EXHIBIT 4.1
RIGHTS AGREEMENT
RIGHTS AGREEMENT (this "Agreement") dated as of November 12, 1998, between
PetroCorp Incorporated, a Texas corporation (the "Company"), and First Union
National Bank, a national banking institution, as Rights Agent (the "Rights
Agent").
W I T N E S S E T H:
WHEREAS, on November 12, 1998 the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one Right
(hereinafter defined) for each share of Common Stock (as hereinafter defined)
outstanding at the close of business on November 23, 1998 (hereinafter referred
to as the "Record Date") and has authorized the issuance of one Right (as such
number may hereafter be adjusted as hereinafter set forth) in respect of each
share of Common Stock issued (on original issuance or out of treasury) after the
Record Date but prior to the earlier of the Distribution Date and the Expiration
Date (as such terms are hereinafter defined), each Right initially evidencing
the right to purchase at the Purchase Price, one one-thousandth (1/1,000th) of a
share of Preferred Stock--Junior Participating Series A of the Company (the
"Preferred Stock"), having the powers, rights and preferences set forth in the
certificate of designation, attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Certain Definitions. The following terms, as used herein, have
the following meanings:
(a) "Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 55%
or more of the shares of Common Stock then outstanding, other than pursuant to a
Qualifying Tender Offer; provided, however, that, an Acquiring Person shall not
include an (i) Exempt Person, or (ii) any Person, together with all Affiliates
and Associates of such Person, who or which would be an Acquiring Person solely
by reason of (A) being the Beneficial Owner of shares of Common Stock of the
Company, the Beneficial Ownership of which was acquired by such Person pursuant
to any action or transaction or series of related actions or transactions
approved by the Board of Directors before such Person otherwise became an
Acquiring Person, or (B) a reduction in the number of issued and outstanding
shares of Common Stock of the Company pursuant to a transaction or a series of
related transactions approved by the Board; and provided further, that in the
event that such Person described in this clause (ii) does not become an
Acquiring Person by reason of subclause (A) or (B) of this clause (ii), such
Person nonetheless shall become an Acquiring Person in the event such Person
thereafter acquires Beneficial Ownership of an additional 1% of the Common Stock
of the Company, unless the acquisition of such additional Common Stock would not
result in such Person becoming an Acquiring Person by reason of subclause (A) or
(B) of this clause (ii). Notwithstanding the foregoing, if the Board determines
in good faith (but only if at the time of such determination by the Board there
are then in office not less than five Continuing Directors and such action is
approved by a majority of the Continuing Directors then in office) that a Person
who would otherwise be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a) has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of shares of Common Stock so that such Person would no longer be an
"Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed an "Acquiring Person" for
any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," and shall be deemed to have Beneficial Ownership
of, any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, beneficially owns (as determined
pursuant to Rule 13d-3 under the Exchange Act as in effect on the date of
this Agreement);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has
(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or the satisfaction of a
condition, or both) pursuant to any agreement, arrangement or
understanding (whether written or oral) or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of or to "beneficially own"
securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of its Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or
(B) the right to vote, alone or in concert with others, pursuant
to any agreement, arrangement or understanding (whether written or
oral) or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of or to "beneficially own" any security
as a result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (1) arises
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act and
(2) is not also then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
or any of its Affiliates or Associates has any agreement, arrangement or
understanding (whether written or oral) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in
subparagraph (ii)(B) immediately above) or disposing of any such
securities. Despite the foregoing, for purposes of determining Beneficial
Ownership of securities under this Agreement, officers and directors of the
Company solely by reason of their
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status as such shall not constitute a group (notwithstanding that they may
be Associates of one another or may be deemed to constitute a group for
purposes of Section 13(d) of the Exchange Act) and shall not be deemed to
own shares owned by another officer or director of the Company. Further,
nothing contained in this definition shall cause a Person ordinarily
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired in a bona fide
firm commitment underwriting pursuant to an underwriting agreement with the
Company. Additionally, in determining the Beneficial Ownership of any
Person with respect to any securities, any options to acquire such
securities held by any Affiliate or Associate of such Person pursuant to an
employee or director option plan of the issuer of such securities shall not
be counted in said determination.
(d) "Business Day" means any day other than a Saturday, Sunday, or a day
on which banking institutions in the State of Texas or Illinois are authorized
or obligated by law or executive order to close.
(e) "close of business" on any given date means 5:00 p.m., New York City
time, on such date; provided, however, that if such date is not a Business Day
"close of business" means 5:00 p.m., New York City time, on the next succeeding
Business Day.
(f) "Closing Price" shall have the meaning ascribed to such term in
Section 11(b)(i) of this Agreement.
(g) "Common Stock" when used with reference to the Company (or without
express reference to another Person) shall mean the Common Stock (presently
$0.01 par value per share) of the Company. "Common Stock" when used with
reference to any Person other than the Company which shall be organized in
corporate form shall mean the capital stock or other equity security with the
greatest voting power of such Person. "Common Stock" when used with reference to
any Person other than the Company which shall not be organized in corporate form
shall mean units of beneficial interest which shall represent the right to
participate in profits, losses, deductions and credits of such Person and which
shall be entitled to exercise the greatest voting power of such Person.
(h) "Continuing Director" shall mean any member of the Board of Directors
of the Company, while such person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board prior to the time that
any Person became an Acquiring Person (other than pursuant to a Qualifying
Tender Offer) or (ii) subsequently became a member of the Board, and whose
nomination for election or election to the Board was recommended or approved by
the Board when there are then in office at least five Continuing Directors and
such nomination for election or election was recommended or approved by a
majority of the Continuing Directors then on the Board.
(i) "Distribution Date" means the earlier of: (i) the close of business
on the tenth day after the Stock Acquisition Date; or (ii) the close of business
on the tenth Business Day (or such later date as may be determined by action of
the Board) after the date of the commencement by any Person (other than an
Exempt Person) of, or the first public announcement of the intent of
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any Person (other than an Exempt Person) to commence, a tender offer or exchange
offer upon the successful completion of which such Person, together with its
Affiliates and Associates, would be the Beneficial Owner of 55% or more of the
then outstanding Common Stock of the Company, regardless of whether any shares
are actually purchased pursuant to such offer. The Distribution Date shall not
be deemed to have been extended by Board action pursuant to the parenthetical
phrase of clause (ii) of this definition unless at the time of such
determination by the Board there are then in office not less than five
Continuing Directors and the determination to extend the Distribution Date is
also approved by a majority of the Continuing Directors then in office.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of
the Company or (iii) any employee benefit plan or employee stock plan of the
Company or any Subsidiary of the Company, or any trust or other entity
organized, appointed, established, or holding Common Stock for or pursuant to
the terms of any such plan.
(l) "Expiration Date" means the earlier of (i) the Final Expiration Date
and (ii) the time at which all Rights are redeemed as provided in Section 23 or
exchanged as provided in Section 24.
(m) "Final Expiration Date" means the close of business on November 12,
2008.
(n) "Person" means any individual, firm, corporation, partnership or
other entity.
(o) "Preferred Stock" means the Preferred Stock--Junior Participating
Series A, par value $0.01 per share, of the Company, having the terms set forth
in the form of certificate of designation attached hereto as Exhibit A. Any
reference in this Agreement to Preferred Stock shall be deemed to include any
authorized fraction of a share of Preferred Stock, unless the context otherwise
requires.
(p) "Purchase Price" with respect to each Right shall mean $24, as such
amount may from time to time be adjusted as provided herein, and shall be
payable in lawful money of the United States of America. All references herein
to the Purchase Price shall mean the Purchase Price as in effect at the time in
question.
(q) "Qualifying Tender Offer" shall mean a tender or exchange offer for
all outstanding shares of Common Stock of the Company determined by a majority
of the Board (provided that at the time of such approval of the Board there are
then in office not less than five Continuing Directors and such offer is
approved by a majority of the Continuing Directors then in office), after
receiving advice from one or more investment banking firms to be (i) at a price
which is fair to the Company's shareholders (taking into account all factors
which members of the Board deem relevant including, without limitation, the
potential long-term value of the Company and the prices which could reasonably
be attained if the Company or its assets were sold on an orderly basis designed
to realize maximum value, and (ii) otherwise in the best interests of the
Company and its shareholders.
(r) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
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(s) "Right" shall mean the right to purchase one one-thousandth
(1/1,000th) of a share of Preferred Stock--Junior Participating Series A, par
value $.01 per share, of the Company, or other securities or property, upon the
terms and subject to the conditions herein set forth.
(t) "Right Certificate" shall have the meaning set forth in Section 3(c)
hereof.
(u) "Section 13 Event" means any event described in clauses (x), (y) or
(z) of Section 13(a).
(v) "Securities Act" means the Securities Act of 1933, as amended.
(w) "Stock Acquisition Date" means the date of the first public
announcement (which shall include, without limitation, the filing of a report on
Schedule 13D under the Exchange Act or any comparable or successor report) by
the Company or an Acquiring Person indicating that an Acquiring Person has
become such.
(x) "Subsidiary" of any Person means any other Person of which securities
or other ownership interests having ordinary voting power, in the absence of
contingencies, to elect a majority of the board of directors or other Persons
performing similar functions are at the time beneficially owned, directly or
indirectly, owned by such first Person.
(y) "Trading Day" means a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, a
Business Day.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. If the Company appoints one or more co-Rights Agents,
the respective duties of the Rights Agent and any co-Rights Agents shall be as
the Company shall determine.
Section 3. Issuance of Rights and Right Certificates. Prior to the
Distribution Date (i) the Rights will be evidenced by the certificates for the
Common Stock (which certificates shall be deemed also to be Right Certificates
(as hereinafter defined)) and not by separate Right Certificates, and the
registered holders of the Common Stock shall be deemed to be the registered
holders of the associated Rights, and (ii) each Right shall be transferable only
simultaneously and together with the transfer of a share of Common Stock
(subject to adjustment as hereinafter provided). As soon as practicable after
the Record Date, the Company will send a summary of the rights substantially in
the form of Exhibit B (the "Summary of Rights") hereto, by postage prepaid mail,
to each record holder of the Common Stock as of the close of business on the
Record Date at the address of such holder shown on the records of the Company.
Until the Distribution Date (or, if earlier, the Expiration Date or Final
Expiration Date), the surrender for transfer of any certificate for Common Stock
shall constitute the surrender for transfer of the Right or Rights associated
with the Common Stock evidenced thereby, whether or not accompanied by a copy of
the Summary of Rights.
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(b) One Right shall be issued in respect of (i) each share of Common Stock
outstanding as of the Record Date, (ii) each additional share of Common Stock
that becomes outstanding (whether by original issuance or out of treasury) after
the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date and (iii) each additional share of Common Stock that is issued
(whether by original issuance or from treasury) after the Distribution Date but
prior to the Expiration Date with Rights as provided in Section 22.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from treasury or transfer or exchange
of Common Stock) after the Record Date but prior to the earliest of the
Distribution Date or the Expiration Date (or, in certain circumstances as
provided in Section 22 hereof, after the Distribution Date) shall have
impressed, printed, written or stamped thereon or otherwise affixed thereto the
following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between PetroCorp Incorporated
(the "Company") and First Union National Bank, dated as of November 12,
1998 (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be redeemed, may be
exchanged, may expire, or may be evidenced by separate certificates and no
longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
Beneficially Owned by Acquiring Persons or their Affiliates or Associates
(as such terms are defined in the Rights Agreement) or any subsequent
holder of such Rights shall be null and void and may not be transferred to
any Person.
(c) As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will send if so requested by the
Company, at the expense of the Company), by first class mail, postage prepaid,
to each record holder of the Common Stock as of the close of business on the
Distribution Date, as shown by the records of the Company, at the address of
such holder shown on such records, a certificate in the form provided by Section
4 hereof (a "Right Certificate"), evidencing one Right (subject to adjustment
as provided herein) for each share of Common Stock so held. As of and after the
Distribution Date, the Rights shall be evidenced solely by Right Certificates
and may be transferred by the transfer of the Right Certificate as permitted
hereby, separately and apart from any transfer of one or more shares of Common
Stock.
Section 4. Form of Right Certificates. (a) The Right Certificates (and the
forms of assignment, election to purchase and certificates to be printed on the
reverse thereof), when, as and if issued shall be substantially in the form of
Exhibit C hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law, rule or regulation or
with any rule or regulation of any stock exchange on which the Common Stock or
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 7, 11 and 22,
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the Right Certificates, evidencing Rights whenever issued, (i) shall be dated as
of the date of issuance of the Rights they represent and (ii) on their face
shall entitle the holders thereof to purchase such number of shares (including
fractional shares which are integral multiples of one-thousandth (1/1,000th) of
a share) of Preferred Stock as shall be set forth therein at the price payable
upon exercise of a Right provided by Section 7(b) hereof (the "Purchase Price"),
but the number and type of such securities and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Any Right Certificate representing Rights beneficially owned by any
Person referred to in clauses (i), (ii) and (iii) of Section 7(e) shall (to the
extent feasible and reasonably identifiable as such) contain the following
legend:
The Rights represented by this Right Certificate are or were beneficially
owned by any Person who was or became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement) or one of certain transferees thereof. Accordingly, this
Right Certificate and the Rights represented hereby may become or may have
become null and void in the circumstances specified in Section 7(e) of such
Agreement.
Section 5. Countersignature and Registration. (a) The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer, President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary, an Assistant
Secretary or a Vice President (provided that such Vice President shall not have
also executed the Right Certificates), either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid or obligatory for any purpose unless so
countersigned. In case any officer of the Company whose manual or facsimile
signature is affixed to the Right Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the Person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed
on behalf of the Company by any Person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office or offices designated as the place for
surrender of Right Certificates upon exercise, transfer or exchange, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show with respect to each Right Certificate the name and address of the
holder, the number of Rights evidenced on its face, the certificate number and
the date.
Section 6. Transfer and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates; Uncertificated Rights. (a) Subject
to the provisions of Sections 4(b), 7(e), 14 and 24, at any time after the
Distribution Date and prior to the Expiration Date any Right Certificate or
Certificates may be transferred, split-up, combined or exchanged
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for another Right Certificate or Certificates representing, in the aggregate,
the same number of Rights as the Right Certificate or Right Certificates
surrendered then represented. Any registered holder desiring to transfer, split-
up, combine or exchange any Right Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Certificates to be transferred, split-up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificate or Certificates until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the reverse side
of such Right Certificate or Certificates and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections 4(b),
7(e), 14 and 24, countersign and deliver to the person entitled thereto a Right
Certificate or Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split-up, combination or
exchange of any Right Certificate or Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Rights Agent will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company and the Rights
Agent may amend this Rights Agreement to provide for uncertificated Rights in
addition to or in place of Rights evidenced by Right Certificates.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The Rights shall not be exercisable until after the Distribution Date.
Subject to Section 7(e) and except as otherwise provided herein, each Right
shall entitle the registered holder thereof, upon exercise thereof as provided
herein, to purchase for the Purchase Price, at any time after the Distribution
Date and prior to the Expiration Date, one one-thousandth (1/1,000th) of a share
of Preferred Stock. The Purchase Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment as herein provided, including Sections 11, 23(a) and 24.
(b) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as provided herein) in whole or in part, upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the principle office
or offices of the Rights Agent designated for that purpose, together with
payment of the aggregate Purchase Price for each one one-thousandth (1/1,000th)
of a share of Preferred Stock as to which the Rights are exercised at or prior
to the Expiration Date.
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(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the completed form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the number of shares of Preferred Stock to be
purchased together with an amount equal to any applicable transfer tax, in
lawful money of the United States of America, in cash or by certified check or
money order payable to the order of the Company, the Rights Agent shall
thereupon (i) either (A) promptly requisition from any transfer agent of the
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the Preferred Stock
with a depositary agent under a depositary arrangement, promptly requisition
from the depositary agent depositary receipts representing the number of one
one-thousandth (1/1,000th) of a share of Preferred Stock to be purchased (in
which case certificates for the Preferred Stock to be represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with all such requests,
(ii) when appropriate, promptly requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14, (iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder, and (iv) when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate exercises less
than all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to the registered holder of such Right Certificate or his
duly authorized assigns, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the time when any person first becomes an Acquiring Person, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or, (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose of effect the avoidance of this Section 7(e),
shall become null and void without any further action, and no holder of such
Rights (including any purported transferee or subsequent holder) shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) are complied
with, but shall have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates and Associates or any transferee of any of
them hereunder.
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(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to exceed
180 calendar days after the Distribution Date, the exercisability of the Rights
in order to prepare and file a registration statement under the Securities Act,
on an appropriate form, with respect to the Preferred Stock purchasable upon
exercise of the Rights and permit such registration statement to become
effective; provided, however, that no such suspension shall remain effective
after, and the Rights shall without any further action by the Company or any
other Person become exercisable immediately upon the effectiveness of such
registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision herein
to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification under the blue sky or securities laws of such
jurisdiction shall not have been obtained, the exercise of the Rights shall not
be permitted under applicable law, or (if required by law) a registration
statement in respect of such securities shall not have been declared effective.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, and any Right Certificate representing Rights
that have become null and void and nontransferable pursuant to Section 7(e)
surrendered or presented for any purpose shall, if surrendered to the Company or
to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered or presented to the Rights Agent, shall be
canceled by it, and no Right Certificates shall be issued in lieu thereof except
as expressly permitted by this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock. (a) The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued shares of Preferred Stock or out of authorized and
issued shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) The Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares of Preferred Stock issued or
reserved for issuance in accordance with this Rights Agreement to be listed,
upon official notice of issuance, upon the
10
principal national securities exchange, if any, upon which the Common Stock is
listed or, if the principal market for the Common Stock is not on any national
securities exchange, to be eligible for quotation in the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or any successor
thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such action as
may be necessary to insure that all shares of Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable shares. So
long as the depositary shares issuable and deliverable upon the exercise of
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all Depositary Shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(d) As soon as practicable after a person becomes an Acquiring Person
(provided that the Company shall not have elected to make the exchange permitted
by Section 24 for all outstanding Rights) the Company covenants and agrees to
use its best efforts to: (i) prepare and file a registration statement under the
Securities Act, with respect to the securities purchasable upon exercise of the
Rights on an appropriate form; (ii) cause such registration statement to become
effective as soon as practicable after such filing; and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock issued or deliverable upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a Person
other than, or in respect of the issuance or delivery of certificates for the
Preferred Stock or other securities, as the case may be, in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or exchange or to issue or deliver any certificates for
Preferred Stock or other securities, as the case may be, upon the exercise or
exchange of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Preferred Stock Record Date. Each Person (other than the
Company) in whose name any Certificate for Preferred Stock is issued upon the
exercise or exchange of Rights shall for all purposes be deemed to have become
the holder of record of the Preferred Stock represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes or governmental charges) was made; provided, however,
that if the date of such surrender and payment is a date upon which transfer
books of the Company relating
11
to the Preferred Stock are closed, such Person shall be deemed to have become
the record holder of such Preferred Stock on, and such certificate shall be
dated, the next succeeding Business Day on which transfer books of the Company
relating to the Preferred Stocks are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to the securities for
which the Rights shall be exercisable, including, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Securities or
Number of Rights. The Purchase Price, the number and kind of securities covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) To preserve the actual or potential economic value of the Rights, if
at any time after the date of this Rights Agreement there shall be any change in
the Common Stock or the Preferred Stock, whether by reason of stock dividends,
stock splits, recapitalizations, mergers, consolidations, combinations or other
similar changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to holders
of Common Stock or Preferred Stock, as the case may be (other than distribution
of the Rights or regular cash dividends) or otherwise, then, in each such event
the Board shall make such appropriate adjustments in the number of shares of
Preferred Stock (or the number and kind of other securities) issuable upon
exercise of each Right, the Purchase Price and Redemption Price in effect at
such time and the number of Rights outstanding at such time (including the
number of Rights or fractional Rights associated with each share of Common
Stock) such that following such adjustment such event shall not have had the
effect of reducing or limiting the benefits the holders of the Rights would have
had absent such event. The adjustments provided for in this Section 11(a)(i)
shall be made successively whenever such an adjustment is required by this
Section 11(a)(i). If an event occurs which will require an adjustment under both
this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24, upon any Person becoming an Acquiring Person,
proper provision shall promptly be made so that each holder of a Right, except
as otherwise provided below and in Section 7(e), shall thereafter have the right
to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of one one-thousandths
(1/1,000ths) of a share of Preferred Stock (such number of shares being referred
to herein as the "Adjustment Shares") as shall be equal to the result obtained
by (x) multiplying the then current Purchase Price by the number of one one-
thousandths (1/1,000ths) of a share of Preferred Stock for which a Right was
exercisable immediately prior to a Person becoming an Acquiring Person and (y)
dividing that product (which, following such first occurrence, shall thereafter
be referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by 50% of the current market price (determined pursuant to
Section 11(b)(i)) per share of Common Stock on the date on which a Person
becomes an Acquiring Person; provided, however, that if the transaction that
would otherwise give rise to the foregoing adjustment is also
12
subject to the provisions of Section 13, then only the provisions of Section 13
shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that there shall not be sufficient shares of Preferred
Stock issued but not outstanding or authorized but unissued to permit the
exercise of Rights in accordance with the foregoing subparagraph (ii), the
Company covenants and agrees that it will take all such action as may be
necessary to authorize additional shares of Preferred Stock for issuance upon
the exercise of Rights; provided, however, that if the Company is unable to
cause the authorization of additional shares of Preferred Stock, then the
Company shall, or in lieu of seeking any such authorization, the Company may, to
the extent necessary and permitted by applicable law and any agreements,
indentures or instruments in effect prior to the Distribution Date to which it
is a party, (A) upon surrender of a Right, pay cash equal to the Purchase Price
in lieu of issuing shares of Preferred Stock and requiring payment therefor, (B)
upon due exercise of a Right and payment of the Purchase Price for each share of
Preferred Stock as to which such Right is exercised, issue equity securities
having a value equal to the value of the shares of Preferred Stock which
otherwise would have been issuable pursuant to the foregoing subparagraph (ii),
which value shall be determined by an investment banking firm selected by the
Board, or (C) upon due exercise of a Right and payment of the Purchase Price for
each share of Preferred Stock as to which such Right is exercised, distribute
Preferred Stock, Common Stock, other equity securities, cash or debt securities
(or any combination thereof) having an aggregate value equal to the value of the
shares of Preferred Stock which otherwise would have been issuable pursuant to
the foregoing subparagraph (ii), which value shall be determined by an
investment banking firm selected by the Board. To the extent that any legal or
contractual restrictions (pursuant to agreements or instruments in effect prior
to the Distribution Date to which it is party) prevent the Company from paying
the full amount payable in accordance with the foregoing sentence, the Company
shall pay to holders of the Rights as to which such payments are being made all
amounts which are not then restricted on a pro rata basis as such payments
become permissible under such legal or contractual restrictions until such
payments have been paid in full.
(b)(i) For the purpose of any computation hereunder, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily Closing Prices (as hereinafter defined) per share of such Common
Stock for the 30 consecutive Trading Days immediately prior to such date;
provided, however, that if the current market price per share of the Common
Stock is determined during a period following the announcement by the issuer of
such Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities exercisable for or convertible into
shares of such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of the 30 Trading Day period, as set forth above, after the ex-
dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"current market price" shall be properly adjusted to take into account ex-
dividend trading. The "Closing Price" for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the American Stock Exchange or, if the shares
of Common Stock are not listed or admitted to trading on the American Stock
Exchange, as reported in the principal consolidated
13
transaction reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of such shares on
such date as determined in good faith by the Board of Directors of the Company
shall be used. If the Common Stock is not publicly held or not so listed or
traded, the "current market price" per share means the fair value per share as
determined in good faith by the Board of Directors of the Company, or, if at the
time of such determination there is an Acquiring Person, by a majority of the
Continuing Directors then in office, or if there are no Continuing Directors, by
an investment banking firm selected by the Board of Directors, which
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current market
price" of the Preferred Stock shall be determined in the same manner as set
forth above for the Common Stock in Section 11(b)(i). If the current market
price for the Preferred Stock cannot be determined in the manner provided above,
the "current market price" of the Preferred Stock shall be conclusively deemed
to be the current market price of the Common Stock (appropriately adjusted to
reflect any stock split, stock dividend, or similar transaction occurring after
the date hereof), multiplied by one thousand. For the purpose of any
computation hereunder, the value of any securities or assets other than the
Preferred Stock or Common Stock of the Company shall be the fair value as
determined in good faith by the Board of Directors of the Company, and, if at
the time of such determination there is an Acquiring Person, by a majority of
the Continuing Directors then in office, or, if there are no Continuing
Directors, by an investment banking firm selected by the Board of Directors,
which determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(c) Except as hereinafter provided, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(c) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to the
nearest one one-hundred thousandth (1/100,000th) of a share of Preferred Stock.
Notwithstanding the first sentence of this Section 11(c), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) one
year from the date of the transaction which mandates such adjustment or (ii) the
Expiration Date.
(d) If, as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised shall become entitled to receive any
securities other than shares of Preferred Stock, thereafter the number of such
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Section 11(a) through (c), inclusive and the
14
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock
shall apply, as nearly as reasonably may be, on like terms to any such other
securities.
(e) All Rights originally issued by the Company subsequent to any
adjustment made to the number of shares of Preferred Stock or other securities
relating to a right shall evidence the right to purchase, for the Purchase
Price, the adjusted number and kind of securities purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(f) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Preferred Stock or number or kind of other securities
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms which were expressed in the
initial Right Certificates issued hereunder.
(g) Before taking any action that would cause an adjustment reducing the
Purchase Price per whole share of Preferred Stock upon exercise below the then
par value, if any, of the shares of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Preferred Stock at such
adjusted Purchase Price.
(h) In any case in which this Section 11 shall require that an adjustment
be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the issuance to the holder of
any Right exercised after such record date the number of shares of Preferred
Stock (or other securities) issuable upon such exercise over and above the
number of shares of Preferred Stock (or other securities) issuable before giving
effect to such adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares or securities upon the occurrence of the
event requiring such adjustment.
(i) The Company covenants and agrees that it will not at any time after
the Distribution Date (i) consolidate with, (ii) merge with or into, or (iii)
sell or otherwise transfer (and/or permit any of its Subsidiaries to sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries taken as a whole, to any other Person or
Persons if (x) at the time of or immediately after such consolidation, merger or
sale there are any rights, warrants or other instruments or securities
outstanding or any agreements or arrangements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the stockholders of a Person who
constitutes, or would constitute, the "Principal Party" for the purposes of
Section 13 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(j) The Company covenants and agrees that after the Distribution Date, it
will not, except as permitted by Section 23, Section 24 or Section 27 take (or
permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action
15
will substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Preferred Stock and
the Common Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in accordance
with Section 26. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall not be
obligated or responsible for calculating any adjustment nor shall it be deemed
to have knowledge of such adjustment unless and until it shall have received
such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. (a) If, following the Distribution Date, directly or indirectly,
(x) the Company shall consolidate with, merge into, or otherwise
combine with, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(i)), and the Company shall not be
the continuing or surviving corporation of such consolidation, merger or
combination,
(y) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(i)) shall merge into, or
otherwise combine with, the Company, and the Company shall be the
continuing or surviving corporation of such merger or combination and, in
connection with such merger or combination, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for other stock
or securities of the Company or any other Person, cash or any other
property, or
(z) the Company and/or one or more of its Subsidiaries shall sell or
otherwise transfer, in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than to the Company or any Subsidiary in any
transaction that complies with Section 11(i)), then, and in each such case,
proper provision shall be made so that (i) each holder of a Right, except
as provided in Section 7(e), shall thereafter have the right to receive,
upon exercise thereof at the Purchase Price, in accordance with the terms
of this Agreement, such number of duly authorized, validly issued, fully
paid and nonassessable shares of freely tradeable Common Stock of the
Principal Party (as hereinafter defined), not subject to any rights of call
or first refusal, liens, encumbrances or other claims, as shall be equal to
the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-thousandth (1/1,000th) of a share of Preferred Stock
for which a Right is exercisable immediately prior to the first occurrence
of any Section 13 Event (or, if a person has become an Acquiring Person
prior to the first occurrence of any Section 13 Event by multiplying the
number of such one-thousandths of a share of Preferred Stock for which a
Right is exercisable immediately prior to the first occurrence of a Person
16
becoming an Acquiring Person by the Purchase Price in effect immediately
prior to such first occurrence) and (B) dividing that product (which,
following the first occurrence of any Section 13 Event shall thereafter be
referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by 50% of the current market price (determined pursuant to
Section 11(b)(i)) per share of the Common Stock of such Principal Party on
the date of consummation of such consolidation, merger, combination sale or
transfer; (ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, combination, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party shall take
such steps (including the authorization and reservation of a sufficient
number of shares of its Common Stock to permit exercise of all outstanding
Rights in accordance with the provisions of Section 9 applicable to the
reservation of Preferred Stock in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation
to the shares of its Common Stock thereafter deliverable upon the exercise
of the Rights. The provisions of this Section 13 shall apply similarly to
successive mergers or consolidations or sales or other transfers.
(b) "Principal Party" means:
(i) in the case of any transaction described in clauses (x) or (y) of
Section 13(a), the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such merger,
consolidation or combination, and if no securities are so issued, the
person that is the other party to such merger, consolidation or
combination; and
(ii) in the case of any transaction described in clause (z) of Section
13(a), the Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case, (A) if the Common
Stock of such Person is not at such time and has not been continuously over
the preceding 12-month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another Person
the Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; and (B) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
combination, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which are not outstanding or
otherwise reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Section 13(a) and
(b)
17
and providing that, as soon as practicable after the date of any consolidation,
merger, combination, sale or transfer mentioned in Section 13(a), the Principal
Party will:
(i) prepare and file a registration statement under the Securities
Act with respect to the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such
registration statement (A) to become effective as soon as practicable after
such filing and (B) to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date;
and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, combinations, sales or other transfers. If any Section 13 Event
shall occur at any time after a Person becomes an Acquiring Person, the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a Qualifying Tender Offer (or a
wholly owned Subsidiary of any such Person or Persons), (ii) the price per share
of Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such Qualifying Tender Offer, and (iii) the form of such
consideration being offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to such Qualifying Tender Offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder shall
expire.
Section 14. Fractional Rights and Fractional Shares. (a) The Company may,
but shall not be required to, issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the American Stock Exchange or,
if the Rights are not listed or admitted to trading on the American Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
18
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the current market value of the
Rights on such date shall be as determined in good faith by the Board of
Directors of the Company.
(b) The Company may, but shall not be required to, issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth
(1/1,000th) of a share of Preferred Stock). In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-thousandth
(1/1,000th) of a share of Preferred Stock, the Company may, at its election,
issue depositary receipts evidencing fractions of shares pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all of the rights, privileges and preferences to which they
would be entitled as owners of the Preferred Stock. With respect to fractional
shares that are not integral multiples of one one-thousandth (1/1,000th) of a
share, if the Company does not issue such fractional shares or depositary
receipts in lieu thereof, there shall be paid to the holders of record of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the value of one one-thousandth of a share
of Preferred Stock. For purposes of this Section 14(b), the current market value
of one one-thousandth of a share of Preferred Stock shall be the closing price
of a share of Common Stock (as determined pursuant to Section 11(b)(i)) for the
Trading Day immediately prior to the date of such exercise.
(c) Following any exchange pursuant to Section 24, the Company shall not
be required to issue fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay to the registered holders
of Right Certificates at the time such Rights are exchanged as herein provided
an amount in cash equal to the same fraction of the current market value of one
share of Common Stock. For purposes of this Section 14(c), the current market
value of one share of Common Stock shall be the closing price of one share of
Common Stock (as determined pursuant to Section 11(b)(i)) for the Trading Day
immediately prior to the date of such exercise or exchange.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be
19
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of, any Person
subject to this Agreement. Any holder of Rights who prevails in an action to
enforce the provisions of this Rights Agreement shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred in such
action.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the Rights
Agent may deem and treat the person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent, subject to the last sentence of Section 7(e), shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned, and/or to comply with such statute, rule or regulation, as soon as
possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company
including, without limitation, any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25), or to
receive dividends
20
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the execution or administration of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent, its directors, officers, employees and agents for, and to hold
each of them harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by any of them in connection with the
administration of this Agreement or the exercise or performance of the Rights
Agent's duties hereunder, including the costs and expenses of defending against
any claim of liability. The Rights Agent shall promptly notify the Company, by
letter or by facsimile confirmed by letter, of the assertion of any action,
proceeding, suit or claim against the Rights Agent, promptly after the Rights
Agent shall have notice of any such assertion of an action, proceeding, suit or
claim. The Company shall be entitled to participate at its own expense in the
defense of any such action, proceeding, suit or claim, and, if the Company so
elects, the Company shall assume the defense of any such action, proceeding,
suit or claim. In the event that the Company assumes such defense, the Company
shall not thereafter be liable for the fees and expenses of any additional
counsel retained by the Rights Agent, so long as the Company shall retain
counsel satisfactory to the Rights Agent, in the exercise of its reasonable
judgment, to defend such action, proceeding, suit or claim. The Rights Agent
agrees not to settle any litigation in connection with any action, proceeding,
suit or claim with respect to which it may seek indemnification from the Company
without the prior written consent of the Company, which shall not be
unreasonably withheld. The costs and expenses of enforcing this right of
indemnification shall also be paid by the Company. The indemnification provided
for hereunder shall survive the expiration of the Rights and the termination of
this Agreement.
(b) The Rights Agent may exclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with the administration of this Agreement or the
exercise or performance of its duties hereunder in reliance upon any Right
Certificate or certificate for Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, instruction, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
(c) Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. (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
21
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions (but no implied duties or obligations shall be read into this
Agreement against the Rights Agent), by all of which the Company and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it may consult
with legal counsel (who may be legal counsel for the Company), and the 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 "Acquiring Person" and the
determination of "current market price") be proved or established by the Company
prior to taking, suffering or omitting to take any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the Chief Executive Officer,
the President or any Vice President and by the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken, suffered or omitted in good faith by
it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
22
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e)) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in any
provision of this Agreement, or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to authorization or reservation of any shares of Common Stock or Preferred
Stock to be issued pursuant to this Agreement or any Right Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when issued, be duly
authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President or the Secretary or any Assistant Secretary or the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken, suffered or omitted to be taken by it in good faith in accordance
with instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any above listed officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application subject to the proposed action or omission and/or specifying
the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract
23
with or lend money to the Company or otherwise act as fully and freely as though
it were not the Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or to any holders of Rights resulting from
any such act, default, neglect or misconduct, provided the Rights Agent was not
grossly negligent in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the cases may be, has either not
been completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(l) The Rights Agent shall not be required to take notice or be deemed to
have notice of any fact, event or determination (including, without limitation,
any dates or events defined in this Agreement or the designation of any Person
as an Acquiring Person, Affiliate or Associate) under this Agreement unless and
until the Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination.
(m) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
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 Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date and at the expense of the Company, to the
holders of the Right Certificates by mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and, subsequent to the Distribution Date, to the holders of the
Rights Certificates by mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
24
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of any state of the United States, in good standing, having an
office in the city of New York, which is authorized under such laws to exercise
stock transfer or corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate of a corporation described in clause (a) of this
sentence; provided, however, that the principal transfer agent for the Common
Stock of the Company shall in any event be qualified to be the Rights Agent.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock
and the Preferred Stock, and, subsequent to the Distribution Date, mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 21, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to shares of Common Stock
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Right Certificate
would be issued, and (ii) no such Right Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption. (a) The Board of Directors of the Company may, at
its option, at any time prior to the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date (or such later date as the Board may
determine with the concurrence of a majority of the Continuing Directors then in
office prior to such time as the Rights are not redeemable) and (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring
25
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"); provided, however, that during the 180 day period
commencing when any Person becomes an Acquiring Person, any redemption of the
Rights shall be effective only if there are at least five Continuing Directors
then in office, and such redemption shall have been approved by the Board of
Directors and by a majority of such Continuing Directors. Notwithstanding
anything in this Agreement to the contrary, the Rights shall not be exercisable
after a Person has become an Acquiring Person until such time as the Company's
right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly thereafter give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in Section 23 or 24, and other than in connection with
the purchase, acquisition or redemption of shares of Common Stock prior to the
Distribution Date.
Section 24. Exchange. The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, mandatorily
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to Section 7(e)) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend, or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"); provided, however, that during
the 180 day period commencing when any Person becomes an Acquiring Person, any
exchange of the Rights shall be effective only if there are at least five
Continuing Directors then in office, and such exchange shall have been approved
by the Board of Directors and by a majority of the such Continuing Directors.
If the Board of Directors of the Company elects to exchange all the Rights for
Common Stock pursuant to this Section 24 prior to the physical distribution of
the Rights Certificates, the Corporation may distribute the Common Stock
issuable in the exchange in lieu of distributing Right Certificates, in which
case for purposes of this Rights Agreement holders of Rights shall be deemed to
have simultaneously received and surrendered for exchange Right Certificates on
the date of such distribution. Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any of its Subsidiaries, any employee benefit
plan of the Company or any of its Subsidiaries, or any entity holding shares of
Common Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of
66 2/3% or more of the shares of Common Stock then outstanding.
26
(b) Any action of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to Section 24(a) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that number
of shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
shall promptly give notice of such exchange to the Rights Agent and the holders
of the Rights to be exchanged by mailing such notice to all such holders at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
Section 7(e) hereof) held by each holder of Rights.
Section 25. Notice of Proposed Actions. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Common Stock or to make any
other distribution to the holders of Common Stock (other than a regular periodic
cash dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of its Common Stock rights or warrants to subscribe for or
to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock), or (iv) to effect
any consolidation or merger into or with any other Person, or to effect and/or,
to permit one or more of its Subsidiaries to effect any sale or other transfer,
in one transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right Certificate, to the extent feasible and in accordance
with Section 26, a notice of such proposed action, which shall specify the
record date for the purposes of such dividend or distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of Common Stock, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Common Stock for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier. The failure to give
notice required by this Section or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any Person becomes an Acquiring Person (except as a result of
a Qualifying Tender Offer) then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate, in accordance
with Section 26, a notice of
27
the occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii).
(c) Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date, a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this Agreement and no other
notice need be given to such holders.
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:
PetroCorp Incorporated
00000 Xxxxxxxxxxx Xxxx Xxxxx
Xxxxx 000, Xxxxx Atrium
Xxxxxxx, Xxxxx 00000
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by registered or certified mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows (and shall be deemed
given upon receipt if so sent and addressed):
First Union National Bank
0000 Xxxx X. X. Xxxxxx Blvd.--3C3
Charlotte, North Carolina 28288-1153
Attention: Shareholder Services Group
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of the
Rights. From and after the Distribution Date, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Right Certificates in order (a) to cure any
ambiguity, (b) to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, (c) to shorten or
lengthen any time period hereunder or (d) to change or supplement the provisions
hereof in any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person). Notwithstanding the foregoing, (i) after any
28
Person has become an Acquiring Person, any supplement or amendment shall be
effective only if there are at least five Continuing Directors then in office,
and such supplement or amendment shall have been approved by a majority of such
Continuing Directors, and (ii) no supplement or amendment pursuant to clause (c)
may lengthen (x) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable or (y) any other time period
unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this
Section, the Rights Agent shall execute such supplement or amendment. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock. Notwithstanding
anything in this Agreement to the contrary, no supplement or amendment that
changes the rights and duties of the Rights Agent under this Agreement will be
effective against the Rights Agent without the execution of such supplement or
amendment by the Rights Agent.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act as in effect on
the date of this Agreement. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
or to the Company, or as may be necessary or advisable in the administration of
this Agreement, including the right and power to (i) interpret the provisions of
this Agreement and (ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including a determination to redeem or
not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for the purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board (or, where specifically provided for herein, by the Continuing
Directors) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board of Directors of the Company or the Continuing
Directors to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
29
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, if any such term, provisions, covenant or restrictions is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Texas and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute one and the
same instrument.
Section 34. Descriptive Headings. The captions herein and table of contents
hereto are included for convenience of reference only, do not constitute a part
of this Agreement and shall be ignored in the construction and interpretation
hereof.
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
PETROCORP INCORPORATED
By:
Attest: -------------------------------------
W. Xxxx XxXxxx
President and Chief Executive Officer
By:
-------------------------
Xxxxx X. Xxxxxxxx
Vice President-Finance,
Secretary and Treasurer
FIRST UNION NATIONAL BANK
AS RIGHTS AGENT
By:
Attest: -------------------------------
Name:
------------------------------
Title:
----------------------------
By:
------------------------
Name:
-----------------------
Title:
----------------------
31
PETROCORP INCORPORATED
EXHIBITS
TO
RIGHTS AGREEMENT
Exhibit A -- Certificate of Designation
Exhibit B -- Summary of Rights
Exhibit C -- Form of Rights Certificate
