Rights Agreement - Jacobs Engineering Group Inc. and First Interstate Bank Ltd.
RIGHTS AGREEMENT
dated as of December 20, 1990
by and between
JACOBS ENGINEERING GROUP INC.
and
FIRST INTERSTATE BANK, LTD.
as Rights Agent
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Section Page
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<S> <C>
1 Certain Definitions................................. 1
2 Appointment of Rights Agent......................... 7
3 Issuance of Right Certificates...................... 7
4 Form of Right Certificates.......................... 9
5 Countersignature and Registration................... 9
6 Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates.................................. 10
7 Exercise of Rights.................................. 11
8 Cancellation and Destruction of
Right Certificates.................................. 13
9 Reservation and Availability of
Capital Stock....................................... 13
10 Securities Record Date.............................. 14
11 Adjustment of Exercise Price,
Number of Shares Issuable Upon Exercise of
Rights or Number of Rights.......................... 14
12 Certificate of Adjusted Exercise Price or
Number of Shares Issuable Upon Exercise
of Rights........................................... 20
13 Consolidation, Merger, or Sale or Transfer
of Assets or Earning Power.......................... 21
14 Fractional Rights and Fractional Shares............. 23
15 Rights of Action.................................... 24
16 Agreement of Right Holders.......................... 25
17 Right Holder and Right Certificate
Holder Not Deemed a Stockholder..................... 25
18 Concerning the Rights Agent......................... 25
</TABLE>
(i)
<PAGE>
TABLE OF CONTENTS
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(continued)
<TABLE>
<CAPTION>
Section Page
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<S> <C>
19 Merger or Consolidation or Change
of Name of Rights Agent ............................ 26
20 Duties of Rights Agent ............................. 26
21 Change of Rights Agent ............................. 28
22 Issuance of New Right Certificates ................. 29
23 Redemption of Rights ............................... 29
24 Exchange of Rights ................................. 30
25 Notice of Certain Events ........................... 31
26 Notices ............................................ 32
27 Supplements and Amendments ......................... 33
28 Certain Covenants .................................. 33
29 Successors ......................................... 34
30 Benefits of this Agreement ......................... 34
31 Severability ....................................... 34
32 Governing Law ...................................... 34
33 Counterparts ....................................... 34
34 Descriptive Headings ............................... 34
</TABLE>
(ii)
<PAGE>
TABLE OF EXHIBITS
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Exhibit A -- Form of Certificate of Designations
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Summary of the Rights
(iii)
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TABLE OF DEFINED TERMS
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<TABLE>
<CAPTION>
Term Defined Page Section
------------ ---- -------
<S> <C> <C>
Adjustment Shares 15 11(a)(ii)
Affiliate 1 1(a)
Agreement 1 Introduction
Associate 1 1(a)
Beneficially Own 1 1(b)
Beneficial Owner 1 1(b)
Business Day 3 1(c)
Close of Business 3 1(d)
Closing Price 4 1(e)
Common Share 3 1(f)
Common Share Equivalent 15 11(a)(iii)
Company (Jacobs Engineering Group Inc.) 1 Introduction
Company (following a Section 13(a) Event) 22 13(a)(iii)
Current Market Price 4 1(g)
Distribution Date 7 3(a)
Exchange Act 4 1(i)
Exchange Ratio 30 24(a)
Exempt Person 4 1(j)
Exercise Price 11 7(c)
Expiration Date 5 1(l)
Independent Director 5 l(m)
NASDAQ 3 1(e)
Person 5 1(n)
</TABLE>
(iv)
<PAGE>
TABLE OF DEFINED TERMS
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(continued)
<TABLE>
<CAPTION>
Term Defined Page Section
------------ ---- -------
<S> <C> <C>
Preferred Share 5 1(o)
Preferred Share Equivalent 16 11(b)
Record Date 1 Recital
Redemption Date 5 l(q)
Redemption Price 30 23(a)
Right 1 Recital
Rights Agent 1 Introduction
Section 11(a)(ii) Event 15 11(a)(ii)
Section 13(a) Event 21 13(a)
Securities Act 6 1(u)
Subsidiary 6 l(v)
Surviving Person 21 13(a)
Trading Day 6 l(w)
Unavailable Adjustment Shares 15 11(a)(iii)
Unavailable Exchange Shares 31 24(c)
Voting Share 6 1(x)
15% Ownership Date 6 1(y)
15% Stockholder 6 l(z)
</TABLE>
(v)
<PAGE>
RIGHTS AGREEMENT
This Rights Agreement ("Agreement") is made and entered into as of the
20th day of December, 1990 by and between Jacobs Engineering Group Inc., a
Delaware corporation (the "Company"), and First Interstate Bank, Ltd. (the
"Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred stock purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company, which dividend is payable
on January 4, 1991 (the "Record Date") to the holders of record of Common Shares
as of the Close of Business (as hereinafter defined) on such date;
WHEREAS, the Board of Directors of the Company has further authorized
and directed the issuance of one (subject to adjustment of such number as
provided in this Agreement) Right for (A) each Common Share that shall be issued
by the Company at any time after the Record Date and prior to the earliest of
the date of the first Section 11(a)(ii) Event, the date of the first Section
13(a) Event, the Redemption Date or the Expiration Date (as such terms are
hereinafter defined), and (B) each Common Share that shall be issued by the
Company at any time on or after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date pursuant to the exercise
of conversion rights, exchange rights, rights (other than Rights), warrants or
options that shall have been issued or granted prior to the earlier of the date
of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event, unless the Board of Directors shall provide otherwise at the time of the
issuance or grant of such conversion rights, exchange rights, rights (other than
Rights), warrants or options; and
WHEREAS, in connection with the matters referred to herein, the
Company desires to appoint the Rights Agent to act on behalf of the Company for
the benefit of the holders of Rights, and the Rights Agent is willing so to act;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein, and for the benefit of the holders of
Rights, the parties hereto hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as in
effect on the date hereof.
(b)(i) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own":
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(A) any securities that such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Rule 13d-3 promulgated under the
Exchange Act, in each case as in effect on the date hereof;
(B) any securities that such Person or any of such Person's Affiliates
or Associates has the right to acquire (whether such right is exercisable
immediately, or only after the passage of time, compliance with regulatory
requirements, the fulfillment of a condition, or otherwise) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise, provided that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, securities tendered pursuant
to a tender offer or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange;
(C) any securities that such Person or any such Person's Affiliates or
Associates has the right to vote, alone or in concert with others, pursuant
to any agreement, arrangement or understanding, provided that a Person
shall not be deemed the Beneficial Owner of, or to Beneficially Own, any
security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy given to such Person or
any of such Person's Affiliates or Associates in response to a public proxy
solicitation made pursuant to and in accordance with the applicable rules
and regulations of the Exchange Act, and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report);
(D) any securities that are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (other than
voting pursuant to a revocable proxy as described in the proviso to Section
l(b)(i)(C) hereof) or disposing of any securities of the Company; and
(E) on any day on or after the Distribution Date, all Rights that
prior to such date were represented by certificates for Common Shares that
such Person Beneficially Owns on such day.
(ii) Notwithstanding anything to the contrary in this Section l(b), a
Person engaged in business as an underwriter of securities shall not be deemed
to be the Beneficial Owner of, or to Beneficially Own, any securities acquired
through such
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Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition.
(iii) Jacobs Family Foundation, Inc., a California nonprofit public
benefit corporation, Dr. Joseph J. Jacobs, Violet J. Jacobs and each
currently existing trust, plan or other entity or vehicle established by
Dr. Joseph J. Jacobs, solely or jointly with Violet J. Jacobs, for the
benefit of Dr. Joseph J. Jacobs, Violet J. Jacobs or any lineal descendent
of the parents of Dr. Joseph J. Jacobs, are each conclusively deemed to be
an Affiliate, on the date hereof, of each of Dr. Joseph J. Jacobs, Violet
J. Jacobs, Jacobs Family Foundation, Inc. and each such trust, plan or
other entity or vehicle. Notwithstanding anything to the contrary in this
Section l(b), any Person who is not an Affiliate, director or member of
Jacobs Family Foundation, Inc. on the date hereof and subsequently becomes
a director and/or member of Jacobs Family Foundation, Inc. shall not be
deemed to Beneficially Own any Voting Shares that are Beneficially, Owned
by Jacobs Family Foundation, Inc., and Jacobs Family Foundation, Inc. shall
not be deemed to Beneficially Own any Voting Shares that are Beneficially
Owned by such Person, solely by reason of such Person being such a director
and/or member.
(c) "Business Day" shall mean any day other than A Saturday, a Sunday
or a day on which banking institutions in the States of New York or California
are authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 o'clock
p.m., Los Angeles time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 o'clock p.m., Los Angeles time, on the
next succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day shall be
the last sale price, regular way, per share of such stock or unit of such other
security 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, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if such stock or other security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such stock or other security is listed or admitted
to trading or, if such stock or 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
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<PAGE>
on any such date such stock or 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 that makes a market in such stock or other security
and that is selected by the Board of Directors of the Company.
(f) "Common Share" shall mean one share of the Common Stock, par value
$1.00 per share, of the Company, unless used with reference to a Person other
than the Company, in which case it shall mean one share of the class of common
stock of such Person having the greatest voting power per share or, if such
Person is a Subsidiary of another Person, one Common Share of the Person that
ultimately controls such Person.
(g) "Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of such
stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; provided,
however, that if any event shall have caused the Closing Price on any Trading
Day during such 30-day period not to be fully comparable with the Closing Price
on the date in question (or, if no Closing Price is available on the date in
question, on the Trading Day immediately preceding the date in question), then
each such noncomparable Closing Price so used shall be appropriately adjusted by
the Board of Directors in order to make the Closing Price on each Trading Day
during the period used for the determination of the Current Market Price fully
comparable with the Closing Price on such date in question (or, if applicable,
the immediately preceding Trading Day). "Current Market Price" per share of any
stock or unit of such other security that is not publicly held or so listed or
traded, and "Current Market Price" of any other property, shall mean the fair
value per share of such stock or unit of such other security, or the fair value
of such other property, respectively, as determined in good faith by the Board
of Directors of the Company based upon such appraisals or valuation reports of
such independent experts as the Board of Directors shall in good faith determine
appropriate, which determination shall be described in a statement filed by the
Company with the Rights Agent.
(h) "Distribution Date" shall have the meaning ascribed to it in
Section 3 hereof.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Exempt Person" shall mean the Company, any wholly-owned
Subsidiary of the Company, any employee benefit plan of the Company or of a
Subsidiary of the Company, and any Person holding Voting Shares for or pursuant
to the terms of any such employee benefit plan.
(k) "Exercise Price" shall have the meaning ascribed to it in Section
7(c) hereof.
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(l) "Expiration Date" shall mean December 20, 2000.
(m) "Independent Director" shall mean any director of the Company who
(i) became a director of the Company prior to the 15% Ownership Date or (ii)
became a director of the Company on or after the 15% Ownership Date, was
recommended to become a director of the Company by a majority of the Independent
Directors then in office and is not (A) a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder, (B) an officer, director or employee of such 15%
Stockholder, Affiliate or Associate, or (C) a relative or nominee of any of the
foregoing. For purposes of this subsection (m), a director shall be deemed to be
a "nominee" of a Person referred to in clause (ii) above if such director was
elected to the Board of Directors of the Company by a vote of stockholders in
which such director failed to receive the affirmative majority of the votes cast
by Persons other than such Person and such Person's Affiliates and Associates.
Whenever this Agreement requires or allows action to be taken by a majority of
the Independent Directors, with or without the concurrence of a specified
minimum number of Independent Directors, if necessary for such action to be
valid under applicable law, such action may be taken by the Board of Directors
or a duly authorized committee thereof, provided that the number of Independent
Directors who are members of the Board of Directors or of such committee and who
vote in favor of such action constitutes a majority of the Independent Directors
then in office and equals or exceeds any such specified minimum number of
Independent Directors.
(n) "Person" shall mean any individual, firm, partnership,
corporation, association, group (as such term is used in Rule 13d-5 promulgated
under the Exchange Act as in effect on the date hereof) or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(o) "Preferred Share" shall mean one share of the Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per share, of the
Company, which shall have the rights and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit A.
(p) "Record Date" shall have the meaning ascribed to it in the
recitals hereto.
(q) "Redemption Date" shall mean the date of the action of a majority,
but not less than three, of the Independent Directors directing the Company to
redeem the Rights pursuant to Section 23(a) hereof or exchange the Rights
pursuant to Section 24(a) hereof.
(r) "Redemption Price" shall have the meaning ascribed to it in
Section 23(a) hereof.
(s) "Section 11(a)(ii) Event" shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.
(t) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
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(u) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(v) "Subsidiary" of any Person shall mean any corporation or other
Person of which equity securities or equity interests representing a majority of
the voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(w) "Trading Day" shall mean, as to any stock or other security, a day
on which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(x) "Voting Share" shall mean (i) a Common Share of the Company and
(ii) any other share of capital stock of the Company entitled to vote generally
in the election of directors or entitled to vote together with the Common Shares
in respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. References in this
Agreement to a percentage or portion of the outstanding Voting Shares shall be
deemed a reference to the percentage or portion of the total votes entitled to
be cast by the holders of the outstanding Voting Shares.
(y) "15% Ownership Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or a 15% Stockholder containing the facts by virtue of which a Person
has become a 15% Stockholder.
(z) "15% Stockholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, hereafter acquires Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares then outstanding and thereupon or thereafter
Beneficially Owns 15% or more of the Voting Shares of the Company then
outstanding; provided, however, that the term "15% Stockholder" shall not
include: (i) an Exempt Person; or (ii) any Person if such Person would not
otherwise be a 15% Stockholder but for a reduction in the number of outstanding
Voting Shares resulting from a stock repurchase program or other similar plan of
the Company or from a self tender offer of the Company, which plan or tender
offer commenced on or after the date hereof, provided, however, that the term
"15% Stockholder" shall include s6'ch Person from and after the first date upon
which (A) such Person, since the date of the commencement of such plan or tender
offer, shall have acquired Beneficial Ownership of, in the aggregate, a number
of Voting Shares of the Company equal to 1% or more of the Voting Shares of the
Company then outstanding and (B) such Person, together with all Affiliates and
Associates of such Person, shall Beneficially Own 15% or more of the Voting
Shares of the Company then outstanding. In
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calculating the percentage of the outstanding Voting Shares that are
Beneficially Owned by a Person for purposes of this subsection (z), Voting
Shares that are Beneficially Owned by such Person shall be deemed outstanding,
and Voting Shares that are not Beneficially Owned by such Person and that are
subject to issuance upon the exercise or conversion of outstanding conversion
rights, exchange rights, rights (other than Rights), warrants or options shall
not be deemed outstanding. Any determination made by the Independent Directors
as to whether any Person is or is not a 15% Stockholder shall be conclusive and
binding upon all holders of Rights.
Section 2. Appointment 0f Rights Agent. The Company hereby appoints
---------------------------
the Rights Agent to act as agent for the Company and the holders of Rights 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 Right Certificates.
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(a) "Distribution Date" shall mean the date, after the date hereof,
that is the earliest of (i) the tenth Business Day (or such later day as shall
be designated by a majority, but not less than three, of the Independent
Directors) following the date of the commencement of, or the first public
announcement of the intent of any Person, other than an Exempt Person, to
commence, a tender offer or exchange offer, the consummation of which would
cause any Person to become a 15% Stockholder, (ii) the date of the first
Section 11(a)(ii) Event or (iii) the date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented
by certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights represented thereby
and (iii) the Rights shall be transferable only in connection with the transfer
of Common Shares. Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common Shares shall also constitute the surrender for transfer of the Rights
represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send by first-class,
postage-prepaid mail to each record holder of Common Shares, as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate substantially in the form of Exhibit
B hereto representing one Right for each Common Share so held. From and after
the Distribution Date, the Rights shall be represented solely by such Right
Certificates and may only be transferred by the transfer of such Right
Certificates, and the holders of such Right
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Certificates, as listed in the records of the Company or any transfer agent or
registrar for such Rights, shall be the record holders of such Rights.
(d) As soon as practicable after the Record Date, the Company shall
send a copy of a Summary of the Rights in substantially the form attached hereto
as Exhibit C by first-class, postage-prepaid mail to each record holder of
Common Shares as of the Close of Business on the Record Date at the address of
such holder shown on the records of the Company.
(e) Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of the Distribution Date, the Redemption Date or
the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also represents Rights that entitle the
holder hereof to certain rights as set forth in a Rights
Agreement dated as of December 20, 1990 by and between the
Corporation and First Interstate Bank, Ltd., as Rights Agent
(the "Rights Agreement"), the terms and conditions of which
are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of the
Corporation. Under certain circumstances specified in the
Rights Agreement, such Rights will be represented by
separate certificates and will no longer be represented by
this certificate. Under certain circumstances specified in
the Rights Agreement, Rights beneficially owned by certain
persons may become null and void. The Corporation will mail
to the record holder of this certificate a copy of the
Rights Agreement without charge promptly following receipt
of a written request therefor.
(f) Certificates for Common Shares issued at any time on or after the
Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued pursuant to the terms
of a Rights Agreement dated as of December 20, 1990 by and between the
Corporation and First Interstate Bank, Ltd., as Rights Agent.
(g) In the event that at any time on or after the earlier of the date
of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Expiration Date,
the Company shall issue any Common Shares pursuant to the exercise of conversion
rights, exchange
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rights, rights (other than Rights), warrants or options that shall have been
issued or granted prior to the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event, then, unless the
Board of Directors of the Company shall have provided otherwise at the time of
the issuance or grant of such conversion rights, exchange rights, rights (other
than Rights), warrants or options, the Rights Agent shall, as soon as
practicable after the date of such event, send by first-class, postage-prepaid
mail to the record holder of such Common Shares, at the address of such holder
as shown on the records of the Company, a Right Certificate substantially in the
form of Exhibit B hereto representing one Right for each Common Share so issued.
(h) Notwithstanding the foregoing provisions of this Section 3, the
Rights Agent shall not send any Right Certificate to any 15% Stockholder or any
of its Affiliates or Associates or to any Person if the Rights held by such
Person are Beneficially Owned by a 15% Stockholder or any of its Affiliates or
Associates. Any determination made by a majority of the Independent Directors as
to whether any Common Shares are or were Beneficially Owned at any time by a 15%
Stockholder or an Affiliate or Associate of a 15% Stockholder shall be
conclusive and binding upon all holders of Rights.
Section 4. Form of Right Certificates. The Right Certificates and the
--------------------------
form of assignment, including certificate, and the form of election to purchase,
including certificate, printed on the reverse thereof, when, as and if issued,
shall be substantially the same as Exhibit B hereto, and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange upon which the Rights or the securities
of the Company issuable upon exercise of the Rights may from time to time be
listed, or to conform to usage. Subject to Section 22 hereof, Right
Certificates, whenever issued, that are issued in respect of Common Shares that
were issued and outstanding as of the Close of Business on the Distribution
Date, shall be dated as of the Distribution Date.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Vice Chairman of the Board, its President or
any Vice President, either manually or by facsimile signature, and may have
affixed thereto the Company's seal or a facsimile thereof attested by its
Secretary or any Assistant Secretary, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before
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countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company. Any Right Certificate may be signed on behalf of the Company by
any person who at the actual date of such execution shall be a proper officer of
the Company to sign such Right Certificate, even though such person was not such
an officer at the date of the execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its principal offices books for registration and transfer of
the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of Right Certificates, the number of Rights
represented on its face by each Right Certificate and the date of each Right
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
---------------------------------------------------------------------
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered. Any registered holder desiring to transfer, split up,
combine or exchange one or more Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent with the form of assignment, including certificate, on the
reverse side thereof completed and duly executed, with signature guaranteed.
Thereupon, the Rights Agent shall countersign and deliver to the person entitled
thereto one or more Right Certificates, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
such Right Certificate if mutilated, the Company shall issue and deliver to the
Rights Agent for delivery to the record holder of such Right Certificate a new
Right Certificate of
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like tenor in lieu of such lost, stolen, destroyed or mutilated Right
Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such Right Certificate represents, or would represent when held by such
Person, Rights that had become or would become null and void pursuant to Section
7(d) hereof.
Section 7. Exercise of Rights.
------------------
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions of
this Agreement, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the earlier of the Redemption Date or the
Expiration Date, the registered holder of any Right Certificate may exercise the
Rights represented thereby in whole or in part upon surrender of such Right
Certificate, with the form of election to purchase, including certificate, on
the reverse side thereof completed and duly executed, with signature guaranteed,
to the Rights Agent at the office of the Rights Agent at Stock Transfer
Department, First Interstate Bank, Ltd., 2661 West Agoura Road, Calabasas,
California 91302, together with payment of the Exercise Price for each Right
exercised. Upon the exercise of an exercisable Right and payment of the Exercise
Price in accordance with the provisions of this Agreement, the holder of such
Right shall be entitled to receive, subject to adjustment as provided herein,
one one-hundredth of a Preferred Share (or, following the occurrence of a
Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares and/or other
securities).
(c) The Exercise Price for the exercise of each Right shall initially
be $90 and shall be payable in lawful money of the United States of America in
accordance with Section 7(f) hereof. The Exercise Price and the number of
Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event, Common Shares and/or other securities) to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 7(e), 11 and 13 hereof and the other provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event, any Rights that are or were Beneficially
Owned by a 15% Stockholder or any Affiliate or Associate of a 15% Stockholder at
any time on or after the Distribution Date shall be null and void, and for all
purposes of this Agreement such Rights shall thereafter be deemed not to be
outstanding, and any holder of such Rights (whether or not such holder is a 15%
Stockholder or an Affiliate or Associate of a 15% Stockholder) shall thereafter
have no right to exercise or exchange such Rights.
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<PAGE>
(e) Prior to the Distribution Date, if a majority, but not less than
three, of the Independent Directors shall have determined that such action
adequately protects the interests of the holders of Rights, the Company may, in
its discretion, substitute for all or any portion of the Preferred Shares that
would otherwise be issuable (after the Close of Business on the Distribution
Date) upon the exercise of each Right and payment of the Exercise Price, (i)
cash, (ii) other equity securities of the Company, (iii) debt securities of the
Company, (iv) other property or (v) any combination of the foregoing, in each
case having an aggregate Current Market Price equal to the aggregate Current
Market Price of the Preferred Shares for which substitution is made. Subject to
Section 7(d) hereof, in the event that the Company takes any action pursuant to
this Section 7(e), such action shall apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate, completed
and duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check or cashier's
check payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) requisition from the transfer agent of the Preferred Shares (or,
following the occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event,
Common Shares and/or securities), certificates for the number of Preferred
Shares (or such other securities) to be purchased, and the Company hereby
irrevocably authorizes such transfer agent to comply with all such requests,
and/or, as provided in Section 14 hereof, requisition from the depositary agent
described therein depositary receipts representing such number of one-hundredths
of a Preferred Share (or such other securities) as are to be purchased (in which
case certificates for the Preferred Shares (or such other securities)
represented by such receipts shall be deposited by the transfer agent with such
depositary agent) and the Company hereby directs such depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional Preferred Shares (or
such other securities) in accordance with Section 14 hereof, (iii) after receipt
of such certificates, depositary receipts or cash, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act and
any applicable securities law of any jurisdiction the Preferred Shares to be
issued pursuant to the exercise of the Rights; provided, however, that nothing
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<PAGE>
contained in this Section 7 shall relieve the Company of its obligations under
Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
Section 8. Cancellation and Destruction Of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
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 Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right Certificates
to the Company or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) Subject to Section 7(e) hereof, the Company shall cause to be
reserved and kept available out of its authorized and unissued equity securities
(or out of its authorized and issued equity securities held in its treasury),
the number of such equity securities that will from time to time be sufficient
to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use its
best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise of
the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register such securities under the Securities Act and any
applicable securities laws and to keep such registration effective until the
earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Exercise Price), be duly
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and validly authorized and issued and fully paid and nonassessable securities.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of a Right Certificate to
a Person other than, or the issuance or delivery of a certificate for securities
in respect of a name other than that of, the registered holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or deliver
any certificate for securities upon the exercise of any Right until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
(f) With respect to the Common Shares and/or other securities issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.
Section 10. Securities Record Date. Each person in whose name any
----------------------
certificate for securities of the Company is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
securities represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate representing such Rights was duly surrendered
and payment of the Exercise 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 securities transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
securities transfer books of the Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares Issuable
-------------------------------------------------------
Upon Exercise of Rights or Number of Rights. The Exercise Price, the number and
-------------------------------------------
kind of securities that may be purchased upon exercise of a Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event that the Company shall at any time after the Close
of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date (A) declare or pay
any dividend on the Preferred Shares payable in Preferred Shares or Voting
Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue Preferred Shares or Voting Shares in a reclassification of the
Preferred Shares (including any such
14
<PAGE>
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, and upon each such
event, the number and kind of Preferred Shares or other securities issuable upon
the exercise of a Right on the date of such event shall be proportionately
adjusted so that the holder of any Right exercised on or after such date shall
be entitled to receive, upon the exercise thereof and payment of the Exercise
Price, the aggregate number and kind of Preferred Shares or other securities or
other property, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when such Right was exercisable and
the transfer books of the Company were open, such holder would have owned upon
such exercise and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs that
would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that a 15% Ownership Date
shall have occurred and neither the Redemption Date nor the Expiration Date
shall have occurred prior to the tenth Business Day following such 15% Ownership
Date, then, and upon each such event, proper provision shall be made so that
except as provided in Section 7(d) hereof, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement and payment of the then current Exercise Price,
in lieu of the securities or other property otherwise purchasable upon such
exercise, such number of Common Shares of the Company as shall equal the result
obtained by multiplying the then current Exercise Price by the then number of
one-hundredths of a Preferred Share for which a Right was exercisable (or, if
the Distribution Date shall not have occurred prior to the date of such Section
11(a)(ii) Event, the number of one-hundredths of a Preferred Share for which a
Right would have been exercisable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 11(a)(ii) Event)
immediately prior to such Section 11(a)(ii) Event, and dividing that product by
50% of the Current Market Price (determined pursuant to Section 11(d) hereof) of
a Common Share on the date of occurrence of the relevant Section 11(a)(ii) Event
(such number of shares being hereinafter referred to as the "Adjustment
Shares"). Successive adjustments shall be made pursuant to this paragraph each
time a Section 11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii) Event the
aggregate number of Common Shares that are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for issuance for
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<PAGE>
purposes other than upon exercise of the Rights is less than the aggregate
number of Adjustment Shares thereafter issuable upon the exercise in full
of the Rights in accordance with Section 11(a)(ii) hereof (the excess of
such number of Adjustment Shares over and above such number of Common
Shares being hereinafter referred to as the "Unavailable Adjustment
Shares"), then, and upon each such event, the Company shall substitute for
the pro rata portion of the Unavailable Adjustment Shares that would
otherwise be issuable thereafter upon the exercise of each Right and
payment of the Exercise Price, (A) cash, (B) other equity securities of the
Company (including, without limitation, shares of preferred stock of the
Company or units of such shares having the same Current Market Price as one
Common Share (a "Common Share Equivalent")), (C) debt securities of the
Company, (D) other property or (E) any combination of the foregoing, in
each case having an aggregate Current Market Price equal to the aggregate
Current Market Price of the Unavailable Adjustment Shares for which
substitution is made. Subject to Section 7(d) hereof, in the event that the
Company takes any action pursuant to this Section 11(a)(iii), such action
shall apply uniformly to all outstanding Rights.
(b) In the event that the Company shall, at any time after the Close
of Business on the Record Date and prior to the Close of Business on the earlier
of the Redemption Date or the Expiration Date, fix a record date prior to the
earlier of the Redemption Date or the Expiration Date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
initially to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("Preferred
Share Equivalents")) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Current
Market Price per Preferred Share on such record date, then, and upon each such
event, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be equal to the sum of
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares that the aggregate offering price of the total number of
Preferred Shares and/or Preferred Share Equivalents to be so offered (and/or the
aggregate initial conversion price of the convertible securities to be so
offered) would purchase at such Current Market Price, and the denominator of
which shall be equal to the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or Preferred
Share Equivalents to be offered for subscription or purchase (or into which the
convertible securities to be so offered are initially convertible); provided,
however, that if such rights, options or warrants are not exercisable
immediately upon issuance but become exercisable only upon the occurrence of a
specified event or the passage of a
16
<PAGE>
specified period of time, then the adjustment to the Exercise Price shall be
made and become effective only upon the occurrence of such event or such passage
of time, and such adjustment shall be made as if the record date for the
issuance of such rights, options or warrants had been the business day
immediately preceding the date upon which such rights, options or warrants
became exercisable. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment to the Exercise Price shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price that would
then be in effect if such record date had not been fixed.
(c) In the event that the Company shall, at any time after the Close
of Business on the Record Date and prior to the Close of Business on the earlier
of the Redemption Date or the Expiration Date, fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of securities or assets (other than a
distribution of securities for which an adjustment is required under Section
11(a)(i) or (b) hereof or a regular quarterly cash dividend), then the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be equal to the excess of the Current
Market Price per Preferred Share on such record date over and above the fair
market value of the portion of the securities or assets to be so distributed
with respect to one Preferred Share, and the denominator of which shall be equal
to such Current Market Price per Preferred Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such a
distribution is not so made, the Exercise Price shall be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(d) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or traded, the "Current Market Price" per
Preferred Share shall be conclusively deemed to be the Current Market Price per
Common Share multiplied by 100.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price; provided, however, that any adjustments that by reason of this Section
11(e) are not required to be made shall be cumulated and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one-thousandth of a Common Share or other
share or one-millionth of a Preferred Share, as the case may be.
17
<PAGE>
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any securities of the Company other than Preferred Shares, the number of
such other securities so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Preferred Shares contained in this
Section 11, and the other provisions of this Agreement with respect to Preferred
Shares shall apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) below, upon each adjustment of the Exercise Price as a result
of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
represent the right to purchase, at the adjusted Exercise Price, that number of
one-hundredths of a Preferred Share (calculated to the nearest one-millionth of
a Preferred Share) obtained by multiplying (i) the number of one-hundredths of a
Preferred Share purchasable upon the exercise of one Right immediately prior to
such adjustment of the Exercise Price by (ii) the Exercise Price in effect
immediately prior to such adjustment, and dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any adjustment of
the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one one-thousandth of a
Right) obtained by dividing the Exercise Price in effect immediately prior to
the adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public announcement. If separate Right Certificates have been
issued, upon each adjustment of the number of
18
<PAGE>
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates representing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment or, at the option of the Company, cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of such adjustment,
and upon surrender thereof if required by the Company, new Right Certificates
representing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Exercise Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or
the number of one-hundredths of a Preferred Share issuable upon the exercise of
one Right, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per one one-hundredth of a Preferred Share and the
number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-hundredths of a Preferred Share at such adjusted Exercise
Price.
(1) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
of the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument representing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such further adjustments in the number of one-
hundredths of a Preferred Share
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<PAGE>
that may be purchased upon exercise of one Right, and such further adjustments
in the Exercise 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 (i) consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at
less than the Current Market Price thereof, (iii) issuance wholly for cash of
Preferred Shares or securities that by their terms are convertible into or
exchangeable for Preferred Shares, (iv) dividends on Preferred Shares payable in
Preferred Shares or (v) issuance of rights, options or warrants referred to
Section 11(b) hereof, hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(n) In the event that the Company shall, at any time after the Close
of Business on the Record Date and prior to the Close of Business on the
earliest of the date of the first Section 11(a)(ii) Event, the date of the first
Section 13(a) Event, the Redemption Date or the Expiration Date, (i) pay any
dividend on the Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, (iii) combine the outstanding Common Shares into a
smaller number of Common Shares or (iv) issue Common Shares in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, and upon each such event, the number of
Preferred Shares issuable upon the exercise of a Right on the date of such event
shall be adjusted so that the holder of any Right exercised on or after the date
of such event shall be entitled to receive, upon the exercise thereof and
payment of the Exercise Price, such number of one-hundredths of a Preferred
Share as shall equal the result obtained by multiplying the number of one-
hundredths of a Preferred Share for which a Right was exercisable (or, if the
Distribution Date shall not have occurred prior to the date of such event, the
number of one-hundredths of a Preferred Share for which a Right would have been
exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such event) immediately prior to such event by
a fraction, the numerator of which shall be equal to the number of Common Shares
outstanding immediately prior to such event and the denominator of which shall
be equal to the number of Common Shares outstanding immediately after such
event. Successive adjustments shall be made pursuant to this Section 11(n) each
time such a dividend is paid or such a subdivision, combination or
reclassification is effected. If an event occurs that would require an
adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(n) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares
---------------------------------------------------------
Issuable Upon Exercise Of Rights. Whenever an adjustment is made as provided in
--------------------------------
Section 11 hereof, the Company shall promptly (a) prepare a certificate setting
forth such
20
<PAGE>
adjustment and a brief statement of the facts giving rise to such adjustment,
(b) file with the Rights Agent and with each transfer agent for the securities
issuable upon exercise of the Rights a copy of such certificate and (c) mail a
brief summary thereof to each holder of Rights in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure of the Company to
make such certification or to give such notice shall not affect the validity or
the force and effect of such adjustment. Any adjustment to be made pursuant to
Sections 11 or 13 hereof shall be effective as of the date of the event giving
rise to such adjustment.
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or
-------------------------------------------------------
Earning Power.
-------------
(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 15% Ownership Date and prior to the earlier of the Redemption Date or
the Expiration Date, (1) the Company shall, directly or indirectly, consolidate
with or merge with and into any other Person and the Company shall not be the
continuing or surviving corporation in such consolidation or merger, (2) any
Person shall, directly or indirectly, consolidate with or merge with and into
the Company and the Company shall be the continuing or surviving corporation in
such merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (3) the Company and/or any one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer,
in one or more transactions (other than transactions in the ordinary course of
business), 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
Person or Persons other than the Company or one or more of its wholly owned
Subsidiaries (such Persons, together with the Persons described in clauses (1)
and (2) above shall be collectively referred to in this Section 13 as the
"Surviving Person"), then, and in each such case, proper provision shall be made
so that:
(i) except as provided in Section 7(d) hereof, each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof
in accordance with the terms of this Agreement and payment of the then
current Exercise Price, in lieu of the securities or other property
otherwise purchasable upon such exercise, such number of validly authorized
and issued, fully paid and nonassessable Common Shares of the Surviving
Person as shall be equal to a fraction, the numerator of which is the
product of the then current Exercise Price multiplied by the number of one-
hundredths of a Preferred Share purchasable upon the exercise of one Right
immediately prior to the first Section 13(a) Event (or, if the Distribution
Date shall not have occurred prior to the date of such Section 13(a) Event,
the number of one-hundredths of a Preferred Share that would have been so
purchasable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 13(a) Event, or,'if a
Section 11(a)(ii) Event has
21
<PAGE>
occurred prior to such Section 13(a) Event, the product of the number of
one-hundredths of a Preferred Share purchasable upon the exercise of a
Right (or, if the Distribution Date shall not have occurred prior to the
date of such Section 11(a)(ii) Event, the number of one-hundredths of a
Preferred Share that would have been so purchasable if the Distribution
Date had occurred on the Business Day immediately preceding the date of
such Section 11(a)(ii) Event) immediately prior to such Section 11(a)(ii)
Event, multiplied by the Exercise Price in effect immediately prior to such
Section 11(a)(ii) Event), and the denominator of which is 50% of the
Current Market Price per Common Share of the Surviving Person on the date
of consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term, "Company," shall thereafter be deemed to refer to
the Surviving Person; and
(iv) the Surviving Person shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable to its Common Shares thereafter deliverable upon the exercise of
Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the
sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), but less than 100% thereof, then each Person
acquiring all or a portion thereof shall assume the obligations of the Company
as to a fraction of each of the Rights equal to the fraction of the assets of
the Company and its Subsidiaries (taken as a whole) acquired by such Person, and
the obligations of the Company as to the remaining fraction of each of the
Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless
prior thereto the Company and the Surviving Person shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that, as soon as practicable after
the date of consummation of such Section 13(a) Event, such Surviving Person
shall:
22
<PAGE>
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as
practicable after such filing, use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date,
and similarly comply with all applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the Common Shares of the Surviving Person purchasable upon
exercise of the Rights on a national securities exchange, or use its best
efforts to cause the Rights and such Common Shares to meet the eligibility
requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof prior to the date of a Section 13(a) Event, such Rights
shall thereafter be exercisable only in the manner described in Section 13(a)
hereof. In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
hereof but shall instead be exercisable pursuant to, and only pursuant to, this
Section 13.
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates that represent fractional Rights. If the
Company shall determine not to issue such fractional Rights, the Company shall
pay to the registered holders of the Right Certificates with respect to which
such fractional Rights would otherwise be issuable, at the time such fractional
Rights would otherwise have been issued as provided herein, an amount in cash
equal to the same fraction of the Current Market Price of a whole Right on the
Business Day immediately prior to the date upon which such fractional Rights
would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common
Shares or Preferred Shares (other than fractions that are integral multiples of
one one-hundredth of a Preferred Share) upon exercise of Rights, or to
distribute certificates that represent
23
<PAGE>
fractional Common Shares or Preferred Shares (other than fractions that are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be represented by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of Preferred Shares. If the
Company shall determine not to issue fractional Common Shares or Preferred
Shares (or depositary receipts in lieu of Preferred Shares), the Company shall
pay to the registered holders of Right Certificates with respect to which such
fractional Common Shares or Preferred Shares would otherwise be issuable, at the
time such Rights are exercised as provided herein, an amount in cash equal to
the same fraction of the Current Market Price of a whole Common Share or
Preferred Share, as the case may be. For purposes of this Section 14(b), the
Current Market Price of a whole Common Share or Preferred Share shall be the
Closing Price per share for the Trading Day immediately prior to the date of
such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Common Shares or Preferred Shares upon exercise of such Right, except as
permitted by this Section 14.
Section 15. Rights Of Action. All rights of action in respect of this
----------------
Agreement, except the rights of action given to the Rights Agent under Section
18 hereof, are vested in the respective registered holders of the Right
Certificates and certificates for Common Shares representing Rights, and any
registered holder of any Right Certificate or of such certificate for Common
Shares, without the consent of the Rights Agent or of the holder of any other
Right Certificate or any other certificate for Common Shares may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights represented by such Right Certificate or by such certificate for Common
Shares in the manner provided in such Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance, and injunctive relief against actual or threatened violations, of
the obligations of any Person under this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and every other holder of a Right that:
24
<PAGE>
(a) prior to the Distribution Date, the Rights shall be represented by
certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only be
transferable on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right Certificate by anyone other than the Company 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. Right Holder and Right Certificate Ho1der Not Deemed a
------------------------------------------------------
Stockholder. No holder, as such, of any Right or Right Certificate shall be
-----------
entitled to vote, receive dividends or be deemed for any purpose the holder of
the securities of the Company that may at any time be issuable upon the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent as compensation for
all services rendered by it hereunder reasonable and customary fees and
expenses. The Company also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in
25
<PAGE>
reliance upon any Right Certificate or certificate for the Preferred Shares or
Common Shares or for other securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document believed
by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
its counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Chance of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be.merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. If, at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in such Right Certificates, and
in this Agreement.
(b) If at any time the name of the Rights Agent shall be changed, and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in such Right 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 Right Certificates,
by their acceptance of the Rights, shall be bound:
26
<PAGE>
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or 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 advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any 15% Stockholder) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the Vice
Chairman of the Board, the President, any Vice President, the Treasurer 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 to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement, or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any Rights becoming null and void pursuant to Section 7(d)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 7, 11, 13 and 23 hereof, or
the ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights represented by Right
Certificates after actual notice that such 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 Preferred Shares or
Common Shares or other securities to be issued pursuant to this Agreement or any
Right Certificate, or as to whether any Preferred Shares or
27
<PAGE>
Common Shares or other securities will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Vice Chairman, the President, any Vice
President, the Secretary, any Assistant Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail, and
to the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting as such, the Company shall appoint a
successor
28
<PAGE>
to the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit such holder's Right Certificate for inspection by the
Company), then the Company shall become the Rights Agent and the registered
holder of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the States of New
York or California (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the States
of New York or California), in good standing, having a principal office in New
York or California, that is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by
federal or state authority and that 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
the purpose of this Agreement and so that the successor Rights Agent may
appropriately act as Rights Agent hereunder. Not later than the effective date
of any such appointment, the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common Shares and
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, 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 Right Certificates. Notwithstanding any of
----------------------------------
the provisions of this Agreement or of the Right Certificates to the contrary,
the Company may, at its option, issue new Right Certificates in such form as may
be approved by the Board of Directors in order to reflect any adjustment or
change in the Exercise Price and the number or kind or class of shares or other
securities or property purchasable upon exercise of the Rights in accordance
with the provisions of this Agreement.
Section 23. Redemption of Rights.
--------------------
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the Expiration
Date, a majority, but not less than
29
<PAGE>
three, of the Independent Directors may, at their option, direct the Company to
redeem all, but not less than all, of the then outstanding Rights at a
redemption price of $.01 per Right, as such redemption price shall be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Redemption Price"), and the
Company shall so redeem the Rights.
(b) Immediately upon the action of a majority, but not less than
three, of the Independent Directors directing the Company to redeem the Rights
pursuant to subsection (a) of this Section 23, or at such time and date
thereafter as they may specify, and without any further action and without any
notice, the right to exercise Rights shall terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
Within 10 Business Days after the date of such action, the Company shall give
notice of such redemption to the holders of Rights by mailing such notice to all
holders of Rights at their last addresses as they appear upon the registry books
of the Rights Agent or, if prior to the Distribution Date, on the registry books
of the transfer agent for the Common Shares. Any notice that is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
such notice, but neither the failure to give any such notice nor any defect
therein shall affect the legality or validity of such redemption. Each such
notice of redemption shall state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may, directly or indirectly, redeem, acquire or purchase for value
any Rights in any manner other than that specifically set forth in Section 24
hereof or in this Section 23, and other than in connection with the purchase of
Common Shares prior to the earlier of the date of the first Section 11(a)(ii)
Event or the date of the first Section 13(a) Event.
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Shares, Preferred Shares, other equity securities of the Company, debt
securities of the Company, other property or any combination of the foregoing,
in each case having an aggregate Current Market Price on the Redemption Date
equal to the Redemption Price.
Section 24. Exchange Of Rights.
------------------
(a) At any time after the 15% Ownership Date and prior to the first
date thereafter upon which a 15% Stockholder, together with all Affiliates and
Associates of such 15% Stockholder, shall be the Beneficial Owner of 50% or more
of the Voting Shares then outstanding, a majority, but not less than three, of
the Independent Directors may, at their option, direct the Company to exchange
all, but not less than all, of the then outstanding Rights for Common Shares at
an exchange ratio of one Common Share per Right, as such exchange ratio shall be
appropriately adjusted to reflect any stock
30
<PAGE>
split, stock dividend, or similar transaction involving Preferred Shares or
Common Shares that occurs after the date hereof (the "Exchange Ratio"), and the
Company shall so exchange the Rights.
(b) Immediately upon the action of a majority, but not less than
three, of the Independent Directors directing the Company to exchange the Rights
pursuant to subsection (a) of this Section 24, or at such time and date
thereafter as they may specify, and without any further action and without any
notice, the right to exercise Rights shall terminate and the only right
thereafter of the holder of a Right shall be to receive a number of Common
Shares equal to the Exchange Ratio. Within 10 Business Days after the date of
such action, the Company shall give notice of such exchange to the holders of
Rights by mailing such notice to all holders of Rights at their last addresses
as they appear upon the registry books of the Rights Agent or, if prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives such notice, but neither the failure
to give any such notice nor any defect therein shall affect the legality or
validity of such exchange. Each such notice of exchange shall state the method
by which the Rights will be exchanged for Common Shares. Neither the Company nor
any of its Affiliates or Associates may, directly or indirectly, redeem, acquire
or purchase for value any Rights in any manner other than that specifically set
forth in Section 23 hereof or in this Section 24, and other than in connection
with the purchase of Common Shares prior to the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event.
(c) Notwithstanding the foregoing, in the event that the aggregate
number of Common Shares that are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise or exchange of the Rights is less than the aggregate number
of Common Shares issuable upon the exchange of the Rights in accordance with
this Section 24 (the excess of such number of authorized Common Shares over and
above such number of issuable Common Shares being hereinafter referred to as the
"Unavailable Exchange Shares"), then the Company shall substitute for the pro
rata portion of the Unavailable Exchange Shares that would otherwise be issuable
upon the exchange of the Rights in accordance with this Section 24, (i) cash,
(ii) other equity securities of the Company (including, without limitation,
Common Share Equivalents), (iii) debt securities of the Company, (iv) other
property or (v) any combination of the foregoing, in each case having an
aggregate Current Market Price equal to the aggregate Current Market Price of
the Unavailable Exchange Shares for which substitution is made. Subject to
Section 7(d) hereof, in the event that the Company takes any action pursuant to
this Section 24, such action shall apply uniformly to all outstanding Rights.
31
<PAGE>
Section 25. Notice of Certain Events.
------------------------
(a) In the event that the Company shall propose (i) to declare or pay
any dividend payable on or make any distribution with respect to its Common
Shares or Preferred Shares (other than a regular quarterly cash dividend), (ii)
to offer to the holders of its Common Shares or Preferred Shares options, rights
or warrants to subscribe for or to purchase any additional shares thereof or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Common Shares or Preferred Shares (other
than a reclassification involving only the subdivision of outstanding shares),
(iv) to effect any consolidation or merger with or into, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person or Persons, or (v) to effect the liquidation, dissolution
or winding up of the Company, then and in each such case, the Company shall give
to each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, that shall.specify the record date for the
purpose of such dividend or distribution, or the date upon which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the Common Shares or Preferred 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 (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Common Shares or Preferred 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 by the holders of the Common Shares or Preferred Shares, whichever date
shall be the earlier. The failure to give the notice required by this Section 25
or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
(b) As soon as practicable after the occurrence of each Section
11(a)(ii) Event and each Section 13(a) Event, the Company shall give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, specifying the event and the consequences of the
event to holders of Rights under Sections 11 and 13 hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
32
<PAGE>
Jacobs Engineering Group Inc.
251 South Lake Avenue
Pasadena, California 91101
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) to the principal office of the Rights
Agent as follows:
First Interstate Bank, Ltd.
707 Wilshire Boulevard, Wll-2
Los Angeles, California 90017
Attention: Stock Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
--------------------------
(a) A majority, but not less than three, of the Independent Directors
may, from time to time, without the approval of any holders of Rights, direct
the Company and the Rights Agent to supplement or amend any provision of this
Agreement in any manner, whether or not such supplement or amendment is adverse
to any holder of Rights, and the Company and the Rights Agent shall so
supplement or amend such provision; provided, however, that from and after the
earliest of (i) the date of the first Section 11(a)(ii) Event, (ii) the date of
the first Section 13(a) Event, (iii) the Redemption Date or (iv) the Expiration
Date, this Agreement shall not be supplemented or amended in any manner that
would materially and adversely affect any holder of outstanding Rights other
than a 15% Stockholder or a Surviving Person.
(b) From and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date, the Company shall not
effect any amendment to the Certificate of Designations for the Preferred Shares
that would materially and adversely affect the rights, privileges or preferences
of the Preferred Shares without the prior approval of the holders of two-thirds
or more of the then outstanding Rights.
Section 28. Certain Covenants. Subject to Section 27 hereof and the
-----------------
other provisions of this Agreement, from and after
33
<PAGE>
the earlier of the date of the first Section 11(a)(ii) Event or the date of the
first Section 13(a) Event and prior to the earlier of the Redemption Date or the
Expiration Date, the Company shall not (a) issue or sell, or permit any
Subsidiary to issue or sell, to a 15% Stockholder or a Surviving Person, or any
Affiliate or Associate of a 15% Stockholder or a Surviving Person, or any Person
holding Voting Shares of the Company that are Beneficially Owned by a 15%
Stockholder or a Surviving Person, (i) any rights, options, warrants or
convertible securities on terms similar to, or that materially adversely affect
the value of, the Rights or (ii) Preferred Shares, Common Shares or shares of
any other class of capital stock, if such sale is intended to or would
materially adversely affect the value of the Rights, or (b) take any other
action that is intended to or.would materially adversely affect the value of the
Rights.
Section 29. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any Person other than the Company, the Rights
Agent, the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
Common Shares representing Rights (other than those Rights that have become null
and void) 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, such registered holders of Right Certificates and such
certificates for Common Shares representing Rights.
Section 31. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and
performed entirely within such state.
Section 33. Counterparts. This Agreement may be executed in any number
------------
of counterparts and each such counterpart shall for all purposes be deemed to be
an original and all such counterparts shall together constitute but one and the
same instrument.
34
<PAGE>
Section 34. Descriptive Headings. Descriptive headings of the several
--------------------
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
Attest: JACOBS ENGINEERING GROUP INC.
By /s/ William C. Markley, III By /s/ John W. Prosser, Jr.
------------------------------ -------------------------------
Name: William C. Markley, III Name: John W. Prosser, Jr.
Title: Assistant Secretary Title: Senior Vice President
Finance & Administration
and Treasurer
Attest: FIRST INTERSTATE BANK, LTD.
By /s/ Barbara J. Mauer By /s/ Joseph Cannata
------------------------------ -------------------------------
Name: Barbara J. Mauer Name: Joseph Cannata
Title: Assistant Vice President Title: Assistant Vice President
5181N
Exhibit A -- 5182N
Exhibit B -- 5183N
Exhibit C -- 5184N
35
<PAGE>
Exhibit A
---------
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
$1.00 Par Value
of
JACOBS ENGINEERING GROUP INC.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
WE, [Name], [Title], and [Name], [Title], of Jacobs Engineering Group
Inc., a corporation organized and existing under the General Corporation Law of
the State of Delaware, in accordance with the provisions of Section 103 thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on December 20, 1990 adopted the following resolution Creating a series of One
Hundred Twenty-Five Thousand (125,000) shares of Preferred Stock, par value
$1.00 per share, designated as Series A Junior Participating Cumulative
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a-series of Preferred Stock of the Corporation be,
and it hereby is, created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof, are as follows:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as Series A Junior Participating Cumulative Preferred Stock, par
value $1.00 per share (the "Series A Preferred Stock"), and the number of shares
constituting such series shall be One Hundred Twenty-Five Thousand (125,000).
Section 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series A Preferred Stock, in preference
to the holders of shares of Common Stock, $1.00 per share, of the Corporation
(the "Common Stock") and of any other junior stock of the Corporation that may
be outstanding, 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 tenth day of January,
<PAGE>
April, July and September in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (i) $.25 per share ($1.00 per annum), or (ii)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock, or a
subdivision of the 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. In the event that the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then and in each such event, the amount
to which the holder of each share of Series A Preferred Stock was entitled
immediately prior to such event under clause (ii) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event, and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, however,
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 per
share ($1.00 per annum) on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A 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 cases such dividends shall begin to
2
<PAGE>
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall cumulate but 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 not more
than 60 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 100 votes (and each one one-hundredth of a share of Series A
Preferred Stock shall entitle the holder thereof to one vote) on all matters
submitted to a vote of the stockholders of the Corporation. In the event that
the Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then and in each such event,
the number of votes per share to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event, and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided in the Certificate of Incorporation
of the Corporation or herein or by law, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the Corporation.
(c) In addition, the holders of shares of Series A Preferred Stock
shall have the following special voting rights:
(i) In the event that at any time dividends on Series A Preferred
Stock, whenever accrued and whether or not consecutive, shall not have been
paid or declared and a sum sufficient for the payment thereof set aside, in
an amount equivalent to six quarterly dividends on all shares of Series A
Preferred Stock at the time outstanding, then and in each such event, the
holders of shares of Series A Preferred Stock and each other series of
preferred stock now or hereafter issued that shall be accorded such class
voting right by the Board of Directors and that shall have the right to
elect three directors as the result of a prior or
3
<PAGE>
subsequent default in payment of dividends on such series (each such other
series being hereinafter called "Other Series of Preferred Stock"), voting
separately as a class without regard to series, shall be entitled to elect three
directors at the next annual meeting of stockholders of the Corporation, in
addition to the directors to be elected by the holders of all shares of the
Corporation entitled to vote for the election of directors, and the holders of
all shares (including the Series A Preferred Stock) otherwise entitled to vote
for directors, voting separately as a class, shall be entitled to elect the
remaining members of the Board of Directors, provided that the Series A
Preferred Stock and each Other Series of Preferred Stock, voting as a class,
shall not have the right to elect more than three directors. Such special voting
right of the holders of shares of Series A Preferred Stock may be exercised
until all dividends in default on the Series A Preferred Stock shall have been
paid in full or declared and funds sufficient therefor set aside, and when so
paid or provided for, such special voting right of the holders of shares of
Series A Preferred Stock shall cease, but subject always to the same provisions
for the vesting of such special voting rights in the event of any such future
dividend default or defaults.
(ii) At any time after such special voting rights shall have so vested
in the holders of shares of Series A Preferred Stock, the Secretary of the
Corporation may, and upon the written request of the holders of record of 10% or
more in number of the shares of Series A Preferred Stock and each Other Series
of Preferred Stock then outstanding addressed to the Secretary at the principal
executive office of the Corporation shall, call a special meeting of the holders
of shares of Preferred Stock so entitled to vote, for the election of the
directors to be elected by them as herein provided, to be held within 60 days
after such call and at the place and upon the notice provided by law and in the
Bylaws for the holding of meetings of stockholders; provided, however, that the
Secretary shall not be required to call such special meeting in the case of any
such request received less than 90 days before the date fixed for any annual
meeting of stockholders, and if in such case such special meeting is not called
or held, the holders of shares of Preferred Stock so entitled to vote shall be
entitled to exercise the special voting rights provided in this paragraph at
such annual meeting. If any such special meeting required to be called as above
provided shall not be called by the Secretary within 30 days after receipt of
any such request, then the holders of record of 10% or more in number of the
shares of Series A Preferred Stock and each Other Series of Preferred Stock then
outstanding may designate in writing one of their number to call such meeting,
and the person so designated may, at the expense of the Corporation, call such
meeting to be held at the place and upon the notice given by such person, and
for that purpose shall have access to the stock books of the
4
<PAGE>
Corporation. No such special meeting and no adjournment thereof shall be held on
a date later than 60 days before the annual meeting of stockholders. If, at any
meeting so called or at any annual meeting held while the holders of shares of
Series A Preferred Stock have the special voting rights provided for in this
paragraph, the holders of not less than 40% of the aggregate voting power of
Series A Preferred Stock and each Other Series of Preferred Stock then
outstanding are present in person or by proxy, which percentage shall be
sufficient to constitute a quorum for the election of additional directors as
herein provided, the then authorized number of directors of the Corporation
shall be increased by three, as of the time of such special meeting or the time
of the first such annual meeting held while such holders have special voting
rights and-such quorum is present, and the holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock, voting as a class,
shall be entitled to elect the additional directors so provided for. If the
directors of the Corporation are then divided into classes under provisions of
the Certificate of Incorporation of the Corporation or the Bylaws, the three
additional directors shall be members of those respective classes of directors
in which a vacancy is created as a result of such increase in the authorized
number of directors. If the foregoing expansion of the size of the Board of
Directors shall not be valid under applicable law, then the holders of shares of
Series A Preferred Stock and of each Other Series of Preferred Stock, voting as
a class, shall be entitled, at the meeting of stockholders at which they would
otherwise have voted, to elect directors to fill any then existing vacancies on
the Board of Directors, and shall additionally be entitled, at such meeting and
each subsequent meeting of stockholders at which directors are elected, to elect
all of the directors then being elected until by such class vote three members
of the Board of Directors have been so elected.
(iii) Upon the election at such meeting by the holders of shares of
Series A Preferred Stock and each Other Series of Preferred Stock, voting as a
class, of the directors they are entitled so to elect, the persons so elected,
together with such persons as may be directors or as may have been elected as
directors by the holders of all shares (including Series A Preferred Stock)
otherwise entitled to vote for directors, shall constitute the duly elected
directors of the Corporation. The additional directors so elected by holders of
shares of Series A Preferred Stock and each Other Series of Preferred Stock,
voting as a class, shall serve until the next annual meeting or until their
respective successors shall be elected and qualified, or if any such director is
a member of a class of directors under provisions dividing the directors into
classes, each such director shall serve until the annual meeting at which the
term of office of such director's class shall expire or until such director's
successor shall be elected and shall qualify, and at each
5
<PAGE>
subsequent meeting of stockholders at which the directorship of any director
elected by the vote of holders of shares of Series A Preferred Stock and each
Other Series of Preferred Stock under the special voting rights set forth in
this paragraph is up for election, said special class voting rights shall apply
in the reelection of such director or in the election of such director's
successor; provided, however, that whenever the holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock shall be divested of
the special rights to elect three directors as above provided, the terms of
office of all persons elected as directors by the holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock, voting as a class, or
elected to fill any vacancies resulting from the death, resignation, or removal
of directors so elected by the holders of shares of Series A Preferred Stock and
each Other Series of Preferred Stock, shall forthwith terminate (and the number
of directors shall be reduced accordingly).
(iv) If, at any time after a special meeting of stockholders or an
annual meeting of stockholders at which the holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock, voting as a class,
have elected directors as provided above, and while the holders of shares of
Series A Preferred Stock and each Other Series of Preferred Stock shall be
entitled so to elect three directors, the number of directors who have been
elected by the holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock (or who by reason of one or more resignations, deaths
or removals have succeeded any directors so elected) shall by reason of
resignation, death or removal be less than three but at least one, the vacancy
in the directors so elected by the holders of shares of the Series A Preferred
Stock and each Other Series of Preferred Stock may be filled by the remaining
director or directors elected by such holders. In the event that such election
shall not occur within 30 days after such vacancy arises, or in the event that
there shall not be incumbent at least one director so elected by such holders,
the Secretary of the Corporation may, and upon the written request of the
holders of record of 10% or more in number of the shares of Series A Preferred
Stock and each Other Series of Preferred Stock then outstanding addressed to the
Secretary at the principal office of the Corporation shall, call a special
meeting of the holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock so entitled to vote, for an election to fill such
vacancy or vacancies, to be held within 60 days after such call and at the place
and upon the notice provided by law and in the Bylaws for the holding of
meetings of stockholders; provided, however, that the Secretary shall not be
required to call such special meeting in the case of any such request received
less than 90 days before the date fixed for any annual meeting of stockholders,
and if in such case such special meeting is not called, the holders of shares of
6
<PAGE>
Preferred Stock so entitled to vote shall be entitled to fill such vacancy
or vacancies at such annual meeting. If any such special meeting required
to be called as above provided shall not be called by the Secretary within
30 days after receipt of any such request, then the holders of record of
10% or more in number of the shares of Series A Preferred Stock and each
Other Series of Preferred Stock then outstanding may designate in writing
one of their number to call such meeting, and the person so designated may,
at the expense of the Corporation, call such meeting to be held at the
place and upon the notice above provided, and for that purpose shall have
access to the stock books of the Corporation; no such special meeting and
no adjournment thereof shall be held on a date later than 60 days before
the annual meeting of stockholders.
(d) Nothing herein Shall prevent the directors or stockholders from
taking any action to increase the number of authorized shares of Series A
Preferred Stock, or increasing the number of authorized shares of Preferred
Stock of the same class as the Series A Preferred Stock or the number of
authorized shares of Common Stock, or changing the par value of the Common Stock
or Preferred Stock, or issuing options, warrants or rights to any class of stock
of the Corporation as authorized by the Certificate of Incorporation of the
Corporation, as it may hereafter be amended.
(e) Except as set forth herein, holders of shares 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 as set forth in the
Certificate of Incorporation of the Corporation or herein or by law) for taking
any corporate action.
Section 4. Certain Restrictions.
--------------------
(a) Whenever any dividends or other distributions payable on the
Series A Preferred Stock as provided in Section 2 hereof 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, directly or indirectly:
(i) declare or pay dividends on, or make any other distributions
with respect to, 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
with respect to, 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 shares of the Series A
Preferred Stock and all such parity stock on which dividends
7
<PAGE>
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 winding up) with 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) 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, directly or indirectly, 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 cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock, without designation as to series, and may be reissued as part
of any series of preferred stock created by resolution or resolutions of the
Board of Directors (including Series A Preferred Stock), 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 to:
(a) 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) $1.00 per share ($.01 per
one one-hundredth of a share), plus an amount equal to accrued and
8
<PAGE>
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, or (ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of shares of Common Stock; or
(b) the holders of 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 distributions made ratably on the Series A Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.
In the event that the Corporation shall at any time declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then and in each such event, the aggregate amount to which the
holder of each share of Series A Preferred Stock was entitled immediately prior
to such event under the proviso in clause (a) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event, and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the
---------------------------
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, or otherwise
changed, then and in each such event, the shares of Series A Preferred Stock
shall at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event that the Corporation shall at
any time declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then and in each such event,
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event, and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
9
<PAGE>
Section 8. No Redemption. The shares of Series A Preferred Stock shall
-------------
not be redeemable. Notwithstanding the foregoing, the Corporation may acquire
shares of Series A Preferred Stock in any other manner permitted by law, the
Certificate of Incorporation of the Corporation or herein.
Section 9. Rank. Unless otherwise provided in the Certificate of
----
Incorporation of the Corporation or a Certificate of Designations relating to a
subsequent series of preferred stock of the Corporation, the Series A Preferred
Stock shall rank junior to all other series of the Corporation's preferred stock
as to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding up, and senior to the Common Stock of the Corporation.
Section 10. Amendment. The Certificate of Incorporation of the
---------
Corporation shall not be amended in any manner that would materially and
adversely alter or change the powers, preferences or special rights of the
Series A Preferred Stock without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single series.
Section 11. Fractional Shares. Series A Preferred Stock may be issued
-----------------
in fractions of a share (in one one-hundredths (1/100) of a share and integral
multiples thereof) that shall entitle the holder thereof, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of shares of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this______
day of _____________, 1990.
______________________________________
[Name]
[Title]
Attest:
______________________________
[Name]
[Title]
5182N
Rights Agreement -- 5181N
10
<PAGE>
Exhibit B
---------
FORM OF
RIGHT CERTIFICATE
Certificate No. R-_____ _____ Rights
NOT EXERCISABLE AFTER DECEMBER 20, 2000 OR EARLIER IF
REDEEMED OR EXCHANGED. THE RIGHTS ARE SUBJECT TO REDEMPTION
AND EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY CERTAIN PERSONS OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID.
Right Certificate
JACOBS ENGINEERING GROUP INC.
This certifies that _______________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms and conditions of a
Rights Agreement (the "Rights Agreement") dated as of December 20, 1990 by and
between Jacobs Engineering Group Inc., aDelaware corporation (the "Company"),
and First Interstate Bank, Ltd. (the "Rights Agent"), to purchase from the
Company at any time prior to the earlier of the Redemption Date (as such term is
defined in the Rights Agreement) or 5:00 o'clock p.m., Los Angeles time, on
December 20, 2000, at the office or agency of the Rights Agent at 2661 West
Agoura Road, Calabasas, California 91302, Attention: Stock Transfer Department,
or at the office of its successor as Rights Agent, one one-hundredth of a fully
paid and nonassessable share of Series A Junior Participating Cumulative
Preferred Stock, par value $1.00 per share, of the Company (a "Preferred
Share"), or, in certain circumstances, other securities or other property, at a
purchase price of $90 per one one-hundredth of a Preferred Share (the "Exercise
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed.
The number of Rights represented by this Right Certificate and the
Exercise Price set forth above are the number of Rights and the Exercise Price
as of December 20, 1990, based upon the Preferred Shares as constituted on such
date. As provided in the Rights Agreement, the Exercise Price and the number of
Preferred Shares or other securities or other property that may be purchased
upon the exercise of the Rights represented by this Right Certificate are
subject to modification and adjustment upon the occurrence of certain events.
The Rights Agreement contains a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of Right
<PAGE>
Certificates. This Right Certificate is subject to all the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof. Copies of the Rights Agreement are
on file at the principal executive offices of the Company and the above-
mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
presentation and surrender at the above-mentioned offices of the Rights Agent,
with the Form of Assignment, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
representing Rights entitling the holder thereof to purchase a like aggregate
number of Preferred Shares or, in certain circumstances, other securities or
other property, as the Rights represented by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon the surrender hereof with the Form of Election to Purchase,
including Certificate, on the reverse side hereof completed and duly executed,
with signature guaranteed, another Right Certificate or Right Certificates for
the number of whole Rights not exercised. Subject to the provisions of the
Rights Agreement, the Rights represented by this Right Certificate may be
redeemed by the Company, at its option, at a redemption price of $.01 per Right
or, upon the occurrence of certain events, the Company, at its option, may
exchange such Rights for fully paid and nonassessable shares of Common Stock,
par value $1.00 per share, of the Company at an exchange ratio of one share per
Right, which exchange ratio is subject to adjustment upon the occurrence of
certain events.
No fractional securities shall be issued upon the exercise of any
Right or Rights represented hereby (other than fractions of Preferred Shares
that are integral multiples of one one-hundredth of a Preferred Share, that may,
at the option of the Company, be represented by depositary receipts), but in
lieu thereof, a cash payment shall be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, until the Right or
Rights represented by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
2
<PAGE>
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ___________.
Attest: JACOBS ENGINEERING GROUP INC.
By_________________________ By__________________________
Name: Name:
Title: Title:
Countersigned:
FIRST INTERSTATE BANK, LTD.
By_________________________
Name:
Title:
3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________________________
_______________________________________________________________________________,
(Name, address and social security or other
identifying number of transferee)
____________________________________ (____________) of the Rights represented by
this Right Certificate, together with all right, title and interest in and to
said Rights, and hereby irrevocably constitutes and appoints __________________
attorney to transfer said Rights on the books of Jacobs Engineering Group Inc.
with full power of substitution.
Dated: ____________________, 19__ ___________________________________
(Signature)
Signature Guaranteed:
Certificate
-----------
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: ____________________, 19__ ___________________________________
(Signature)
Signature Guaranteed:
4
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
5
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To Jacobs Engineering Group Inc.:
The undersigned hereby irrevocably elects to exercise ________________
________________ (__________) of the Rights represented by this Right
Certificate to purchase the following:
(Check one of the following boxes)
[_] the Preferred Shares or other securities or property issuable upon the
exercise of said number of Rights pursuant to Section 7(c) of the Rights
Agreement.
[_] the shares of the Common Stock, par value $1.00 per share, of the Company,
or other securities or property issuable upon the exercise of said number
of Rights pursuant to Section 11(a)(ii) of the Rights Agreement.
[_] the securities issuable upon the exercise of said number of Rights pursuant
to Section 13(a) of the Rights Agreement.
The undersigned hereby requests that any such property and a
certificate for any such securities be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by this Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated: __________________, 19__ _______________________________
(Signature)
Signature Guaranteed:
6
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
Certificate
-----------
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: ________________________, 19__ ___________________________________
(Signature)
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any property or certificate for securities upon
the exercise of this Right Certificate or issue any new Right Certificate for
any remaining balance of unexercised Rights represented by this Right
Certificate.
5183N
Rights Agreement -- 5181N
7
<PAGE>
Exhibit C
---------
FORM OF
SUMMARY OF THE RIGHTS
On December 20, 1990, the Board of Directors of Jacobs Engineering
Group Inc. (the "Company") authorized and declared a dividend of one preferred
stock purchase right (a "Right") for each share of common stock, par value $1.00
per share, of the Company (the "Common Shares"). The dividend is payable on
January 4, 1991 (the "Record Date") to the holders of record of Common Shares as
of the close of business on such date.
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of December
20, 1990 by and between the Company and First Interstate Bank, Ltd., as Rights
Agent (the "Rights Agent").
1. Common Share Certificates Representing Rights.
---------------------------------------------
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights shall not be exercisable, (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) the stock certificates representing
Common Shares Shall also represent the Rights attached to such Common Shares.
Common Share certificates issued after the Record Date and prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.
2. Distribution Date.
-----------------
The "Distribution Date" is the earliest of (a) the tenth business day
following the date of the first public announcement that any person (other than
the Company or certain related entities) has become the beneficial owner of 15%
or more of the then outstanding Common Shares (such person is a "15%
Stockholder" and the date of such public announcement is the "15% Ownership
Date"), (b) the tenth business day (or such later day as shall be designated by
a majority, but not less than three, of the independent directors) following the
date of the commencement of, Or the announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would cause any person
to become a 15% Stockholder or (c) the first date, on or after the 15% Ownership
Date, upon which the Company is acquired in a merger Or other business
combination in which the Company is not the Surviving corporation or in which
the outstanding Common Shares are changed into or exchanged for stock or assets
of another person, or upon which 50% or more of the Company's consolidated
assets or earning power are sold (other than in transactions in the ordinary
course of business).
<PAGE>
In calculating the percentage of outstanding Common Shares that are
beneficially owned by any person, such person shall be deemed to beneficially
own any Common Shares issuable upon the exercise, exchange or conversion of any
options, warrants or other securities beneficially owned by such person;
provided, however, that such Common Shares shall not be deemed outstanding for
the purpose of calculating the percentage of Common Shares that are beneficially
owned by any other person. Notwithstanding the foregoing, if any person is the
beneficial owner of at least 15% of the outstanding Common Shares on the date of
the Rights Agreement, or thereafter becomes the beneficial owner of at least 15%
of the outstanding Common Shares as a result of any increase in the number of
Common Shares issuable upon the exercise, exchange or conversion of outstanding
securities, or any decrease in the number of outstanding Common Shares resulting
from any stock repurchase plan or self tender offer of the Company, then such
person shall not be deemed a "15% Stockholder" until such person thereafter
acquires beneficial ownership of, in the aggregate, a number of additional
Common Shares equal to 1% or more of the then outstanding Common Shares.
The Rights Agreement provides that (x) Dr. Joseph J. Jacobs and
certain related persons and entities, including Jacobs Family Foundation, Inc.,
are each conclusively deemed to beneficially own each other's Common Shares, and
(y) any person who is not an affiliate or director of Jacobs Family Foundation,
Inc. on December 20, 1990 and subsequently becomes a director shall not be
deemed to beneficially own any Common Shares that are beneficially owned by
Jacobs Family Foundation, Inc., and Jacobs Family Foundation, Inc. shall not be
deemed to beneficially own any Common Shares that are beneficially owned by such
person, solely by reason of such person being such a director. Under the
beneficial ownership definitions of the Rights Agreement, Dr. Jacobs is deemed
to own 28.0% of the outstanding Common Shares of the Company. However, under the
provisions of the Rights Agreement, Dr. Jacobs would not be deemed to be a "15%
Stockholder" unless and until he acquires a number of additional Common Shares
equal to 1% or more of the then outstanding Common Shares.
By reason of the beneficial ownership provisions of the rules and
regulations of the Securities and Exchange Commission governing proxy
statements, the Proxy Statement of the Company dated January 9, 1991 states that
Mr. Siggi B. Wilzig may be deemed to be the beneficial owner of 18.0% of the
outstanding Common Shares by reason of his relationships with Wilshire Oil
Company of Texas and The Trustcompany Bancorporation. Under the beneficial
ownership definitions of the Rights Agreement, Mr. Wilzig is conclusively
presumed to own beneficially the shares
DFM4/EXH.C 2.
<PAGE>
owned by Wilshire Oil Company of Texas and The Trustcompany Bancorporation.
Although no mention of Mr. Wilzig, Wilshire Oil Company of Texas or The
Trustcompany Bancorporation is made in the Rights Agreement, if Mr. Wilzig, The
Trustcompany Bancorporation or Wilshire Oil Company of Texas should acquire a
number of additional Common Shares equal to 1% or more of the outstanding Common
Shares, then Mr. Wilzig would be deemed to be a "15% Stockholder".
Upon the close of business on the Distribution Date, the Rights shall
separate from the Common Shares, Right certificates shall be issued and the
Rights shall become exercisable to purchase Preferred Shares as described in
Section 5 below.
3. Issuance of Right Certificates.
------------------------------
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
4. Expiration of Rights.
--------------------
The Rights shall expire on December 20, 2000, unless earlier redeemed
or exchanged.
5. Exercise of Rights.
------------------
Unless the Rights have expired or been redeemed or exchanged, they may
be exercised, at the option of the holders, pursuant to paragraphs (a), (b) or
(c) below. No Right may be exercised more than once or pursuant to more than one
of such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by a 15%
Stockholder or that was attached to a Common Share that is subject to an option
beneficially owned by a 15% Stockholder shall be void.
(a) Right to Purchase Preferred Shares. From and after the close of
----------------------------------
business on the Distribution Date, each Right (other than a Right that has
become void) shall be exercisable to purchase one one-hundredth of a share of
Series A Junior Participating Cumulative Preferred Stock, par value $1.00 per
share, of the Company (the "Preferred Shares"), at an exercise price of $90 (the
"Exercise Price"). Prior to the Distribution Date, the Company may substitute
for all or any portion of the Preferred Shares that would otherwise be issuable
upon exercise
DFM/EXH.C 3.
<PAGE>
of the Rights, cash, assets or other securities having the same aggregate value
as such Preferred Shares. The Preferred Shares are nonredeemable and, unless
otherwise provided in connection with the creation of a subsequent series of
preferred stock, are subordinate to any other series of the Company's preferred
Stock, whether issued before or after the issuance of the Preferred Shares. The
Preferred Shares may not be issued except upon exercise of Rights. The holder of
a Preferred Share is entitled to receive when, as and if declared, the greater
of (i) cash and non-cash dividends in an amount equal to 100 times the dividends
declared on each Common Share or (ii) a preferential annual dividend of $1.00
per Preferred Share ($.01 per one one-hundredth of a Preferred Share). In the
event of liquidation, the holders of Preferred Shares shall be entitled to
receive a liquidation payment in an amount equal to the greater of (1) $1.00 per
Preferred Share ($.01 per one one-hundredth of a Preferred Share), plus all
accrued and unpaid dividends and distributions on the Preferred Shares, or (2)
an amount equal to 100 times the aggregate amount to be distributed per Common
Share. Each Preferred Share has 100 votes, voting together with the Common
Shares. In the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, the holder of a Preferred Share shall be entitled
to receive 100 times the amount received per Common Share. The rights of the
Preferred Shares as to dividends, voting and liquidation preferences are
protected by antidilution provisions. It is anticipated that the value of one
one-hundredth of a Preferred Share should approximate the value of one Common
Share.
(b) Right to Purchase Common Shares of the Company. From and after the
----------------------------------------------
close of business on the tenth business day following the 15% Ownership Date,
each Right (other than a Right that has become void) shall be exercisable to
purchase, at the Exercise Price (initially $90), Common Shares with a market
value equal to two times the Exercise Price. If the Company does not have
sufficient Common Shares available for all Rights to be exercised, the Company
shall substitute for all or any portion of the Common Shares that would
otherwise be issuable upon the exercise of the Rights, cash, assets or other
securities having the same aggregate value as such Common Shares.
(c) Right to Purchase Common Stock of a Successor Corporation. If, on
---------------------------------------------------------
or after the 15% Ownership Date, (i) the Company is acquired in a merger or
other business combination in which the Company is not the surviving
corporation, (ii) the Company is the surviving corporation in a merger or other
business combination in which all or part of the outstanding Common Shares are
changed into or exchanged for stock or assets of another person or (iii) 50% or
more of the Company's consolidated assets or earning power are sold (other than
in
DFM4/EXH.C 4.
<PAGE>
transactions in the ordinary course of business), then each Right (other than a
Right that has become void) Shall thereafter be exercisable to purchase, at the
Exercise Price (initially $90), shares of common stock of the surviving
corporation or purchaser, respectively, with an aggregate market value equal to
two times the Exercise Price.
6. Adjustments to Prevent Dilution.
-------------------------------
The Exercise Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Agreement in
order to prevent dilution.
7. Cash Paid Instead of Issuing Fractional Securities.
--------------------------------------------------
With certain exceptions, no adjustment in the Exercise Price shall be
required until cumulative adjustments require an adjustment of at least 1%. No
fractional securities shall be issued upon exercise of a Right (other than
fractions of Preferred Shares that are integral multiples of one one-hundredth
of a Preferred Share and that may, at the election of the Company, be evidenced
by depositary receipts) and in lieu thereof, an adjustment in cash shall be made
based on the market price of such Securities on the last trading date prior to
the date of exercise.
8. Redemption.
----------
At any time prior to the earlier of (a) the tenth business day
following the 15% Ownership Date or (b) the first event of the type described in
Section 5(c) above, a majority, but not less than three, of the independent
directors may, at their option, direct the Company to redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price"),
and the Company shall so redeem the Rights. Immediately upon such action by the
independent directors (the date of such action is the "Redemption Date"), the
right to exercise Rights shall terminate and the only right of the holders of
Rights thereafter shall be to receive the Redemption Price.
9. Exchange.
--------
At any time after the 15% Ownership Date and prior to the first date
thereafter upon which a 15% Stockholder shall be the beneficial owner of 50% or
more of the outstanding Common Shares, a majority, but not less than three, of
the independent directors may, at their option, direct the Company to exchange
all, but not less than all, of the then outstanding Rights for
DFM4/EXH.C 5.
<PAGE>
Common Shares at an exchange ratio of one Common Share per Right (the "Exchange
Ratio"), and the Company shall so exchange the Rights. Immediately upon such
action by the independent directors, the right to exercise Rights shall
terminate and the only right of the holders of Rights thereafter shall be to
receive a number of Common Shares equal to the Exchange Ratio.
10. Stockholder Rights Prior to Exercise.
------------------------------------
Until a Right is exercised, the holder thereof, as such, shall have no
rights as a stockholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. Amendment of Rights Agreement.
-----------------------------
A majority, but not less than three, of the independent directors may,
from time to time, without the approval of any holder of Rights, direct the
Company and the Rights Agent to supplement or amend any provision of the Rights
Agreement in any manner, whether or not such supplement or amendment is adverse
to any holder of Rights, and the Company and the Rights Agent shall so
supplement or amend such provision; provided, however, that from and after the
earliest of (a) the tenth business day following the 15% Ownership Date, (b) the
first event of the type described in Section 5(c) above, or (c) the Redemption
Date, the Rights Agreement shall not be supplemented or amended in any manner
that would materially and adversely affect any holder of outstanding Rights.
DFM4/EXH.C 6.