RIGHTS AGREEMENT
This Agreement, dated as of May 25, 2000, between Allied Waste Industries,
Inc., a Delaware corporation (the "Company"), and American Stock Transfer &
Trust Company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company authorized and declared a
dividend distribution of one Right (as hereinafter defined) for each outstanding
share of Common Stock, par value $.01 per share, of the Company (the "Common
Stock") outstanding at the close of business on May 31, 2000, (the "Record
Date"), and a dividend distribution for each outstanding share of Series A
Senior Convertible Preferred Stock, par value $.10 per share, of the Company
(the "Senior Preferred Stock") outstanding on the Record Date of that number of
Rights (the "As Converted Number of Rights") which would have been received by a
holder of one Share of Series A Senior Convertible Preferred Stock had he
converted such share into shares of Common Stock immediately prior to the Record
Date, each Right representing the right to purchase one ten-thousandth of a
share of Series B Junior 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 this Agreement, upon the terms and subject
to the conditions set forth herein, and has further authorized and directed the
issuance of one Right with respect to each share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with respect to shares of
Common Stock that shall become outstanding after the Distribution Date and prior
to the earlier of the Redemption Date and the Expiration Date in accordance with
the provisions of Section 23 of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this 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 the Board of
Directors of the Company, shall be the Beneficial Owner of shares of stock
of the Company having 15% or more of the voting power of all Voting Stock
(as such term is hereinafter defined) then outstanding 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 shares having 15% or more of
the voting power of all outstanding shares of Voting Stock, but shall not
include the Company, any subsidiary of the Company (as such term is
hereinafter defined), any employee benefit plan of the Company or any of
its subsidiaries or any entity holding shares of Common Stock organized,
appointed or established by the Company or any of its subsidiaries for or
pursuant to the terms of any such plan or any trustee or administrator of
any such plan; provided, however, that no Person shall be an Acquiring
Person if within three Business Days after such Person would (but for the
operation of this proviso) otherwise have become an Acquiring Person or, if
such Person did so inadvertently, after such Person discovers that it would
otherwise have become an Acquiring Person if such Person both (i) notifies
the Board of Directors of the Company that such Person would (absent the
operation of this proviso) have become an Acquiring Person inadvertently
and (ii) within three Business Days after such notification, such Person
divests itself of a sufficient number of shares of Voting Stock so that
such Person is no longer the Beneficial Owner of shares of stock having 15%
or more of the voting power of all outstanding shares of Voting Stock. In
addition, none of the stockholders party to the Second Amended and Restated
Shareholders Agreement, dated as of July 30, 1999, between the Company and
certain stockholders of the Company (the "Shareholders Agreement"), and the
Related Persons (as defined in the Shareholders Agreement) of such
stockholders shall be an Acquiring Person as a result of being the
Beneficial Ownership of Voting Stock owned as of the date of this Agreement
or hereafter acquired in compliance with the provisions of the Shareholders
Agreement, as it may be validly amended from time to time hereafter;
provided, however, that acquisitions of Voting Stock by such Persons in
excess of that permitted by the Shareholders Agreement (as it may be
validly amended from time to time) will result in such Person becoming an
Acquiring Person if such Person is then the Beneficial Owner of shares of
stock having 15% or more of the voting power of all outstanding shares of
Voting Stock; provided, however, that if such Person would (but for the
operation of this proviso) have become an Acquiring Person inadvertently,
and if such Person both notifies the Board of Directors of the Company of
its inadvertence within three Business Days after such Person would have
otherwise become an Acquiring Person and within three Business Days after
such notification divests itself of the Voting Stock acquired in violation
of the Shareholders Agreement, then such Person shall not become an
Acquiring Person.
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(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
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(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 these Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," securities tendered pursuant to a tender or exchange offer made
by 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 be not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange Act and (2)
is not also then reportable 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),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (B) of subparagraph (ii) of
this paragraph (c)) or disposing of any securities of the Company.
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(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Arizona
or New York are authorized or obligated by law or executive order to
close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
Scottsdale, Arizona time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Scottsdale,
Arizona time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company, except that "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, the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding such
capital stock, equity securities or equity interests.
(g) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(h) "Preferred Stock" shall mean the Series B Junior
Participating Preferred Stock, par value $.10 per share, of the
Company.
(i) "Rights Agreement" shall mean this Agreement, including as it
may hereafter be amended.
(j) "Senior Preferred Stock" shall mean the Series A Senior
Convertible Preferred Stock, par value $.10 per share, of the Company.
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(k) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(l) A "subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or voting interests is owned, directly or
indirectly, by such Person, or which is otherwise controlled by such
Person.
(m) "Voting Stock" shall mean capital stock of the Company
generally entitled to vote for the election of directors to the Board
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 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 or (ii)
the tenth Business Day after the date of the commencement of, or first
public announcement of the intent of any Person (other than the
Company, any subsidiary of the Company, or any employee benefit plan
of the Company or any of its subsidiaries or any trustee or
administrator of any such plan in its capacity as such) to commence
(which intention to commence remains in effect for five business days
after such announcement), a tender or exchange offer which would
result in such Person becoming an Acquiring Person (or, in the case of
clause (i), such later date determined by the Board of Directors of
the Company, which date shall not be later than the Stock Acquisition
Date) (the earlier of the dates specified in (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section
3) by the certificates for Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock shall
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be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights (and the right to receive
certificates therefor) will be transferable only in connection with
the transfer of the underlying shares of Common Stock and Senior
Preferred Stock (including a transfer to the Company); provided,
however, that if a tender or exchange offer is terminated prior to the
occurrence of the Distribution Date, then no Distribution Date shall
occur as a result of that tender or exchange offer. As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of
the Common Stock and the Senior Preferred 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 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 and the As Converted Number of Rights for each share of Senior
Preferred Stock so held. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
(b) With respect to certificates for the Common Stock and the
Senior Preferred Stock outstanding as of the date of this Agreement,
until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the
Common Stock and the Senior Preferred Stock shall also be the
registered holders of the associated Rights. Until the Distribution
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Date (or earlier redemption, expiration or termination of the Rights),
the surrender for transfer of any of the certificates for the Common
Stock and the Senior Preferred Stock outstanding on the Record Date
shall also constitute the transfer of the Rights associated with the
Common Stock and the Senior Preferred Stock represented by such
certificate. Upon the request of the holder of any shares of Common
Stock and the Senior Preferred Stock or, after the Distribution Date,
the holder of any Rights, the Company shall, at its expense, provide a
copy of the Summary of Rights in the form attached hereto as Exhibit
C.
(c) Certificates for the Common Stock and the Senior Preferred
Stock issued (or which become outstanding) after the date of this
Agreement (or as soon thereafter as is reasonably practicable), 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 an Amended and Restated Rights Agreement between Allied Waste
Industries, Inc. and American Stock Transfer & Trust Company (the "Rights
Agent") dated as of May 25, 2000 (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 Allied Waste 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. Allied Waste Industries, Inc. will mail
to the holder of this certificate a copy of the Rights Agreement without charge
within fifteen days after receipt of a written request therefor. Under certain
circumstances, Rights issued to Acquiring Persons (as defined in the Rights
Agreement) or certain related persons and any subsequent holder of such Rights
may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock and the Senior
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Preferred 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 or the Senior Preferred Stock represented by such certificate. If the
Company purchases or otherwise acquires shares of Common Stock or Senior
Preferred Stock prior to the Distribution Date, any Rights associated with such
Common Stock or Senior Preferred Stock shall be deemed canceled and retired so
that the Company shall not be entitled to exercise any Right associated with the
shares of Common Stock or Senior Preferred 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 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 ten-thousandths of a
share of Preferred Stock as shall be set forth therein at the price
per share set forth therein (the "Purchase Price"), but the number of
such shares and the Purchase Price shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 23 hereof that represents Rights beneficially owned by an
Acquiring Person or any Associate or Affiliate thereof and any Rights
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Certificate issued at any time upon the transfer of any Rights to such
an Acquiring Person or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate, and any
Rights Certificate issued pursuant to Section 6 or Section 11 upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Rights Certificate were issued to a Person who
was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement). 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, any President or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the person who signed such
Rights Certificates had not ceased to be such officer of the Company; and any
Rights 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.
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Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at one of its offices, 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
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 ten-thousandths of a share of Preferred Stock as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment 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.
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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 will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7.Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon
presentation of the Rights Certificate, with the appropriate form of
election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together
with payment of the Purchase Price for each one ten-thousandth of a
share of Preferred Stock (or such other number of shares or other
securities) as to which the Rights are exercised, at or prior to the
earlier of (i) the close of business on May 31, 2010 (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed
as provided in Section 24 hereof (such earlier 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 or Senior
Preferred 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 or Senior Preferred Stock in accordance
with and subject to the provisions of this Agreement, including the
provisions of Sections 4(b), 6 and 7(e) hereof, as of the date such
Person becomes a record holder of shares of Common Stock or Senior
Preferred Stock.
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(b) Subject to the terms and conditions set forth herein, when
exercisable, each Right shall represent the right to purchase one
ten-thousandth of a share of Preferred Stock. The Purchase Price for
each one ten-thousandth of a share of Preferred Stock pursuant to the
exercise of a Right shall initially be $85, 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 duly
executed, accompanied by payment of the Purchase Price for the shares
(or other securities or property) to be purchased and an amount equal
to any applicable transfer tax (as determined by the Rights Agent) in
cash, or by certified check or bank draft 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 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 ten-thousandth 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 will direct the depositary agent to comply with
such request, (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 Xxxxxxx x0, (xxx) promptly after receipt of
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such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt promptly deliver
such cash to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, and/or distribute
other property pursuant to Section 11(a), the Company will make all
arrangements necessary so that such other securities and/or property
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).
(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 l5 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the time an Acquiring Person first becomes such, any
Rights beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any Affiliate or Associate thereof) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
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transferee of an Acquiring Person (or of any Affiliate or Associate
thereof) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of
the Corporation 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 Corporation 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 no liability to any
holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person
or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless the 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 completed and signed by
the registered holder thereof and the Company shall have been provided
with such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
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combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for such purpose and cancellation or,
if surrendered to the Rights Agent for such purpose, 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. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued shares of Preferred Stock, or any authorized and
issued 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 an event specified in Section
11, shall so reserve and keep available a sufficient number of shares of
Preferred Stock (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the shares of Preferred Stock (and, after the occurrence of an
event specified in Section 11, any 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.
The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all shares of Preferred Stock, Common Stock and/or
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other securities 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.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any certificates for shares of Preferred Stock, Common Stock and/or other
securities 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 the shares of Preferred Stock, Common Stock and/or other
securities in a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or deliver
any certificates for shares of Preferred Stock, Common Stock and/or other
securities in a name other than that of the registered holder upon the exercise
of any Rights until 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.
The Company shall use its best efforts to (i) file, as soon as practicable
following the Distribution Date, a registration statement under the Securities
Act of 1933 (the "Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the 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.
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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) 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) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly presented and payment of the Purchase Price (and
any applicable transfer taxes) was made; provided, however, that if the date of
such presentation and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Stock (or Common Stock and/or other securities) transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number 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 or fractional units of shares of Preferred Stock,
(B) subdivide the outstanding Preferred Stock, (C) combine the
18
outstanding Preferred Stock into a smaller number of shares or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this
Section 11(a), and Section 7(e), 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 of
units of one ten-thousandths of a share of Preferred Stock and the
number and kind of shares of capital stock issuable on such date upon
exercise of a Right, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number of units of one ten-thousandths of a
share of Preferred Stock and the number and kind of shares of capital
stock and other securities which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon exercise of one
Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to any
adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then
19
proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall, for a period of
60 days (or such other longer period as may be established by
action of a majority of the Board of Directors) after the later
of the occurrence of any such event and the effective date of an
appropriate registration statement pursuant to Section 9, have a
right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement,
such number of one ten-thousandths of shares of the Preferred
Stock as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one
ten-thousandths of a share of Preferred Stock for which a Right
is exercisable immediately prior to the first occurrence of such
event and dividing that product by (y) 50% of the current market
price per one two-thousandths of a share of the Preferred Stock
(determined pursuant to Section 11(d)) on the date of such first
occurrence (such number of one ten-thousandths of a share being
referred to as the "number of Adjustment Shares").
(iii) In the event that there shall not be sufficient
authorized but unissued shares of Preferred Stock to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), then, in the event the Rights become so
exercisable, notwithstanding any other provision of this
Agreement, to the extent necessary and permitted by applicable
law and any agreements in effect on the date hereof to which it
is a party, 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, a number of
20
shares of Common Stock equal to the number of Adjustment Shares
or a number of shares, or units of shares, of preferred stock
equal to the number of Adjustment Shares where the Board of
Directors of the Company shall have deemed such shares or units
to have at least the same or more favorable rights, privileges
and preferences as the Preferred Stock (an "equivalent preferred
stock") or a combination of Preferred Stock and/or Common Stock
and/or equivalent preferred stock having the requisite value as
determined by the the Board of Directors; provided, however, if
there are unavailable sufficient shares of Preferred Stock and/or
Common Stock and/or equivalent preferred stock, then the Company
shall take all such action as may be necessary to authorize
additional shares of Preferred Stock and/or equivalent preferred
stock and/or shares of Common Stock for issuance upon exercise of
the Rights, including the calling of or meeting of shareholders;
and provided, further, that if the Company is unable to cause
sufficient shares of Preferred Stock and/or equivalent preferred
stock and/or shares of Common Stock 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
Preferred Shares upon exercise at the Adjusted Purchase Price (as
such terms are hereinafter defined.) As used herein, the term
Adjusted Number of Preferred Shares shall be equal to that number
of one ten-thousandths of a share of Preferred Stock (and/or
shares or units of equivalent preferred stock and/or shares of
Common Stock) equal to the product of (x) the number of
Adjustment Shares and (y) a fraction, the numerator of which is
the number of one ten-thousandths of a share of Preferred Stock
(and/or shares or units of equivalent preferred stock and/or
shares of Common Stock) 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 Preferred
21
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 Preferred Stock,
equivalent preferred stock and shares of Common Stock upon
exercise of the Rights among holders of Rights.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock
entitling them (for a period expiring within 45 calendar days after
such record date) to subscribe for or purchase Preferred Stock (or
equivalent preferred stock or securities convertible into Preferred
Stock or equivalent preferred stock) at a price per share of Preferred
Stock or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred
Stock or equivalent preferred stock) less than the current market
price (as defined 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 to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or 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
22
upon exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of
such consideration shall be determined reasonably and with good faith
to the holders of Rights 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 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 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 defined in Section 11(d)) per share of Preferred
Stock on such record date, less the fair market value (as determined
reasonably and with good faith to the holders of Rights 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
23
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 current market price per share of
the Preferred Stock; provided, however, that in no event shall the
consideration to be paid upon exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. 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 be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
in Section 11(a)(iii), the "current market price" per share of Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock 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 Common Stock is determined during a
period following the announcement by the issuer of such Common Stock
of (A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of
such Common Stock or (B) any subdivision, combination or
reclassification of such Common Stock, 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 properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the shares of Common Stock are not
24
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading or, if the shares of Common Stock or not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on
such date as determined reasonably and with good faith by the Board of
Directors of the Company shall be used and shall be binding on the
Rights Agent. The term, "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share determined
reasonably and with good faith to the holders of Rights 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 ten-thousandths of a
share) of Preferred Stock or any other security shall be
determined in the same manner as set forth above for the Common
Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the current market price per share (or one
25
ten-thousandths 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 an
amount equal to 10,000 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the current
market price per share of the Common Stock and the "current
market price" per one ten-thousandths 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
conclusive for all purposes.
(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 ten-thousandth of a share of Common Stock or
other share or one ten-millionth of a share of Preferred Stock (or any
other 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 Expiration Date.
26
(f) If as a result of any provision of Section 11(a) or Section
13(a), 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
shares of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one ten-thousandths of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one ten-thousandths of a share of
Preferred Stock covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of shares of Preferred Stock
27
purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one ten-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 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 one ten-thousandth of a share of Preferred
28
Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express
the Purchase Price per share and the number of shares which were
expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated or par value, if
any, of the shares 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
fully paid and nonassessable shares of Preferred Stock, Common Stock
or other securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything to the contrary in this Section 11 notwithstanding,
the Company, by action of a majority of the Board of Directors, shall
be entitled to make such reductions in the Purchase Price, in addition
to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any shares of Preferred
Stock at less than the current market price, issuance wholly for cash
29
of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other
Person (other than a subsidiary of the Company in a transaction which
does not violate Section 11(o) hereof), (ii) merge with or into any
other Person (other than a subsidiary of the Company in a transaction
which does not violate Section 11(o) 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 11(o) 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 or securities outstanding or
agreements in effect or other actions taken, which would materially
diminish or otherwise eliminate the benefits intended to be afforded
by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates 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
certificate certifying compliance with this Section 11(n).
30
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26
hereof, take (or permit any subsidiary to take) any action 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.
(p) 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(p) shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination, consolidation or reclassification is
effected.
(q) 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
31
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 and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, on or following the Stock Acquisition
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
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 one or more of
its subsidiaries shall sell, mortgage or otherwise transfer), in one
or more transactions, assets or earning power aggregating more than
32
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, shall have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of 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 (1) multiplying the then current Purchase Price by the
number of one ten-thousandths of a share of Preferred Stock for which
a Right is then exercisable and dividing that product by (2) 50% of
the 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 consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
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 such
consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y)
of the first sentence of this Section 13, the Person that is the
issuer of any securities into which shares of Common Stock of the
33
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to
the merger or consolidation (including, if applicable, the
Company if it is the surviving corporation); and
(ii) in the case of any transaction described in (z) of the
first sentence in this Section 13, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (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 Common Stocks
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
34
as a result of such consolidation, merger, sale or transfer shall have
a sufficient number of shares of its authorized Common Stock which
have not been issued or reserved for issuance in order to permit the
exercise in full of the Rights in accordance with this Section 13 and
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 consolidation, merger, sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal
Party at its own expense will
(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
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.
Section 14. Additional Covenant. Notwithstanding any other provision of
this Agreement, no adjustment to the Purchase Price, the number of shares (or
35
fractions of a share) of Preferred Stock, Common Stock or other securities for
which a Right is exercisable or the number of Rights outstanding or any similar
adjustment shall be made or be effective if such adjustment would have the
effect of reducing or limiting the benefits the holders of the Rights would have
had absent such adjustment, including, without limitation, the benefits under
Section 11(a)(ii) and Section 13, unless the terms of this Agreement are amended
so as to preserve such benefits.
Section 15. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(n), 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 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
36
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 reasonably and with good faith to the holders of Rights 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 integral multiples of one
ten-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 integral multiples of one
ten-thousandth of a share of Preferred Stock). In lieu of fractional shares
of Preferred Stock that are not integral multiples of one ten-thousandth of
a share of Preferred Stock, the Company may pay to the registered holders
of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one ten-thousandth of a share of Preferred Stock. For purposes of
this Section 15(b), the current market value of one ten-thousandth of a
share of Preferred Stock shall be one ten-thousandth of the closing price
of a share of Preferred Stock (as determined pursuant to of 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 one
ten-thousandth of a share of Preferred Stock, Common Stock, or other
37
securities upon the exercise of a Right, the Company shall not be required
to issue fractions of shares of Common Stock upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Common
Stock. In lieu of fractional units of one ten-thousandth of a share of
Preferred Stock or fractional shares of any such other securities, the
Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a unit or share of such
securities, as the case may be. For purposes of this Section 15(c), the
current market value of any such unit or share shall be the closing price
of a share of Common Stock (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right.
Section 16. Rights of Action. All rights of action in respect of this
Agreement (other than 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 the Senior Preferred Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock and
the Senior Preferred 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 and the Senior Preferred 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.
38
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement in which they successfully prosecute their
claims.
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
and the Senior Preferred 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; (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 a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock or Senior Preferred Stock certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock or Senior Preferred 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
39
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company shall not have sought or
otherwise cooperated in obtaining such order, decree or ruling and must use
its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
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 stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions thereof.
Section 19. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and 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, damage, claim, 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
40
in connection with the acceptance and administration of this Agreement,
including the costs and expenses (including reasonable attorney's fees and
expenses) of defending against any claim of liability arising therefrom,
directly or indirectly. The indemnity provided for in this Section 19 shall
survive the expiration of the Rights and the termination of this Agreement.
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.
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 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 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
41
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 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 any Acquiring Person) be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the
42
Board, any Vice Chairman of the Board, the President, 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 Rights
becoming null and void pursuant to Section 7(e) hereof or for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Sections 11 or 13 hereof or responsible
for the manner, method or amount of any such adjustment or the ascertaining
of the existence of facts that would require any such adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such 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 the provisions of Section 15 hereof; nor shall it by any act
43
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or Common
Stock to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Preferred Stock (or fractional shares thereof)
or Common Stock will, when so issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from the Chairman
of the Board, any Vice Chairman of the Board, 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. Any
application by the Rights Agent for written instructions from the Company
may at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent with respect to its
duties or obligations under this Agreement and the date on and/or after
which such action taken or omitted in accordance with a proposal included
in any such application on or after the date specified therein (which date
shall not be less than three Business Days after the date any such officer
actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received written
instructions from the Company in response to such application specifying
the action to be taken or omitted.
44
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, 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 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.
45
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,
subsequent to the Distribution Date, to 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,
subsequent to the Distribution Date, to the holders of the Rights Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any state, in good standing, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50,000,000. 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 Right 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
46
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, if such
appointment occurs after the Distribution Date, 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 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 per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Stock following the Distribution Date and
prior to the Expiration Date, the Company 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 prior to the Distribution
Date, 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 Certificate 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 shall 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.
47
Section 24. Redemption and Termination.
(a) (i) The Board of Directors of the Company may, at its option, at
any time prior to 5:00 P.M., Scottsdale, Arizona time, on the earlier of
(x) the Stock Acquisition Date or (y) the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at the redemption
price of $.0001 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"Redemption Price").
(ii) In addition, a majority of 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 event described in clause (x), (y), or (z) of
Section 13(a) hereof, 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 shares of Common Stock are treated alike
and not involving an Acquiring 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 (z) 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.
48
(b) Immediately upon the date for redemption set forth (or determined
in the manner specified) 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 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.
Section 25. Notice of Certain Events. In case the Company at any time on or
after the Distribution Date shall propose (a) 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 (b) 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 (c) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), or (d) to effect
any consolidation or merger into or with, or to effect any sale or other
49
transfer (or to permit one or more of its subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to, any
other Person, or (e) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the 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 (a) or (b) 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.
In case any of the events set forth in Section 11(a)(ii) of this Agreement
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) hereof.
Section 26. 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:
50
Allied Waste Industries, Inc.
00000 Xxxxx Xxxxxxxx-Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Corporate 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:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Ms. Xxxxx Xxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date, the
Company may from time to time supplement or amend any provision of this
Agreement in any respect without the approval of any holders of certificates
representing Common Stock and the Rights. From and after the Distribution Date,
the Company may from time to time supplement or amend this Agreement without the
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
51
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
27, 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 Section 19 or Section 21 of 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 shares of Common Stock.
Section 28. Determination and Actions by the Board of Directors, etc.. 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 and whether any proposed amendment
adversely affects the interests of the holders of Right Certificates). For all
purposes of this Agreement, any calculation of the number of shares of Common
52
Stock or other securities 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. 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 Right Certificates and all other parties, and (y) not subject the
Board to any liability to the holders of the Right Certificates or holders of
shares of Common Stock.
Section 29. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the 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 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
53
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 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
54
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted - for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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: ALLIED WASTE INDUSTRIES, INC.
By
/s/ Xxxxxx X. Xxxx /s/ Xxxxxx X. Xxx Xxxxxxx
----------------------------------- ----------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxx Xxxxxxx
Title: Vice President, Legal Title: Chairman, President, and
and Corporate Secretary Chief Executive Officer
Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY
By
/s/ Xxxxx Xxxxxx /s/ Xxxxxxx X. Xxxxxx
----------------------------------- -----------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary Title: Vice President
55
Exhibit A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
ALLIED WASTE INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Xxxxxx X. Xxx Xxxxxxx, Chairman of the Board, President and Chief
Executive Officer, and Xxxxxx X. Xxxx, Vice President-Legal and Secretary, of
Allied Waste Industries, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Amended and Restated Certificate of Incorporation of the said Corporation and
Section 151(g) of the General Corporation Law of the State of Delaware, the said
Board of Directors on May 18, 2000 adopted the following resolution at a meeting
duly called and held:.
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Amended and
Restated Certificate of Incorporation and Section 151(g) of the General
Corporation Law of the State of Delaware, the Board of Directors hereby creates
a series of Preferred Stock of the Corporation and hereby states the designation
and number of shares, and fixes the relative rights, preferences, powers,
qualifications and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock," par value $.10
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 B Junior 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
56
Series B Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series B Junior Participating Preferred Stock, in
preference to the holders of shares of Common Stock, par value $0.01 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 last day of each of March, June, September and December in each year (or, in
each case, if not a date on which the Corporation is open for business, the next
succeeding business day) or such earlier date in any such month on which
dividends on the Common Stock are payable (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series B Junior 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, 10,000 times the
aggregate per share amount of all cash dividends, and 10,000 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 B Junior Participating Preferred Stock. In the event the
Corporation shall at any time after May 31, 2000 (the "Rights Declaration Date")
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series B Junior 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
B Junior 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 B Junior 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 B Junior Participating Preferred Stock from the Quarterly Dividend
57
Payment Date next preceding the date of issue of such shares of Series B Junior
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
B Junior 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 B Junior 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 B Junior 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 B Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series B Junior Participating Preferred Stock shall entitle the holder
thereof to 10,000 votes on all matters submitted to a vote of the stockholders
of the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series B Junior Participating Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares of
Series B Junior 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 stockholders of the Corporation.
(C) (i) If at any time dividends on any Series B Junior 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
58
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 B
Junior 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 Series B Junior 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 B Junior 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 stockholders, and thereafter at annual
meetings of stockholders, 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 B Junior 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 stockholder or stockholders 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 special meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the President, a Vice-President or the
Secretary of the Corporation. Notice of such meeting and of any annual
meeting at which holders of 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
59
called for a time not earlier than 20 days and not later than 60 days after
such order or request or in default of the calling of such meeting within
60 days after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less
than ten percent (10%) of the total number of shares of Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no
such special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of 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) 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 the 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 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.
(D) Except as set forth herein, holders of Series B Junior 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 B Junior Participating Preferred Stock as
60
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
B Junior 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 B Junior 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 B Junior
Participating Preferred Stock, except dividends paid ratably on the Series
B Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Junior
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 B Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series B Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series B Junior 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.
61
Section 5. Reacquired Shares. Any shares of Series B Junior 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 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Junior Participating Preferred Stock unless, prior thereto, the holders
of shares of Series B Junior Participating Preferred Stock shall have received
$10,000 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series B Liquidation Preference"). Following the payment of the full amount of
the Series B Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series B Junior 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 B Liquidation Preference by (ii) 10,000 (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 B Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series B
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series B Junior 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 B Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series B Junior 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 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
62
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 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series B Junior 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 10,000 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 B Junior 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 8. No Redemption. The shares of Series B Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series B Junior 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 10. Amendment. The Amended and 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 B Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority or more of
the outstanding shares of Series B Junior Participating Preferred Stock, voting
separately as a class.
63
Section 11. Fractional Shares. Series B Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series B Junior Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this day of May,
2000.
/s/ Xxxxxx X. Xxx Xxxxxxx
-----------------------------------
Xxxxxx X. Xxx Xxxxxxx
Chairman of the Board of Directors,
President and Chief Executive Officer
Attest:
/s/ Xxxxxx X Xxxx
--------------------------------------
Xxxxxx X. Xxxx
Vice President-Legal and Secretary
64
Exhibit B
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER MAY 31, 2010 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.0001 PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON
OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE AMENDED AND RESTATED RIGHTS AGREEMENT).
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE NULL
AND VOID.]*
Rights Certificate
Allied Waste 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 May 25, 2000 (the "Rights Agreement") between
Allied Waste Industries, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M. (Scottsdale, Arizona time) on May
31, 2010 at the principal office of the Rights Agent, or its successors as
Rights Agent, one ten-thousandths of a fully paid, nonassessable share of Series
B Junior Participating Preferred Stock (the "Preferred Stock") of the Company,
65
at a purchase price of $85 per one ten-thousandths 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 May 31, 2000, 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 Rights Certificates
66
for the number of whole Rights not exercised. If this Rights Certificate shall
be exercised in whole or in part in 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 $.0001 per Right.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one ten-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 of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or, to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
67
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of , 20 .
Attest: ALLIED WASTE INDUSTRIES, INC.
By
------------------------- -----------------------------
Name: Name:
Title: Title:
Countersigned:
[ ]
--------------------------------
Authorized Signature
68
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
---------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _____________________, 20__
------------------------------------
Signature
Signature Guaranteed:
69
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(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 an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _____________________, 20__ ____________________________________
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 Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
70
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights
Certificate other than pursuant to Section 11(a)(ii) of the
Rights Agreement.)
To ALLIED WASTE 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 balances, 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: __________________, 20__
------------------------------------
Signature
Signature Guaranteed:
71
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(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 an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: __________________, 20__
------------------------------------
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 Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
72
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 ALLIED WASTE 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 balances, 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: __________________, 20__
------------------------------------
Signature
Signature Guaranteed:
73
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(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 an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: __________________, 20__
------------------------------------
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 Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
74
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On May 18, 2000, the Board of Directors of Allied Waste Industries, Inc.
(the "Company") declared a dividend distribution of one Right for each
outstanding share of common stock, par value $0.01 per share (the "Common
Stock"), of the Company to stockholders of record at the close of business on
May 31, 2000 (the "Record Date") and a dividend distribution for each
outstanding share of Series A Senior Convertible Preferred Stock, par value $.10
per share, of the Company (the "Senior Preferred Stock"), equal to the number of
Rights which would have been received by the holder if he had converted such
share into Common Stock immediately prior to the Record Date, payable to
stockholders of record as of the Record Date. Except as set forth below, each
Right, when exercisable, entitles the registered holder to purchase from the
Company one ten-thousandth of a share of a series of preferred stock, designated
as Series B Junior Participating Preferred Stock, par value $.10 per share (the
"Preferred Stock"), at a price of $85 per one ten thousandth of a share (the
"Purchase Price), subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement (the "Rights Agreement") between
the Company and American Stock Transfer & Trust Company, as Rights Agent.
Until the earlier to occur of (i) a public announcement that, without the
prior consent of the Board of Directors of the Company, a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of stock of the Company
representing 15% or more of the voting power of all outstanding stock of the
Company generally entitled to vote for the election of directors ("Voting
Stock") (the "Stock Acquisition Date"), or (ii) ten business days (or such later
date as the Board may determine) 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 and related persons having beneficial
ownership of 15% or more of the voting power of all outstanding shares of Voting
Stock without the prior consent of the Board of Directors of the Company (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock or Senior Preferred Stock
certificates outstanding as of May 31, 2000, by such Common Stock or Senior
Preferred Stock certificate and no separate Rights Certificates will be
distributed. The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred with and only with Common Stock or Senior
Preferred Stock certificates. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Stock or Senior Preferred Stock
certificates issued after May 31, 2000, (or as soon thereafter as practicable)
75
upon transfer or new issuance of the Common Stock or Senior Preferred Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock or Senior Preferred
Stock outstanding as of May 31, 2000, will also constitute the transfer of the
Rights associated with the Common Stock or Senior Preferred Stock represented by
such certificate, even without such notation. 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.
Notwithstanding the foregoing, the stock ownership of the holders of the
Senior Preferred Stock, their affiliates and certain related parties shall not
result in their becoming an Acquiring Person if their stock ownership is in
compliance with the terms of their Shareholders Agreement with the Company.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on May 31, 2010, unless earlier redeemed by the Company as described
below.
In the event that any person becomes an Acquiring Person, each holder of a
Right generally 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 (or such other longer period set by the Board of
Directors) to receive upon exercise of the Right that number of units of one
ten-thousandths of a share of Preferred Stock (or, under certain circumstances,
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 exercise price of the Right (such right
being called the "Subscription Right"). Notwithstanding the foregoing, following
the occurrence of a Person becoming an Acquiring Person, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by the Acquiring Person or any affiliate or associate thereof
will be null and void.
In the event that, at any time following the Stock Acquisition Date, the
Company is 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 made so that each holder of
a Right (except a Right voided as set forth above) shall thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
(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 exercise price of the Right (such right being called the "Merger
Right"). The holder of a Right will continue to have the Merger Right whether or
not such holder exercises the Subscription Right.
76
The Purchase Price payable, the number of Rights and the number of units of
one ten-thousandths of a share of Preferred Stock or shares of the Common 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 and dividends payable in
Preferred Stock) 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 fractions of shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
The number of outstanding Rights associated with each share of Common Stock
and the voting and economic rights of each one ten-thousandths of a share of
Preferred Stock issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in 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 $.0001 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 Subscription Right is exercisable, the
Board of Directors 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 any person who was an
Acquiring Person) or it affiliates or associates. 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.
77
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 the greater of $10.00 and 10,000 times the dividend declared on each Common
Share. In the event of liquidation, the holders of Preferred Stock will receive
a preferred liquidation payment equal to the greater of $10,000 and 10,000 times
the payment made per Common Share. Each share of Preferred Stock will have
10,000 votes, voting together with the Common Shares. In the event of any
merger, consolidation or other transaction in which Common Shares are exchanged,
each share of Preferred Stock will be entitled to receive 10,000 times the
amount and type of consideration received per Common Share. 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 in integral multiples of one ten-thousandth
of a share 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 ten-thousandth
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, (i) prior to the Distribution Date in any
manner, and (ii) on or after the Distribution Date to cure any ambiguity, 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 Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
78
EXHIBIT 1
--------------------------------------------------------------------------------
ALLIED WASTE INDUSTRIES, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Rights Agent
----------------------------------------
Rights Agreement
Dated as of May 25, 2000
--------------------------------------------------------------------------------
79
Table of Contents
-----------------
Page
----
Section 1. Certain Definitions.......................................................................2
Section 2. Appointment of Rights Agent...............................................................6
Section 3. Issue of Rights Certificates..............................................................6
Section 4. Form of Rights Certificates...............................................................9
Section 5. Countersignature and Registration.........................................................10
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or
Stolen Rights Certificates.....................................................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............................12
Section 8. Cancellation and Destruction of Rights Certificates.......................................15
Section 9. Reservation and Availability of Preferred Stock...........................................16
Section 10. Preferred Stock Record Date..............................................................18
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights..............18
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 Covenant......................................................................35
Section 15. Fractional Rights and Fractional Shares..................................................36
Section 16. Rights of Action.........................................................................38
Section 17. Agreement of Rights Holders..............................................................39
Section 18. Rights Certificate Holder Not Deemed a Stockholder.......................................40
Section 19. Concerning the Rights Agent..............................................................40
Section 20. Merger or Consolidation or Change of Name of Rights Agent................................41
Section 21. Duties of Rights Agent...................................................................42
Section 22. Change of Rights Agent...................................................................46
Section 23. Issuance of New Rights Certificates......................................................47
Section 24. Redemption and Termination...............................................................48
Section 25. Notice of Certain Events.................................................................49
Section 26. Notices 50
Section 27. Supplements and Amendments...............................................................51
Section 28. Determination and Actions by the Board of Directors, etc.................................52
Section 29. Successors...............................................................................53
Section 30. Benefits of this Agreement...............................................................53
Section 31. Severability.............................................................................53
Section 32. Governing Law............................................................................53
Section 33. Counterparts.............................................................................54
Section 34. Descriptive Headings.....................................................................55
Exhibit A -- Form of Certificate of Designation
of Series B Junior Participating Preferred Stock
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
--------
* The portion of the legend in brackets shall be inserted only if applicable.
ii
