Exhibit 3 to Form 8-K submitted on December 19, 1997
The ServiceMaster Company
and
▇▇▇▇▇▇ Trust and Savings Bank
Rights Agent
Rights Agreement
Dated as of December 15, 1997
Table of Contents
Page
Recitals Recitals 1
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issuance of Rights Certificates 7
Section 4. Form of Rights Certificates 9
Section 5. Execution, Countersignature and Registration 9
Section 6. Transfer, Division, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights 10
Section 8. Cancellation and Destruction of Rights Certificates 12
Section 9. Reservation and Availability of Preferred Stock 13
Section 10. Preferred Stock Record Date 14
Section 11. Adjustments to Purchase Price, Number of Shares or
Number of Rights 14
Section 12. Certification of Adjustments 24
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 24
Section 14. Fractional Rights and Fractional Shares 27
Section 15. Rights of Action 27
Section 16. Agreement of Rights Holders Concerning Transfer
and Ownership of Rights 28
Section 17. Rights Holder Not Deemed a Stockholder 28
Section 18. Concerning the Rights Agent 28
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Section 19. Merger or Consolidation or Change of Name of
Rights Agent 29
Section 20. Duties of Rights Agent 29
Section 21. Change of Rights Agent 31
Section 22. Issuance of New Rights Certificates 32
Section 23. Redemption and Termination 32
Section 24. Notice of Certain Events 33
Section 25. Notices 34
Section 26. Supplements and Amendments 34
Section 27. Successors 35
Section 28. Benefits of this Agreement 35
Section 29. Severability 35
Section 30. Governing Law 35
Section 31. Counterparts 36
Section 32. Descriptive Headings 36
Section 33. Grammatical Construction 36
Exhibit A Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A
Exhibit B Form of Rights Certificate
Exhibit C Form of Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 15, 1997, between The
ServiceMaster Company, a Delaware corporation (the "Company"), and ▇▇▇▇▇▇ Trust
and Savings Bank, an Illinois Banking Corporation (the "Rights Agent").
RECITALS
The Company has entered into a Merger and Reorganization Agreement
which was amended and restated as of October 3, 1997 and which provides among
other things for the merger (the AReincorporating Merger@) of a subsidiary of
the Company into ServiceMaster Limited Partnership, a Delaware limited
partnership (ASMLP@), under terms upon which among other things: (i) every
limited partnership share issued by SMLP and outstanding immediately prior to
the Reincorporating Merger will be converted into one share of the Common Stock
(as defined in Section 1) of the Company and (ii) the Company will become the
ultimate parent in the ServiceMaster enterprise. The Board of Directors of the
Company has authorized issuance of one preferred share purchase right (a
"Right") for each share of Common Stock (as defined in Section 1) of the Company
into which the limited partnership shares in SMLP are converted in the
Reincorporating Merger (the AReincorporation Shares@) simultaneous with the
issuance of the Reincorporation Shares and has authorized the issuance of one
Right for each share of Common Stock of the Company other than any
Reincorporation Share issued after the Reincorporating Merger and before the
earliest of Distribution Date, the Redemption Date and the Final Expiration Date
(as such terms are defined in Section 1) and in certain cases following the
Distribution Date. Immediately after the Reincorporating Merger, each Right
issued in connection with that ▇▇▇▇▇▇ will represent the right to purchase one
one-thousandth of one share of Preferred Stock (as defined in Section 1) upon
the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
"Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, is (or has previously been, at any
time after the Reincorporation, whether or not such Person(s) continues to be)
the Beneficial Owner of 15% or more of the Common Stock then outstanding
(determined without taking into account any securities exercisable or
exchangeable for, or convertible into, Common Stock, other than any such
securities beneficially owned by the Acquiring Person and Affiliates and
Associates of such Person). However, "Acquiring Person" shall not include any
Exempt Person.
Notwithstanding the foregoing, a Person shall not become an "Acquiring
Person" solely as the result of (i) an acquisition of Common Stock by the
Company or any Subsidiary which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially
owned by such Person
to 15% more of the Common Stock then outstanding as determined above, or (ii)
such Person becoming the Beneficial Owner of 15% or more of the Common Stock
then outstanding as determined above solely as a result of an Exempt Event;
provided, however, that if a Person becomes the Beneficial Owner of 15% or more
of the Common Stock then outstanding as determined above solely by reason of
such a share acquisition by the Company or the occurrence of such an Exempt
Event and such Person shall, after becoming the Beneficial Owner of such Common
Stock, become the Beneficial Owner of any additional shares of Common Stock by
any means whatsoever (other than as a result of the subsequent occurrence of an
Exempt Event, a stock dividend or a subdivision of the Common Stock into a
larger number of shares or a similar transaction), then such Person shall be
deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person", as defined pursuant to the foregoing provisions
of this paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement. The determination of whether such
Person's becoming an Acquiring Person shall have been inadvertent and the
determination of whether the divestment of sufficient shares shall have been
made as promptly as practicable shall be made by a majority of the Board of
Directors of the Company.
"Affiliate" has the meaning given to such term in Rule 12b- 2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Agreement; provided that, for purposes of this Agreement, the term
"Affiliate" shall not include any Person that is an Exempt Person.
"Associate" has the meaning given to such term in Rule 12b- 2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Agreement; provided that, for purposes of this Agreement, the term
"Associate" shall not include any Person that is an Exempt Person.
Except as provided below, a Person shall be deemed to be the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any securities:
(i) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether
or not then exercisable or effective) to acquire pursuant to any
agreement, arrangement or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise;
provided, however, that a Person will 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
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of such Person or any
Affiliate or Associate of such Person until such tendered securities
are accepted for purchase or exchange; and provided further, that
prior to the occurrence of a Triggering Event, a Person will not be
deemed the Beneficial Owner of, or to beneficially own, securities
obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then
exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security pursuant to this clause
(iii) if the agreement, arrangement or understanding to vote, or to
direct the voting of, such security (A) 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 Exchange
Act and applicable rules and regulations thereunder and (B) is not
also then reportable under Item 6 (or any comparable or successor
item) of Schedule 13D under the Exchange Act (or any comparable or
successor schedule or report);
(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act or
any successor provision; or
(v) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate of such other Person with
whom such Person or any Affiliate or Associate of such Person has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in subparagraph (iii) of this Section
1(d)) or disposing of any securities of the Company.
Nothing in the preceding sentence shall cause a Person engaged in business
as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for purposes of
this Agreement, no Person shall be treated as the "Beneficial Owner" of, or to
be deemed to "beneficially own," any securities solely by reason of the
ownership of those securities by any other Person that is an Exempt Person.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding", when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially under the preceding provisions in this definition.
"Business Combination" has the meaning set forth in
Section 13 of this Agreement.
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"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York or Illinois are authorized
or obligated by law or executive order to close.
"Close of Business" on any given date means 5:00 p.m., Chicago time, on
such date; provided, however, that if such date is not a Business Day it shall
mean 5:00 p.m. Chicago time, on the next succeeding Business Day.
"Common Stock" when used with reference to the Company means the Common
Stock, par value $.01 per share, of the Company (as the same may be changed by
reason of any combination, subdivision or reclassification of the Common Stock).
"Common Stock" when used with reference to any Person (other than the Company
prior to a Business Combination) means shares of capital stock of such Person
(if such Person is a corporation) of any class or series, or units of equity
interests in such Person (if such Person is not a corporation) of any class or
series, the terms of which shares or units do not limit (as a fixed amount and
not merely in proportional terms) the amount of dividends or income payable or
distributable on such shares or units or the amount of assets distributable on
such shares or units upon any voluntary or involuntary liquidation, dissolution
or winding up of such Person and do not provide that such shares or units are
subject to redemption at the option of such Person, or any shares of capital
stock or units of equity interests into which the foregoing shall be
reclassified or changed; provided, however, that if at any time there are more
than one such class or series of capital stock of or equity interests in such
Person, "Common Stock" of such Person will include all such classes and series
substantially in the proportion of the total number of shares or other units of
each such class or series outstanding at such time.
"Current Market Price" per share of Common Stock, Common Equivalent Share
or any other security on any date is the average of the daily closing prices per
share of such Common Stock, Common Equivalent Share or any other security for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date for the purpose of any computation under this
Agreement except computations made pursuant to Section 11(c)(3), and for the
Trading Day immediately prior to such date for the purpose of any computation
under Section 11(c)(3); provided, however, that in the event that the Current
Market Price per share of Common Stock, Common Equivalent Share or any other
security is determined during a period following the announcement by the issuer
of such Common Stock, Common Equivalent Share or any other security of (i) a
dividend or distribution on such Common Stock, Common Equivalent Share or any
other security other than a regular quarterly cash dividend, or (ii) any
subdivision, combination or reclassification of such Common Stock, Common
Equivalent Share or any other security, and prior to the expiration of 30
Trading Days after the "exdividend" 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" must be appropriately adjusted to
take into account such dividend, distribution, subdivision, combination or
reclassification. The closing price for each Trading Day shall be the last sale
price, regular way, on such day, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
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 ("NYSE") or, if the Common Stock, Common Equivalent Share or any
other security are not listed or admitted to trading on the NYSE, as reported in
the
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principal consolidated transaction reporting system with respect to
securities listed on the principal United States national securities exchange on
which the Common Stock, Common Equivalent Share or any other security are listed
or admitted to trading or, if the Common Stock, Common Equivalent Share or any
other security or, if the Common Stock, Common Equivalent Share or any other
security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date the Common
Stock, Common Equivalent Share or any other security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors of the Company. If no such market maker is making a market, the
fair market value of such shares on such day as determined in good faith by a
majority of the Board of Directors of the Company or the Board of Directors of
the issuer of such Common Stock, Common Equivalent Share or any other security
shall be used, which determination shall be described in a statement filed with
the Rights Agent and shall be binding and conclusive for all purposes. The term
"Trading Day" means a day on which the principal United States national
securities exchange on which the Common Stock, Common Equivalent Share or any
other security are listed or admitted to trading is open for the transaction of
business or, if the Common Stock, Common Equivalent Share or any other security
is not listed or admitted to trading on any United States national securities
exchange, but is traded in the over-the-counter market, then any day for which
the high bid and low asked prices in the over-thecounter market are reported, or
if the Common Stock, Common Equivalent Share or any other security is not traded
in the overthe-counter market, then a Business Day. If the Preferred Shares are
not publicly traded, the "current per share market price" of the Preferred
Shares shall be conclusively deemed to be the current per share market price of
the Common Shares as determined pursuant to this paragraph (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by the Adjustment Number
(calculated as prescribed in the terms governing the Preferred Stock).
"Distribution Date" means the earlier of (i) the day after the Company's
right to redeem the Rights pursuant to Section 23(a)(i) expires and (ii) the
tenth Business Day after commencement or public disclosure of an intention to
commence (including, without limitation, any such commencement or public
disclosure which occurs before or after the Reincorporation and prior to the
issuance of the Rights) a tender offer or exchange offer by a Person if, after
acquiring the maximum number of securities sought pursuant to such offer, such
Person, or any Affiliate or Associate of such Person, would be an Acquiring
Person. A majority of the Board of Directors of the Company may defer the date
set forth in clause (ii) of the preceding sentence to a specified later date or
to an unspecified later date to be determined by a subsequent action or event.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any successor statute.
"Exchange Date" means the time at which Rights are exchanged pursuant to
Section 11(c)(3).
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"Exempt Event" means with respect to any Person, the acquisition by such
Person of Beneficial Ownership of Common Stock solely as a result of the
occurrence of a Triggering Event and the effect of such Triggering Event on the
last proviso of clause (ii) of the definition of Beneficial Owner, other than a
Triggering Event in which such Person becomes an Acquiring Person.
"Exempt Person" means (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the
Company, (iv) any Person holding Common Stock for any such employee benefit plan
or for employees of the Company or of any Subsidiary of the Company pursuant to
the terms of any such employee benefit plan and (v) any Person who, prior to the
Stock Acquisition Date with respect to such Person, is determined in good faith
by the Board of Directors of the Company to be an Exempt Person.
"Exercise Amount" means the amount payable by the holder as a condition to
the exercise of one Right. Until and unless it shall be adjusted in accordance
with this Agreement, the Exercise Amount shall be $130.
"Expiration Date" means the Close of Business on December 11, 2007,
provided that if a Triggering Event shall have occurred prior to December 11,
2007, then the Expiration Date shall be ten years after the Trigger Date.
"Person" means any individual, firm, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity, and shall include any "group" as that term is used
in Rule 13d-5(b) under the Exchange Act (or any successor provision).
"Preferred Stock" means the Company's Junior Participating Preferred Stock,
Series A, par value $.01 per share, having the rights and preferences set forth
in the Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A, attached
hereto as Exhibit A.
"Principal Party" means (i) in the case of any Business Combination
described in clause (i), (ii) or (iii) of the first sentence of Section 13(a),
(A) the Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted or for which they are exchanged in such
Business Combination or, if there is more than one such issuer, the issuer of
the Common Stock which has the greatest aggregate market value or (B) if no
securities are so issued, the Person that survives or results from the Business
Combination or, if there is more than one such Person, the Person the Common
Stock of which has the greatest aggregate market value, and (ii) in the case of
any Business Combination described in clause (iv) of the first sentence in
Section 13(a), the Person that receives the greatest portion of the assets or
earning power transferred pursuant to such Business Combination or, if each
Person that is a party to such Business Combination receives the same portion of
the assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot reasonably be determined,
whichever of such Persons is the issuer of the Common Stock which has the
greatest aggregate market value; provided, however, that in any such case, 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
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and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act; (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value; or (z)
if the Common Stock of none of such other Persons has been so registered,
"Principal Party" refers to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. In case such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
"Purchase Price:" Until the Trigger Date, the term Purchase Price means the
price at which one-one thousandth of a share of Preferred Stock shall be
purchasable with the Rights. The Purchase Price shall be $130 per one
one-thousandth of a share of Preferred Stock until and unless it shall be
adjusted pursuant to this Agreement. Immediately after the Trigger Date, the
term APurchase Price@ shall mean the price per Common Share for which Common
Shares shall be purchasable with the Rights. Thereafter the term "Purchase
Price" as applied with respect to each kind of stock or other property
purchasable with the Rights as a result of adjustments prescribed by this
Agreement shall mean the price at which each share of such stock or the smallest
available unit of such other property is purchasable with the Rights.
"Redemption Date" means the time at which the Rights are scheduled to be
redeemed as provided in Section 23.
"Redemption Price" has the meaning given to such term in
Section 23.
"Reincorporation" means the time at which the limited partner interests of
SMLP are converted into Common Stock of the Company in connection with the
Reincorporating Merger.
"Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.
"Stock Acquisition Date" means the first date of public disclosure by the
Company, an Acquiring Person or otherwise that an Acquiring Person has become
such.
"Subsidiary" has the meaning given to such term in Rule 12b2 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement.
"Trigger Date" means the first date after the Reincorporation upon which a
Person becomes an Acquiring Person.
"Triggering Event" shall mean a Person becoming an
Acquiring Person.
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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.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights
shall be issued in respect of and shall be evidenced by the certificates
representing the shares of Common Stock issued in connection with the
Reincorporating Merger and shares of Common Stock other than any Reincorporating
Shares issued after the Reincorporation and prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date or the Expiration Date
(which certificates for Common Stock shall be deemed to also be certificates
evidencing the Rights), and not by separate certificates; (ii) the registered
holders of such shares of Common Stock shall also be the registered holders of
the Rights associated with such shares; and (iii) the Rights shall be
transferable only in connection with the transfer of shares of Common Stock, and
the surrender for transfer of any certificate for such shares of Common Stock
shall also constitute the surrender for transfer of the Rights associated with
such shares. As soon as practicable after the Company has notified the Rights
Agent of the occurrence of the Distribution Date, the Rights Agent shall, at the
expense of the Company, (except as otherwise provided in Section 7(e)) mail, by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, as shown by the
records of the Company, at the address of such holder shown on such records, one
or more certificates evidencing the Rights ("Rights Certificates"), in
substantially the form of Exhibit B hereto, evidencing one Right (as adjusted
from time to time pursuant to this Agreement) for each share of Common Stock so
held. From and after the Distribution Date, the Rights will be evidenced solely
by such Rights Certificates.
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(b) Rights shall be issued in respect of all shares of Common Stock which
are issued or sold by the Company after the Reincorporation but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date and the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold (i) pursuant to
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or arrangement created prior to the Distribution Date, or (ii)
upon the exercise, conversion or exchange of securities issued by the Company
prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and Rights Certificate shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (y) no such Rights and Rights Certificates shall be issued, if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof. Certificates issued in connection with the
Reincorporating Merger representing shares of Common Stock and shares of Common
Stock issued after the Reincorporation but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date shall have impressed, printed, or written on, or otherwise affixed to them
a legend substantially in the following form:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between The
ServiceMaster Company and ▇▇▇▇▇▇ Trust and Savings Bank, as Rights
Agent, dated as of December 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
ServiceMaster Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
ServiceMaster Company will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances, Rights that were, are
or become beneficially owned by Acquiring Persons or their Associates
or Affiliates (as such terms are defined in the Rights Agreement) may
become null and void and the holder of any of such Rights (including
any subsequent holder) shall not have any right to exercise such
Rights.
Section 4. Form of Rights Certificates. The Rights Certificates (and the
form of election to purchase shares and form of assignment to be printed on the
reverse thereof) shall be in substantially the form of Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights may from time
to time be listed, or to conform
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to usage. Subject to the provisions of this
Agreement, the Rights Certificates, whenever issued, shall be dated as of the
Distribution Date, and on their face shall entitle the holders thereof to
purchase such number of shares of Preferred Stock as shall be set forth therein
at the Purchase Price set forth therein, but the number of such securities and
the Purchase Price shall be subject to adjustment as provided in this Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the Company
by the Company's Chief Executive Officer, President, Chief Financial Officer,
Treasurer 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 Company's Secretary or an Assistant Secretary, either
manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or, if permitted by the
Company, by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed a Rights
Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
(b) Notwithstanding any other provision of this Agreement, neither
the Company, the Rights Agent nor anyone else shall have any obligation to issue
any Rights Certificate to an Acquiring Person or to anyone else in whose hands
the Rights nominally represented by such Certificate shall be null and void
either initially or in connection with a request to register a transfer of
Rights represented by a certificate previously issued. In the event that at the
Distribution Date or any other date upon which Rights Certificates would
otherwise be issuable, the Company shall not be obligated to issue Rights
Certificates to any person making a tender offer which if consummated could
render such person an Acquiring Person or to any Affiliate or Associate of such
person until and unless the Tender Offer is withdrawn and the person shall have
established to the Company=s reasonable satisfaction that such person does not
intend to become an Acquiring Person. The Company shall be entitled to require
any person claiming the right to receive a Rights Certificate such evidence as
the Company shall require in good faith to establish to the Company's
satisfaction that the Rights represented by that Certificate have not become
null and void under the provisions in Section 7(e) or that the Company is not
entitled to withhold such certificate under the provisions of the preceding
sentence.
(c) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced by each Rights Certificate, and the
certificate number and the date of issuance of each Rights Certificate.
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Section 6. Transfer, Division, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.
(a) Subject to the provisions of Section 5(b) and Section 14, at any
time after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earliest of the Redemption Date, the Exchange Date and
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or other securities, cash or other property,
following a Triggering Event or a Business Combination, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to such
transfer, division, combination or exchange, the Company may require payment by
the surrendering holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection therewith. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have duly completed and executed the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or such former or proposed Beneficial
Owner) thereof or such Beneficial Owner's Affiliates or Associates as the
Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-thousandth (1/1000) of a share of
Preferred Stock, subject to adjustment from time to time as provided in Sections
11 and 13.
(b) The registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided in this Agreement) in whole or
in part (except that no fraction
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of a Right may be exercised) at any time after
the Distribution Date and prior to the earliest of the Expiration Date, the
Exchange Date and the Redemption Date, by surrendering the Rights Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal corporate trust office of the Rights Agent,
together with payment of the Exercise Amount for each Right exercised.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Exercise Amount for each Right exercised and an amount equal to any
applicable transfer tax required to be paid by the surrendering holder pursuant
to Section 9(d), the Rights Agent shall, subject to the provisions of this
Agreement, thereupon promptly (i)(A) requisition from any transfer agent for the
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the Preferred Stock (or other securities, as
the case may be) to be purchased (and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests), or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock (or
other securities, as the case may be) issuable upon exercise of the Rights with
a depositary agent, requisition from the depositary agent depositary receipts
representing such Preferred Stock (or other securities, as the case may be) as
are to be purchased (in which case certificates for the Preferred Stock (or
other securities, as the case may be) represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company shall
direct the depositary agent to comply with such request; (ii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder; and (iii) if
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 of this Agreement
and, promptly after receipt thereof, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate. In the event that
the Company is obligated to issue other securities (including shares of Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
this Agreement, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 5(b) and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date or the Stock Acquisition Date by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee after the
Acquiring Person becomes such, or (iii) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either
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(A) a
direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or to holders of equity
interests in any Associate or Affiliate of such Acquiring Person) or to any
Person with whom the Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a direct or indirect transfer which a
majority of the Board of Directors of the Company determines is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall, immediately upon the occurrence of a
Triggering Event and without any further action, be null and void and no holder
of such Rights shall have any rights whatsoever with respect to such Rights
whether under this Agreement or otherwise, provided, however, that, in the case
of transferees under clause (ii) or clause (iii) above, any Rights beneficially
owned by such transferee shall be null and void only if and to the extent such
Rights were formerly beneficially owned by a Person who was, at the time such
Person beneficially owned such Rights, or who later became, an Acquiring Person
or an Affiliate or Associate of such Acquiring Person. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but shall have no liability to any holder of a
Rights Certificate or to any other Person as a result of the Company's failure
to make, or any delay in making (including any such failure or delay by the
Board of Directors of the Company) any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the registered holder of a Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former or proposed
Beneficial Owner) thereof or the Affiliates or Associates of such Beneficial
Owner (or former or proposed Beneficial Owner) as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, division,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
the provisions of this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares of Common Stock and/or other securities held in
its treasury) free from preemptive rights or any right of first refusal, a
sufficient number of shares of Preferred Stock (and, following the occurrence of
a Triggering Event, shares of Common Stock and/or other securities) to permit
the exercise in full of all Rights from time to time outstanding.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event, shares of Common
Stock and/or other securities) issuable upon the exercise of Rights may be
listed on any United States national securities exchange or quoted on any
automated quotation system, to use its best efforts to cause, from and after the
time that the Rights become exercisable, all such shares and/or other securities
reserved for such issuance to be listed on such exchange or quoted on such
automated quotation system upon official notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) 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 original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to (i) pay any transfer tax which
may be payable in respect of any transfer involved in the issuance or delivery
of any Rights Certificates or the issuance or delivery of any certificates for
shares of Preferred Stock (or Common Stock and/or other securities as the case
may be) to a Person other than, or in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
(ii) transfer or deliver any Rights Certificate or issue or deliver any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
(e) The Company shall (i) as soon as practicable following a
Triggering Event, (or such earlier time the Distribution Date as may be required
by law) prepare and file a registration statement on an appropriate form under
the Securities Act with respect to the securities purchasable upon exercise of
the Rights, (ii) cause such registration statement to become effective as soon
as
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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 Rights are no
longer exercisable for such securities and (B) the Expiration Date. The Company
shall also take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date of a
Triggering Event, the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (and/or such other securities, as the
case may be) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustments to Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of securities, cash and other
property obtainable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment from time to time as provided in this
Section 11.
(a) Adjustments Prior to Trigger Date:
(1) In the event the Company shall at any time after
the Reincorporation and prior to the Trigger Date (i) pay a dividend or make
a distribution on the Common Stock payable in shares of Common Stock, (ii)
subdivide (by a stock split or otherwise) the outstanding Common Stock into
a larger number of shares, (iii) combine (by a reverse stock split or
otherwise) the outstanding Common Stock into a smaller number of shares (and
any of the actions described in clauses (i), (ii) or (iii) are herein called
a "stock split") then:
(A) The number of Rights outstanding shall be
adjusted so that after giving effect to such stock split the number of
Rights outstanding shall be exactly equal to the number of shares of
Common Stock outstanding (and so that prior to the Distribution Date
one Right shall be associated
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with every share of Common Stock
outstanding after such Stock Split);
(B) The Exercise Amount shall be adjusted by
multiplying the Exercise Amount in effect
immediately prior to such stock split by a
fraction, the numerator of which shall be the
number of shares of Common Stock outstanding
immediately prior to such stock split and the
denominator of which shall be the number of
shares of Common Stock outstanding immediately
after to such stock split;
(C) The Purchase Price for each one-one thousandth of a share of Preferred
Stock shall not change; and
(D) The fraction of a share of Preferred Stock purchasable with each Right
immediately after to such stock split shall be equal to the product
derived by multiplying the fraction of a Preferred Share purchasable
with each Right immediately prior to such stock split times the
fraction cited in clause (B) above.
The following example illustrates the intended operation of the preceding
provisions. Assume that initially, each Right would (when and if it became
exercisable) entitle its holder to purchase one one-thousandth share of
Preferred Stock for $130 (and accordingly the initial Exercise Amount and
the initial Purchase Price per one onethousandth share of Preferred Stock
are each $130). Assume further that prior to the Distribution Date, the
Company splits its Common Stock two for one (thereby doubling the number of
shares of Common Stock outstanding). The intended operation of the preceding
adjustment provisions is that: (i) the number of Rights outstanding would
also double; (ii) one Right would be associated with each share of Common
Stock outstanding after the stock split; (iii) each Right would have an
Exercise Amount equal to $65; (iv) each Right will entitle its holder (when
and if the Right becomes exercisable) to purchase one two-thousandth of one
share of Preferred Stock; and (v) the Purchase Price for each one one-
thousandth share of Preferred Stock would remain $130 so that the
price for each one twothousandths of a share of Preferred Stock
purchasable with each Right would be $65.
(2) Adjustment in Rights Certificates: In the event the Distribution
Date shall occur and the Company shall issue separate
certificates to represent the Rights, the following provisions
shall thereafter apply:
(A) In the event the number of Rights outstanding are increased
pursuant to Section 11(a)(1), the Company shall as promptly
as reasonably possible distribute to the record holders of
the Rights on the record date for the stock split giving
rise to the increase in the number of
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Rights certificates
representing the additional Rights issuable by reason of
such stock split.
(B) In the event the number of Rights outstanding
are reduced pursuant to Section 11(a) by
reason of the occurrence of a reverse stock
split or its functional equivalent, then each
Rights certificate outstanding prior to such
reverse stock split shall thereafter the
reduced number of Rights into which the Rights
represented by such certificate immediately
prior to such reverse stock split shall have
been converted by reason of the occurrence of
that reverse stock split.
(b) Basic Triggering Event Adjustments: Upon the first occurrence of a
Triggering Event (except as otherwise provided in this Agreement) each Right
shall be changed so that immediately after the Triggering Event:
(1) it shall no longer be exercisable for Preferred Shares but rather
shall be exercisable for Common Stock;
(2) the number of shares of Common Stock which may be acquired upon
exercise of each Right shall be equal to the result obtained by
dividing (x) 50% of the Current Market Price per share of Common
Stock on the date of the occurrence of the Triggering Event into
(y) the Exercise Amount in effect immediately prior to the
Triggering Event; and
(3) the Purchase Price per Common Share purchasable with each Right
shall be equal to 50% of the Current Market Price per share of
Common Stock on the date of the occurrence of the Triggering
Event.
(c) Other Post Triggering Event Adjustments.
(1) At any time after the occurrence of a Triggering Event, the Board
of Directors of the Company shall have the right to reduce the
Exercise Amount by such amount as the Board shall desire provided
that (i) the Exercise Amount shall not be reduced to less than
$1, (ii) the reduction shall not result in a Purchase Price lower
than the par
value per share of the shares purchasable with the Rights, and (iii) the
Board shall determine that such reduction is not contrary to the interests
of holders of Rights (other than any Acquiring Person or any other person
in whose hands the Rights are void). The term "Reduction Amount" means the
amount of the reduction in the Exercise Amount which shall be made in
accordance with the preceding sentence. In the event any reduction shall
actually be made in accordance with this paragraph, then the number of
Common Shares purchasable with each Right shall be reduced to an amount
having a Current Value equal to the remainder derived by subtracting the
Reduction Amount from the Current Value as of the date of such adjustment
of the number of Common Shares
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purchasable with each Right immediately
prior to such adjustment. For purposes of the preceding sentence, (i) the
"Current Value" of a particular number of Common Shares shall be equal to
the product derived by multiplying that particular number times the greater
of (i) the Current Market Price (calculated as prescribed in Section 1) or
(ii) the closing price per share (calculated as prescribed in Section 1)
for the Common Shares on the Trading Day immediately prior to the day on
which the adjustment shall be made and (ii) Athe number of Common Shares
purchasable with each Right immediately prior to such adjustment@ shall be
the number after giving effect to the adjustment to be made on the Trigger
Date pursuant to Section 11(b) and any other adjustments which shall have
been prescribed by this Agreement for the period from the Trigger Date to
the date upon which the adjustment shall be made under this Section
11(c)(1). Upon making each adjustment under this Section 11(c)(1), the
Purchase Price for each of the Common Shares purchasable after making such
adjustment shall be reduced to the quotient derived by dividing the
Exercise Amount in effect after such reduction by the number of Common
Shares purchasable with each Right after giving effect to the reduction
prescribed by this Section 11(c)(1).
(2) Use of Common Equivalent Shares: In the event that the number of shares of
Common Stock which are authorized by the Company's certificate of
incorporation, but which are not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights (AAvailable Common Stock@)
is not sufficient to permit the exercise in full of the Rights after the
adjustment made in accordance with Section 11(b), then:
(A) the Company shall first reduce the Exercise
Amount pursuant to Section 11(c)(1) by a Reduction Amount equal to the
lesser of (i) the amount which shall be sufficient to reduce the
amount of Common Stock purchasable with the Rights (after giving
effect to the adjustment prescribed by Section 11(c)(1)) to an number
of shares not in excess of the Available Common Stock or (ii) the
maximum amount permitted by Section 11(c)(1).
(B)If the amount of the adjustment required by the preceding sentence shall
not be sufficient to reduce the amount of Common Stock purchasable with the
Rights to an number of shares not in excess of the Available Common Stock,
then (i) the Available Common Stock shall be allocated among the
outstanding Rights so that each Right shall entitle its holder to purchase
the same quantity of Available Common Stock and (ii) a fraction of a share
of Preferred Stock which when multiplied times the Adjustment Number then
in effect under the terms of the Preferred Stock produces a product equal
to the remainder derived by subtracting the number of shares of Common
Stock purchasable with each Right after the allocation specified in
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clause
(i) from the number of shares of Common Stock which would have been
purchasable with such Right if the Corporation had had a sufficient number
of shares of Common Stock to permit the Right to be exercisable entirely
for Common Stock.
(C) The fraction of a Preferred Share equal to the
reciprocal of the Adjustment Number in effect
at the time the term shall be applied shall be
deemed to be a ACommon Equivalent Share@ for
purposes of this Agreement. The Company shall
take all actions reasonably necessary so that
as nearly as possible each Common Equivalent
Share represents substantially the same
interest in the Company, has the same dividend
rate, and has other characteristics as similar
as possible to one share of Common Stock. The
term ACommon Share@ whenever it is used in
this Agreement means both a share of Common
Stock and a Common Equivalent Share.
(D) If circumstances after the Initial Trigger
Date require the use of Common Equivalent
Shares, the Company shall use its best efforts
to obtain authorization to issue a sufficient
quantity of Common Stock to permit Common
Stock to be issued upon exercise of the Rights
and/or any exercise of the exchange right
under the following section. Each time the
Company=s authorized Common Stock shall be
increased, the adjustment required under the
preceding paragraphs shall be redone to
maximize the amount of Common Stock issuable
upon exercise of the Rights. To the extent
excess authorized Common Stock remains after
the readjustment required by the preceding
sentence, the holder of any outstanding Common
Equivalent Share shall have the right at any
time to require the Company to exchange that
share for a share of Common Stock.
(E) In no event however shall the Company be obligated to reserve any Common
Stock for issuance under the Rights until and unless a Triggering Event
actually occurs.
(F) In no event shall the Company issue any Preferred Stock except upon for
issuances caused by exercise of the Rights and except for issuances
required by Section 11(c) or Section 11(d)(6).
(3) Exchange Option:
(A) Except as otherwise provided in Section 11(a)(iv)(B), a majority of the
Board of Directors of the Company may, at their option, at any time and
from time to time cause the Company to exchange for all or part of the
then-outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of
-19-
Section 7(e) hereof),
shares of Common Stock. The number of shares of Common Stock issuable for
each Right in any such exchange (the AExchange Shares@) shall be a number
of shares of Common Stock equal to the greater of (i) the quotient derived
by dividing the Adjustment Number under the Preferred Stock as of the
record date set by the Board for such exchange by the Adjustment Number
immediately prior to the Trigger Date or (ii) a number of shares of Common
Stock having a Current Market Price measured as of the record date set by
the Board for such exchange equal to the higher of (i) the Current Market
Price per Right measured as of such date or (ii) the remainder derived by
subtracting the Exercise Amount from the Current Market Price at such date
of the Common Shares for which each Right would be exercisable were it not
for the Board=s election to exercise its exchange right under this
paragraph. Any partial exchange shall be effected on a pro rata basis
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(B) Immediately upon the action of a majority of the Board of Directors of the
Company ordering the exchange of any particular Rights pursuant to this
Section 11(c)(3) and without any further action and without any notice,
the right to exercise those particular Rights shall terminate and the only
right a holder shall have thereafter with respect to any of those
particular Rights shall be to receive the number of shares of Common Stock
issuable in exchange under the terms of the preceding paragraph. The
Company shall promptly give public notice of any such exchange and in
addition, the Company shall promptly mail a notice of any such exchange to
all of the holders of such Rights in accordance with Section 25 of this
Agreement; provided, however, that the failure to give, any delay in
giving or any defect in, such notice shall not affect the validity of such
exchange. Each such notice of exchange will state the method by which
the exchange of the Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. 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 such fractional shares
of Common Stock, the Company shall pay to the registered holders of
the Rights Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to
the product derived by multiplying (x) the subject fraction, by (y)
the last sale price of the Company's Common Stock on the fifth Trading
Day following the public announcement of the exchange by the Company,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, in either case
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on a when
issued basis (taking into account the exchange), as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE (or, if the
Company's Common Stock is not so listed or traded, then as determined
in the manner provided under the definition of "Current Market Price,"
adjusted to take into account the exchange). In determining whether
any particular holder shall be obligated to receive cash in lieu of a
fractional share, the holder shall be entitled to have all Rights
beneficially owned by such holder aggregated so that only one
fractional share shall be attributable to all the Rights so
beneficially owned.
(d) Antidilution Adjustments After the Trigger Date:
(1) In the event the Company shall at any time after the Trigger Date
effect any stock split with respect to its Common Stock, then the
Purchase Price to be in effect after such stock split shall be
determined by multiplying the Purchase Price in effect immediately
prior to such action by a fraction, the numerator of which shall be
the number of Common Shares outstanding immediately prior to such
stock split and the denominator of which shall be the number of Common
Shares outstanding immediately after such stock split.
(2) In case the Company shall at any time after the Trigger Date fix a
record date for the making of a distribution to holders of Common
Stock (including any such distribution made in connection with a
reclassification of the Common Stock or a consolidation or merger in
which the Company is the surviving corpor ation) of securities (other
than Common Stock and rights, options or warrants referred to in
Section 11(d)(3)), cash (other than a regular periodic cash dividend
at an annual rate not in excess of (x) 125% of the annual
rate of the regular cash dividend paid on the Common Stock during the
immediately preceding fiscal year or (y) in the event that a regular cash
dividend was not paid on the Common Stock during such preceding fiscal
year, 5% of the Current Market Price of the Common Stock on the date such
regular cash dividend was first declared), property, evidences of
indebtedness or assets, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Common Stock on such record
date, less the fair market value (as determined in good faith by a majority
of the Board of Directors of the Company whose determination shall be
described in a statement filed with the Rights Agent) of such securities,
cash, property, evidences of indebtedness or assets to be so distributed in
-21-
respect of one share of Common Stock, and the denominator of which shall be
such Current Market Price per share of Common Stock on such record date.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not made following such
adjustment, the Purchase Price shall be readjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(3) If the Company shall at any time after the Trigger Date fix a record date
for the issuance of rights, options or warrants to holders of Common Shares
entitling them to subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per Common Share (or, in the
case of a convertible security, having a conversion price per Common Share)
less than the Current Market Price per share of Common Stock on such record
date and requiring that the conversion or purchase right be exercised
within 45 calendar days after such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Common
Shares outstanding on such record date, plus the number of Common Shares
which the aggregate exercise and/or conversion price for the total number
of Common Shares which are obtainable upon exercise and/or conversion of
such rights, options, warrants or convertible securities would purchase at
such Current Market Price, and the denominator of which shall be the number
of shares of Common Shares outstanding on such record date, plus the number
of additional Common Shares which may be obtained upon exercise and/or
conversion of such rights, options, warrants or convertible securities. In
case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by a majority of the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent. Common Shares owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights,
options or warrants are not issued following such adjustment, the Purchase
Price shall be readjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(4) Anything in this Section 11 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Purchase
-22-
Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it in its sole discretion shall determine to
be advisable in order that any combination or subdivision of the Common
Stock, issuance wholly for cash of any Common Stock at less than the
Current Market Price, issuance wholly for cash of Common Stock or
securities which by their terms are convertible into or exchangeable or
exercisable for Common Shares, stock dividends or issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Common Shares, shall not be taxable to such
stockholders.
(5) After each adjustment of the Purchase Price pursuant to any of subsections
(1) - (4) immediately above, the number of Common Shares purchasable with
each Right shall be adjusted to the quotient derived by dividing the
Purchase Price as constituted after giving effect to such adjustment into
the Exercise Amount.
(6) The Company shall not take any of the actions described in any of
subsections (1) - (3) above at a time when any Common Equivalent Shares are
outstanding unless the Company shall take substantively identical actions
with respect to the outstanding Common Stock and outstanding Common
Equivalent Shares. Conversely, the Company shall not take any actions with
respect to outstanding Common Equivalent Shares analogous to those
described in any of subsections (1) - (3) above unless the Company shall
take substantively identical actions with respect to the outstanding Common
Stock and outstanding Common Equivalent Shares.
(e) Recapitalizations.
(1) In the event that after the Trigger Date, the Company shall issue
any securities in a reclassification of the Common Stock or in any
other recapitalization (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), then in each such event:
(A) the property purchasable with each Right shall be adjusted to be
whatever the owner of that Right would have owned by reason of both
(i) the exercise of that Right immediately prior to such
recapitalization or reclassification and (ii) the effect of that
recapitalization or reclassification on the property assumed to have
been received in such exercise.
-23-
(B) The Exercise Amount shall be allocated among the shares of
stock and/or other units property for which the Right shall
be exercisable after giving effect to the adjustment cited
in clause (A) based on the fair market value of such
property to determine the Purchase Price for each such share
and/or unit.
(2) To illustrate the intended operation of this provision, assume
that: (i) immediately prior to a reclassification, each Right
were exercisable for 10 Common Shares and the Exercise Amount
were $130 (resulting in a purchase price of $13 per Common
Share); (ii) as a result of the Reclassification, each
outstanding Common Share is reclassified into two New Common
Shares and one Series B Share; and (iii) immediately after the
reclassification, the market value of each New Common Share was
$30 and the market value of each Series B share was $15.
Immediately after the assumed reclassification, each Right would
be exercisable for 20 New Common Shares at a purchase price of
$5.20 per share and ten Series B Shares at a purchase price of
$2.60 per share.
(f) In the event a Triggering Event shall occur, or in the event there
shall be a recapitalization or reclassification pursuant to Section 11(e), or in
the event there shall be any merger or other action which shall cause a change
in the property purchasable with the Rights under Section 13, or in the event
there shall be any other occurrence or development which shall cause the
property purchasable with the Rights to consist in whole or in part of anything
other than Preferred Stock, then and in any such event:
(1) The certificates representing the Rights shall automatically be
deemed to represent the adjusted terms of the Rights without the
need to replace such certificates. The Company shall thereafter
make arrangements for the production of certificates representing
the revised terms of the Rights resulting from such adjustment
and shall use such certificates to represent Rights for which new
certificates shall be issuable by reason of a transfer of record
ownership or by reason of a request by the existing record owner
for a replacement certificate representing the revised terms of
the Rights.
(2) The principles underlying the adjustment provisions in this
Section 11 and elsewhere in this Agreement shall be applied to
fairly and proportionately adjust the shares or other property
purchasable with the Rights and the purchase price for each share
or other property unit purchasable with the Rights after giving
effect to the adjustments required by reason of such event to
reflect any subsequent capital changes or other events. Without
limiting by implication the generality of the preceding sentence,
the provisions of Sections 7, 9, 10, 12, 13, 14 and 24 of this
Agreement which related to the Preferred Stock shall after the
occurrence of any such event apply in a substantively identical
manner to the shares or other property purchasable with the
Rights after giving effect to such event.
-24-
(g) Before taking any action that would cause an adjustment reducing the
Purchase Price per share at which shares are purchasable with the Rights below
the par value of those shares, 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 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 shares of Common Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
over and above the shares of Common Stock and other securities, cash or property
of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) or other securities, cash or property upon the occurrence of the
event requiring such adjustment.
(i) The Company covenants and agrees that on and after the Trigger Date
neither it nor any combination of it and its subsidiaries shall (i) consolidate
with any other Person, or (ii) merge with or into any other Person or (iii)
directly or indirectly sell, lease, or otherwise transfer or dispose of (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 if (A) at the time of or
immediately after such consolidation, merger, sale, lease, transfer, or
disposition there are any rights, warrants, securities or other instruments
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, lease, transfer, or disposition the stockholders (or equity holders) of
the Person who constitutes, or would constitute, the Principal Party in such
transaction shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (C) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights. The Company shall not consummate any such consolidation, merger,
sale, lease, transfer, or disposition unless prior thereto the Company and such
other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(i).
(j) The Company covenants and agrees that, after the Trigger Date it will
not, except as permitted by Section 11(c)(3) of this Agreement, 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, directly or indirectly, diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. Certification of Adjustments. 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 stock then purchasable with the Rights a copy
-25-
of such certificate and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or, if no Rights Certificates
have been issued, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the
Company to give such notice shall not affect the validity of or
the force or effect of or the requirement for such adjustment.
Any adjustment to be made pursuant to Sections 11 and 13 of this
Agreement shall be effective as of the date of the event giving
rise to such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any
adjustment therein contained and shall not be obligated or
responsible for calculating any adjustment nor shall it be deemed
to have knowledge of such adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) A "Business Combination" shall be deemed to occur in the event that,
in or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(i) and Section 11(j) of this Agreement) in a transaction in which the Company
is not the continuing, resulting or surviving corporation of such merger or
consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(i) and Section 11(j) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or part of the Common
Stock shall be changed (including, without limitation, any conversion into or
exchange for securities of the Company or of any other Person, cash or any other
property), (iii) the Company shall, directly or indirectly, effect a share
exchange in which all or part of the Common Stock shall be changed (including,
without limitation, any conversion into or exchange for securities of any other
Person, cash or any other property) or (iv) the Company shall, directly or
indirectly, sell, lease, exchange, mortgage, pledge or otherwise transfer or
dispose of (or one or more of its Subsidiaries shall directly or indirectly
sell, lease, exchange, mortgage, pledge or otherwise transfer or dispose of), 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 (other than the Company or
any of its Subsidiaries in one or more transactions each and all of which comply
with Section 11(i) and Section 11(j) of this Agreement).
In the event of a Business Combination, proper provision shall be made so
that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise of each Right such
number of shares of Common Stock of the Principal Party as shall be equal to the
result obtained by dividing the Exercise Amount in effect prior to the Business
Combination by 50% of the Current Market Price per share of the Common Stock of
such Principal Party immediately prior to the consummation of such Business
Combination. All shares of Common Stock of any Person for which any Right may be
exercised after consummation of a Business Combination as provided in this
Section 13(a) shall, when issued upon exercise thereof in accordance with this
Agreement, be duly and validly authorized and issued, fully paid, nonassessable,
freely tradeable, not subject to liens or encumbrances, and free of preemptive
rights, rights of first refusal or any other restrictions or limitations on the
transfer or ownership thereof of
-26-
any kind or nature whatsoever. The Purchase
Price per share for such Common Stock immediately after such Business
Combination shall be equal to 50% of the Current Market Price per share of the
Common Stock of such Principal Party immediately prior to the consummation of
such Business Combination.
(b) After consummation of any Business Combination, (i) the Principal
Party shall be liable for, and shall assume, by virtue of such Business
Combination and without the necessity of any further act, all the obligations
and duties of the Company pursuant to this Agreement, (ii) the term "Company" as
used in this Agreement shall thereafter be deemed to refer to such Principal
Party and (iii) such Principal Party shall take all steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such Business Combination as
necessary to ensure that the provisions of this Agreement 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.
(c) The Company shall not consummate any Business Combination unless prior
thereto (i) the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or reserved for issuance
(other than shares reserved for issuance pursuant to this Agreement to the
holders of Rights) to permit the exercise in full of the Rights in accordance
with this Section 13, (ii) the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the fulfillment of the Principal Party's obligations and the terms as set
forth in paragraphs (a) and (b) of this Section 13 and further providing that,
as soon as practicable on or after the date of such Business Combination, the
Principal Party, at its own expense, shall (A) prepare and file, if necessary, a
registration statement on an appropriate form under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights, (B) use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date, (C) 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 (or any successor
form) under the Exchange Act, (D) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights under the
state securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate, (E) use its best efforts to list the Rights and the securities
purchasable upon exercise of the Rights on a United States national securities
exchange and (F) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights, (iii) the Company and the Principal Party
shall have furnished to the Rights Agent an opinion of independent counsel
stating that such supplemental agreement is a legal, valid and binding agreement
of the Principal Party enforceable against the Principal Party in accordance
with its terms, and (iv) the Company and the Principal Party shall have filed
with the Rights Agent a certificate of a nationally recognized firm of
independent accountants setting forth the number of shares of Common Stock of
such issuer which may be purchased upon the exercise of each Right after the
consummation of such Business Combination.
-27-
(d) The provisions of this Section 13 shall similarly apply to successive
Business Combinations. In the event a Business Combination shall be consummated
at any time after the occurrence of a Triggering Event, the Rights which have
not theretofore been exercised shall thereafter be exercisable for the
consideration and in the manner described in Section 13(a). The provisions of
Section 11(b) of this Agreement shall be applicable to events which occur after
a Business Combination.
(e) Notwithstanding any other provision of this Agreement, no adjustment
to the number or kind of shares (or fractions of a share), cash or other
property for which a Right is exercisable or the number of Rights outstanding or
associated with each share of Common Stock or any similar or other adjustment
shall be made or be effective if such adjustment would have the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such adjustment, including, without limitation, the benefits under
Sections 11 and 13, unless the terms of this Agreement are amended so as to
preserve such benefits, provided that this paragraph shall not prevent any
change prior to the Stock Acquisition Date permitted by Section 26(a) and
provided that this Section 13(e) shall not be deemed to limit or impair the
right to engage in an exchange pursuant to Section 11(c)(3).
(f) The Company covenants and agrees that it shall not effect any Business
Combination if at the time of, or immediately after such Business Combination,
there are any rights, options, warrants or other instruments outstanding which
would diminish or otherwise eliminate the benefits intended to be afforded by
the Rights.
(g) Without limiting the generality of this Section 13, in the event the
nature of the organization of any Principal Party shall preclude or limit the
acquisition of Common Stock of such Principal Party upon exercise of the Rights
as required by Section 13(a) as a result of a Business Combination, it shall be
a condition to such Business Combination that such Principal Party shall take
such steps (including, but not limited to, a reorganization) as may be necessary
to ensure that the benefits intended to be derived under this Section 13 upon
the exercise of the Rights are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional
Rights or to distribute Rights Certificates which evidence fractional Rights.
(b) The Company shall permit the issuance and trading of Preferred
Stock in fractional shares such that the smallest fractional share tradeable at
any particular time shall equal the reciprocal of the Adjustment Number in
effect at that particular time. The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of the reciprocal of the Adjustment Number) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of the
reciprocal of the Adjustment Number). Fractions of shares of Preferred Stock
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such
-28-
agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Stock. In lieu
of fractional shares of Preferred Stock that are not integral multiples of the
reciprocal of the Adjustment Number, the Company may at its option (i) issue
scrip or warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive the reciprocal of the Adjustment Number of one
share of Preferred Stock upon the surrender of such scrip or warrants
aggregating the reciprocal of the Adjustment Number of one share of Preferred
Stock, or (ii) pay to the registered holders of Rights Certificates at the time
such Rights Certificates are exercised as provided in this Agreement an amount
in cash equal to the same fraction of the relevant closing price of a share of
Preferred Stock. For purposes of this Section 14(b), the relevant closing price
of a share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Equivalent Shares or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the product derived by
multiplying (x) the subject fraction, by (y) the closing price of a share of
Common Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by his acceptance thereof expressly waives any
right to receive any fractional Rights or any fractional shares upon exercise of
a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided, all rights of
action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, any
registered holders of associated Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, any share of associated
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right, may, on 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 rights pursuant to this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights. 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:
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(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificate or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the stock
purchasable with such Right or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Rights Holder Not Deemed a Stockholder. No holder, as such, of
any Rights Certificate shall be entitled to vote or to receive dividends or
distributions or shall be deemed for any purpose the holder of Preferred Stock
or any other securities, cash or other property which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right (i) to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, (ii) to give or withhold consent to any corporate action,
(iii) to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24), (iv) to receive dividends, distributions or
subscription rights, (v) to institute, as a holder of Preferred Stock or other
securities issuable on exercise of the Rights represented by any Rights
Certificate, any derivative action on behalf of the Company, or otherwise, until
and only to the extent that the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions of this
Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
negligence, bad faith, willful misconduct or breach of this Agreement on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises. The costs and expenses of enforcing this right of indemnification
shall also be paid by the Company. The indemnification provided for hereunder
shall survive the expiration of the Rights and the termination of this
Agreement.
The Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its
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administration of this Agreement in
reliance upon any Rights Certificate or certificate for Preferred Stock or
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document reasonably believed
by it to be genuine and to be signed, executed and, when necessary, verified or
acknowledged, by the proper Person or Persons. Notwithstanding anything in this
Agreement to the contrary, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
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 document 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 Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificate so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound (and no implied duties or
obligations shall be read into this Agreement against the Rights Agent):
(a) Before the Rights Agent acts or refrains from acting, it 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.
-31-
(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 or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman,
the Chief Executive Officer, the President, the Chief Financial Officer, the
General Counsel, the Treasurer, any Vice President or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the
negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except 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 of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any change or
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13 or 23 or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual
notice of any change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock, Common Stock or
other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock, Common Stock or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is ▇▇▇▇▇▇ authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman, the Chief Executive Officer, the President, the Chief Financial
Officer, the General Counsel, the Treasurer, any Vice President or the Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken
-32-
by it or lack of action in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with the proposal
included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application subject to the proposed action or omission and/or specifying the
action to be taken or omitted.
(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 contract with or lend money to the Company or
otherwise act as fully and freely as though the Rights Agent were not serving as
such under this Agreement. Nothing in this Agreement shall become pecuniarily
interested in any transaction in which the Company may be interested, or
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents. The Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(l) The Rights Agent shall not be required to take notice or be deemed
to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
-33-
(m) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, 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 notice of 30 days in writing mailed to the Company and to each transfer
agent of the Common Stock or Preferred Stock by registered or certified mail
and, at the expense of the Company, to the holders of the Rights Certificates by
either (i) first-class mail or (ii) by disclosure in a periodic report of the
Company required to be filed under the Exchange Act, any permitted report under
the Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. The Company may remove the
Rights Agent or any successor Rights Agent upon notice of 30 days in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by either (i)
first-class mail or (ii) by disclosure in a periodic report of the Company
required to be filed under the Exchange Act, any permitted report under the
Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. 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. Notwithstanding any other
provision of this Agreement, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized to conduct
a banking, corporate trust or stock transfer business in the State of New York)
in good standing, which is authorized under such laws to exercise corporate
trust powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as 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
such 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 or Preferred Stock; the Company
shall also either (i) mail a notice thereof in writing to the registered holders
of the Rights Certificates or (ii) make a disclosure with respect thereto in a
periodic report of the Company required to be filed under the Exchange Act, any
permitted report under the Exchange Act, a press release of the Company or in
any proxy or other communication of the Company with its
-34-
stockholders. Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights Certificates to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by a majority of the Board of Directors of the
Company to reflect any adjustment or change in the Purchase Price per share and
the number or kind or class of securities, cash or other property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the Trigger Date and (ii) the Expiration
Date, redeem all but not less than all of the then-outstanding Rights at a
redemption price of $.01 per Right (the "Redemption Price") appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the Reincorporation. The Company may, at its option, pay the
Redemption Price in cash, shares (including fractional shares) of Common Stock
(based on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors. The redemption of the Rights by the Board of Directors of the
Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors of the Company in its sole discretion may
establish.
-35-
(b) At the time and date of effectiveness set forth in any resolution of
the Board of Directors of the Company ordering the redemption of the Rights,
without any further action and without any further 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; provided, however, that such
resolution of the Board of Directors of the Company may be revoked, rescinded or
otherwise modified at any time prior to the time and date of effectiveness set
forth in such resolution, in which event the right to exercise will not
terminate at the time and date originally set for such termination by the Board
of Directors of the Company. The Company shall promptly give public notice of
any such redemption; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such redemption. The
Company shall also give notice of such redemption to the Rights Agent. The
Company may elect to give notice of such redemption to the holders of the
then-outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the issuance of Rights Certificates, on the registry books of the transfer
agent for the Common Stock. Any notice which is mailed in the manner provided in
this Agreement shall be deemed given, whether or not the holder receives the
notice. In connection with any redemption permitted under this Section 23, the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the issuance of the Rights Certificates,
on the registry books of the transfer agent for the Common Stock, and upon such
action, all outstanding Rights Certificates shall be null and void without any
further action by the Company. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23, and other
than in connection with the purchase of shares of Common Stock prior to the
earlier of the Distribution Date and the Expiration Date.
Section 24. Notice of Certain Events. In case the Company, on or after the
Distribution Date, shall propose to (a) pay any dividend payable in stock of any
class to the holders of its Common Shares or to make any other distribution to
the holders of its Common Shares (other than a regular periodic cash dividend at
an annual rate not in excess of 125% of the annualized rate of the cash dividend
paid on the Common Shares during the immediately preceding fiscal year), or (b)
offer to the holders of its Common Shares rights, options or warrants to
subscribe for or to purchase any additional shares of Common Shares or shares of
stock of any class or any other securities, rights or options, or (c) effect any
reclassification of the Common Shares (other than a reclassification involving
only the subdivision of outstanding shares of Common Shares, a change in the par
value of such Common Shares or a change from par value to no par value), or (d)
directly or indirectly effect any consolidation or merger into or with, or
effect any sale, lease, exchange, or other transfer or disposition (or to permit
one or more of its Subsidiaries to effect any sale, lease, exchange or other
transfer or disposition), 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 (e) 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, in accordance with Section 25,
a notice of such proposed action, which shall specify any record date for the
purposes of such stock dividend or distribution of rights, or the date on which
such reclassification, consolidation, merger, sale, lease,
-36-
exchange, transfer,
disposition, liquidation, dissolution or winding up is to take place and if such
holders will or may participate therein, the date of participation therein by
the holders of Common Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (a) or (b) above
at least 20 days prior to the record date for determining holders of the Common
Shares for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein, if any, by the holders of Common Shares,
whichever shall be the earlier. The failure to give notice as required by this
Section 24 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.
In case any Triggering Event or Business Combination shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 25, notice of the
occurrence of such Triggering Event or Business Combination, which shall specify
the Triggering Event or Business Combination and include a description of the
consequences of such event to holders of Rights under Section 11 or 13.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
The ServiceMaster Company
One ServiceMaster ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
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 Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by certified or registered mail, and shall be deemed given upon receipt,
addressed (until another address is filed in writing with the Company) to
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
-37-
Section 26. Supplements and Amendments.
(a) At any time prior to the Trigger Date, a majority of
the Board of Directors of the Company may, and the Rights Agent shall, if so
directed, supplement or amend any provision of this Agreement, including,
without limitation, the Beneficial Ownership percent as set forth in Section 1
at which a Person becomes an Acquiring Person and the definition of Exempt
Person as set forth in Section 1 to include any Person in addition to the
Persons described therein, without the approval of any holders of Rights.
(b) Except as otherwise provided in Section 26(c):
(1) The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board of Directors of the
Company or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement and
(ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem
or not redeem the Rights, to exchange or not exchange the Rights for
Common Stock or other securities of the Company, or to amend or
supplement this Agreement).
(2) All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with
respect to the foregoing)
which are done or made by the Board of Directors of the Company in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other Persons, and (y) not subject the Board of
Directors of the Company to any liability to the holders of the Rights.
(c) From and after the Trigger Date: (1) No amendment or other change shall
be made in
this Agreement or the terms of the Rights which is prohibited by
Section 11(j) or Section 13(f) or which would otherwise adversely
affect the interests of the holders of Rights Certificates (other than
an Acquiring Person or any other person in whose hands the Rights are
void under the provisions of Section 7(e)).
(2) The Board shall not be entitled to exercise the powers specified in
Section 26(a) or 26(b) after the Trigger Date unless the Board can
establish by clear and convincing evidence that its action satisfies
the requirement in Section 23(c)(1).
(d) Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the
Rights Agent under this Agreement will be effective against the Rights
Agent without the execution of such supplement or amendment by the
Rights Agent.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns
hereunder.
-38-
Section 28. 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 Rights any legal or equitable right, remedy or claim under
this Agreement; and this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights. Each
provision in this Agreement shall be a valid and binding obligation of each
party to this Agreement and shall be enforceable against that party in
accordance with its terms.
Section 29. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and enforceable
under applicable law, but if any provision of this Agreement shall be held to be
prohibited by or unenforceable under applicable law, (i) such provision shall be
applied to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (ii) all other provisions of this
Agreement shall remain in full force and effect. No rule of strict construction,
rule resolving ambiguities against the person who drafted the provision giving
rise to such ambiguities, or other such rule of interpretation shall be applied
against any party with respect to this Agreement.
Section 30. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the internal laws of Delaware applicable to contracts to be made
and performed entirely within Delaware.
Section 31. Counterparts. This Agreement may be executed in counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and both such counterparts shall together constitute but one and the
same instrument.
Section 32. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the
provisions of this Agreement.
Section 33. Grammatical Construction. Throughout this Agreement, where such
meanings would be appropriate, (a) any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms (e.g., references to "he"
shall also include "she" and "it" and references to "who" and "whom" shall also
include "which") and (b) the plural form of nouns and pronouns shall include the
singular and vice-versa.
* * * * *
-39-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE SERVICEMASTER COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief
Executive Officer
▇▇▇▇▇▇ Trust and Savings Bank,
as Rights Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
-40-
EXHIBIT A
The ServiceMaster Company
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Senior Vice President and General Counsel of
The ServiceMaster Company, a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 151 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on December 12, 1997, adopted the following resolution creating a series of
1,000,000 shares of Preferred Stock designated as Series A Junior Participating
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation of the Corporation and out of the
Preferred Stock authorized therein, the Board hereby authorizes that a series of
Preferred Stock of the Corporation be, and it hereby is, created and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock," par value $.01
per share (the "Series A Preferred Stock") and the number of shares constituting
such series shall be 1,000,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
A-1
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of
Common Stock and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day of March, June, September and December in each year (each
such date, a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $25.00 or (b) the
Adjustment Number (as defined below) times the aggregate per share amount
of all cash dividends, and the Adjustment Number times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of Series A Preferred Stock. The "Adjustment Number" shall
initially be 1000. In the event the Corporation shall at any time after
December 31, 1997 (i) declare or pay any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock into
a greater number of shares or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$25.00 per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date. The Board shall
have the right to authorize payment of each dividend declared on the Series
A Preferred Stock by reason of the declaration of a dividend or
distribution on the Common Stock at the same time as the dividend or
distribution on the Common Stock shall occur, and if the Board does so, the
amount of the dividend or distribution otherwise payable on the Series A
Preferred Stock on the next following Quarterly Dividend Payment Date shall
be reduced by the amount of the dividends paid on the Series A Preferred
Stock pursuant to the authority granted in
A-2
this sentence from but not
including the Quarterly Dividend Payment Date immediately preceding such
Quarter Dividend Payment Date and end on such Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred
Stock, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date, provided that if at the time of issuance of such shares of
Series A Preferred Stock dividends shall be in arrears on the shares of
Series A Preferred Stock then outstanding, dividends shall begin to accrue
on such shares of Series A Preferred Stock from the date from which the
dividends then in arrears shall have begun to accrue and the amount of
accrued dividend owed on each newly issued share shall be the same as the
accrued dividend per share then in arrears on the previously issued shares
then outstanding. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to
the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series
A Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number (as adjusted
from time to time pursuant to Section 2(A) hereof) on all matters submitted
to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein or required 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 stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such
A-3
contingency shall mark the beginning of a period (a
"default period") that shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods and for the
current quarterly period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, (1) the number of Directors shall be increased
by two, effective as of the time of election of such Directors as herein
provided, and (2) the holders of Series A Preferred Stock and the holders
of other Preferred Stock upon which these or like voting rights have been
conferred and are exercisable (the "Voting Preferred Stock") with dividends
in arrears equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect such four Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that such voting right shall not be exercised unless the holders
of at least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum
of the holders of Common Stock shall not affect the exercise by the holders
of Voting Preferred Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Voting Preferred Stock outstanding, irrespective of series,
may request, the calling of a special meeting of the holders of Voting
Preferred Stock, which meeting shall thereupon be called by the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Financial
Officer, a Vice President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Voting Preferred
Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be
given to each holder of record of Voting Preferred Stock by mailing a copy
of such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier
than 10 days and not later than 60 days after such order or request or, in
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Voting Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a
class, (x) the Directors so elected by the holders of Voting Preferred
Stock shall continue in office until the earlier of the time at
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which their
successors shall have been elected by such holders or the expiration of the
default period, and (y) any vacancy in the Board of Directors may be filled
by vote of the remaining Director theretofore elected by the holders of the
class or classes of stock which elected the Director whose office shall
have become vacant. References in this paragraph (C) to Directors elected
by the holders of a particular class or classes of stock shall include
Directors elected by such Directors to fill vacancies as provided in clause
(y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the holders
of Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Certificate of
Incorporation or Bylaws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate of Incorporation or Bylaws).
(D) Except as set forth herein or as otherwise required by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, 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 junior (either as to dividends or upon
liquidation, dissolution or
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winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior 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) redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. 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 the greater of (i) $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, and (ii) an aggregate amount per share, equal to the Adjustment
Number (as adjusted from time to time pursuant to Section 2(A) hereof) 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.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock
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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 then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock issued at any time.
Section 10. Fractional Shares. The Series A Preferred Stock shall be
issuable in fractional shares such that the smallest fraction of a share to
which a shareholder shall be entitled at any particular time shall be equal to
the reciprocal of the Adjustment Number in effect at that particular time.
Section 11. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of two-thirds
of the outstanding shares of Series A Preferred Stock, voting together as a
single class.
IN WITNESS WHEREOF, this Certificate of Designations has been executed
on behalf of the Corporation by its Senior Vice President and General Counsel
and attested by its Assistant Secretary this 18th day of December, 1997.
By _________________________
Sr. Vice President and General Counsel
Attest:
-----------------------------
Secretary
A-7
`
Exhibit B
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER _____________ __, 200__ OR EARLIER IF
NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT
TO REDEMPTION OR EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
The ServiceMaster Company
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 December 15, 1997 (the "Rights Agreement"),
between The ServiceMaster Company, a Delaware corporation (the "Company"), and
▇▇▇▇▇▇ Trust and Savings Bank, an Illinois banking corporation (the "Agent"),
unless notice of redemption shall have been previously given by the Company, to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (Chicago time) on
__________ __, 200__ at the principal corporate trust office of the Rights
Agent, or at the office of its successor as Rights Agent, one one-thousandth of
a fully paid nonassessable share of the Junior Participating Preferred Stock,
Series A, par value $.01 per share, of the Company (the "Preferred Stock") at a
purchase price of $130 per one onethousandth share, upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase duly
executed. The Purchase Price may be paid in cash or by certified bank check or
bank draft payable to the order of the Company.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities, cash or other property which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
If the Rights evidenced by this Rights Certificate are or were
formerly beneficially owned, on or after the earlier of the Distribution Date
and the Stock Acquisition Date, by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person or (ii) a direct or indirect transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person), such
Rights may become null and void, in which event the holder of any such Right
(including any subsequent holder) shall not have any right with respect to such
Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full
B-1
description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the abovementioned office of the
Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal corporate trust office of the Rights Agent, may
be exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (a) may be redeemed by the Board of Directors of
the Company at its option at a redemption price of $.01 per Right subject to
adjustment, payable, at the election of the Company, in cash or shares
(including fractional shares) of Common Stock or such other consideration as the
Board of Directors may determine, at any time prior to the earlier of (i) the
Trigger Date and (ii) the Expiration Date, or (b) may be exchanged after the
Trigger Date by the Board of Directors of the Company at its option in whole or
in part for shares of the Company's Common Stock.
The Company shall not be obligated to issue by reason of the exercise
of any Right evidenced hereby a fractional share of Preferred Stock smaller than
the reciprocal of the Adjustment Number in effect at that particular time under
the terms governing the Preferred Stock but shall be obligated to pay cash in
lieu of any such smaller fractional share in the amount established by the
Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or to receive dividends on, or shall be deemed for any purpose the holder
of, Preferred Stock or of any other securities, cash or property which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Certificate be construed to confer upon the holder
hereof, 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 the Rights Agreement), or
to receive dividends or subscription rights, or to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
B-2
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
* * * * *
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of _______ __, ____.
THE SERVICEMASTER COMPANY
By: _____________________________
Title:
Countersigned:
▇▇▇▇▇▇ Trust and Savings Bank
By: ________________________
Authorized Officer
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED the undersigned___________________________________
hereby sells, assigns and transfers unto _____________________________
__________________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
________________________ with a power of attorney to transfer the said Rights
and a Rights Certificate evidencing such Rights on the books of The
ServiceMaster Company, with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or
other identifying number of transferee: ________________________
________________________________________________________________
(Please print name and address)
________________________________________________________________
B-4
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate or any Rights evidenced hereby G are G are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned G did G did not acquire any of the
Rights evidenced by this Rights Certificate from any Person who is
or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _____________________ ____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association or any successor organization thereto.
NOTICE
The signature on the foregoing Form of Assignment must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and until
and unless the Company is provided with such evidence as it may require to
establish that the beneficial owner of the Rights evidenced by this Right
Certificate is not an Acquiring Person or an Affiliate or Associate thereof and
did not receive its interests in such Rights in any transfer chain passing
through any such Acquiring Person or an Affiliate or Associate thereof, the
Company shall have the right not to release this certificate or to issue any
replacement therefor.
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: The ServiceMaster Company
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Rights Certificate to purchase
the shares of Preferred Stock or other securities, cash or other property
issuable upon the exercise of such Rights and requests that certificates for
such shares or other securities be issued in the name of, and such cash or other
property be paid to:
Please insert Social Security
or other identifying number of purchaser:________________________
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby exercised shall be mailed to and registered in the name
of the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned): Please insert Social Security or other identifying
number: ________________________
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
B-6
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate G are G are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned G did G did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _______________________ __________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association or any successor organization thereto.
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and until
and unless the Company is provided with such evidence as it may require to
establish that the beneficial owner of the Rights evidenced by this Right
Certificate is not an Acquiring Person or an Affiliate or Associate thereof and
did not receive its interests in such Rights in any transfer chain passing
through any such Acquiring Person or an Affiliate or Associate thereof, the
Company shall have the right (i) not to issue any securities or other property
which might otherwise be issuable by reason of the attempted exercise of any
Rights evidenced hereby and (ii) not to release this certificate or to issue any
replacement therefor.
B-7