred Stock Record Date. Each person in
whose name any certificate for shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of
Preferred Stock (or Common Stock and/or other securities, as the
case may be) represented thereby on, and such certificate shall
be dated, 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 Stock and/or other
securities, as the case may be) transfer books of the Company are
closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated,
the next
19
succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books
of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate, as such,
shall not be entitled to any rights of a shareholder of the
Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights. The Purchase Price, the number
and kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares or
(D) issue any shares of its capital stock in a reclassification
of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and in Section 7(e), the Purchase
Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision,
20
combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon the exercise of one
Right. If an event occurs which would require an adjustment
under both Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) In the event that any Person, alone or
together with its Affiliates and Associates, shall become an
Acquiring Person, then proper provision shall be made so that
each holder of a Right (except as provided below and in Section
7(e) hereof), shall, for a period of 60 days after the later of
the occurrence of any such event or the effective date of an
appropriate registration statement under the Act pursuant to
Section 9 hereof, have a right to receive, upon exercise thereof
at a price equal to the then current Purchase Price, in
accordance with the terms of this Agreement, such number of
shares of Common Stock of the Company (or in the discretion of
the Board of Directors, one one-thousandth of a share of
Preferred Stock) as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then
number of one one-thousandths of a share of Preferred Stock for
which a Right is then exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that
product by 50% of the then current market price per one share of
Common Stock (determined pursuant to Section 11(d) hereof) on the
date of such first occurrence (such number of shares being
referred to as the "Adjustment Shares"); provided, however, that
if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section
13 hereof, then only the provisions of Section 13 hereof shall
apply and no adjustment shall be made pursuant to this Section
11(a)(ii).
(iii) In the event that there shall not be
sufficient treasury shares or authorized but unissued (and
unreserved) shares of Common Stock to permit the exercise
21
in full of the Rights in accordance with the foregoing
subparagraph (ii) and the Rights become so exercisable (and the
Board has determined to make all or some of the Rights
exercisable into fractions of a share of Preferred Stock),
notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law, each Right
shall thereafter represent the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, (x) a number of (or fractions of) shares
of Common Stock (up to the maximum number of shares of Common
Stock which may permissibly be issued) and (y) a number of one
one-thousandths of a share of Preferred Stock or a number of (or
fractions of) other equity securities of the Company (or, in the
discretion of the Board of Directors, debt) which the Board of
Directors of the Company has determined to have the same
aggregate current market value (determined pursuant to Sections
11(d)(i) and (ii) hereof, to the extent applicable) as one share
of Common Stock (such number of, or fractions of, shares of
Preferred Stock or other equity securities or debt of the
Company) being referred to as a "capital stock equivalent", equal
in the aggregate to the number of Adjustment Shares; provided,
however, if there are unavailable sufficient shares (or fractions
of shares) of Common Stock and/or capital stock equivalents, then
the Company shall, to the extent permitted by applicable law,
take all such action as may be necessary to authorize additional
shares of Common Stock or capital stock equivalents for issuance
upon exercise of the Rights, including the calling of a meeting
of shareholders; and provided, further, that the Company shall
issue no capital stock equivalent upon exercise of the Rights
until the Company has first issued all authorized and unreserved
shares of Common Stock; and provided, further, that if the
Company is unable to cause sufficient shares of Common Stock
and/or capital stock equivalents to be available for issuance
upon exercise in full of the Rights, then each Right shall
thereafter represent the right to receive the Adjusted Number of
Shares upon exercise at the Adjusted Purchase Price (as such
terms are hereinafter defined). As used herein, the term
"Adjusted Number of
22
Shares" shall be equal to that number of shares (or fractions of
shares) of Common Stock (and/or capital stock equivalents) equal
to the product of (x) the number of Adjustment Shares and (y) a
fraction, the numerator of which is the number of shares of
Common Stock (and/or capital stock equivalents) available for
issuance upon exercise of the Rights and the denominator of which
is the aggregate number of Adjustment Shares otherwise issuable
upon exercise in full of all Rights (assuming there were
sufficient shares of Common Stock available) (such fraction being
referred to as the "Proration Factor"). The "Adjusted Purchase
Price" shall mean the product of the Purchase Price and the
Proration Factor. The Board of Directors may, but shall not be
required to, establish procedures to allocate the right to
receive Common Stock and capital stock equivalents upon exercise
of the Rights among holders of Rights.
(b) If the Company shall fix a record date for the
issuance of rights (other than the 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 or more favorable rights, privileges and preferences as the
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 then current market price (as determined in
Section 11(d)) per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares
of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or equivalent
preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered)
would purchase at
23
such current market price per share of Preferred Stock and the
denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred
stock to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company issuable upon the exercise of one Right. In case
such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of
such consideration shall be determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent. 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, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(c) If the Company shall fix a record date for the
making of a distribution to all holders of 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, cash (other
than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in
stock other than Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)), 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 (as
24
determined in Section 11(d)) per share of Preferred Stock on such
record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be binding on 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
distributable in respect of one share of Preferred Stock and the
denominator of which shall be such current market price per share
of the Preferred Stock; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock
of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the
Purchase Price 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" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to
be the average of the daily closing prices per share of such
Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market
price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security
or securities convertible into such shares or (B) any
subdivision, combination or reclassification of such Security,
and prior to the expiration of 30 Trading Days after the ex-
dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
and in each such case, the "current market price" shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the
25
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other exchange or market
system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of
Directors of the Company. If on any such date no such market
maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading
is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities
exchange, a Business Day. Subject to Section 11(d)(ii) hereof,
if any Security is not publicly held or so listed or traded, the
"current market price" of such Security shall mean the fair
market value per share determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding
on the Rights Agent.
(ii) For the purpose of any computation hereunder,
the "current market price" per share (or one one-thousandth of a
share) of Preferred Stock shall be determined in the same manner
as set forth above in clause (i) of this Section 11(d). If
26
the current market price per share (or one one-thousandth of a
share) of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this
Section 11(d), the "current market price" per share of Preferred
Stock shall be conclusively deemed to be one-thousand (as such
number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations or similar
transactions with respect to the Common Stock occurring after the
date of this Agreement) multiplied by the current market price
per share of Common Stock as determined pursuant to Section
11(d)(i) and the current market price per one one-thousandth of a
share of Preferred Stock shall be equal to the current market
price per share of the Common Stock (as appropriately adjusted).
If neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, "current market price" per share
shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1%
in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one one-thousandth of a
share of Preferred Stock, or one ten-thousandth of a share of
Common Stock or other share Security, 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 mandates such adjustment or (ii) the Final
Expiration Date.
27
(f) If as a result of any provision of Section
11(a)(ii) or Section 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,
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 Section
11(a) through (c), inclusive, and the provisions of Sections 7,
9, 10, 13 and 15 hereof with respect to the Preferred Stock 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-thousandths of a share of Preferred
Stock purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the calculations
made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a share of
Preferred Stock (calculated to the nearest one ten-thousandth)
obtained by (i) multiplying (x) the number of one one-thousandths
of a share of Preferred Stock covered by a Right immediately
prior to this adjustment of the Purchase Price by (y) the
Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of one one-
thousandths of a share of Preferred Stock purchasable upon the
28
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-thousandths of a share of Preferred Stock for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 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 15 hereof, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Preferred Stock
issuable upon the exercise of the Rights, the Rights
29
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 stated or
par value, if any, of the number of one one-thousandths of a
share of Preferred Stock, Common Stock or other securities
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
such number of fully paid and nonassessable one one-thousandths
of a share of Preferred Stock, Common Stock or other securities
at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and
capital stock equivalents, a portion of the consideration paid
upon such exercise, equal to at least the then par value of a
share of Common Stock of the Company, shall be allocated as the
payment for each share of Common Stock of the Company so
received.
(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 number
of one one-thousandths of a share of Preferred Stock, Common
Stock or other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the number of one
one-thousandths of a share of Preferred Stock, Common Stock or
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 xxxx or other
appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring
such adjustment.
30
(m) Anything to the contrary in this Section 11
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that (i) any consolidation or subdivision of
the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price, (iii)
issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such
shareholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the date of this Agreement and prior to the Distribution
Date (i) declare or pay a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, (iii) combine or consolidate the
outstanding Common Stock into a smaller number of shares, or (iv)
issue any shares of its capital stock in a reclassification of
the outstanding Common Stock, then in any such case, the number
of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common
Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately following the
occurrence of such event. The adjustments provided for in this
Section 11(n) shall be made successively
31
whenever such a dividend is declared or paid or such a
subdivision, combination, consolidation or reclassification is
effected.
(o) The exercise of Rights under Section 11(a)(ii)
shall only result in the loss of rights under Section 11(a)(ii)
to the extent so exercised and shall not otherwise affect the
rights represented by the Rights under this Rights Agreement,
including the rights represented by Section 13.
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 and the Common Stock a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, on or following the Stock
Acquisition Date, or, if a Transaction is proposed, the
Distribution Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person, (y)
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 consolidation or merger and, in
connection with such merger, all or part of the shares of Common
Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property or
all holders of shares of Common Stock are not treated alike or
following the merger or consolidation the holders of Common Stock
immediately prior to the transaction do not hold in the same
proportion all of the Voting Power of the corporation surviving
the transaction or (z) the Company shall sell, mortgage or
otherwise transfer (or
32
one or more of its Subsidiaries shall sell, mortgage or otherwise
transfer), in one transaction or a series of related
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, proper provision shall be made so that (i)
following the Distribution Date, each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at a price equal to
the then current Purchase Price, in accordance with the terms of
this Agreement such number of shares of freely tradeable Common
Stock of the Principal Party (as hereinafter defined), free and
clear of liens, rights of call or first refusal, encumbrances or
other adverse claims, as shall be equal to the result obtained by
(x) multiplying the then current Purchase Price by the number of
one one-thousandths of a share of Preferred Stock for which a
Right is then exercisable and dividing that product by (y) 50% of
the then current market price per share of the Common Stock of
such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such Section 13 Event,
(ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) 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 to such Principal
Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with Section 9
hereof) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
33
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of this Section 13(a),
the Person that is the issuer of any securities into which shares
of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation
(including, if applicable, the Company, if it is the surviving
corporation); and
(ii) in the case of any transaction described in
clause (z) 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 of the foregoing
cases, (1) if the Common Stock of such Person is not at such time
and has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary or Affiliate of another
Person, "Principal Party" shall refer to such other Person; (2)
in case such Person is a Subsidiary, directly or indirectly, or
Affiliate of more than one Person, the shares of Common Stock of
two or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest aggregate market value; and
(3) in case such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth
in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the
Company and each Principal Party and each other Person who may
become a Principal Party as a result of a Section 13 Event shall
have a
34
sufficient number of its authorized shares of its Common Stock
that 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
paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any Section 13
Event, the Principal Party at its own expense shall:
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
will use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and
will use its best efforts to cause such registration statement to
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as may be
necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party and each
of its Affiliates which comply in all material respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
The rights under this Section 13 shall be in addition to the
rights to exercise Rights and adjustments under Section 11(a)(ii)
and shall survive any exercise thereunder.
(d) The Company shall not consummate any Section 13
Event which shall be a Transaction unless prior thereto
certificates evidencing the Rights have been distributed in
accordance with Section 3(a) to holders of shares of Common Stock
twenty
35
Business Days prior to the date on which the Transaction becomes
effective or is consummated.
(e) Notwithstanding anything in this Agreement to the
contrary, the provisions of this Section 13 shall not be
applicable to a transaction described in clauses (x) and (y) of
Section 13(a) if: (i) such transaction is consummated with a
Person or Persons who acquired shares of Common Stock pursuant to
a Permitted Offer (or a wholly owned Subsidiary of any such
Person or Persons); (ii) the price per share of Common Stock
offered in such transaction is not less than the price per Common
Share paid to all holders of Common Stock whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of
consideration offered in such transaction is the same as the form
of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this
subsection (d), all Rights hereunder shall expire.
Section 14. Additional Covenants.
(a) After the Distribution Date, the Company covenants
and agrees that it shall not (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction
which does not violate Section 14(b) hereof); (ii) merge with or
into any other Person (other, than a Subsidiary of the Company in
a transaction which does not violate Section 14(b) hereof); or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related
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 or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 14(b)
hereof), if (x) at the time of or immediately after such
consolidation, merger, sale or transfer there are any charter or
by-law provisions or any rights, warrants or other instruments
outstanding or agreements in effect or other actions taken, which
would diminish or otherwise eliminate the benefits intended to be
afforded by the Rights
36
or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for
purposes of Section 13 hereof shall have received a distribution
of Rights previously owned by such Person or any of its
Affiliates and Associates. The Company shall not consummate any
such consolidation, merger, sale or transfer unless prior thereto
the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing
compliance with this subsection.
(b) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 24
or Section 28 hereof, take (or permit any Subsidiary to take) any
action the purpose of which is to, or if at the time such action
is taken it is reasonably foreseeable that the effect of such
action is to materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
Section 15. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 15(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price of the Rights for any 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
37
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights the fair value
of the Rights on such date as determined in good faith by the
Board of Directors of the Company shall be used and shall be
binding on the Rights Agent.
(b) The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions
which are one one-thousandths or integral multiples of one one-
thousandth of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are one one-
thousandths or integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred
Stock in integral multiples of one one-thousandth of a share of
Preferred Stock may, at the election of the Company, be evidenced
by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided
that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of
the shares of Preferred Stock represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock that
are not one one-thousandths or integral multiples of one one-
thousandth of a share of Preferred Stock, the Company may pay to
the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one one-
thousandth of a share of Preferred Stock. For purposes of this
Section 15(b), the current market value of one one-thousandth of
a
38
share of Preferred Stock shall be the closing price of one-one-
thousandth of a share of Preferred Stock (as determined pursuant
to Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of one of the
transactions or events specified in Section 11 giving rise to the
right to receive shares of Common Stock, capital stock
equivalents (other than Preferred Stock) or other securities upon
the exercise of a Right, the Company shall not be required to
issue fractions of shares or units of such shares of Common
Stock, capital stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which
evidence fractions of such shares of Common Stock, capital stock
equivalents or other securities. In lieu of fractional shares or
units of such shares of Common Stock, capital stock equivalents
or other securities, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share or unit of such
shares of Common Stock, capital stock equivalents or other
securities. For purposes of this Section 15(c), the current
market value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the
date of such exercise and, if such capital stock equivalent is
not traded, each such capital stock equivalent shall have the
value of one one-thousandth of a share of Preferred Stock.
(d) Except as otherwise expressly provided herein, the
holder of a Right by the acceptance of the Right expressly waives
the right to receive any fractional Right or any fractional share
upon exercise of a Right.
Section 16. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 19 hereof, are vested in the
respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common
39
Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his 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 shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to
this Agreement. Holders of Rights shall be entitled to recover
the reasonable costs and expenses, including attorneys' fees,
incurred by them in any bona fide action to enforce the
provisions of this Agreement provided such Holders prevail in
such action either by judicial determination or settlement.
Section 17. 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 Common
Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights
Agent, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate form fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in
whose name the Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any
40
notations of ownership or writing on the Rights Certificates or
the associated Common Stock certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last
sentence of Section 7(e) hereof, shall be affected by any notice
to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or a beneficial interest in a
Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree, or
ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.
Section 18. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the shares of Preferred Stock, Common 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 shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in Section 25 hereof), or to receive dividends or other
distributions or to exercise any preemptive 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 19. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder as agreed,
41
and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross 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 arising
therefrom, directly or indirectly.
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 Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons set
forth in Section 21.
Section 20.
Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party,
or any corporation succeeding to the stock transfer or all or
substantially all of 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 that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions
of Section 22 hereof. In case at the time such successor Rights
Agent shall
42
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 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.
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 21. 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
selected by it (who may be legal counsel for the Company), and
the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such
opinion.
(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 (including, without limitation,
the identity of an Acquiring Person) be proved or established by
the Company prior to taking or suffering any action hereunder,
such fact or matter (unless
43
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, any Vice Chairman of the Board, its President, the
Chief Executive Officer, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own gross 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 the
fact that it has countersigned the Rights Certificates) or be
required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 7(e) hereof or any adjustment
required under the provisions of Section 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 adjustment); nor shall it be responsible for
any determination by the Board of Directors of the Company of the
current market value of the Rights or Preferred Stock or Common
Stock pursuant to
44
the provisions of Section 15 hereof; nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Preferred
Stock, shares of Common Stock or other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock, shares of Common Stock or
other securities will, when 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 and certificates delivered pursuant to any
provision hereof from any one of the Chairman of the Board, any
Vice Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the
Company, and is authorized to apply to such officers for advice
or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
45
(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, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company or to the
holders of the Rights resulting from any such act, omission,
default, neglect or misconduct, provided 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 hereunder if there
shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been
completed or indicates an affirmative response to clause 1 and/or
2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first
consulting with the Company.
Section 22. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Stock and Preferred Stock by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed
or shall
46
otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice
of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by
the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall
be (a) a corporation organized and doing business under the laws
of the United States or of any state of the United States, so
long as such corporation complies with the applicable rules and
requirements of the New York Stock Exchange, as such rules and
requirements may be amended or modified from time to time, is
authorized under such laws to exercise stock transfer or
corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 (or such lower number as approved
by the Board) or (b) an affiliate of a corporation described in
clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Stock and Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 22,
however, or any defect therein, shall not affect the legality or
validity of the
47
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 23. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of
this Agreement.
In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior
to the Expiration Date, the Company (a) shall with respect to
shares of Common Stock so issued or sold pursuant to the exercise
of stock options or under any employee plan or arrangement, or
upon the exercise, conversion or exchange of securities, notes or
debentures issued by the Company, and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors of
the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or
sale; provided, however, that (i) the Company shall not be
obligated to issue any such Right Certificates if, and to the
extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right
Certificate would be issued, and (ii) no Right Certificate shall
be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 24. Redemption and Termination.
(a) (i) Subject to Section 24(a)(iii) the Board of
Directors of the Company may, at its option, at any time prior to
the earlier of (x) the Stock Acquisition Date or (y) 5:00 P.M.,
E.S.T., on the Final Expiration Date, redeem all but not less
than all of the then outstanding Rights at a redemption price of
$.01 per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar
48
transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price").
The Company may, at its option, pay the Redemption Price either
in shares of Common Stock (based on the "current market price"
per share, as defined in Section 11(d)(i) hereof, of the shares
of Common Stock at the time of redemption) or cash; provided that
if the Company elects to pay the Redemption Price in shares of
Common Stock, the Company shall not be required to issue any
fractional shares of Common Stock and the number of shares of
Common Stock issuable to each holder of Rights shall be rounded
down to the next whole share.
(ii) In addition, subject to Section 24(a)(iii),
the Board of Directors of the Company may, at its option, at any
time following the Stock Acquisition Date and the expiration of
the period during which the rights of holders of Rights pursuant
to Section 11(a)(ii) hereof may be exercised as a result of the
occurrence of such Stock Acquisition Date but prior to any
Section 13 Event redeem all but not less than all of the then
outstanding Rights at the Redemption Price in connection with any
such event in which all holders of Common Stock are treated alike
and not involving an Acquiring Person or a Transaction Person or
an Affiliate or Associate of an Acquiring Person or any Person in
which the Acquiring Person or an Affiliate or Associate of an
Acquiring Person has an interest, or any other Person acting
directly or indirectly on behalf of or in concert with any such
Acquiring Person, Associate or Affiliate (other than involvement
by an Acquiring Person, Affiliate, Associate or such other Person
solely as a holder of shares of Common Stock (of the Company)
being treated like all other such holders) or following the
occurrence of an event set forth in, and the expiration of any
period during which the holder of Rights may exercise the rights
under, Section 11(a)(ii) if and for as long as the Acquiring
Person is not thereafter the Beneficial Owner of securities
representing ten percent or more of the voting power of all
securities of the Company generally entitled to vote for the
election of directors of the Company.
49
(iii) Notwithstanding anything to the contrary
in this Agreement, including, without limitation, the provisions
of Section 24(a)(i) and (ii), in the event that a majority of the
Board of Directors of the Company is comprised of (i) persons
elected at a meeting or by written consent of stockholders who
were not nominated by the Board of Directors in office
immediately prior to such meeting or action by written consent,
and/or (ii) successors of such persons elected to the Board of
Directors for the purpose of either facilitating a Transaction
with a Transaction Person or circumventing directly or indirectly
the provisions of this Section 24(a)(iii), then (I) the Rights
may not be redeemed for a period of 365 days following the
effectiveness of such election if such redemption is reasonably
likely to have the purpose or effect of facilitating a
Transaction with a Transaction Person and (II) the Rights may not
be redeemed following such 365 day period if (x) such redemption
is reasonably likely to have the purpose of facilitating a
Transaction with a Transaction Person and (y) during such 365 day
period, the Company enters into any agreement, arrangement or
understanding with any Transaction Person which is reasonably
likely to have the purpose or effect of facilitating a
Transaction with any Transaction Person.
(b) Immediately upon the date for redemption set forth
(or determined in the manner specified in) in a resolution of the
Board of Directors of the Company 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.
Within ten days after the action of the Board of Directors
ordering any such redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to
the Rights Agent and 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 Stock. Any notice which is
50
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 24 and other than in
connection with the purchase of Common Stock prior to the
Distribution Date.
(c) The Company may, at its option, discharge all of
its obligations with respect to the Rights by (i) issuing a press
release announcing the manner of redemption of the Rights in
accordance with this Agreement and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books
of the transfer agent of the Common Stock, and upon such action,
all outstanding Rights Certificates shall be null and void
without any further action by the Company.
Section 25. Exchange.
(a) Subject to Section 25(e), the Board of Directors
of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of
Section 7(e) and 11(a)(ii) hereof) for Common Stock of the
Company at an exchange ratio of one Common Stock per Right,
appropriately adjusted to reflect any stock split, stock
dividend, recapitalization or similar transaction involving
either the Common Stock or the Preferred Stock occurring after
the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, any entity holding Common Stock
for or pursuant to the terms of any such plan or any trustee,
51
administrator or fiduciary of such a plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to Section 25(a) hereof and without any further action
and without any notice, the right to exercise such rights shall
terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock
equal to the number of such rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Stock for Rights will
be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Sections 7(e) and 11(a)(ii) hereof) held by each holder
of Rights.
(c) In any exchange pursuant to this Section 25, the
Company, at its option, may substitute Preferred Stock (or
equivalent preferred shares, as such term is defined in Section
11(b) hereof) for some or all of the Common Stock exchangeable
for Rights, at the initial rate of one one-thousandth of a share
of Preferred Stock (or equivalent preferred share) for each share
of Common Stock, as appropriately adjusted to reflect adjustments
in the voting rights of the Preferred Stock pursuant to the terms
52
thereof, so that the fraction of a share of Preferred Stock
delivered in lieu of each share of Common Stock shall have the
same voting rights as one share of Common Stock.
(d) The Board shall not authorize any exchange
transaction referred to in Section 25(a) hereof unless at the
time such exchange is authorized there shall be sufficient Common
Stock and/or Preferred Stock issued but not outstanding, or
authorized but unissued, to permit the exchange of Rights as
contemplated in accordance with this Section 25.
(e) The Board of Directors may only exchange Rights
pursuant to Section 25(a) hereof if a majority of the
Disinterested Directors authorizes such exchange.
Section 26. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any
dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the holders
of Preferred Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the Company) or (ii) to
offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to
effect any consolidation or merger into or with any other Person
(other than a Subsidiary of the Company in a transaction which
does not violate Section 14(b) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions,
of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person or
Persons (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which does not violate Section
14(b) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company
shall
53
give to each holder of a Rights Certificate, in accordance with
Section 27 hereof, a notice of such proposed action, to the
extent feasible, and file a certificate with the Rights Agent to
that effect, 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 shares of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 20 days prior
to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock whichever
shall be the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the
Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 27
hereof, a notice of the occurrence of such event, which notice
shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof and (ii) all
references in the preceding Section 26(a) to Preferred Stock
shall be deemed thereafter to refer also, if appropriate, to
Common Stock and/or, if appropriate, other securities of the
Company.
Section 27. 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:
54
National Service Industries, Inc.
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Facsimile: 404/853-1015
Attention: Secretary
Subject to the provisions of Section 22, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
Wachovia Bank, N.A.
000 X. Xxxxxx Xxxxxx -- Shareholder Services
Dept., Xxxxxx Xxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Facsimile: 910/770-4832
Attention: Shareholder Services Manager
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate or, if prior to the Distribution Date, to the
holder of certificates representing Common Stock shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 28. Supplements and Amendments. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing Common Stock. From and after the Distribution Date,
the Company and the Rights Agent, shall, if the Company so
directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained
herein which may be
55
defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to
change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this
Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights. Upon the delivery of a certificate from
an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms
of this Section 28, the Rights Agent shall execute such
supplement or amendment provided that such supplement or
amendment does not adversely affect the rights or obligations of
the Rights Agent under Sections 19 or 21 under this Agreement and
such amendment or supplement shall be effective regardless of
whether or when executed by the Rights Agent. Prior to the
Distribution Date, the interests of the holders of Rights shall
be deemed coincident with the interests of the holders of Common
Stock. Notwithstanding anything contained in this Rights
Agreement to the contrary, in the event that a majority of the
Board of Directors of the Company is comprised of (i) persons
elected at a meeting or by written consent of stockholders who
were not nominated by the Board of Directors in office
immediately prior to such meeting or written consent, and/or (ii)
successors of such persons elected to the Board of Directors for
the purpose of either facilitating a Transaction with a
Transaction Person or circumventing directly or indirectly the
provisions of this Section 28, then (I) for a period of 365 days
following the effectiveness of such action, this Rights Agreement
shall not be amended or supplemented in any manner reasonably
likely to have the purpose or effect of facilitating a
Transaction with a Transaction Person and
56
(II) no amendments or supplements may be made following such 365-
day period if (x) such amendment or supplement is reasonably
likely to have the purpose of facilitating a Transaction with a
Transaction Person and (y) during such 365-day period, the
Company enters into any agreement, arrangement or understanding
with any Transaction Person which is reasonably likely to have
the purpose or effect of facilitating a Transaction with any
Transaction Person .
Section 29. Determination and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding
at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock
or any other 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 as in effect on the date of this Agreement. The
Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board, or the
Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights Certificates and all
other parties, and (y) not subject the Board to any liability to
the holders of the Rights Certificates.
57
Section 30. 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 31. 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 Stock) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common
Stock).
Section 32. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 33. Governing Law. This Agreement, each Right
and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made
and to be performed entirely within such State.
Section 34. 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 35. 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.
58
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
Attest: NATIONAL SERVICE INDUSTRIES,INC.
[Seal]
By:
Name: Name:
Title: Title:
Attest: WACHOVIA BANK, N.A.
[Seal]
By:
Name: Name:
Title: Title:
59
Exhibit A
AMENDED CERTIFICATE
OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A PARTICIPATING PREFERRED STOCK
of
NATIONAL SERVICE INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
National Service Industries, Inc., a corporation organized
and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), in accordance with the provisions
of Section 103 thereof, DOES HEREBY CERTIFY:
That (i) pursuant to the authority conferred upon the Board
of Directors by the Restated Certificate of Incorporation, the
Board of Directors on May 9, 1988, adopted a resolution creating
a series of 500,000 shares of No Par Value Preferred Stock
designated as Series A Participating Preferred Stock, (ii) the
Corporation filed a Certificate of Designation, Preferences and
Rights of Series A Participating Preferred Stock on May 12, 1988
(the "Certificate of Designation"), and (iii) no shares of the
Series A Participating Preferred Stock have been issued.
The Corporation DOES HEREBY FURTHER CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by Article FOURTH of the Restated Certificate of
Incorporation and Section 151(g) of the General Corporation Law
of the State of Delaware, the Board of Directors on December 17,
1997, adopted the following resolution amending the Certificate
of Designation originally filed with the Secretary of State of
Delaware on May 12, 1988, that created a series of preferred
stock designated as "Series A Participating Preferred Stock:"
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Corporation by Article FOURTH of the Restated
Certificate of Incorporation, the Certificate of Designation
originally filed with the Secretary of State of the State of
Delaware on May 12, 1988, that created a series of preferred
stock designated as "Series A Participating Preferred Stock" of
the Corporation be, and it hereby is, amended, and that the
designation and amount thereof and the 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. The shares of such
series shall be designated as "Series A Participating Preferred
Stock," which shall have a stated value of $0.05 per share, and
the number of shares constituting such series shall be 500,000.
Such number of shares may be increased or decreased by resolution
of the Board of Directors; provided, that no decrease shall
reduce the number of shares of Series A Participating Preferred
Stock to a number less than that of the shares then outstanding
plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Participating Preferred Stock
with respect to dividends, the holders of shares of Series A
Participating Preferred Stock in preference to the holders of
shares of Common Stock, par value $1.00 per share (the "Common
Stock"), of the Corporation and any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of October,
January, April and July in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Participating Preferred 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,
1,000 times the aggregate per share amount of all cash dividends,
and 1,000 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A
Participating Preferred Stock. In the event the Corporation
shall at any time after May 1, 1988 (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which holders of
shares of Series A Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Participating Preferred Stock as
provided in paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $10.00 per share on the Series
A-2
A Participating Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Participating Preferred Stock
unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Participating
Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date in either of which
events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares
of Series A Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-
share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Participating Preferred 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
A Participating Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Participating Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the shareholders of the Corporation;
provided, however, that with regard to any election for the
Corporation's Board of Directors (except as provided for in
paragraph (C) of this Section 3), the maximum number of votes for
the election of directors exercised by shares of Preferred Stock
(including the Series A Participating Preferred Stock) shall not
exceed the number of votes for the election of directors
represented by authorized and issued shares of Common Stock
entitled to vote less one, and the number of votes for the
election of directors exercised by shares of Preferred Stock
(including the Series A Participating Preferred Stock) shall be
reduced as necessary on a pro-rata basis to effectuate this
result.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Participating Preferred Stock and
the holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of shareholders of the
Corporation.
(C) (i) If at any time dividends on any Series A
Participating Preferred Stock shall be in arrears in an amount
equal to six (6) quarterly dividends thereon, the occurrence of
such contingency shall xxxx the beginning of a period (herein
called a "default period") which shall extend until such time
when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on
all shares of Series A Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of Preferred
Stock (including holders of the
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Series A Participating Preferred Stock) with dividends in
arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, irrespective of series, shall have
the right to elect two (2) Directors.
(ii) During any default period, such voting right of the
holders of Series A Participating Preferred Stock may be
exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting
of shareholders, and thereafter at annual meetings of
shareholders, provided that neither such voting right nor the
right of the holders of any other series of Preferred Stock, if,
any, to increase, in certain cases, the authorized number of
Directors shall be exercised unless the holders of ten percent
(10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the
holders of Common Stock shall not affect the exercise by the
holders of Preferred Stock of such voting right. At any meeting
at which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to
fill such vacancies, if any, in the Board of Directors as may
then exist up to two (2) Directors or, if such right is exercised
at an annual meeting, to elect two (2) Directors. If the number
which may be so elected at any special meeting does not amount to
the required number, the holders of the Preferred Stock shall
have the right to make such increase in the number of Directors
as shall be necessary to permit the election by them of the
required number. After the holders of the Preferred Stock shall
have exercised their right to elect Directors in any default
period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of
the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari
passu with the Series A Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect Directors, the Board of Directors may order,
or any shareholder or shareholders owning in the aggregate not
less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request,
the calling of a special meeting of the holders of Preferred
Stock, which meeting shall thereupon be called by the President,
a Vice-President or the Corporate Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his
last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 10 days
and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such
order or request, such meeting may be called on similar notice by
any shareholder or shareholders owning in the aggregate not less
than ten percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the shareholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall
continue to be entitled to elect the whole number of Directors
until the holders of Preferred Stock shall have exercised their
right to elect two (2) Directors
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voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Stock shall
continue in office until their successors shall have been elected
by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as
provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining Directors theretofore elected
by the holders of the class of stock which elected the Director
whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular
class of stock shall include Directors elected by such Directors
to fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) In any default period, the total number of Directors on
the Board of Directors shall not be less than five (5) Directors.
(vi) Immediately upon the expiration of a default period,
(x) the right of the holders of Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors
elected by the holders of Preferred Stock as a class shall
terminate, and (z) the number of Directors shall be such number
as may be provided for in, or pursuant to, the Restated
Certificate of Incorporation or By-Laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of
this Section 3 (such number being subject, however to change
thereafter in any manner provided by law or in the Restated
Certificate of Incorporation or By-Laws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and
(z) in the preceding sentence may be filled by a majority of the
remaining Directors, even though less than a quorum.
(D) Except as set forth herein, holders of Series A
Participating Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Participating Preferred
Stock outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Participating Preferred Stock
except dividends paid ratably on the Series A Participating
Preferred Stock and all such parity stock on which
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dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Participating Preferred Stock
provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Participating
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Participating Preferred Stock or any
shares of stock ranking on a parity with the Series A
Participating Preferred Stock except in accordance with a
purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Conversion Rights.
(A) Subject to the provision for adjustment hereinafter set
forth, each one one-thousandth of a share of Series A
Participating Preferred Stock shall, for a period of 90 days
after issuance, be convertible at the option of the respective
holders thereof, at the office of the Corporation and at such
other place or places, if any, as the Board of Directors may
determine, without the payment of further consideration, into one
(1) share of Common Stock of the Corporation.
(B) 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
one (1) share of Common Stock into which each one one-thousandth
of a share of Series A Participating Preferred Stock shall be
convertible shall be adjusted by multiplying such share 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.
(C) At such times as the conversion rights are exercised
for Series A Participating Preferred Stock, the Corporation
shall, to the extent that unreserved authorized and unissued or
A-6
treasury shares of Common Stock are available, reserve sufficient
shares of Common Stock to permit the conversion of such Series A
Participating Preferred Stock into Common Stock. In the event
that sufficient unreserved authorized and unissued or treasury
shares of Common Stock are not available to permit such
reservation and conversion, the Corporation shall use reasonable
efforts to obtain shareholder approval of an increase in the
number of authorized shares of Common Stock to permit the
aforementioned reservation and conversion of Series A
Participating Preferred Stock into Common Stock.
Section 6. Reacquired Shares. Any shares of Series A
Participating Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 7. 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 A Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Participating
Preferred Stock shall have received per share, the greater of
1,000 times the exercise price per Right or 1,000 times the
payment made per share of Common Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A
Participating Preferred Stock unless, prior thereto, the holders
of shares of Common Stock shall have received an amount per share
(the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 1,000
(as appropriately adjusted as set forth in subparagraph (C) below
to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment
of the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series
A Participating Preferred Stock and Common Stock, respectively,
holders of Series A Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of Preferred
Stock, if any, which rank on a parity with the Series A
Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the
event there are not sufficient assets
A-7
available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. 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 A Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per
share (subject to the provision for adjustment hereinafter set
forth) equal to l,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (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 A
Participating Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that are outstanding immediately prior to such
event.
Section 9. Redemption. The shares of Series A
Participating Preferred Stock shall not be redeemable.
Section 10. Ranking. The Series A Participating Preferred
Stock shall rank junior to all other series of the Corporation's
Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall
provide otherwise.
Section 11. Amendment. The Restated 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 A Participating
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds (66 2/3%)
of the outstanding shares of Series A Participating Preferred
Stock voting separately as a class.
Section 12. Fractional Shares. Series A Participating
Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holders fractional
shares,
A-8
to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of
holders of Series A Participating Preferred Stock.
A-9
IN WITNESS WHEREOF, I have executed and subscribed this
Amended Certificate of Designation and do affirm the foregoing as
true under the penalties of perjury, this 17th day of December,
1997.
NATIONAL SERVICE INDUSTRIES, INC.
By:
Name:
Title:
A-10
Exhibit B
[Form of Rights Certificate]
Certificate No. R-
__________Rights
NOT EXERCISABLE AFTER May 19, 2008 OR EARLIER
IF NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $. 01 PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. THE RIGHTS
ARE SUBJECT TO EXCHANGE, AT THE OPTION OF THE
COMPANY, AT ONE COMMON SHARE PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME (A) AN ACQUIRING PERSON,
(B) AN ASSOCIATE, AFFILIATE OR TRANSFEREE OF
AN ACQUIRING PERSON OR (C) A TRANSACTION
PERSON, AFFILIATE, ASSOCIATE OR TRANSFEREE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
ARE NULL AND VOID.]*
Rights Certificate
NATIONAL SERVICE INDUSTRIES, 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 Amended and Restated
Rights Agreement dated as of December 17, 1997 (the "Rights
Agreement") between National Service Industries, Inc., a Delaware
corporation (the "Company"), and Wachovia Bank, N.A. (the "Rights
Agent"), to purchase from the Company at any time after the
Distribution Date (as such
_____________________
* The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentences.
term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Eastern Standard Time) on May 19, 2008 at the principal office
of the Rights Agent in Winston-Salem, North Carolina, one one-
thousandth of a fully paid, nonassessable share of Series A
Participating Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $160 per one one-thousandth of a
share (the "Purchase Price"), upon presentation and surrender of
this Rights Certificate with the appropriate Form of Election to
Purchase duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price
as of December 17, 1997, based on the Preferred Stock as
constituted at such date. As provided in the Rights Agreement,
the Purchase Price and the number of shares of Preferred Stock or
other securities which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates. Copies of the Rights Agreement are on file
at the principal office of the Company and are also available
upon written request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the
Rights Agent, may be exercised for another Rights Certificate or
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 or Rights Certificates surrendered shall have
entitled such holder to purchase. If this Rights Certificate
shall be exercised (other than pursuant to Section 11(a)(ii) of
the Rights Agreement) in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or
B-2
Rights Certificates for the number of whole Rights not exercised.
If this Rights Certificate shall be exercised in whole or in part
pursuant to Section 11(a)(ii) of the Rights Agreement, the holder
shall be entitled to receive this Rights Certificate duly marked
to indicate that such exercise has occurred as set forth in the
Rights Agreement.
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 $.01 per Right.
Subject to the provisions of the Rights Agreement, the Company,
at its option, may elect to mail payment of the redemption price
to the registered holder of the Right at the time of redemption,
in which event this certificate may become void without any
further action by the Company.
No fractional shares of Preferred Stock will be issued
upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are one one-thousandth or integral multiples
of one one-thousandth of a share of Preferred Stock, which may,
at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder, as such, of any 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 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 shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in Section 26 of the Rights Agreement), or to receive
dividends or other distributions, or otherwise, until the Right
or Rights evidenced by this Rights Certificate shall have been
exercised.
B-3
This Rights Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
B-4
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of ____________,
_____.
ATTEST: NATIONAL SERVICE INDUSTRIES,
INC.
By:
Name: Name:
Title: Title:
Countersigned:
WACHOVIA BANK, N.A.
Authorized Signatures
B-5
(Form of Reverse Side of Rights Certificate)
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sell, 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: , 19__
Signature
Signature Guaranteed:
B-6
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [
] are [ ] are not being sold, assigned and transferred by or
on behalf of a Person who is or was (i) an Acquiring Person, (ii)
an Affiliate, Associate or transferee of any such Acquiring
Person (as such terms are defined in the Rights Agreement) or
(iii) a Transaction Person or an Affiliate, Associate (as such
terms are defined in the Rights Agreement) or transferee thereof;
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is or
was (i) an Acquiring Person, (ii) an Affiliate, Associate or
transferee of any such Acquiring Person (as such terms are
defined in the Rights Agreement) or (iii) a Transaction Person or
an Affiliate, Associate (as such terms are defined in the Rights
Agreement) or transferee thereof.
Dated: , 19__ Signature
NOTICE
The signature to the foregoing Assignment 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.
In the event the certification set forth above in the Form
of Assignment or the Form of Election to Purchase, as the case
may be, is not completed, the Company and the Rights Agent will
deem the Beneficial Owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person, Transaction Person or any
Affiliate, Associate or transferee of such Acquiring Person or
Transaction Person (as such terms are defined in the Rights
Agreement), and such Assignment or Election to Purchase will not
be honored.
B-7
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To NATIONAL SERVICE INDUSTRIES, INC.:
The undersigned hereby irrevocably elects to exercise
________ Rights represented by this Rights Certificate to
purchase the shares of Common Stock (or such other securities of
the Company) issuable upon the exercise of the Rights and
requests that certificates for such shares be issued in the name
of:
(Please insert social security or other identifying number)
(Please print name and address)
The Rights Certificate indicating the balance, if any, of
such Rights which may still be exercised pursuant to each of
Section 11(a)(ii) and Section 13 of the Rights Agreement shall be
returned to the undersigned unless such person requests that the
Rights Certificate be registered in the name of and delivered to:
Please insert social security or other identifying number
(complete only if Rights Certificate is to be registered in a
name other than the undersigned)
(Please print name and address)
Dated: , 19__
Signature
Signature Guaranteed:
B-8
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [
] are [ ] are not being sold, assigned and transferred by or
on behalf of a Person who is or was (i) an Acquiring Person, (ii)
an Affiliate, Associate or transferee of any such Acquiring
Person (as such terms are defined in the Rights Agreement) or
(iii) a Transaction Person or an Affiliate, Associate (as such
terms are defined in the Rights Agreement) or transferee thereof;
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is or
was (i) an Acquiring Person, (ii) an Affiliate, Associate or
transferee of any such Acquiring Person (as such terms are
defined in the Rights Agreement) or (iii) a Transaction Person or
an Affiliate, Associate (as such terms are defined in the Rights
Agreement) or transferee thereof.
Dated: , 19__ Signature
NOTICE
The signature to the foregoing Election to Purchase 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.
In the event the certification set forth above in the Form
of Assignment or the Form of Election to Purchase, as the case
may be, is not completed, the Company and the Rights Agent will
deem the Beneficial Owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person, Transaction Person or any
Affiliate, Associate or transferee of such Acquiring Person or
Transaction Person (as such terms are defined in the Rights
Agreement), and such Assignment or Election to Purchase will not
be honored.
B-9
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
to exercise the Rights Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To NATIONAL SERVICE INDUSTRIES, INC.:
The undersigned hereby irrevocably elects to exercise
_________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock (or such other securities
of the Company or any other Person) issuable upon the exercise of
the Rights and requests that certificates for such shares be
issued in the name of:
(Please insert social security or other identifying number)
(Please print name and address)
The Rights Certificate indicating the balance, if any, of
such Rights which may still be exercised pursuant to each of
Section 11(a)(ii) and Section 13 of the Rights Agreement shall be
returned to the undersigned unless such person requests that the
Rights Certificate be registered in the name of and delivered to:
Please insert social security or other identifying number
(complete only if Rights Certificate is to be registered in a
name other than the undersigned)
(Please print name and address)
Dated: , 19__
Signature
Signature Guaranteed:
B-10
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [
] are [ ] are not being sold, assigned and transferred by or
on behalf of a Person who is or was (i) an Acquiring Person, (ii)
an Affiliate, Associate or transferee of any such Acquiring
Person (as such terms are defined in the Rights Agreement) or
(iii) a Transaction Person or an Affiliate, Associate (as such
terms are defined in the Rights Agreement) or transferee thereof;
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is or
was (i) an Acquiring Person, (ii) an Affiliate, Associate or
transferee of any such Acquiring Person (as such terms are
defined in the Rights Agreement) or (iii) a Transaction Person or
an Affiliate, Associate (as such terms are defined in the Rights
Agreement) or transferee thereof.
Dated: , 19__ Signature
NOTICE
The signature to the foregoing Election to Purchase 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.
In the event the certification set forth above in the Form
of Assignment or the Form of Election to Purchase, as the case
may be, is not completed, the Company and the Rights Agent will
deem the Beneficial Owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person, Transaction Person or
Affiliate, Associate or transferee of such Acquiring Person or
Transaction Person (as such terms are defined in the Rights
Agreement), and such Assignment or Election to Purchase will not
be honored.
B-11
Exhibit C
SUMMARY OF RIGHTS
TO PURCHASE PREFERRED SHARES
On May 9, 1988, the Board of Directors of National Service
Industries, Inc. (the "Company") declared a dividend distribution
of one Right for each outstanding share of common stock, $1.00
par value (the "Common Stock"), of the Company to stockholders of
record at the close of business on May 19, 1988 (the "Record
Date"). On December 17, 1997, the Board of Directors of the
Company adopted certain amendments to the terms of the Rights.
Except as set forth below, each Right (as amended), when
exercisable, entitles the registered holder to purchase from the
Company one one-thousandth of a share of a series of convertible
preferred stock, designated as Series A Participating Preferred
Stock, $0.05 stated value (the "Preferred Stock"), at a price of
$160 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights, as amended, are set forth in
an Amended and Restated Rights Agreement (the "Rights Agreement")
between the Company and Wachovia Bank, N.A., as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no
separate Rights certificates will be distributed. Until the
earlier to occur of (i) the first date of public announcement
that, without the prior consent of the Company, a Person (as
defined in the Rights Agreement), alone or together with its
Affiliates and Associates (as defined in the Rights Agreement),
has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common
Stock of the Company (the "Stock Acquisition Date"); (ii) the
close of business on the tenth (10th) business day (unless such
date is extended by the Board of Directors) following the
commencement of (or a public announcement of an intention to
make) a tender offer or exchange offer which would result in any
Person or group of related Persons becoming an Acquiring Person,
without the prior consent of the Company or (iii) twenty business
days prior to the date on which a Transaction (as such term is
hereinafter defined) is reasonably expected to become effective
or be consummated (the earliest of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect
to any of the Common Stock certificates outstanding as of
December 17, 1997, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with Common
Stock certificates. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock
certificates issued after December 17, 1997 (or as soon
thereafter as practicable), upon transfer, replacement or new
issuance of Common Stock will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender for transfer of any Common Stock certificates
outstanding as of December 17, 1997 even without such a notation,
will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates. As soon as
practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will
be mailed to holders of record of
the Common Stock as of the close of business on the Distribution
Date, and the separate Rights Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on May 19, 2008, unless
earlier redeemed by the Company as described below.
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, certain convertible securities or securities having the
same or more favorable rights, privileges and preferences as the
Preferred Stock at less than the current market price of the
Preferred Stock or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends out of earnings or retained
earnings) or of subscription rights or warrants (other than those
referred to above).
With certain exceptions, no adjustments in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Rights will be issued, and in lieu thereof, an adjustment in cash
will be made based on the market price of the Rights on the last
trading day prior to the date on which such fractional Rights
would otherwise be issuable.
In the event that any Person becomes an Acquiring Person
(unless pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock at a price and on terms
determined, prior to the purchase of shares under such tender or
exchange offer, by at least a majority of the members of the
Disinterested Directors to be both adequate and otherwise in the
best interests of the Company and its stockholders (a "Permitted
Offer")), proper provision shall be made so that each holder of a
Right will thereafter have the right for a 60-day period after
the later of the date of such event, or the effectiveness of an
appropriate registration statement, to receive upon exercise of
the Right that number of units of one one-thousandths of a share
of Preferred Stock (or, under certain circumstances, shares of
Common Stock or other securities) having an average market value
during a specified time period (immediately prior to the
occurrence of a Person becoming an Acquiring Person) of two times
the Purchase Price of the Right (such right being called the
"Flip-In Right"). Disinterested Directors are directors of the
Company who are not (i) officers or employees of the Company,
(ii) Acquiring Persons or Affiliates or Associates thereof, or
representatives of any of them, or (iii) any Person who was
directly or indirectly proposed or nominated as a director of the
Company by a Transaction Person.
In the event that, at any time on or following the Stock
Acquisition Date, or, if a Transaction is proposed, the
Distribution Date, the Company is, directly or indirectly,
acquired in a merger or other business combination transaction or
50% or more of the Company's assets or earning power are sold (in
one transaction or a series of transactions), proper provision
shall be
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made so that each holder of a Right (except a Right voided as set
forth herein) shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price of the
Right, that number of shares of common stock of the acquiring
company (or, in the event there is more than one acquiring
company, the acquiring company receiving the greatest portion of
the assets or earning power transferred) which, at the time of
such transaction, would have a market value of two times the
Purchase Price of the Right (such right being called the "Flip-
Over Right").
The holder of a Right will continue to have the Flip-Over
Right whether or not such holder exercises the Flip-In Right.
Upon the occurrence of any of the events giving rise to the
exercisability of the Flip-Over Right or the Flip-In Right, any
Rights that are or were at any time owned by an Acquiring Person
or a Transaction Person (as hereinafter defined) engaging in any
of such transactions or receiving the benefits thereof on or
after the time the Acquiring Person or Transaction Person becomes
such shall become null and void insofar as they relate to the
Flip-Over Right or the Flip-In Right.
The number of outstanding Rights associated with each share
of Common Stock and the voting and economic rights of each one
one-thousandth of a share of Preferred Stock issuable upon
exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on
the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
At any time prior to the earlier to occur of (i) the close
of business on the Stock Acquisition Date or (ii) the expiration
of the Rights, the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption
Price"), which redemption shall be effective upon the action of
the Board of Directors. Additionally, following the Stock
Acquisition Date and the expiration of the period during which
the Flip-In is exercisable, the Company may redeem the then
outstanding Rights in whole, but not in part, at the Redemption
Price, provided that such redemption is in connection with a
merger or other business combination transaction or series of
transactions involving the Company in which all holders of Common
Stock are treated alike, but not involving an Acquiring Person or
Transaction Person or any Affiliates or Associates thereof. Upon
the effective date of the redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
In the event that a majority of the Board of Directors of
the Company in office following a meeting of stockholders or
stockholder action by written consent are not nominated by the
Board of Directors serving immediately prior to such meeting or
action, then for 365 days following such meeting or action the
Rights may not be redeemed or amended if such redemption or
amendment is reasonably likely to facilitate a merger,
combination or sale of assets or earning power of the Company (a
"Transaction") with a Person who (A) either (i) is or will become
an Acquiring Person or (ii) is a party involved in a merger or
consolidation with, or a sale of assets by, the Company or
affiliate or associate thereof if the Transaction were to be
C-3
consummated and (B) who has directly or indirectly proposed or
nominated a member of the Board who is in office at the time the
Transaction is being considered (a "Transaction Person"). The
Rights may not be redeemed thereafter if during such 365-day
period the Company enters into any agreement reasonably likely to
facilitate a Transaction with a Transaction Person and the
redemption is reasonably likely to facilitate a Transaction with
a Transaction Person.
At any time after a Person becomes an Acquiring Person but
before such Acquiring Person, together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding, the Company may, at
its option, exchange all or part of the then outstanding and
exercisable Rights (other than those owned by the Acquiring
Person, together with any Affiliates and Associates of such
Acquiring Person, which have become null and void) at an exchange
ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction involving either the Common Stock or the Preferred
Stock occurring after the date hereof (the "Exchange Ratio"). The
Board of Directors may only exchange Rights if a majority of the
Disinterested Directors authorize such exchange. Immediately
upon the action of the Board of Directors ordering the exchange
of any Rights and without any further action and without any
notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number
of such Rights held by such holder multiplied by the Exchange
Ratio.
The Preferred Stock purchasable upon exercise of the Rights
will be nonredeemable and junior to any other series of preferred
stock the Company may issue (unless otherwise provided in the
terms of such stock). Each share of Preferred Stock will have a
preferential quarterly dividend in an amount equal to 1,000 times
the dividend declared on each share of Common Stock, but in no
event less than $10.00. In the event of liquidation, the holders
of Preferred Stock will receive a preferred liquidation payment
per share equal to the greater of 1,000 times the Purchase Price
per Right or 1,000 times the payment made per each share of
Common Stock. Subject to certain adjustments to reflect an
increase or decrease in the number of outstanding shares of
Common Stock, each one one-thousandth of a share of Preferred
Stock shall, for a period of 90 days after issuance, be
convertible into one share of Common Stock.
Each share of Preferred Stock will have 1,000 votes, voting
together with the shares of Common Stock on all matters submitted
to a vote of the shareholders of the Company. With regard to any
election for the Company's Board of Directors, however, the
maximum number of votes for the election of directors exercised
by shares of preferred stock (including the Preferred Stock)
shall not exceed the number of votes for the election of
directors represented by authorized and issued shares of Common
Stock less one, and the number of votes for the election of
directors exercised by shares of preferred stock (including the
Preferred Stock) shall be reduced as necessary on a pro-rata
basis to effectuate this result. If the Company fails to pay
dividends on the Preferred Stock for a specified period (a
"default period"), the holders of Preferred Stock shall have the
additional right to elect two (2) directors to the Board of
Directors until such default period expires. In any default
period, the total number of directors on the Board of Directors
shall not be less than five (5) directors.
C-4
In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each
share of Preferred Stock will be entitled to receive 1,000 times
the amount and type of consideration received per share of Common
Stock. The rights of the Preferred Stock as to dividends,
liquidation and voting, and in the event of mergers and
consolidations, are protected by customary anti-dilution
provisions. Fractional shares of Preferred Stock will be
issuable; however, the Company may elect to distribute depositary
receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of one
one-thousandths of a share, an adjustment in cash will be made
based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
Except as set forth above, the terms of the Rights may be
amended by the Board of Directors of the Company and the Rights
Agent, (i) prior to the Distribution Date in any manner, and (ii)
on or after the Distribution Date to cure any ambiguity, to
shorten or lengthen any time period under the Rights Agreement,
to correct or supplement any provision of the Rights Agreement
which may be defective or inconsistent with any other provisions,
or in any manner not adversely affecting the interests of the
holders of the Rights.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Form 8-A/A
amending the Company's Registration Statement on Form 8-A,
previously filed on May 11, 1988 (as subsequently amended on May
17, 1988). A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights
does not purport to be complete and its qualified in its entirety
by reference to the Rights Agreement, which is incorporated
herein by reference.
C-5
