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RIGHTS AGREEMENT
RIGHTS AGREEMENT (this "Agreement") dated as of May 15, 1997, between
Veritas DGC Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company, as Rights
Agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on May 23, 1997 the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one Right
(hereinafter defined) for each share of Common Stock (as hereinafter defined)
outstanding at the close of business on June 12, 1997 (hereinafter referred to
as the "Record Date") and has authorized the issuance of one Right (as such
number may hereafter be adjusted as hereinafter set forth) in respect of each
share of Common Stock issued (on original issuance or out of treasury) after
the Record Date but prior to the earlier of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined), each Right initially
evidencing the right to purchase at the Purchase Price, one one-thousandth
(1/1,000th) of a share of Preferred Stock--Junior Participating Series A of the
Company (the "Preferred Stock"), having the powers, rights and preferences set
forth in the certificate of designation, attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Certain Definitions. The following terms, as used
herein, have the following meanings:
(a) "Acquiring Person" means any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding, other than
pursuant to a Qualifying Tender Offer; provided, however, that, an Acquiring
Person shall not include an (i) Exempt Person, or (ii) any Person, together
with all Affiliates and Associates of such Person, who or which would be an
Acquiring Person solely by reason of (A) being the Beneficial Owner of shares
of Common Stock of the Company, the Beneficial Ownership of which was acquired
by such Person pursuant to any action or transaction or series of related
actions or transactions approved by the Board of Directors before such Person
otherwise became an Acquiring Person, or (B) a reduction in the number of
issued and outstanding shares of Common Stock of the Company pursuant to a
transaction or a series of related transactions approved by the Board; and
provided further, that in the event that such Person described in this clause
(ii) does not become an Acquiring Person by reason of subclause (A) or (B) of
this clause (ii), such Person nonetheless shall become an Acquiring Person in
the event such Person thereafter acquires Beneficial Ownership of an additional
1% of the Common Stock of the Company, unless the acquisition of such
additional Common Stock would not result in such Person becoming an Acquiring
Person by reason of subclause (A) or (B) of this clause (ii). Notwithstanding
the foregoing, if the Board determines in good faith (but only if at the time
of such determination by the Board there are then in office not less than five
Continuing Directors and such action is approved by a majority of the
Continuing Directors then in office) that a Person who would otherwise be an
"Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a) has become
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such inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such Person would no longer
be an "Acquiring Person" as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed an "Acquiring Person"
for any purposes of this Agreement.
(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 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," and shall be deemed to have Beneficial
Ownership of, any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, beneficially
owns (as determined pursuant to Rule 13d-3 under the Exchange
Act as in effect on the date of this Agreement);
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has
(A) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time or the satisfaction of a condition, or
both) pursuant to any agreement, arrangement or
understanding (whether written or oral) or upon the
exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of or to
"beneficially own" securities tendered pursuant to a
tender or exchange offer made by or on behalf of such
Person or any of its Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange; or
(B) the right to vote, alone or in
concert with others, pursuant to any agreement,
arrangement or understanding (whether written or oral)
or otherwise; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of or to
"beneficially own" any security as a result of an
agreement, arrangement or understanding to vote such
security if such agreement, arrangement or
understanding (1) arises solely from a revocable proxy
or consent given in response to a public proxy or
consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
under the Exchange Act and (2) is not also then
reportable 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 its Affiliates or
Associates has any agreement, arrangement or understanding
(whether written or oral) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as
described in subparagraph (ii)(B) immediately above) or
disposing
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of any such securities. Despite the foregoing, for purposes
of determining Beneficial Ownership of securities under this
Agreement, officers and directors of the Company solely by
reason of their status as such shall not constitute a group
(notwithstanding that they may be Associates of one another or
may be deemed to constitute a group for purposes of Section
13(d) of the Exchange Act) and shall not be deemed to own
shares owned by another officer or director of the Company.
Further, nothing contained in this definition shall cause a
Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired in a bona fide
firm commitment underwriting pursuant to an underwriting
agreement with the Company.
(d) "Business Day" means any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
(e) "Capital Stock" when used with reference to the Company (or
without express reference to another Person) shall mean Common Stock and
Exchangeable Shares.
(f) "Close of business" on any given date means 5:00 p.m., New
York City time, on such date; provided, however, that if such date is not a
Business Day "close of business" means 5:00 p.m., New York City time, on the
next succeeding Business Day.
(g) "Common Stock" when used with reference to the Company (or
without express reference to another Person) shall mean the Common Stock
(presently $0.01 par value per share) of the Company. "Common Stock" when used
with reference to any Person other than the Company which shall be organized in
corporate form shall mean the capital stock or other equity security with the
greatest voting power of such Person. "Common Stock" when used with reference
to any Person other than the Company which shall not be organized in corporate
form shall mean units of beneficial interest which shall represent the right to
participate in profits, losses, deductions and credits of such Person and which
shall be entitled to exercise the greatest voting power of such Person.
(h) "Continuing Director" shall mean any member of the Board of
Directors of the Company, while such person is a member of the Board, who is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
or a representative or nominee of an Acquiring Person or of any such Affiliate
or Associate, and who either (i) was a member of the Board prior to the time
that any Person became an Acquiring Person (other than pursuant to a Qualifying
Tender Offer) or (ii) subsequently became a member of the Board, and whose
nomination for election or election to the Board was recommended or approved by
the Board when there are then in office at least five Continuing Directors and
such nomination for election or election was recommended or approved by a
majority of the Continuing Directors then on the Board.
(i) "Distribution Date" means the earlier of: (i) the close of
business on the tenth day after the Stock Acquisition Date; or (ii) the close
of business on the tenth Business Day (or such later date as may be determined
by action of the Board) after the date of the commencement by any Person (other
than an Exempt Person) of, or the first public announcement of the intent of
any Person (other than an Exempt Person) to commence a tender offer or exchange
offer upon the successful
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completion of which such Person, together with its Affiliates and Associates,
would be the Beneficial Owner of 15% or more of the then outstanding Common
Stock of the Company, regardless of whether any shares are actually purchased
pursuant to such offer. The Distribution Date shall not be deemed to have been
extended by Board action pursuant to the parenthetical phrase of clause (ii) of
this definition unless at the time of such determination by the Board there are
then in office not less than five Continuing Directors and the determination to
extend the Distribution Date is also approved by a majority of the Continuing
Directors then in office.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Exchangeable Shares" means the Exchangeable Shares of Veritas
Energy Services, Inc., an Alberta corporation, all of whose common stock is at
the date hereof owned by the Company ("VES").
(l) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company or (iii) any employee benefit plan or employee stock
plan of the Company or any Subsidiary of the Company, or any trust or other
entity organized, appointed, established, or holding Common Stock for or
pursuant to the terms of any such plan.
(m) "Expiration Date" means the earlier of (i) the Final
Expiration Date and (ii) the time at which all Rights are redeemed as provided
in Section 23 or exchanged as provided in Section 24.
(n) "Final Expiration Date" means the close of business on May 15,
2007.
(o) "Person" means any individual, firm, corporation, partnership
or other entity.
(p) "Preferred Stock" means the Preferred Stock--Junior
Participating Series A, par value $0.01 per share, of the Company, having the
terms set forth in the form of certificate of designation attached hereto as
Exhibit A. Any reference in this Agreement to Preferred Stock shall be deemed
to include any authorized fraction of a share of Preferred Stock, unless the
context otherwise requires.
(q) "Purchase Price" with respect to each Right shall mean $100,
as such amount may from time to time be adjusted as provided herein, and shall
be payable in lawful money of the United States of America. All references
herein to the Purchase Price shall mean the Purchase Price as in effect at the
time in question.
(r) "Qualifying Tender Offer" shall mean a tender or exchange
offer for all outstanding shares of Common Stock of the Company determined by a
majority of the Board (provided that at the time of such approval of the Board
there are then in office not less than five Continuing Directors and such offer
is approved by a majority of the Continuing Directors then in office), after
receiving advice from one or more investment banking firms to be (i) at a price
which is fair to the Company's shareholders (taking into account all factors
which members of the Board deem relevant including, without limitation, the
potential long-term value of the Company and the prices which could reasonably
be attained if the Company or its assets were sold on an orderly basis designed
to realize maximum value, and (ii) otherwise in the best interests of the
Company and its shareholders.
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(s) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(t) "Right" shall mean the right to purchase one one-thousandth
(1/1,000th) of a share of Preferred Stock--Junior Participating Series A, par
value $.01 per share, of the Company, or other securities or property, upon the
terms and subject to the conditions herein set forth.
(u) "Right Certificate" shall have the meaning set forth in
Section 3(c) hereof.
(v) "Section 13 Event" means any event described in clauses (x),
(y) or (z) of Section 13(a).
(w) "Securities Act" means the Securities Act of 1933, as amended.
(x) "Stock Acquisition Date" means the date of the first public
announcement (which shall include, without limitation, the filing of a report
on Schedule 13D under the Exchange Act or any comparable or successor report)
by the Company or an Acquiring Person indicating that an Acquiring Person has
become such.
(y) "Subsidiary" of any Person means any other Person of which
securities or other ownership interests having ordinary voting power, in the
absence of contingencies, to elect a majority of the board of directors or
other Persons performing similar functions are at the time beneficially owned,
directly or indirectly, owned by such first Person.
(z) "Trading Day" means 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.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable. If the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
Section 3. Issuance of Rights and Right Certificates. (a) Prior
to the Distribution Date (i) the Rights will be evidenced by the certificates
for the Capital Stock (which certificates shall be deemed also to be Right
Certificates (as hereinafter defined)) and not by separate Right Certificates,
and the registered holders of the Capital Stock shall be deemed to be the
registered holders of the associated Rights, and (ii) each Right shall be
transferable only simultaneously and together with the transfer of a share of
Capital Stock (subject to adjustment as hereinafter provided). As soon as
practicable after the Record Date, the Company will send a summary of the
rights substantially in the form of Exhibit B-1 and B-2 hereto, by postage
prepaid mail, to each record holder of the Capital Stock as of the close of
business on the Record Date at the address of such holder shown on the records
of the Company or VES, as the case may be. Until the Distribution Date (or, if
earlier, the Expiration Date or Final Expiration Date), the surrender for
transfer of any certificate for Capital
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Stock shall constitute the surrender for transfer of the Right or Rights
associated with the Capital Stock evidenced thereby, whether or not accompanied
by a copy of the Summary of Rights.
(b) One Right shall be issued in respect of (i) each share of
Common Stock outstanding as of the Record Date, (ii) each additional share of
Common Stock that becomes outstanding (whether by original issuance or out of
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date, (iii) each additional share of Common Stock that
is issued (whether by original issuance or from treasury) after the
Distribution Date but prior to the Expiration Date with Rights as provided in
Section 22 and (iv) each Exchangeable Share outstanding as of the Record Date
(with such Rights in respect of Exchangeable Shares deemed to be issued to
Veritas Energy Services, Inc. for the sole purpose of simultaneously
transferring and distributing the same to holders of Exchangeable Shares in the
same manner, on the same basis, at the same time and with the same effect as
though such Exchangeable Shares (and the certificates evidencing same) were
shares of Common Stock. Certificates for Common Stock and Exchangeable Shares
(including, without limitation, certificates issued upon original issuance,
disposition from treasury or transfer or exchange of Common Stock or
Exchangeable Shares) after the Record Date but prior to the earliest of the
Distribution Date or the Expiration Date (or, in certain circumstances as
provided in Section 22 hereof, after the Distribution Date) shall have
impressed, printed, written or stamped thereon or otherwise affixed thereto the
following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Veritas DGC
Inc. (the "Company") and ChaseMellon Shareholder Services, L.L.C. dated
as of May 15, 1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may be exchanged, may expire, or may be evidenced by separate
certificates and no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement without charge promptly after receipt of a written
request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or Beneficially Owned by Acquiring Persons
or their Affiliates or Associates (as such terms are defined in the
Rights Agreement) or any subsequent holder of such Rights shall be null
and void and may not be transferred to any Person.
(c) As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will send if so
requested by the Company), by first class mail, postage prepaid, to each record
holder of the Capital Stock as of the close of business on the Distribution
Date, as shown by the records of the Company, at the address of such holder
shown on such records, a certificate in the form provided by Section 4 hereof
(a "Right Certificate"), evidencing one right (subject to adjustment as
provided herein) for each share of Capital Stock so held. As of and after the
Distribution Date, the Rights shall be evidenced solely by Right Certificates
and may be transferred by the transfer of the Right Certificate as permitted
hereby, separately and apart from any transfer of one or more shares of Capital
Stock.
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Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of assignment, election to purchase and
certificates to be printed on the reverse thereof), when, as and if issued
shall be substantially in the form of Exhibit C 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, rule or regulation or with any rule or regulation of any stock
exchange on which the Capital Stock Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Sections 7, 11 and 22, the
Right Certificates, evidencing Rights whenever issued, (i) shall be dated as of
the date of issuance of the Rights they represent and (ii) on their face shall
entitle the holders thereof to purchase such number of shares (including
fractional shares which are integral multiples of one-thousandth (1/1,000th) of
a share) of Preferred Stock as shall be set forth therein at the price payable
upon exercise of a Right provided by Section 7(b) hereof (the "Purchase
Price"), but the number and type of such securities and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Right Certificate representing Rights beneficially owned
by any Person referred to in clauses (i), (ii) and (iii) of Section 7(e) shall
(to the extent feasible and reasonably identifiable as such) contain the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by any Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) or one of certain transferees thereof.
Accordingly, this Right Certificate and the Rights represented hereby
may become or may have become null and void in the circumstances
specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, Chief Executive Officer, 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,
an Assistant Secretary or a Vice President (provided that such Vice President
shall not have also executed the Rights Certificates), either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid or obligatory for any purpose unless so
countersigned. In case any officer of the Company whose manual or facsimile
signature is affixed to the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the Person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed
on behalf of the Company by any Person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of this Rights
Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the place
for surrender of Right Certificates upon exercise, transfer or exchange, books
for registration and transfer of the Right Certificates issued hereunder.
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Such books shall show with respect to each Right Certificate the name and
address of the holder, the number of Rights evidenced on its face, the
certificate number and the date.
Section 6. Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates; Uncertificated Rights.
(a) Subject to the provisions of Sections 4(b), 7(e), 14 and 24, at any time
after the Distribution Date and prior to the Expiration Date any Right
Certificate or Certificates may be transferred, split-up, combined or exchanged
for another Right Certificate or Certificates representing, in the aggregate,
the same number of Rights as the Right Certificate or Right Certificates
surrendered then represented. Any registered holder desiring to transfer,
split-up, combine or exchange any Right Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Certificates to be transferred, split-up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate or Certificates until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate or Certificates and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections
4(b), 7(e), 14 and 24, countersign and deliver to the person entitled thereto a
Right Certificate or 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 any Right Certificate or Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Rights Agent will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company and
the Rights Agent may amend this Rights Agreement to provide for uncertificated
Rights in addition to or in place of Rights evidenced by Right Certificates.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) The Rights shall not be exercisable until after the Distribution
Date. Subject to Section 7(e) and except as otherwise provided herein, each
Right shall entitle the registered holder thereof, upon exercise thereof as
provided herein, to purchase for the Purchase Price, at any time after the
Distribution Date and prior to the Expiration Date, one one- thousandth
(1/1,000th) of a share of Preferred Stock. The Purchase Price and the number
of shares of Preferred Stock or other securities to be acquired upon exercise
of a Right shall be subject to adjustment as herein provided, including
Sections 11, 23(a) and 24.
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(b) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as provided herein) in whole or in part,
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the principle
office or offices of the Rights Agent designated for that purpose, together
with payment of the aggregate Purchase Price for each one one-thousandth
(1/1,000th) of a share of Preferred Stock as to which the Rights are exercised
at or prior to the Expiration Date.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the completed form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the number of shares of
Preferred Stock to be purchased together with an amount equal to any applicable
transfer tax, in lawful money of the United States of America, in cash or by
certified check or money order payable to the order of the Company, the Rights
Agent shall thereupon (i) either (A) promptly requisition from any transfer
agent of the Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests or (B) if the Company shall have elected to
deposit the Preferred Stock with a depositary agent under a depositary
arrangement, promptly requisition from the depositary agent depositary receipts
representing the number of one one- thousandth (1/1,000th) of a share of
Preferred Stock to be purchased (in which case certificates for the Preferred
Stock to be 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 all such requests, (ii) when appropriate, promptly
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
exercises less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to the registered holder of such Right
Certificate or his duly authorized assigns, subject to the provisions of
Section 14.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the time when any person first becomes an Acquiring Person, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or, (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights, or (B) a
transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose of effect
the avoidance of this Section 7(e) shall become null and void without any
further action, and no holder of such Rights (including any purported
transferee or subsequent holder) shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or otherwise.
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The Company shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) 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 and Associates or any transferee of any of them 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 of Rights upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not
to exceed 180 calendar days after the Distribution Date, the exercisability of
the Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Stock
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such
time as the suspension is no longer in effect. Notwithstanding any provision
herein to the contrary, the Rights shall not be exercisable in any jurisdiction
if the requisite qualification under the blue sky or securities laws of such
jurisdiction shall not have been obtained, the exercise of the Rights shall not
be permitted under applicable law, or (if required by law) a registration
statement in respect of such securities shall not have been declared effective.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split-up, combination or exchange shall, and any Right Certificate representing
Rights that have become null and void and nontransferable pursuant to Section
7(e) surrendered or presented for any purpose shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered or presented to the Rights
Agent, shall be canceled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all canceled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock or out
of 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.
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(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance in accordance with this Rights Agreement to be
listed, upon official notice of issuance, upon the principal national
securities exchange, if any, upon which the Common Stock is listed or, if the
principal market for the Common Stock is not on any national securities
exchange, to be eligible for quotation in the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or any successor
thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares. So long as the depositary shares issuable and
deliverable upon the exercise of Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all Depositary Shares
reserved for such issuance to be listed on such exchange upon official notice
of issuance upon such exercise.
(d) As soon as practicable after a person becomes an Acquiring
Person (provided that the Company shall not have elected to make the exchange
permitted by Section 24 for all outstanding Rights) the Company covenants and
agrees to use its best efforts to: (i) prepare and file a registration
statement under the Securities 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 Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the Expiration Date. The Company will also take
such action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any shares of Preferred Stock issued or deliverable upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or in respect of the issuance or delivery
of certificates for the Preferred Stock or other securities, as the case may
be, in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or exchange or to issue
or deliver any certificates for Preferred Stock or other securities, as the
case may be, upon the exercise or exchange of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person (other than
the Company) in whose name any Certificate for Preferred Stock is issued upon
the exercise or exchange of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Stock represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes or governmental charges) was made; provided,
however, that if the date of such
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surrender and payment is a date upon which transfer books of the Company
relating to the Preferred Stock are closed, such Person shall be deemed to have
become the record holder of such Preferred Stock on, and such certificate shall
be dated, the next succeeding Business Day on which transfer books of the
Company relating to the Preferred Stocks are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to the
securities for which the Rights shall be exercisable, including, 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
Securities or Number of Rights. The Purchase Price, the number and kind of
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a)(i) To preserve the actual or potential economic value of the
Rights, if at any time after the date of this Rights Agreement there shall be
any change in the Common Stock or the Preferred Stock, whether by reason of
stock dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Stock or Preferred Stock, as the case
may be (other than distribution of the Rights or regular cash dividends) or
otherwise, then, in each such event the Board shall make such appropriate
adjustments in the number of shares of Preferred Stock (or the number and kind
of other securities) issuable upon exercise of each Right, the Purchase Price
and Redemption Price in effect at such time and the number of Rights
outstanding at such time (including the number of Rights or fractional Rights
associated with each share of Common Stock) such that following such adjustment
such event shall not have had the effect of reducing or limiting the benefits
the holders of the Rights would have had absent such event. The adjustments
provided for in this Section 11(a)(i) shall be made successively whenever such
an adjustment is required by this Section 11(a)(i). If an event occurs which
will require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24, upon any Person becoming an Acquiring
Person, proper provision shall promptly be made so that each holder of a Right,
except as otherwise provided below and in Section 7(e), shall thereafter have
the right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of one
one-thousandths (1/1,000ths) of a share of Preferred Stock (such number of
shares being referred to herein as the "Adjustment Shares") as shall be equal
to the result obtained by (x) multiplying the then current Purchase Price by
the number of one one-thousandths (1/1,000ths) of a share of Preferred Stock
for which a Right was exercisable immediately prior to a Person becoming an
Acquiring Person and (y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by 50% of the current market
price (determined pursuant to Section 11(b)(i)) per share of Common Stock on
the date on which a Person becomes an Acquiring Person; provided, however, that
if the transaction that would otherwise give rise to the foregoing adjustment
is also subject to the provisions of Section 13, then only the provisions of
Section 13 shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii).
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(iii) In the event that there shall not be sufficient shares of
Preferred Stock issued but not outstanding or authorized but unissued to permit
the exercise of Rights in accordance with the foregoing subparagraph (ii), the
Company covenants and agrees that it will take all such action as may be
necessary to authorize additional shares of Preferred Stock for issuance upon
the exercise of Rights; provided, however, that if the Company is unable to
cause the authorization of additional shares of Preferred Stock, then the
Company shall, or in lieu of seeking any such authorization, the Company may,
to the extent necessary and permitted by applicable law and any agreements,
indentures or instruments in effect prior to the Distribution Date to which it
is a party, (A) upon surrender of a Right, pay cash equal to the Purchase Price
in lieu of issuing shares of Preferred Stock and requiring payment therefor,
(B) upon due exercise of a Right and payment of the Purchase Price for each
share of Preferred Stock as to which such Right is exercised, issue equity
securities having a value equal to the value of the shares of Preferred Stock
which otherwise would have been issuable pursuant to the foregoing subparagraph
(ii), which value shall be determined by an investment banking firm selected by
the Board, or (C) upon due exercise of a Right and payment of the Purchase
Price for each share of Preferred Stock as to which such Right is exercised,
distribute Preferred Stock, Common Stock, other equity securities, cash or debt
securities (or any combination thereof) having an aggregate value equal to the
value of the shares of Preferred Stock which otherwise would have been issuable
pursuant to the foregoing subparagraph (ii), which value shall be determined by
an investment banking firm selected by the Board. To the extent that any legal
or contractual restrictions (pursuant to agreements or instruments in effect
prior to the Distribution Date to which it is party) prevent the Company from
paying the full amount payable in accordance with the foregoing sentence, the
Company shall pay to holders of the Rights as to which such payments are being
made all amounts which are not then restricted on a pro rata basis as such
payments become permissible under such legal or contractual restrictions until
such payments have been paid in full.
(b)(i) For the purpose of any computation hereunder, 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 immediately prior to such date; provided, however,
that if the current market price per share 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 exercisable for or convertible into shares of
such Common Stock (other than the Rights), or (B) any subdivision, combination
or reclassification of such Common Stock, and prior to the expiration of the 30
Trading Day period, as set forth above, 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 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 or admitted to trading 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 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
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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 in good faith by the Board of Directors of the Company shall be
used. If the Common Stock is not publicly held or not so listed or traded, the
"current market price" per share means the fair value per share as determined
in good faith by the Board of Directors of the Company, or, if at the time of
such determination there is an Acquiring Person, by a majority of the
Continuing Directors then in office, or if there are no Continuing Directors,
by an investment banking firm selected by the Board of Directors, which
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current market
price" of the Preferred Stock shall be determined in the same manner as set
forth above for the Common Stock in Section 11(b)(i). If the current market
price for the Preferred Stock cannot be determined in the manner provided
above, the "current market price" of the Preferred Stock shall be conclusively
deemed to be the current market price of the Common Stock (appropriately
adjusted to reflect any stock split, stock dividend, or similar transaction
occurring after the date hereof), multiplied by one thousand. For the purpose
of any computation hereunder, the value of any securities or assets other than
the Preferred Stock or Common Stock of the Company shall be the fair value as
determined in good faith by the Board of Directors of the Company, and, if at
the time of such determination there is an Acquiring Person, by a majority of
the Continuing Directors then in office, or, if there are no Continuing
Directors, by an investment banking firm selected by the Board of Directors,
which determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(c) Except as hereinafter provided, 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(c) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest one one-hundred thousandth (1/100,000th) of a share of Preferred
Stock. Notwithstanding the first sentence of this Section 11(c), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) one year from the date of the transaction which mandates such adjustment
or (ii) the Expiration Date.
(d) If, as a result of an adjustment made pursuant to Section
11(a), the holder of any Right thereafter exercised shall become entitled to
receive any securities other than shares of Preferred Stock, thereafter the
number of such securities 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 of Section 11(a) through (c),
inclusive and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Stock shall apply, as nearly as reasonably may be, on like terms
to any such other securities.
(e) All Rights originally issued by the Company subsequent to any
adjustment made to the number of shares of Preferred Stock or other securities
relating to a right shall evidence the right
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to purchase, for the Purchase Price, the adjusted number and kind of securities
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(f) Irrespective of any adjustment or change in the Purchase Price
or the number of shares of Preferred Stock or number or kind of other
securities issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the terms which was
expressed in the initial Right Certificates issued hereunder.
(g) Before taking any action that would cause an adjustment
reducing the Purchase Price per whole share of Preferred Stock upon exercise
below the then par value, if any, of the shares of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Preferred
Stock at such adjusted Purchase Price.
(h) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of shares
of Preferred Stock (or other securities) issuable upon such exercise over and
above the number of shares of Preferred Stock (or other securities) issuable
before giving effect 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 or securities
upon the occurrence of the event requiring such adjustment.
(i) The Company covenants and agrees that it will not at any time
after the Distribution Date (i) consolidate with, (ii) merge with or into, or
(iii) sell or otherwise transfer (and/or permit any of its Subsidiaries to sell
or otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries taken as a whole, to any other Person
or Persons if (x) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or
securities outstanding or any agreements or arrangements in effect which would
substantially 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 a Person who
constitutes, or would constitute, the "Principal Party" for the purposes of
Section 13 shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(j) The Company covenants and agrees that after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
take (or permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13, 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
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holder of a Right Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in accordance with
Section 26. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) If, following the Distribution Date, directly or
indirectly,
(x) the Company shall consolidate with, merge into, or
otherwise combine with, any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(i)), and the
Company shall not be the continuing or surviving corporation of such
consolidation, merger or combination,
(y) any Person (other than a Subsidiary of the Company in
a transaction that complies with Section 11(i)) shall merge into, or
otherwise combine with, the Company, and the Company shall be the
continuing or surviving corporation of such merger or combination and,
in connection with such merger or combination, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged
for other stock or securities of the Company or any other Person, cash
or any other property, or
(z) the Company and/or one or more of its Subsidiaries
shall sell or otherwise transfer, in one transaction or a series of
related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than to the
Company or any Subsidiary in any transaction that complies with Section
11(i)), then, and in each such case, proper provision shall be made so
that (i) each holder of a Right, except as provided in Section 7(e),
shall thereafter have the right to receive, upon exercise thereof at
the Purchase Price, in accordance with the terms of this Agreement,
such number of duly authorized, validly issued, fully paid and
nonassessable shares of freely tradeable Common Stock of the Principal
Party (as hereinafter defined), not subject to any rights of call or
first refusal, liens, encumbrances or other claims, as shall be equal
to the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-thousandth (1/1,000th) of a share of
Preferred Stock for which a Right is exercisable immediately prior to
the first occurrence of any Section 13 Event (or, if a person has
become an Acquiring Person prior to the first occurrence of any Section
13 Event by multiplying the number of such one-thousandths of a share
of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Person becoming an Acquiring Person by the
Purchase Price in effect immediately prior to such first occurrence)
and (B) dividing that product (which, following the first occurrence of
any Section 13 Event shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of
the current market price (determined pursuant to Section 11(b)(i)) per
share of the Common Stock of such Principal Party on the date of
consummation of such consolidation, merger, combination sale or
transfer; (ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, combination,
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 shall apply only to such
Principal Party following the first occurrence of a Section 13 Event;
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and (iv) such Principal Party shall take such steps (including the
authorization and reservation of a sufficient number of shares of its
Common Stock to permit exercise of all outstanding Rights in accordance
with the provisions of Section 9 applicable to the reservation of
Preferred Stock in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to the shares of its Common Stock thereafter deliverable upon
the exercise of the Rights. The provisions of this Section 13 shall
apply similarly to successive mergers or consolidations or sales or
other transfers.
(b) "Principal Party" means:
(i) in the case of any transaction described in
clauses (x) or (y) of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of
the Company are converted in such merger, consolidation or
combination, and if no securities are so issued, the person
that is the other party to such merger, consolidation or
combination; and
(ii) in the case of any transaction described in
clause (z) of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (A) if the Common
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 of another Person the Common
Stock of which is and has been so registered, "Principal
Party" shall refer to such other Person; and (B) in case such
Person is a Subsidiary, directly or indirectly, of more than
one Person, 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.
(c) The Company shall not consummate any such consolidation,
merger, combination, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which are not
outstanding or otherwise reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
Section 13(a) and (b) and providing that, as soon as practicable after the date
of any consolidation, merger, combination, sale or transfer mentioned in
Section 13(a), the Principal Party will:
(i) prepare and file a registration statement
under the Securities Act with respect to the securities
purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration
statement (A) to become effective as soon as practicable after
such filing and (B) to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act)
until the Expiration Date; and
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(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, combinations, sales or other transfers. If any Section 13
Event shall occur at any time after a Person becomes an Acquiring Person, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired shares of Capital Stock pursuant to a Qualifying
Tender Offer (or a wholly owned Subsidiary of any such Person or Persons), (ii)
the price per share of Capital Stock offered in such transaction is not less
than the price per share of Common Stock paid to all holders of shares of
Capital Stock whose shares were purchased pursuant to such Qualifying Tender
Offer, and (iii) the form of such consideration being offered to the remaining
holders of shares of Capital Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such Qualifying Tender Offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company may, but shall not be required to, issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(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 or admitted to trading on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price, or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the
Rights, the current market value of the Rights on such date shall be as
determined in good faith by the Board of Directors of the Company.
(b) The Company may, but shall not be required to, issue fractions
of shares of Preferred Stock (other than fractions which are integral multiples
of one one-thousandth of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
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Preferred Stock (other than fractions which are integral multiples of one
one-thousandth (1/1,000th) of a share of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth (1/1,000th) of a share of Preferred Stock, the Company may, at
its election, issue depositary receipts evidencing fractions of shares pursuant
to an appropriate agreement between the Company and a depositary selected by
it, provided that such agreement shall provide that the holders of such
depositary receipts shall have all of the rights, privileges and preferences to
which they would be entitled as owners of the Preferred Stock. With respect to
fractional shares that are not integral multiples of one one-thousandth
(1/1,000th) of a share, if the Company does not issue such fractional shares or
depositary receipts in lieu thereof, there shall be paid to the holders of
record of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the value of one
one-thousandth of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-thousandth of a share of Preferred
Stock shall be the closing price of a share of Common Stock (as determined
pursuant to Section 11(b)(i)) for the Trading Day immediately prior to the date
of such exercise.
(c) Following any exchange pursuant to Section 24, the Company
shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of fractional shares of Common Stock, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exchanged
as herein provided an amount in cash equal to the same fraction of the current
market value of one share of Common Stock. For purposes of this Section 14(c),
the current market value of one share of Common Stock shall be the closing
price of one share of Common Stock (as determined pursuant to Section 11(b)(i))
for the Trading Day immediately prior to the date of such exercise or exchange.
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Capital Stock); and any registered holder of any Right Certificate (or, prior
to the Distribution Date, of the Capital Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Capital 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 Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of, any Person subject to this
Agreement. Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
Section 16. Agreement of Right Holders. Every holder of a Right
by accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Capital Stock;
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(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the
Rights Agent may deem and treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Capital Stock certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Capital 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),
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 other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned, and/or to comply with such statute, rule or regulation, as soon as
possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred 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 Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company
including, without limitation, 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), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other disbursements
incurred in the execution or administration of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the administration of this Agreement or the exercise or
performance of its duties hereunder, including the costs and expenses of
defending against any claim of liability. The Rights Agent shall promptly
notify the Company, by letter or by facsimile confirmed by letter, of the
assertion of any action, proceeding, suit or claim against the Rights Agent,
promptly after the Rights
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Agent shall have notice of any such assertion of an action, proceeding, suit or
claim. The Company shall be entitled to participate at its own expense in the
defense of any such action, proceeding, suit or claim, and, if the Company so
elects, the Company shall assume the defense of any such action, proceeding,
suit or claim. In the event that the Company assumes such defense, the Company
shall not thereafter be liable for the fees and expenses of any additional
counsel retained by the Rights Agent, so long as the Company shall retain
counsel satisfactory to the Rights Agent, in the exercise of its reasonable
judgment, to defend such action, proceeding, suit or claim. The Rights Agent
agrees not to settle any litigation in connection with any action, proceeding,
suit or claim with respect to which it may seek indemnification from the
Company without the prior written consent of the Company.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with the administration of this Agreement or the exercise or
performance of its duties hereunder in reliance upon any Right Certificate or
certificate for Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, instruction, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. (a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21. In
case at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
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Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any "Acquiring Person" and the
determination of "current market price") be proved or established by the
Company prior to taking, suffering or omitting to take 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 Board, the Chief
Executive Officer, the President or any Vice President and by the Treasurer or
any Assistant Treasurer or 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, suffered or omitted in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e)) or any adjustment
in the terms of the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 11, 13, 23, or 24, or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to authorization or reservation of any
shares of Capital Stock or Preferred Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Capital Stock
or Preferred Stock will, when issued, be duly authorized, validly 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
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and assurances as may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President or the Secretary or any Assistant Secretary or the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken, suffered or omitted to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the 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
Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company or to any holders of Rights
resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof.
(j) If, with respect to any Right 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 cases may be, has either not
been completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Capital Stock and Preferred Stock by registered or
certified mail, and, subsequent to the Distribution Date, to the holders of the
Right Certificates by 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 Capital Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Rights Certificates
by 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 Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized
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and doing business under the laws of the United States or of any state of the
United States, in good standing, having an office in the city of New York,
which is authorized under such laws to exercise stock transfer or corporate
trust powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a
corporation described in clause (a) of this sentence; provided, however, that
the principal transfer agent for the Common Stock of the Company shall in any
event be qualified to be the Rights Agent. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and, subsequent to the Distribution Date, mail a notice
thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, or any defect
therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Capital Stock following the Distribution
Date and prior to the Expiration Date, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Right Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
Right Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption. (a) The Board of Directors of the Company
may, at its option, at any time prior to the earlier of (i) the close of
business on the tenth day after the Stock Acquisition Date (or such later date
as the Board may determine with the concurrence of a majority of the Continuing
Directors then in office prior to such time as the Rights are not redeemable)
and (ii) the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.001 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); provided, however, that
during the 180 day period commencing when any Person becomes an Acquiring
Person, any redemption of the Rights shall be effective only if there are at
least five Continuing Directors then in office, and such redemption shall have
been approved by the Board of Directors and by a majority of such Continuing
Directors.
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Notwithstanding anything in this Agreement to the contrary, the Rights shall
not be exercisable after a Person has become an Acquiring Person until such
time as the Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. The Company shall promptly thereafter
give notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common 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. Neither the Company nor any of its Affiliates
or Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in Section 23 or 24, and
other than in connection with the purchase, acquisition or redemption of shares
of Common Stock prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company
may, at its option, at any time after any Person becomes an Acquiring Person,
mandatorily exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to Section 7(e))
for shares of Common Stock at an exchange ratio of one share of Common Stock
per Right, appropriately adjusted to reflect any stock split, stock dividend,
or similar transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"); provided, however, that
during the 180 day period commencing when any Person becomes an Acquiring
Person, any exchange of the Rights shall be effective only if there are at
least five Continuing Directors then in office, and such exchange shall have
been approved by the Board of Directors and by a majority of the such
Continuing Directors. If the Board of Directors of the Company elects to
exchange all the Rights for Common Stock pursuant to this Section 24 prior to
the physical distribution of the Rights Certificates, the Corporation may
distribute the Common Stock issuable in the exchange in lieu of distributing
Right Certificates, in which case for purposes of this Rights Agreement holders
of Rights shall be deemed to have simultaneously received and surrendered for
exchange Right Certificates on the date of such distribution. Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any of its
Subsidiaries, any employee benefit plan of the Company or any of its
Subsidiaries, or any entity holding shares of Common Stock for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the shares of
Common Stock then outstanding.
(b) Any action of the Board of Directors of the Company ordering
the exchange of any Rights pursuant to Section 24(a) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
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exchange. The Company shall promptly give notice of such exchange to the
Rights Agent and the holders of the Rights to be exchanged by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Shares of Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to Section 7(e) hereof) held
by each holder of Rights.
Section 25. Notice of Proposed Actions. (a) In case the Company
shall propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Common Stock or to make any
other distribution to the holders of Common Stock (other than a regular
periodic cash dividend out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of its Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or shares of
stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock), or (iv)
to effect any consolidation or merger into or with any other Person, or to
effect and/or, to permit one or more of its Subsidiaries to effect any sale or
other transfer, in one transaction or a series of related 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 Persons, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right Certificate, to the extent
feasible and in accordance with Section 26, a notice of such proposed action,
which shall specify the record date for the purposes of such dividend or
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 Common
Stock, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 20 days
prior to the record date for determining holders of the Common 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 Common Stock, whichever shall be the
earlier. The failure to give notice required by this Section or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the vote upon any such action.
(b) In case any Person becomes an Acquiring Person (except as a
result of a Qualifying Tender Offer) then, in any such case, the Company shall
as soon as practicable thereafter give to each holder of a Right Certificate,
in accordance with Section 26, 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).
(c) Notwithstanding anything in this Agreement to the contrary,
prior to the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given to such holders.
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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 Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Veritas DGC Inc.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior
to the Distribution Date, to the holder of any certificate representing shares
of Capital Stock) shall be sufficiently given or made if sent by 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 and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of the Rights. From and after the Distribution Date, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order
(a) to cure any ambiguity, (b) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(c) to shorten or lengthen any time period hereunder or (d) to change or
supplement the provisions hereof in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). Notwithstanding the foregoing,
(i) after any Person has become an Acquiring Person, any supplement or
amendment shall be effective only if there are at least five Continuing
Directors then in office, and such supplement or amendment shall have been
approved by a majority of such Continuing Directors, and (ii) no supplement or
amendment pursuant to clause (c) may lengthen (x) a time period relating to
when the Rights may be redeemed at such time as the Rights are not then
redeemable or (y) 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, the Rights Agent
shall execute such supplement or amendment. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Capital Stock.
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Section 28. 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 29. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange
Act as in effect on the date of this Agreement. The Board of Directors of the
Company (with, where specifically provided for herein, the concurrence of the
Continuing Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including 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 a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for the purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board (or, where
specifically provided for herein, by the Continuing Directors) in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties, and (y) not subject the Board
of Directors of the Company or the Continuing Directors to any liability to the
holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Capital 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 Right Certificates (and, prior to the Distribution Date, the Capital
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;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, if any such term, provisions, covenant or restrictions is held by
such court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the close of business on
the tenth day following the date of such determination by the Board of
Directors.
Section 32. Governing Law. This Agreement, each Right and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Texas and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
28
29
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
one and the same instrument.
Section 34. Descriptive Headings. The captions herein and table
of contents hereto are included for convenience of reference only, do not
constitute a part of this Agreement and shall be ignored in the construction
and interpretation hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
VERITAS DGC INC.
By: /S/ XXXXXXX XXXXXXX
-------------------------------
Attest: Xxxxxxx Xxxxxxx,
Executive Vice President and
Chief Financial Officer
By:/S/ XXXXX X. XXXXXX
-----------------------------
Xxxxx X. Xxxxxx,
Secretary
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.,
AS RIGHTS AGENT
By: /S/ XXXXXXX X. XXXXX XXXXXXX
---------------------------------
Attest: Xxxxxxx X. Xxxxx-Xxxxxxx,
Vice President
By: /S/ XXXXXXXX X. XXXXX
----------------------------
Xxxxxxxx X. Xxxxx,
Assistant Vice President
29
30
VERITAS DGC INC.
EXHIBITS
TO
RIGHTS AGREEMENT
Exhibit A -- Certificate of Designation
Exhibit B-1 -- Summary of Rights--Veritas DGC
Exhibit B-2 -- Summary of Rights--Veritas Energy
Services, Inc.
Exhibit C -- Form of Rights Certificate
31
EXHIBIT A
VERITAS DGC INC.
STATEMENT OF
DESIGNATIONS, PREFERENCES, LIMITATIONS
AND RELATIVE RIGHTS OF ITS
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Pursuant to Section 151 of the Delaware General Corporation Law,
Veritas DGC Inc., a corporation organized and existing under the Delaware
General Corporation Law (the "Corporation"),
DOES HEREBY CERTIFY that pursuant to the authority conferred upon the
Board of Directors by the Restated Certificate of Incorporation, of the
Corporation, and pursuant to Section 151 of the Delaware General Corporation
Law, said Board of Directors, at a meeting duly held on May 23, 1997, duly
adopted a resolution providing for the issuance of a series of 400,000 shares
of Preferred Stock--Junior Participating Series A, which resolution is and
reads as follows:
RESOLVED, that pursuant to the authority expressly granted to and
invested in the Board of directors of Veritas DGC Inc. (the "Corporation") by
the provisions of the Restated Certificate of Incorporation of the Corporation,
a series of the Preferred Stock, par value $.01 per share, of the Corporation
be, and it hereby is, established, and that such series of Preferred Stock
shall have the powers and preferences, and the relative, participating,
optional and other rights, and the qualifications, limitations, and
restrictions thereon set forth below:
SECTION 1. Designation and Amount. The shares of such series
shall be designated as "Preferred Stock--Junior Participating Series A" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 400,000. Such number of shares may be increased or
decreased by resolution by the Board of Directors and without shareholder
action; provided, however, that no decrease shall reduce the number of shares
of Series A Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights, or warrants upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Preferred Stock, including (without limitation) that certain Rights Agreement
dated as of May 15, 1997 (the "Rights Agreement") to which the Corporation is a
party.
A-1
32
SECTION 2. Dividends and Distributions. (a) Subject to the
prior dividend rights of the holders of shares of any (i) other series of
Preferred Stock or (ii) other class of capital stock, whether now existing or
hereafter created (other than Common Stock), which does not by its express
terms rank on a parity with or subordinate to the Series A Preferred Stock with
respect to payment of dividends, the holders of Series A Preferred Stock shall
be entitled to receive dividends when, as and if declared from time-to-time by
the board of directors, out of any funds legally available for that purpose;
provided, however, that no dividend shall be declared or paid on Common Stock
(other than in shares of Common Stock) unless a dividend shall be
simultaneously declared and paid on each share of outstanding Series A
Preferred Stock in an amount equal to 1,000 times (subject to adjustment as set
forth below) the amount of the dividend then declared and paid on each share of
Common Stock. In the event the Corporation shall at any time following the
initial issuance of Series A Preferred Stock declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which each share of Series A Preferred Stock was
entitled immediately prior to such event to receive pursuant to 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 provisions of this Section 2 shall not apply to any
dividend or other distribution which shall be directly or indirectly in
furtherance of any plan of liquidation, whether or not the same shall have been
approved by shareholders.
SECTION 3. Voting Rights. In addition to any other voting
rights required by law, the holders of shares of Series A Preferred Stock shall
have the following voting rights:
(a) Subject to the provisions for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes (and each one one-thousandth (1/1,000th) of a share of Series A
Preferred Stock shall have one vote) on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any
time following the initial issuance of Series A Preferred Stock declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event shall
be adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
A-2
33
(b) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation, including, without limitation, the election of
directors. If the holders of the Corporation's Common Stock shall be entitled
to cumulate their votes at any election of directors, or upon any other matter,
the holders of the Series A Preferred Stock shall also be entitled to
cumulative voting at such election of directors or upon such other matter. If
cumulative voting shall ever be denied to the holders of the Corporation's
Common Stock, the holders of the Series A Preferred Stock shall similarly cease
to be entitled to cumulative voting, without any further action or consent by
the holders of Series A Preferred Stock.
(c) Except as otherwise set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
SECTION 4. Certain Restrictions. (a) Whenever dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, on shares of Series A Preferred stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock; provided, however, that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective Series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
A-3
34
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. Liquidation Rights. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (a)
to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received $1,000 per share, plus an amount equal to any declared but unpaid
dividends thereon, to the date of such payment; provided, however, that the
holders of shares of Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to adjustment as hereinafter set forth,
equal to 1,000 times the aggregate amount to be distributed per share to
holders of Common Stock, or (b) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time following the initial issuance of Series A Preferred Stock declare or
pay any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
the proviso in clause (a) 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.
SECTION 6. Consolidation, Merger, Etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A 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 1,000 times the aggregate amount of stock,
securities, cash and/or any other property, 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 following the initial issuance of Series A
Preferred Stock declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
A-4
35
SECTION 7. Ranking. The Series A Preferred Stock shall rank
junior with respect to payment of dividends and on liquidation to all other
classes and series of the Corporation's Preferred Stock, whether now existing
or hereafter created, except any class or series that specifically provides
that it shall rank on a parity with or junior to the Series A Preferred Stock.
SECTION 8. Redemption. The shares of Series A Preferred Stock
shall not be redeemable. Notwithstanding the foregoing, the Corporation may
acquire shares of Series A Preferred Stock in any other manner permitted by
law, the Certificate of Incorporation or this amendment thereof. The shares of
Series A Preferred Stock shall not be subject to or entitled to the operation
of a retirement or sinking fund.
SECTION 9. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of
holders of Series A Preferred Stock. In lieu of fractional shares, the
Corporation, prior to the first issuance of a share or a fraction of a share of
Series A Preferred Stock, may elect to (a) make a cash payment as provided in
the Rights Agreement for fractions of a share other than one one-thousandths
(1/1,000ths) of a share or an integral multiple thereof or (b) issue depository
receipts evidencing such authorized fraction of a share of Series A Preferred
Stock pursuant to an appropriate agreement between the Corporation and a
depository selected by the Corporation; provided, however, that such agreement
shall provide that the holders of such depository receipts shall have all the
rights, privileges and preferences to which they are entitled as holders of the
Series A Preferred Stock.
SECTION 10. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock (without designation as to series) 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 in the Restated Certificate of Incorporation of the
Corporation.
SECTION 11. Amendment. The Restated Certificate of Incorporation of
the Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares, if any, of Series A
Preferred Stock voting separately as a class.
SECTION 12. No Other Rights. The Series A Preferred Stock shall not
have any relative, participating, optional or other special rights and powers
other than as set forth herein and in the Certificate of Incorporation of the
Corporation, as amended, or as provided by law, nor shall the holders thereof
have any preemptive right to acquire any shares or securities of any kind,
whether now or hereafter authorized, which may at any time be issued, sold, or
offered for sale by the Corporation.
A-5
36
IN WITNESS WHEREOF, the said Veritas DGC Inc. has caused this
statement to be duly executed by Xxxxxxx Xxxxxxx, its Vice President and
attested by Xxxxx X. Xxxxxx, its Secretary, on this 27th day of May 1997.
VERITAS DGC INC.
By:
-----------------------------------------
Xxxxxxx Xxxxxxx, Executive Vice President
and Chief Financial Officer
ATTEST:
By:
------------------------------
Xxxxx X. Xxxxxx, Secretary
A-6
37
EXHIBIT B-1
June 12, 1997
Dear Shareholder:
Your Board of Directors has adopted a Shareholder Rights Plan (the
"Plan") designed to deter coercive or unfair takeover tactics and to prevent an
acquiror from gaining control of Veritas DGC Inc. (the "Company") without
offering a fair price to all of its shareholders. Included with this letter is
a Summary of the Plan. We suggest that you retain this document for future
reference.
The Board has adopted the Plan because it enhances the Board's ability
to protect the shareholders' and the Company's interest in the event of a
coercive or unfair takeover attempt. More than 3,000 publicly held companies
in the United States have adopted shareholder rights plans. Adoption of such a
plan is now a commonly accepted business practice for protecting shareholder
interests.
Under the Plan, holders of record of Common Stock at the close of
business June 12, 1997, will receive one Preferred Stock Purchase Right (a
"Right") for each share of Common Stock held. Until such Rights become
exercisable, your Common Stock certificates will evidence your Rights. The
Rights will automatically trade with the Common Stock and will be exercisable
only if and when an event arises to trigger them. The triggering events are
described in the Summary of the Plan.
The Plan is not intended to prevent an acquisition of the Company on
terms that are favorable and fair to all shareholders. Furthermore, it should
not dissuade any perspective offeror willing to negotiate with your Board of
Directors and will not interfere with a merger or any other business
combination transaction that your Board of Directors judges to be fair to the
shareholders. The Plan is therefore intended to discourage unilateral takeover
attempts and to encourage potential acquirors to negotiate with the Board.
There can be no assurance, however, that the Plan will result in any premium
being paid on the Company's Common Stock in the event of a takeover contest.
Because the Board may redeem the Rights at any time before they are triggered,
the Plan will not prevent a takeover of the Company that is determined by the
Board to be in the best interest of shareholders and the Company.
B-1-1
38
June 12, 1997
Page 2
Issuance of the Rights has no dilutive effect, will not affect
reported earnings per share, and is not taxable to the Company or its
shareholders. The Rights will not restrict trading of the Company's
securities.
Your Board of Directors believes that the Plan represents an effective
and commonly accepted means of protecting the shareholders' interests without
in any way weakening the Company's financial strength or interfering with the
Company's business plans. As such, it is an expression of the Company's
confidence in the future and our intention to give our shareholders a full
opportunity to benefit from the Company's growth and success.
Xxxxx X. Xxxxxx
Chairman of the Board and
Chief Executive Officer
B-1-2
39
SUMMARY OF SHAREHOLDER RIGHTS PLAN
ISSUANCE OF RIGHTS
On May 27, 1997, the Board of Directors of Veritas DGC Inc. (the
"Company") declared a distribution of one Right for each outstanding share of
common stock, par value $0.01 per share (the "Common Stock"), of the Company to
shareholders of record at the close of business on June 12, 1997 (the "Record
Date"). Except as described below, each Right when exercisable, entitles the
registered holder to purchase from the Company one one-thousandth (1/1,000th)
of a share of Preferred Stock--Junior Participating Series A, par value $.01
per share (the "Preferred Stock"), at a price of $100 per one one-thousandth
(1/1,000th) share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Right Agreement (the
"Rights Agreement") between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent.
As of June 12, 1997, there were approximately ____________ shares of
Common Stock outstanding and approximately ___________ shares of Common Stock
were reserved for issuance under stock option plans and outstanding warrants.
Each outstanding share of Common Stock on June 12, 1997, will receive one
Right. 400,000 shares of Preferred Stock will be reserved for issuance in the
event of exercise of the Rights.
TRANSFER AND SEPARATION
The Rights are not exercisable until the Distribution Date.
Accordingly, the Rights Agreement provides that, until the Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
As soon as practicable following any Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights. As of and after the Distribution Date, the Rights shall be evidenced
solely by Right Certificates and may be transferred by the transfer of the
Right Certificate separately and apart from any transfer of Common Stock.
B-1-3
40
DISTRIBUTION DATE
The term "Distribution Date" means the earlier of:
(i) the close of business on the tenth day after a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares
of the Company's Common Stock, other than pursuant to a Qualifying
Tender Offer (defined below); or
(ii) the close of business on the tenth Business Day (or such
later date as may be determined by action of the Company's Board of
Directors) after the date of the commencement or the announcement of
the intention to commence by any person or group (other than certain
exempt persons) of a tender offer or exchange offer upon the
successful completion of which such person or group would be the
beneficial owner of 15% or more of the then outstanding Common Stock
of the Company, regardless of whether any shares are actually
purchased pursuant to such offer.
A person or group is generally not considered an "Acquiring Person,"
if either the beneficial ownership of Common Stock that would otherwise cause
it to be an Acquiring Person was acquired in a transaction or series of
transactions approved in advance by the board of directors of the Company (the
"Board of Directors"), or the Board of Directors determines in good faith that
the person who would otherwise be an Acquiring Person has become such
inadvertently and such person divests as promptly as practicable a sufficient
number of shares of Common Stock so that the person would no longer
beneficially own 15% or more of the outstanding Common Stock.
A "Qualifying Tender Offer" means a tender offer or exchange offer
that a majority of the members of the Board of Directors determine to be at a
fair price and otherwise in the best interests of the Company and its
shareholders.
EXERCISE
As stated above, until the Distribution Date the Rights are not
exercisable. However, in the event that any person or group or affiliated or
associated persons becomes an Acquiring Person, and subject to the Company's
right to redeem the Rights, each holder of a Right (other than an Acquiring
Person), will thereafter have the right to receive upon exercise a number of
one one-thousandths (1/1,000ths) of a share of Preferred Stock determined by
dividing the Purchase Price (subject to adjustment) by 50% of the current
market price of the Common Stock on the date a person becomes an Acquiring
Person. Because of the nature of the voting, dividend, and liquidation rights
of the Preferred Stock, the value of each one one-thousandth (1/1,000th)
interest in a share of Preferred Stock purchasable upon exercise of each Right
should approximate the value of one share of Common Stock. It is therefore
anticipated (although there can be no assurance) that the value of the
Preferred Stock purchased upon exercise of the Rights will be approximately
twice the exercise price paid.
B-1-4
41
If the Rights are not redeemed as described below and in the event
that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
after a person or group has become an Acquiring Person, proper provision will
be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right.
Following the occurrence of any of the events set forth in the
preceding two paragraphs any Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will immediately become null and void. While the distribution of the
Rights will not be taxable to shareholders or to the Company, shareholders may
recognize taxable income upon the occurrence of subsequent events--for example,
upon the Rights becoming exercisable with respect to an acquiror's stock,
whether or not exercised. Holders of the Rights should consult with their tax
advisors in the event any such subsequent event occurs.
The Rights will expire on May 15, 2007 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a shareholder of
the Company, including, without limitation, the right to vote or to receive
dividends.
REDEMPTION
At any time prior to the time a person or group of affiliated or
associated persons becomes an Acquiring Person (or, subject to certain
exceptions, during the 180 day period then commencing, if there are at least
five Continuing Directors, a majority of whom approve the redemption), the
Board of Directors may redeem the Rights in whole, but not in part, at a price
of $.001 per Right (the "Redemption Price"). The redemption of the Rights may
be made effective at such time on such basis with such conditions as the Board
of Directors in its sole discretion may establish. Immediately upon any
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.
EXCHANGE
At any time after any person or group becomes an Acquiring Person (or
during the 180 day period then commencing, if there are at least five
Continuing Directors, a majority of whom approve the exchange) and prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Stock, the Board of Directors may exchange the Rights (other than Rights owned
by such person or group which will have become void), in whole or in part, at
an exchange ratio of one share of Common Stock per Right (subject to
adjustment).
B-1-5
42
THE PREFERRED STOCK
Each share of Preferred Stock will be entitled to an aggregate
dividend of 1,000 times any dividend declared per share of Common Stock. In
the event of liquidation, the holders of the Preferred Stock will be entitled
to an aggregate payment of 1,000 times the payment made per share of Common
Stock, but in no event shall they receive less than $1,000 per share. Each
share of Preferred Stock will have 1,000 votes, voting together with the Common
Stock, except as otherwise provided by law. Finally, in the event of any
merger, consolidation, or other transaction in which Common Stock are
exchanged, each share of Preferred Stock will be entitled to receive 1,000
times the amount receivable per share of Common Stock. The shares of Preferred
Stock purchasable under the Plan will not be redeemable.
ANTIDILUTION
The Purchase Price payable, the number of Rights, and the number of
shares of Preferred Stock or other securities or property issuable, upon
exercise of the Rights, are subject to adjustment from time to time to prevent
dilution, among other circumstances, in the event of a stock dividend on, or a
subdivision, split, combination, consolidation or reclassification of, the
Preferred Stock or the Common Stock, or a reverse split of the outstanding
shares of Preferred Stock or the Common Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. The Company may, but is not required to, issue fractional
Rights or fractional Preferred Stock (other than fractions which are integral
multiples of one one-thousandth (1/1,000th) of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts.
In lieu thereof, an adjustment in cash will be made based upon the market price
of the Common Stock on the last trading day prior to the date of exercise.
AMENDMENT OF RIGHTS AGREEMENT
Prior to the Distribution Date, the Company may supplement or amend
any provision of the Rights Agreement without the approval of any holders of
the Rights. From and after the Distribution Date, the Company may supplement
or amend the Rights Agreement without the approval of any holders of Right
Certificates in order (a) to cure any ambiguity, (b) to correct or supplement
any provision contained therein which may be defective or inconsistent with any
other provision therein, (c) to shorten or lengthen any time period thereunder
or (d) to change or supplement the provisions thereof in any manner which the
Company may deem necessary or desirable and which does not adversely affect the
interests of the holders of Right Certificates (other than Acquiring Person or
an Affiliate or Associate of an Acquiring Person). Notwithstanding the
foregoing, no supplement or amendment pursuant to clause (c) may lengthen (x) a
time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable or (y) 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.
B-1-6
43
CERTAIN DETERMINATIONS
The Rights Agreement prohibits the making of certain determinations
and actions by the Board of Directors unless at the time of such determinations
there are then in office not less than five Continuing Directors and the
determination or action in question is also approved by a majority of the
Continuing Directors then in office. These determinations and actions include:
(i) determining that a tender offer or exchange offer is a Qualifying Tender
Offer; (ii) extending the Distribution Date following the commencement or
announcement of a tender offer or exchange offer; (iii) determining that a
person became an Acquiring Person inadvertently; (iv) redeeming of the Rights;
(v) exchanging the Rights for Common Stock; (vi) valuing certain securities or
assets other than the Common Stock and Preferred Stock; and (vii) amending or
supplementing the Rights Agreement.
A "Continuing Director" means any member of the Board of Directors who
is not an Acquiring Person or an affiliate or associate of an Acquiring Person,
and who either (i) was a member of the Board of Directors prior to the time
that any person became an Acquiring Person (other than pursuant to a Qualifying
Tender Offer), or (ii) subsequently became a member of the Board of Directors,
and whose nomination for election or election to the Board of Directors was
recommended or approved by the Board of Directors when there are then in office
at least five Continuing Directors and such nomination for election or election
was recommended or approved by a majority of the Continuing Directors then on
the Board of Directors.
CERTAIN EFFECTS OF THE RIGHTS
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired, and under certain circumstances the Rights
beneficially owned (or that were owned) by such a person or group may become
void. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors because, if the Rights would
become exercisable as a result of such merger or other business combination,
the Board of Directors, may, at its option prior to time that any Person
becomes an Acquiring Person, redeem all (but not less than all) of the then
outstanding Rights at the Redemption Price.
THE RIGHTS AGREEMENT
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 hereby incorporated herein by reference.
B-1-7
44
EXHIBIT B-2
June 12, 1997
Dear Shareholder:
The Board of Directors of Veritas DGC Inc. (the "Company") has adopted
a Shareholder Rights Plan (the "Plan") designed to deter coercive or unfair
takeover tactics and to prevent an acquiror from gaining control of the Company
without offering a fair price to all of its shareholders, including the holders
of Veritas Energy Services, Inc. ("VES") Exchangeable Shares. Included with
this letter is a Summary of the Plan. We suggest that you retain this document
for future reference.
The Board has adopted the Plan because it enhances the Board's ability
to protect the shareholders' and the Company's interest in the event of a
coercive or unfair takeover attempt. More than 3,000 publicly held companies
in the United States have adopted shareholder rights plans. Adoption of such a
plan is now a commonly accepted business practice for protecting shareholder
interests.
Under the Plan, holders of record of VES Exchangeable Shares at the
close of business June 12, 1997, will receive from VES a dividend of one
Company Preferred Stock Purchase Right (a "Right") for each VES Exchangeable
Share held. While the Company and VES are of the view that each Right will be
valueless when distributed as a dividend to the holders of VES Exchangeable
Shares, VES has recorded the Rights on its books at U.S.$.001 per Right, which
in the opinion of the Company's investment banker is the maximum value of a
Right. Until such Rights become exercisable, your VES Exchangeable Share
certificates will evidence your Rights. The Rights will automatically trade
with the VES Exchangeable Shares and will be exercisable only if and when an
event arises to trigger them. The triggering events are described in the
Summary of the Plan.
The Plan is not intended to prevent an acquisition of the Company on
terms that are favorable and fair to all shareholders. Furthermore, it should
not dissuade any perspective offeror willing to negotiate with the Company's
Board of Directors and will not interfere with a merger or any other business
combination transaction that the Company's Board of Directors judges to be fair
to the shareholders. The Plan is therefore intended to discourage unilateral
takeover attempts and to encourage potential acquirors to negotiate with the
Board. There can be no assurance, however, that the Plan will result in any
premium being paid on the VES Exchangeable Shares in the event of a takeover
contest. Because the Board may redeem the Rights at any time before they are
triggered, the Plan will not prevent a takeover of the Company that is
determined by the Board to be in the best interest of shareholders and the
Company.
B-2-1
45
June 12, 1997
Page 2
Issuance of the Rights has no dilutive effect on the Company, will not
its affect reported earnings per share. Though the Rights dividend is taxable
to holders of VES Exchangeable Shares, and each holder is advised to consult
with its own tax adviser concerning its taxability in Canada, the Company and
VES are of the view that the dividend has a value of no more than U.S.$.001 per
Right (i.e., U.S.$1.00 per 1,000 Rights), as discussed above. The Rights will
not restrict trading of the VES Exchangeable Shares or the Company's Common
Stock.
The Company's Board of Directors believes that the Plan represents an
effective and commonly accepted means of protecting the shareholders' interests
without in any way weakening the Company's financial strength or interfering
with the Company's business plans. As such, it is an expression of the
Company's confidence in the future and our intention to give our shareholders a
full opportunity to benefit from the Company's growth and success.
B-2-2
46
SUMMARY OF SHAREHOLDER RIGHTS PLAN
ISSUANCE OF RIGHTS
On May 27, 1997, the board of directors of Veritas Energy Services,
Inc. ("VES") declared a dividend of one Right for each outstanding
Exchangeable Share of VES to shareholders of record at the close of business on
June 12, 1997 (the "Record Date"). Except as described below, each Right when
exercisable, entitles the registered holder to purchase from Veritas DGC Inc.
(the "Company") one one-thousandth (1/1,000th) of a share of Company Preferred
Stock--Junior Participating Series A, par value $.01 per share (the "Preferred
Stock"), at a price of $100 per one one-thousandth (1/1,000th) share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Right Agreement (the "Rights Agreement") between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
As of June 12, 1997, there were approximately ____________
Exchangeable Shares outstanding.
TRANSFER AND SEPARATION
The Rights are not exercisable until the Distribution Date.
Accordingly, the Rights Agreement provides that, until the Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Exchangeable Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Exchangeable
Share certificates issued after the Record Date upon transfer or new issuance
of Exchangeable Shares 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
Exchangeable Shares outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights being attached thereto, will also
constitute the transfer of the Rights associated with the Exchangeable Shares
represented by such certificate.
As soon as practicable following any Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Exchangeable Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights. As of and after the Distribution Date, the Rights shall be evidenced
solely by Right Certificates and may be transferred by the transfer of the
Right Certificate separately and apart from any transfer of Exchangeable
Shares.
DISTRIBUTION DATE
The term "Distribution Date" means the earlier of:
(i) the close of business on the tenth day after a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares
of the Company's Common Stock, other than pursuant to a Qualifying
Tender Offer (defined below); or
X-0-0
00
(xx) the close of business on the tenth Business Day (or such
later date as may be determined by action of the Company's Board of
Directors) after the date of the commencement or the announcement of
the intention to commence by any person or group (other than certain
exempt persons) of a tender offer or exchange offer upon the
successful completion of which such person or group would be the
beneficial owner of 15% or more of the then outstanding Common Stock
of the Company, regardless of whether any shares are actually
purchased pursuant to such offer.
A person or group is generally not considered an "Acquiring Person,"
if either the beneficial ownership of Common Stock that would otherwise cause
it to be an Acquiring Person was acquired in a transaction or series of
transactions approved in advance by the board of directors of the Company (the
"Board of Directors"), or the Board of Directors determines in good faith that
the person who would otherwise be an Acquiring Person has become such
inadvertently and such person divests as promptly as practicable a sufficient
number of shares of Common Stock so that the person would no longer
beneficially own 15% or more of the outstanding Common Stock.
A "Qualifying Tender Offer" means a tender offer or exchange offer
that a majority of the members of the Board of Directors determine to be at a
fair price and otherwise in the best interests of the Company and its
shareholders.
EXERCISE
As stated above, until the Distribution Date the Rights are not
exercisable. However, in the event that any person or group or affiliated or
associated persons becomes an Acquiring Person, and subject to the Company's
right to redeem the Rights, each holder of a Right (other than an Acquiring
Person), will thereafter have the right to receive upon exercise a number of
one one-thousandths (1/1,000ths) of a share of Preferred Stock determined by
dividing the Purchase Price (subject to adjustment) by 50% of the current
market price of the Company Common Stock on the date a person becomes an
Acquiring Person. Because of the nature of the voting, dividend, and
liquidation rights of the Preferred Stock, the value of each one one-thousandth
(1/1,000th) interest in a share of Preferred Stock purchasable upon exercise of
each Right should approximate the value of one share of Company Common Stock.
It is therefore anticipated (although there can be no assurance) that the value
of the Preferred Stock purchased upon exercise of the Rights will be
approximately twice the exercise price paid.
If the Rights are not redeemed as described below and in the event
that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
after a person or group has become an Acquiring Person, proper provision will
be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right.
Following the occurrence of any of the events set forth in the
preceding two paragraphs any Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will immediately become null and void. While the distribution of the
B-2-4
48
Rights should be taxable to holders of Exchangeable Shares at no more than
U.S.$.001 per Right (U.S.$1.00 per 1,000 Rights), shareholders may recognize
significant taxable income upon the occurrence of subsequent events--for
example, upon the Rights becoming exercisable with respect to an acquiror's
stock, whether or not exercised. Holders of the Rights should consult with
their tax advisors in the event any such subsequent event occurs.
The Rights will expire on May 15, 2007 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a shareholder of
the Company, including, without limitation, the right to vote or to receive
dividends.
REDEMPTION
At any time prior to the time a person or group of affiliated or
associated persons becomes an Acquiring Person (or, subject to certain
exceptions, during the 180 day period then commencing, if there are at least
five Continuing Directors, a majority of whom approve the redemption), the
Board of Directors may redeem the Rights in whole, but not in part, at a price
of U.S. $.001 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time on such basis with such conditions as the
Board of Directors in its sole discretion may establish. Immediately upon any
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.
EXCHANGE
At any time after any person or group becomes an Acquiring Person (or
during the 180 day period then commencing, if there are at least five
Continuing Directors, a majority of whom approve the exchange) and prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Stock, the Board of Directors may exchange the Rights (other than Rights owned
by such person or group which will have become void), in whole or in part, at
an exchange ratio of one share of Common Stock per Right (subject to
adjustment).
THE PREFERRED STOCK
Each share of Preferred Stock will be entitled to an aggregate
dividend of 1,000 times any dividend declared per share of Common Stock. In
the event of liquidation, the holders of the Preferred Stock will be entitled
to an aggregate payment of 1,000 times the payment made per share of Common
Stock, but in no event shall they receive less than $1,000 per share. Each
share of Preferred Stock will have 1,000 votes, voting together with the Common
Stock, except as otherwise provided by law. Finally, in the event of any
merger, consolidation, or other transaction in which Common Stock are
exchanged, each share of Preferred Stock will be entitled to receive 1,000
times the amount receivable per share of Common Stock. The shares of Preferred
Stock purchasable under the Plan will not be redeemable.
B-2-5
49
ANTIDILUTION
The Purchase Price payable, the number of Rights, and the number of
shares of Preferred Stock or other securities or property issuable, upon
exercise of the Rights, are subject to adjustment from time to time to prevent
dilution, among other circumstances, in the event of a stock dividend on, or a
subdivision, split, combination, consolidation or reclassification of, the
Preferred Stock or the Common Stock, or a reverse split of the outstanding
shares of Preferred Stock or the Common Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. The Company may, but is not required to, issue fractional
Rights or fractional Preferred Stock (other than fractions which are integral
multiples of one one-thousandth (1/1,000th) of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts.
In lieu thereof, an adjustment in cash will be made based upon the market price
of the Common Stock on the last trading day prior to the date of exercise.
AMENDMENT OF RIGHTS AGREEMENT
Prior to the Distribution Date, the Company may supplement or amend
any provision of the Rights Agreement without the approval of any holders of
the Rights. From and after the Distribution Date, the Company may supplement
or amend the Rights Agreement without the approval of any holders of Right
Certificates in order (a) to cure any ambiguity, (b) to correct or supplement
any provision contained therein which may be defective or inconsistent with any
other provision therein, (c) to shorten or lengthen any time period thereunder
or (d) to change or supplement the provisions thereof in any manner which the
Company may deem necessary or desirable and which does not adversely affect the
interests of the holders of Right Certificates (other than Acquiring Person or
an Affiliate or Associate of an Acquiring Person). Notwithstanding the
foregoing, no supplement or amendment pursuant to clause (c) may lengthen (x) a
time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable or (y) 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.
CERTAIN DETERMINATIONS
The Rights Agreement prohibits the making of certain determinations
and actions by the Board of Directors unless at the time of such determinations
there are then in office not less than five Continuing Directors and the
determination or action in question is also approved by a majority of the
Continuing Directors then in office. These determinations and actions include:
(i) determining that a tender offer or exchange offer is a Qualifying Tender
Offer; (ii) extending the Distribution Date following the commencement or
announcement of a tender offer or exchange offer; (iii) determining that a
person became an Acquiring Person inadvertently; (iv) redeeming of the Rights;
(v) exchanging the Rights for Common Stock; (vi) valuing certain securities or
assets other than the Common Stock and Preferred Stock; and (vii) amending or
supplementing the Rights Agreement.
B-2-6
50
A "Continuing Director" means any member of the Board of Directors who
is not an Acquiring Person or an affiliate or associate of an Acquiring Person,
and who either (i) was a member of the Board of Directors prior to the time
that any person became an Acquiring Person (other than pursuant to a Qualifying
Tender Offer), or (ii) subsequently became a member of the Board of Directors,
and whose nomination for election or election to the Board of Directors was
recommended or approved by the Board of Directors when there are then in office
at least five Continuing Directors and such nomination for election or election
was recommended or approved by a majority of the Continuing Directors then on
the Board of Directors.
CERTAIN EFFECTS OF THE RIGHTS
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired, and under certain circumstances the Rights
beneficially owned (or that were owned) by such a person or group may become
void. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors because, if the Rights would
become exercisable as a result of such merger or other business combination,
the Board of Directors, may, at its option prior to time that any Person
becomes an Acquiring Person, redeem all (but not less than all) of the then
outstanding Rights at the Redemption Price.
THE RIGHTS AGREEMENT
A copy of the Rights Agreement is available free of charge from the
Company or VES. 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 hereby incorporated herein by reference.
B-2-7
51
EXHIBIT C
[Form of Right Certificate]
Certificate No. R- ___________ Rights
This Certificate is Transferable in
Dallas, Texas or
New York, New York
NOT EXERCISABLE AFTER MAY 15, 2007 OR EARLIER IF REDEEMED OR EXCHANGED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
IF THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT), THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME OR MAY HAVE BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.
RIGHT CERTIFICATE
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of May 15, 1997 (the "Rights Agreement") between
Veritas DGC Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date and prior to the Expiration Date at the office or offices of
the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-thousandth (1/1,000th) of a fully paid, nonassessable share of
Preferred Stock--Junior Participating Series A, par value $.01 per share, (the
"Preferred Stock") of the Company, at a cash purchase price of $100 per one
one-thousandth (1/1,000th) of a share (the "Purchase Price"), payable in cash
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase and the related Certificate duly executed.
Terms used herein and not otherwise defined have the meanings assigned
to them in the Rights Agreement.
The number of rights evidenced by this Right Certificate, the Purchase
Price and the number and kind of shares which may be purchased upon exercise
thereof are the number of Rights, Purchase Price, and the number and kind of
shares which may be so purchased as of June 12, 1997. As provided in the
Rights Agreement, the number of Rights represented by this Rights Certificate,
the Purchase Price and the number and kind of shares of Preferred Stock or
other securities which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.
C-1
52
From and after the time when any person first becomes an Acquiring
Person, other than pursuant to a Qualifying Tender Offer, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose of effect the avoidance of Section 7(e) of the
Rights Agreement shall become null and void without any further action, and no
holder of such Rights (including any purported transferee or subsequent holder)
shall have any rights whatsoever with respect to such Rights, whether under any
provision of the Rights Agreement or otherwise.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file with the Rights Agent and are also
available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a
like aggregate number and kind of shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option, (a) at any time prior to the
earlier of (i) the close of business on the tenth day after the Stock
Acquisition Date (or such later date as a majority of the Continuing Directors
then in office may designate in an amendment to the Rights Agreement) and (ii)
the Final Expiration Date, redeem all but not less than all the Rights
evidenced by this Certificate at a redemption price of $.001 per Right; or (b)
at any time after any Person becomes an Acquiring Person (but before any Person
becomes the Beneficial Owner of 50% or more of the shares of Common Stock then
outstanding), exchange all or part of the Rights evidenced by this Certificate
for shares of Common Stock at an exchange ratio of one share of Common Stock
per Right. If the Rights shall be exchanged in part, the holder of this Right
Certificate shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of Rights not exchanged.
The Company may issue fractions of Preferred Stock or distribute
certificates which evidence fractions of Preferred Stock upon the exercise of
any Right or Rights evidenced hereby. In lieu of
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53
issuing fractional shares, the Company may elect to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one
one-thousandth (1/1,000th) of a share or any integral multiple thereof or to
issue certificates or utilize a depository arrangement as provided in the terms
of the Rights Agreement and the Preferred Stock.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder 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.
This Right 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: VERITAS DGC INC.
---------------------
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent,
By:
-------------------------------
Authorized Officer
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED
--------------------------------------------------------------
hereby sells, assigns and transfers unto
----------------------------------------
(Please print name and
address of transferee)
--------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
---------------------------
----------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___ are ___ are
not being exercised 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 in 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 Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
---------------------------
----------------------------------
Signature
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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55
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented
by the Right Certificate.)
To Veritas DGC Inc.:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase the Preferred Stock
issuable upon the exercise of the Rights (or such other securities or property
of the Company or of any other person which may be issuable upon the exercise
of the Rights) and requests that certificates for such shares be issued in the
name of and delivered to:
Please insert social security or other identifying
number:
----------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Please insert social security or other identifying number:
----------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated:
---------------------------
----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Form of Election To Purchase must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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