AGREEMENT
by and between
QUICKSILVER RESOURCES INC.
and
MELLON INVESTOR SERVICES LLC
as Rights Agent
Dated as of March 11, 2003
TABLE OF CONTENTS
Page
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Section 1 Certain Definitions...............................................1
Section 2 Appointment of Rights Agent.......................................5
Section 3 Issuance of Right Certificates....................................6
Section 4 Form of Right Certificates........................................8
Section 5 Countersignature and Registration.................................8
Section 6 Transfer, Split-Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates......................................9
Section 7 Exercise of Rights; Purchase Price;
Expiration Date of Rights........................................10
Section 8 Cancellation and Destruction of Right Certificates...............12
Section 9 Reservation and Availability of Capital Stock....................13
Section 10 Preferred Shares Record Date.....................................14
Section 11 Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights.......................................14
Section 12 Certificate of Adjusted Purchase Price
or Number of Shares..............................................21
Section 13 Consolidation, Merger or Sale or
Transfer of Assets or Earning Power..............................21
Section 14 Fractional Rights and Fractional Shares..........................23
Section 15 Rights of Action.................................................25
Section 16 Agreement of Right Holders.......................................25
Section 17 Right Certificate Holder Not Deemed a Stockholder................26
Section 18 Concerning the Rights Agent......................................26
Section 19 Merger or Consolidation or Change of Name of Rights Agent........27
Section 20 Duties of Rights Agent...........................................28
Section 21 Change of Rights Agent...........................................30
Section 22 Issuance of New Right Certificates...............................31
Section 23 Redemption and Termination.......................................31
Section 24 Exchange.........................................................32
Section 25 Notice of Certain Events.........................................33
Section 26 Notices..........................................................34
Section 27 Supplements and Amendments.......................................35
Section 28 Determination and Actions by the Board, etc......................35
Section 29 Successors.......................................................36
Section 30 Benefits of this Agreement.......................................36
Section 31 Severability.....................................................36
Section 32 Governing Law....................................................36
Section 33 Counterparts.....................................................36
Section 34 Descriptive Headings.............................................37
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EXHIBITS
--------
Exhibit A Form of Certificate of Designation of Preferred Stock
Exhibit B Form of Right Certificate
Exhibit C Summary of Rights to Purchase Preferred Shares
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (this "Agreement") is made and entered into as of
March 11, 2003 by and between Quicksilver Resources Inc., a Delaware corporation
(the "Corporation"), and Mellon Investor Services LLC, a New Jersey limited
liability company (the "Rights Agent").
The Board of Directors of the Corporation has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Corporation outstanding at the Close of Business
(as hereinafter defined) on March 26, 2003 (the "Record Date"), each Right
representing the right to purchase one one-thousandth of a Preferred Share (as
hereinafter defined), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding between the Record
Date and the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to Common Shares that shall
become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date in accordance with the provisions
of this Agreement.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the then outstanding Common Shares (other than as a
result of a Permitted Offer) or was such a Beneficial Owner at any time
after the date hereof, whether or not such Person continues to be the
Beneficial Owner of 15% or more of the then outstanding Common Shares.
Notwithstanding the foregoing, (i) the term "Acquiring Person" shall not
include (A) the Corporation, (B) any Subsidiary of the Corporation, (C) any
employee benefit plan of the Corporation or of any Subsidiary of the
Corporation, (D) any Person or entity organized, appointed or established
by the Corporation for or pursuant to the terms of any such plan, or (E)
any Grandfathered Stockholder; and (ii) no Person shall be deemed to be an
"Acquiring Person" either (A) as a result of the acquisition of Common
Shares by the Corporation which, by reducing the number of Common Shares
outstanding, increases the proportional number of shares beneficially owned
by such Person together with all Affiliates and Associates of such Person
(except that if (1) a Person would become an Acquiring Person (but for the
operation of this subclause A) as a result of the acquisition of Common
Shares by the Corporation, and (2) after such share acquisition by the
Corporation, such Person, or an Affiliate or Associate of such Person,
becomes the Beneficial Owner of any additional Common Shares (other than
pursuant to a dividend or distribution paid or made by the Corporation on
the outstanding Common Shares or pursuant to a split or subdivision of the
outstanding Common Shares), then such Person shall be deemed an Acquiring
Person), or (B) if (1) within eight days after such Person would otherwise
have become an Acquiring Person (but for the operation of this subclause
B), such Person notifies the Board that
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such Person did so inadvertently and (2) within two days after such
notification, such Person is the Beneficial Owner of less than 15% of the
outstanding Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
(c) "Adjusted Number of Shares" shall have the meaning set forth in
Section 11(d)(iii) hereof.
(d) "Adjusted Purchase Price" shall have the meaning set forth in
Section 11(d)(iii) hereof.
(e) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
(f) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," 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 of the General Rules and Regulations 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 upon the
occurrence of certain events or after the passage of time or both)
pursuant to any agreement, arrangement or understanding (whether or
not in writing), 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 such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) the
right to vote (whether such right is exercisable immediately or only
upon the occurrence of certain events or after the passage of time or
both) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own,
any security under this clause B 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 to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act,
and (2) is not also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding, whether or not in writing
(other than customary agreements with and between underwriters and
selling group
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members with respect to a bona fide public offering of securities),
relating to the acquisition, holding, voting (except to the extent
contemplated by the proviso to Section 1(f)(ii)(B) hereof) or
disposing of any securities of the Corporation.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Corporation, shall mean
the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(g) "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.
(h) "Board" shall mean the Board of Directors of the Corporation.
(i) "Business Day" shall mean any day other than a Saturday, Sunday,
U.S. federal holiday, or a day on which banking institutions in the State
of Texas or New Jersey or the city in which the principal office of the
Rights Agent is located are authorized or obligated by law or executive
order to close.
(j) "Capital Stock Equivalent" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(k) "Close of Business" on any given date shall mean 5:00 P.M.,
Dallas, Texas time, on such date; provided, however, that if such date is
not a Business Day "Close of Business" shall mean 5:00 P.M., Dallas, Texas
time, on the next succeeding Business Day.
(l) "Common Shares" when used with respect to the Corporation shall
mean the shares of common stock, par value $0.01 per share, of the
Corporation or, in the event of a subdivision, combination or consolidation
with respect to such shares of common stock, the shares of common stock
resulting from such subdivision, combination or consolidation, except that,
when used with reference to any Person other than the Corporation, "Common
Shares" shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary
of another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(m) "current per share market price" shall have the meaning set forth
in Section 11(d) hereof.
(n) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(o) "equivalent preferred shares" shall have the meaning set forth in
Section 11(a)(iii) hereof.
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(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and as in effect on the date of this Agreement.
(q) "Exchange Ratio" shall have the meaning set forth in Section 24(b)
hereof.
(r) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "Grandfathered Stockholder" shall mean at any time Xxxxxx X.
Xxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxx Self and Xxxx Xxxxxx and any of their
Affiliates or Associates, including without limitation Mercury Exploration
Company and Quicksilver Energy, LC.
(t) "Interested Stockholder" shall mean any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which
any such Acquiring Person, Affiliate or Associate has an interest which
represents in excess of 5% of the total combined economic or voting power
of such other Person, or any other Person acting directly or indirectly on
behalf of or in concert with any such Acquiring Person, Affiliate or
Associate.
(u) "NASDAQ" shall mean The Nasdaq Stock Market.
(v) "Permitted Offer" shall mean a tender or exchange offer which is
for all outstanding Common Shares at a price and on terms determined, prior
to the purchase of shares under such tender or exchange offer, by at least
a majority of the members of the Board who are not Acquiring Persons or
Affiliates, Associates, nominees or representatives of an Acquiring Person,
to be adequate (taking into account all factors that such directors deem
relevant, including without limitation prices that could reasonably be
achieved if the Corporation or its assets were sold on an orderly basis
designed to realize maximum value) and otherwise in the best interests of
the Corporation and its stockholders (other than the Person or any
Affiliate or Associate thereof on whose basis the offer is being made)
taking into account all factors that such directors may deem relevant.
(w) "Person" shall mean any individual, firm, partnership,
corporation, limited liability company, trust, association, joint venture
or other entity, and shall include any successor (by merger or otherwise)
of such entity.
(x) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, with a par value of $0.01 per share, of the
Corporation having the relative rights, preferences and limitations set
forth in the Form of Certificate of Designation attached to this Agreement
as Exhibit A.
(y) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(z) "Proration Factor" shall have the meaning set forth in Section
11(a)(iii) hereof.
(aa) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
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(bb) "Redemption Price" shall have the meaning set forth in Section
23(a)(i) hereof.
(cc) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(dd) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(ee) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(ff) "Section 13 Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(gg) "Security" shall have the meaning set forth in Section 11(d)
hereof
(hh) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to the Exchange Act) by the
Corporation or an Acquiring Person that an Acquiring Person has become
such; provided, that, if such Person is determined not to have become an
Acquiring Person pursuant to Section 1(a)(ii) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(ii) "Subsidiary" of any Person shall mean any corporation or other
Person of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
(jj) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(kk) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
(ll) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(mm) "Voting Securities" shall have the meaning set forth in Section
13(a) hereof.
Section 2. Appointment of Rights Agent. The Corporation hereby appoints the
Rights Agent to act as agent for the Corporation in accordance with the terms
and conditions hereof. The Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable, in which case the respective duties of the Rights Agent
and any co-Rights Agent shall be as the Corporation shall determine; provided,
however, no such appointment or allocation of duties shall change or increase
the Rights Agent's duties, liabilities or obligations. The Rights Agent shall
have no duty
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to supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the Shares
Acquisition Date or (ii) the Close of Business on the tenth 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 the Corporation, any Subsidiary
of the Corporation, any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation or any Person or entity organized, appointed
or established by the Corporation for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention of any
Person (other than the Corporation, any Subsidiary of the Corporation, any
employee benefit plan of the Corporation or of any Subsidiary of the
Corporation or any Person or entity organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan) to commence
(which intention to commence remains in effect for five Business Days after
such announcement), a tender or exchange offer the consummation of which
would result in any Person becoming an Acquiring Person (including, in the
case of both clause (i) and (ii), any such date which is after the date of
this Agreement and prior to the issuance of the Rights), the earlier of
such dates being herein referred to as the "Distribution Date," (1) the
Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (2) the right to
receive Right Certificates will be transferable only in connection with the
transfer of the underlying Common Shares (including without limitation a
transfer to the Corporation); provided, however, that, if a tender offer is
terminated prior to the occurrence of a Distribution Date, then no
Distribution Date shall occur as a result of such tender offer. Upon the
occurrence of a Distribution Date, the Corporation shall promptly notify
the Rights Agent thereof in writing and request a stockholder list from the
Corporation's transfer agent. As soon as practicable after the Rights Agent
receives such notice and list, and all other relevant information which the
Rights Agent may request, the Corporation will prepare and execute, the
Rights Agent will countersign, and the Corporation will send or cause to be
sent by first-class mail, postage-prepaid, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address
of such holder shown on the records of the Corporation, a Right
Certificate, substantially in the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As of
and after the Distribution Date, the Rights will be evidenced solely by
such Right Certificates. Until the Rights Agent receives written notice
that the Distribution Date has occurred, the Rights Agent may presume
conclusively for all purposes that the Distribution Date has not occurred.
(b) As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form of Exhibit C hereto (the "Summary of
Rights"), by first-class mail, postage-prepaid, to each record holder of
Common Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Corporation. With
respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with a
copy of the Summary of Rights attached thereto. Until the Distribution Date
(or the earlier of the
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Redemption Date or the Final Expiration Date), the surrender for transfer
of any certificate for Common Shares outstanding on the Record Date, with
or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with such Common Shares.
(c) Rights shall be issued in respect of all Common Shares outstanding
as of the Record Date or issued (on original issuance or out of treasury)
after the Record Date but prior to the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date. In addition, in
connection with the issuance or sale of Common Shares following the
Distribution Date and prior to the earlier of the Redemption Date and the
Final Expiration Date, the Corporation (i) shall, with respect to Common
Shares 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 other securities issued by the Corporation prior to the
Distribution Date, and (ii) may, in any other case, if deemed necessary or
appropriate by the Board, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that no such Right Certificate shall be issued if, and
to the extent that (x) the Corporation shall be advised by counsel that
such issuance would create a significant risk of material adverse tax
consequences to the Corporation or the Person to whom such Right
Certificate would be issued or (y) appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
(d) Certificates for Common Shares which become outstanding (including
without limitation reacquired Common Shares referred to in the last
sentence of this paragraph (d)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, shall be deemed also to be certificates for Rights, and
shall bear substantially the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Quicksilver
Resources Inc. and Mellon Investor Services LLC (or any successor
thereto) as Rights Agent, dated as of March 11, 2003, as amended or
supplemented from time to time (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 Quicksilver Resources
Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate, may be redeemed or
exchanged or may expire. Quicksilver Resources Inc. will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As set forth in
the Rights Agreement, Rights issued to, or held by, any Person who is,
was or becomes an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement) and
certain related Persons, whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void.
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With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Corporation purchases or
acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be
deemed cancelled and retired so that the Corporation shall not be entitled
to exercise any Rights associated with such Common Shares which are no
longer outstanding. Notwithstanding this Section 3(d), the omission of a
legend shall not affect the enforceability of any part of this Agreement or
the rights of any holder of the Rights.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Corporation may deem appropriate (but which do not
affect the rights, duties or responsibilities of the Rights Agent as set
forth in this Agreement) and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time
be listed, or to conform to usage. Subject to the provisions of Sections 11
and 22 hereof, the Right Certificates shall entitle the holders thereof to
purchase such number of one one-thousandths of a Preferred Share as shall
be set forth therein at the price per one one-thousandth of a Preferred
Share set forth therein, as specified in Section 7(b) hereof (the "Purchase
Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights which are null and void pursuant to
Section 7(e) of this Agreement and any Right Certificate issued pursuant to
Section 6 or 11 hereof upon transfer, exchange, replacement or adjustment
of any other Right Certificate referred to in this sentence, shall contain
(to the extent the Rights Agent has written notice thereof and to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Right Certificate and the Rights
represented hereby are null and void.
(c) Provisions of Section 7(e) of this Agreement shall be operative
whether or not the foregoing legend is contained on any such Right
Certificate.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Corporation by its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents,
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or its Treasurer, either manually or by facsimile signature, shall have
affixed thereto the Corporation's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Corporation,
either manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Corporation who shall
have signed any of the Right Certificates shall cease to be such officer of
the Corporation before countersignature by the Rights Agent and issuance
and delivery by the Corporation, such Right Certificates may nevertheless
be countersigned by the Rights Agent and issued and delivered by the
Corporation with the same force and effect as though the Person who signed
such Right Certificates had not ceased to be such officer of the
Corporation; and any Right Certificate may be signed on behalf of the
Corporation by any Person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Corporation 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 and receipt by the Rights Agent of
the written notice, shareholder list and additional relevant information
referred to in Section 3(a) hereof, the Rights Agent will keep or cause to
be kept, at its office designated pursuant to Section 26 hereof as the
appropriate 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 the names and
addresses of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right Certificates and the
certificate number and the date of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to purchase a like
number of one one-thousandth of a Preferred Share (or, following a
Triggering Event, other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Corporation shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Right Certificate
until the registered holder shall have duly and properly completed and
signed the certificate contained in the form of assignment on the reverse
side of such Right Certificate 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 Corporation or the Rights
Agent shall reasonably request. Thereupon the Rights Agent shall, subject
to Sections 4(b), 7(e) and 14 hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may
be, as so requested. The Corporation may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any
9
transfer, split up, combination or exchange of Right Certificates. The
Rights Agent shall have no obligation to take any action under any Section
of this Agreement that requires the payment by a Rights holder of
applicable taxes and/or governmental charges until it is satisfied that all
applicable taxes and governmental charges have been paid.
(b) Upon receipt by the Corporation and the Rights Agent of evidence
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 satisfactory to them, and, at the Corporation's or the Rights
Agent's request, reimbursement to the Corporation 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
Corporation will make and deliver a new Right Certificate of like tenor to
the Rights Agent for countersignature and delivery to the registered holder
in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution
Date upon surrender of the Right Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to
the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment (in lawful money of the United States of
America by certified check or bank draft payable to the order of the
Corporation) of the aggregate Purchase Price for the total number of one
one-thousandths of a Preferred Share (or other securities, as the case may
be) as to which such surrendered Rights are exercised, and an amount equal
to any applicable transfer tax, at or prior to the earliest of (i) the
Close of Business on March 11, 2013 (the "Final Expiration Date"), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iii) the time at which the Rights are exchanged as
provided in Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of a Preferred
Share pursuant to the exercise of a Right shall initially be $100.00, shall
be subject to adjustment from time to time as provided in the next sentence
and in Sections 11 and 13(a) hereof and shall be payable in accordance with
paragraph (c) of this Section 7. Anything in this Agreement to the contrary
notwithstanding, in the event that, at any time after the date of this
Agreement and prior to the Distribution Date, the Corporation shall (i)
declare or pay any dividend on the Common Shares payable in Common Shares
or (ii) effect a subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common Shares, then, in
any such case, each Common Share outstanding following such subdivision,
combination or consolidation shall continue to have a Right associated
therewith and the Purchase Price following any such event shall be
proportionately adjusted to equal the result obtained by multiplying the
Purchase Price immediately prior to such event by a fraction the numerator
of which shall be the total number of Common Shares outstanding immediately
prior to the occurrence of the event and the denominator of which shall be
the total number of Common Shares outstanding immediately
10
following the occurrence of such event. The adjustment provided for in the
preceding sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment of the Purchase Price for the Preferred
Shares (or other securities, as the case may be) to be purchased and an
amount equal to any applicable tax or governmental charge required to be
paid by the holder of such Right Certificate in accordance with Section 6
hereof by certified check, cashier's check or money order payable to the
order of the Corporation, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares certificates
for the number of Preferred Shares to be purchased (and the Corporation
hereby irrevocably authorizes its transfer agent to comply with all such
requests), or (B) if the Corporation, in its sole discretion, shall have
elected to deposit the Preferred Shares issuable upon exercise of the
Rights hereunder into a depositary, requisition from the depositary agent
of depositary receipts representing such number of one one-thousandths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Corporation will direct
the depositary agent to comply with such requests; (ii) when appropriate,
requisition from the Corporation the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof; (iii)
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 thereof, deliver such cash
to or upon the order of the registered holder of such Right Certificate. In
the event that the Corporation is obligated to issue other securities
(including Common Shares) of the Corporation pursuant to Section 11(a)
hereof, the Corporation will make all arrangements necessary so that such
other securities are available for distribution by the Rights Agent, if and
when necessary to comply with this Agreement.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii) hereof, the Rights Agent shall return such
Right Certificate to the registered holder thereof after imprinting,
stamping or otherwise indicating thereon that the rights represented by
such Right Certificate no longer include the rights provided by Section
11(a)(ii) hereof and, if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii) hereof.
(d) In case the registered holder of any Right Certificate shall
exercise 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 to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Sections 6 and 14 hereof, or the Rights Agent shall place an
appropriate notation on the Right Certificate with respect to those Rights
exercised.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an
11
Acquiring Person or an Affiliate or Associate of an Acquiring Person, (ii)
a transferee of an Acquiring Person (or of any Affiliate or Associate
thereof) who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any
Person with whom the Acquiring Person has a continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board has determined is part of an agreement,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Corporation shall promptly notify the Rights
Agent in writing when this Section 7(e) applies and shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but neither the Corporation nor the
Rights Agent shall have any liability to any holder of Right Certificates
or other Person as a result of the Corporation's failure to make any
determinations with respect to an Acquiring Person or its Affiliates,
Associates or any transferee of any of them hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported transfer pursuant to Section 6 hereof or
exercise as set forth in this Section 7, unless such registered holder (i)
shall have duly and properly completed and signed the certificate contained
in the form of assignment or election to purchase, as the case may be, set
forth on the reverse side of the Right Certificate surrendered for such
transfer or exercise, as the case may be, (ii) shall not have indicated an
affirmative response to clause 1 or 2 thereof, (iii) tendered the Purchase
Price (and an amount equal to any applicable tax or charge required to be
paid by the holder of such Rights Certificate hereunder), and (iv) shall
have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as
the Corporation or the Rights Agent shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Corporation or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Corporation 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
Corporation otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Corporation, or shall, at the
written request of the Corporation, destroy such cancelled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Corporation.
12
Section 9. Reservation and Availability of Capital Stock.
(a) The Corporation covenants and agrees that (i) at all times prior
to the occurrence of a Section 11(a)(ii) Event, it will cause to be
reserved and kept available out of its authorized and unissued Preferred
Shares, or any authorized and issued Preferred Shares held in its treasury,
the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights, and (ii) after the occurrence
of a Section 11(a)(ii) Event, it will, to the extent reasonably
practicable, so reserve and keep available a sufficient number of Common
Shares (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
(b) So long as the Preferred Shares (and, after the occurrence of a
Section 11(a)(ii) Event, Common Shares or any other securities) issuable
upon the exercise of the Rights may be listed on any stock exchange, the
Corporation shall use its best efforts to cause, from and after such time
as the Rights become exercisable, all securities reserved for such issuance
to be listed on such exchange upon official notice of issuance upon such
exercise.
(c) The Corporation covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (or Common
Shares and/or other securities, as the case may be) delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and non-assessable
shares or securities.
(d) The Corporation further covenants and agrees that it will pay when
due and payable any and all federal and state taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares (or Common Shares and/or other securities, as
the case may be) upon the exercise of Rights. The Corporation shall not,
however, be required to pay any tax or charge which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates or depositary receipts
for the Preferred Shares (or Common Shares and/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 to issue
or to deliver any certificates or depositary receipts for Preferred Shares
(or Common Shares and/or other securities, as the case may be) upon the
exercise of any Rights, until any such tax or charge shall have been paid
(any such tax or charge being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to
the Corporation's satisfaction that no such tax or charge is due.
(e) The Corporation shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date (or, if required by law,
at such earlier time following the Distribution Date as so required), a
registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Act and the rules and regulations thereunder) until the date of the
expiration of the rights provided by Section 11(a)(ii) hereof. The
Corporation will also take such action as may be appropriate under the blue
sky laws of the various states. The Corporation may
13
temporarily suspend, for a period of time not to exceed 90 days after the
date set forth in clause (i) of this Section 9(e), the exercisability of
the Rights in order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension, the Corporation
shall issue a public announcement (with prompt written notice thereof to
the Rights Agent) stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement (with prompt
written notice thereof to the Rights Agent) at such time as the suspension
is no longer in effect. Notwithstanding any such provision of this
Agreement to the contrary, the Rights shall not be exercisable for
securities in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, such exercise therefor shall not
be permitted under applicable law, or a registration statement in respect
of such securities shall not have been declared effective.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) 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 taxes and other governmental charges) was made; provided,
however, that, if the date of such surrender and payment is a date upon which
the transfer books of the Corporation relating to the Preferred Shares (or
Common Shares and/or other securities, as the case may be) are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
applicable transfer books are open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares into a
greater number of Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of Preferred Shares, or (D) issue any shares
of its capital stock in a reclassification of the Preferred Shares
(including without limitation any such reclassification in connection with
a consolidation or merger in which the Corporation is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in effect immediately prior to
the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall
(except as otherwise provided herein, including without limitation Section
7(e) hereof) thereafter be entitled to receive, upon exercise thereof at
the Purchase Price in effect immediately prior to such date, the aggregate
number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the applicable
transfer books of the Corporation were open, such holder would have been
entitled to receive upon such exercise by
14
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Corporation issuable upon exercise of one
Right. If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person, alone or together with its Affiliates
and Associates, shall, at any time after the date of this Agreement, become
an Acquiring Person, then proper provision shall be made so that each
holder of a Right shall (except as provided below and in Section 7(e)
hereof), for a period of 60 days after the later of the occurrence of any
such event or the effective date of an appropriate registration statement
under the Act pursuant to Section 9 hereof, have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price, in
accordance with the terms of this Agreement, in lieu of Preferred Shares,
such number of duly authorized, validly issued, fully paid and
non-assessable Common Shares (or, in the discretion of the Board, one
one-thousandths of a Preferred Share) as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the then number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and
dividing that product by (B) 50% of the then current per share market price
of the Common Shares (determined pursuant to Section 11(d) hereof) on the
date of such first occurrence (such number of shares being referred to as
the "Adjustment Shares"); provided, however, that, if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of Section 13
hereof 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 treasury shares
or authorized but unissued (and unreserved) Common Shares to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof
and the Rights become so exercisable (and the Board has determined to make
the Rights exercisable into fractions of a Preferred Share),
notwithstanding any other provision of this Agreement, to the extent
necessary and permitted by applicable law, each Right shall thereafter
represent the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, (A) a number
of (or fractions of) Common Shares (up to the maximum number of Common
Shares which may permissibly be issued) and (B) one-one-thousandths of a
Preferred Share or a number of, or fractions of other equity securities of
the Corporation (or, in the discretion of the Board, debt) which the Board
has determined to have the same aggregate current market value (determined
pursuant to Sections 11(d)(i) and (ii) hereof, to the extent applicable) as
one Common Share (such number of, or fractions of, Preferred Shares or
other equity securities or debt of the Corporation being referred to as a
"capital stock equivalent"), equal in the aggregate to the number of
Adjustment Shares; provided, however, if sufficient Common Shares and/or
capital stock equivalents are unavailable, then the Corporation shall, to
the extent permitted by applicable law, take all such action as may be
necessary to authorize additional Common Shares or capital stock
equivalents for issuance upon exercise of the Rights, including the calling
of a meeting of stockholders; and provided, further, that, if the
Corporation is unable to cause
15
sufficient Common Shares and/or capital stock equivalents to be available
for issuance upon exercise in full of the Rights, then each Right shall
thereafter represent the right to receive the Adjusted Number of Shares
upon exercise at the Adjusted Purchase Price (as such terms are hereinafter
defined). As used herein, the term "Adjusted Number of Shares" shall mean
that number of (or fractions of) Common Shares (and/or capital stock
equivalents) equal to the product of (X) the number of Adjustment Shares
and (Y) a fraction, the numerator of which is the number of Common Shares
(and/or capital stock equivalents) available for issuance upon exercise of
the Rights and the denominator of which is the aggregate number of
Adjustment Shares otherwise issuable upon exercise in full of all Rights
(assuming there were a sufficient number of Common Shares available) (such
fraction being referred to as the "Proration Factor"). The "Adjusted
Purchase Price" shall mean the product of the Purchase Price and the
Proration Factor. The Board may, but shall not be required to, establish
procedures to allocate the right to receive Common Shares and capital stock
equivalents upon exercise of the Rights among holders of Rights.
(b) In case the Corporation shall fix a record date for the issuance
of rights (other than the Rights), options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities convertible
into or exercisable for Preferred Shares or equivalent preferred shares at
a price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred Shares
or equivalent preferred shares) less than the then current per share market
price of the Preferred Shares (as determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or equivalent preferred shares so
to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current per
share market price, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Corporation issuable upon exercise of one Right. In case such
subscription price may be paid by delivery of consideration part or all of
which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board, whose determination
shall be described in a written statement filed with the Rights Agent and
shall be conclusive for all purposes. Preferred Shares owned by or held for
the account of the Corporation shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date
had not been fixed.
16
(c) In case the Corporation shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness, equity securities other than Preferred Shares or assets
(other than a regular periodic cash dividend or a dividend payable in
Preferred Shares) or subscription rights, options or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market
price (as determined pursuant to Section 11(d) hereof) of the Preferred
Shares on such record date, less the fair market value (as determined in
good faith by the Board, whose determination shall be described in a
written statement filed with the Rights Agent and shall be conclusive for
all purposes) of the portion of the assets, equity securities or evidences
of indebtedness so to be distributed or of such subscription rights,
options or warrants applicable to one Preferred Share, and the denominator
of which shall be such current per share market price of the Preferred
Shares; provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Corporation to be issued upon exercise
of one Right. Such adjustments shall be made successively whenever such a
record date is fixed; and, in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive
Trading Days immediately prior to but not including such date; provided,
however, that, in the event the current per share market price of the
Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such
shares or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading Days after but not
including 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 per share market price shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted
to trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Security selected by
the Board. If on any such date no such market maker is making a market in
the Security, the fair value of the Security on such date
17
as determined in good faith by the Board shall be used. The term "Trading
Day" shall mean a day on which the principal national securities exchange
on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i) hereof. If the
Preferred Shares are not publicly traded, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined pursuant
to Section 11(d)(i) hereof, (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of
this Agreement), multiplied by 1,000. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current per
share market price" of the Preferred Shares shall mean the fair value per
share as determined in good faith by the Board, whose determination shall
be described in a written statement filed with the Rights Agent and shall
be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e), are
not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one one-millionth of a Preferred
Share or one ten-thousandth of any other share or security as the case may
be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates
such adjustment or (ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive, upon exercise of such Right, any shares
of capital stock of the Corporation other than Preferred Shares, thereafter
the number of other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11(a) through (c) hereof, inclusive,
and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Corporation subsequent to any
adjustment made hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-thousandths of a Preferred
Share and other capital stock of the Corporation purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) The Corporation may elect, on or after the date of any adjustment
of the Purchase Price, to adjust the number of Rights, in lieu of any
adjustment in the number of one one-thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each of the
18
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Corporation shall
make a public announcement (and shall promptly deliver a copy of such
announcement to the Rights Agent) of its election to adjust the number of
Rights, indicating the record date for the adjustment and, if known at the
time, the amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(h), the Corporation shall, as promptly as practicable, cause to
be distributed to holders of record of Right Certificates on such record
date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of
such adjustment or, at the option of the Corporation, shall cause to be
distributed to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Corporation, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein (and may, at the option of the Corporation, reflect the adjusted
Purchase Price) and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in the initial
Right Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the number of one
one-thousandths of a Preferred Share, Common Shares or other securities
issuable upon exercise of the Rights, the Corporation shall take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue such number of
fully paid and non-assessable one one-thousandths of a Preferred Share,
Common Shares or other securities at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Corporation may elect (and shall provide the Rights
Agent with prompt written notice of such election) to defer, until the
occurrence of such event, the issuance to the holder of any Right exercised
after such record date of the Preferred Shares, Common Shares or other
securities of the Corporation, if any, issuable upon such exercise over and
above the Preferred Shares, Common Shares or other securities of the
Corporation, if any, issuable upon exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the
Corporation shall deliver to such
19
holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Corporation shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it, in its sole discretion, shall determine
to be advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less
than the current market price, (iii) issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made
by the Corporation to holders of its Preferred Shares shall not be taxable
to such stockholders.
(m) The Corporation covenants and agrees that it will not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Corporation in a transaction which does not
violate Section 11(n) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Corporation in a transaction which does not
violate Section 11(n) hereof), or (iii) sell or otherwise transfer (or
permit any Subsidiary of the Corporation 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
Corporation and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its Subsidiaries in one
or more transactions each of which does not violate Section 11(n) hereof),
if (x) at the time of or immediately after such consolidation, merger, sale
or transfer there are any charter or by-law provisions or any rights,
warrants or other instruments or securities outstanding or agreements in
effect or other actions taken, which would materially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights, or (y) prior
to, simultaneously with or immediately after such consolidation, merger,
sale or transfer, the stockholders of the Person who constitutes, or would
constitute, the Principal Party (for purposes of Section 13(a) hereof)
shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates. The Corporation shall not
consummate any such consolidation, merger, sale or transfer unless prior
thereto the Corporation and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing
compliance with this Section 11(m).
(n) The Corporation covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, 24 or 27 hereof, take
(or permit any of its Subsidiaries to take) any action the purpose of which
is to, or if at the time such action is taken it is reasonably foreseeable
that the effect of such action would be to, materially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(o) The exercise of Rights under Section 11(a)(ii) hereof shall only
result in the loss of rights under said Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the
Rights under this Agreement, including the rights represented by Section 13
hereof.
20
(p) Unless the Corporation shall have exercised its election as
provided in Section 11(h) hereof, upon each adjustment of the Purchase
Price as a result of the calculations made in Section 11(b) or (c) hereof,
each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-thousandths of a Preferred Share (calculated
to the nearest one-millionth) obtained by (i) multiplying (A) the number of
one one-thousandths of a share for which a Right was exercisable
immediately prior to this adjustment by (B) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made or any event affecting the Rights or their
exercisability (including, without limitation, an event which causes Rights to
become null and void) occurs as provided in Section 11 or 13 hereof, the
Corporation shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief, reasonably detailed statement of the facts,
computations and methodology giving rise to such adjustment or describing such
an event, (b) file with the Rights Agent and with each transfer agent for the
Common Shares and the Preferred Shares 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 Common Shares)
in accordance with Section 26 hereof. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment or statement therein
contained and shall have no duty with respect to and shall not be deemed to have
knowledge of such adjustment or event unless and until it shall have received
such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, on or following the Shares Acquisition Date,
directly or indirectly, (x) the Corporation shall consolidate with, or
merge with and into, any Person (and the Corporation shall not be the
continuing or surviving corporation of such consolidation or merger), (y)
the Corporation shall consolidate with, or merge with, any Person, and the
Corporation shall be the continuing or surviving corporation of such
consolidation or merger (other than, in a case of any transaction described
in clause (x) or (y) above, a merger or consolidation which would result in
all of the securities generally entitled to vote in the election of
directors ("voting securities") of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or
by being converted into securities of the surviving entity) all of the
voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation and the holders of such
securities not having changed as a result of such merger or consolidation),
or (z) the Corporation shall sell or otherwise transfer (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 Corporation and its
Subsidiaries (taken as a whole) to any Person (other than the Corporation
or any Subsidiary of the Corporation in one or more transactions each of
which does not violate Section 11(n) hereof), then, and in each such case
(except as provided in Section 13(d) hereof), proper provision shall be
made so that (i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price, in
21
accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of duly authorized, validly issued, fully paid,
non-assessable and freely tradeable Common Shares of the Principal Party
(as hereinafter defined), not subject to any liens, encumbrances, rights of
call or first refusal or other adverse claims, as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number
of one one-thousandths of a Preferred Share for which a Right is then
exercisable (without taking into account any adjustment previously made
pursuant to Section 11(a)(ii) hereof) and dividing that product by (B) 50%
of the then current per share market price of the Common Shares of such
Principal Party (determined pursuant to Section 11(d)(i) hereof) on the
date of consummation of such Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such Section
13 Event, all the obligations and duties of the Corporation pursuant to
this Agreement; (iii) the term "Corporation" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof 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 without limitation the
authorization and reservation of a sufficient number of its Common Shares
to permit exercise of all outstanding Rights in accordance with this
Section 13(a)) 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 Common
Shares of such Principal Party thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a) hereof, the Person that is the
issuer of any securities into which Common Shares of the Corporation
are converted in such merger or consolidation, and if no securities
are so issued, the Person that survives or results from such merger or
consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) hereof, 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 of the foregoing cases, (A) if the Common Shares
of such Person are not at such time and have 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 Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (B) in
case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Shares 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 Shares having the greatest
aggregate market value; and (C) in case such Person is owned, directly
or indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the rules
set forth in clauses (A) and (B) above shall apply to each of the
chains of ownership having an interest in such joint venture as if
such party were a "Subsidiary" of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such
interests.
22
(c) The Corporation shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of its authorized Common Shares which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Corporation
and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth in
Sections 13(a) and (b) hereof and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer
mentioned in Section 13(a) hereof, the Principal Party, at its own expense,
shall:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue
sky or securities laws of such jurisdictions as may be necessary or
appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party 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 or consolidations or sales or other transfers. The rights under
this Section 13 shall be in addition to the rights to exercise Rights and
adjustments under Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in clauses
(x) and (y) of Section 13(a) hereof if: (i) such transaction is consummated
with a Person or Persons who acquired Common Shares pursuant to a Permitted
Offer (or a wholly owned Subsidiary of any such Person or Persons); (ii)
the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares
were purchased pursuant to such Permitted Offer; and (iii) the form of
consideration offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted 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 Corporation 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
23
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 for any day
shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Rights are not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on 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. If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as determined in good
faith by the Board shall be used.
(b) The Corporation shall not be required to issue fractions of
Preferred Shares (other than fractions which are one one-thousandth or
integral multiples of one one-thousandth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are one
one-thousandth or integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the
Corporation, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Corporation and a depositary selected by
it; provided, that such agreement shall provide that the holders of such
depositary receipts shall have the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not one one-thousandth or integral multiples of one
one-thousandth of a Preferred Share, the Corporation shall pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one one-thousandth of a Preferred Share. For
the purposes of this Section 14(b), the current market value of one
one-thousandth of a Preferred Share shall be one one-thousandth of the
closing price of a Preferred Share (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive Common
Shares, capital stock equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Corporation shall not be
required to issue fractions of shares or units of such Common Shares,
capital stock equivalents or other securities upon exercise of the Rights
or to distribute certificates which evidence fractions of such Common
Shares, capital stock equivalents or other securities. In lieu of
fractional shares or units of such Common Shares, capital stock equivalents
or other securities, the Corporation may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
a share or unit of such Common Shares, capital stock equivalents or other
24
securities. For purposes of this Section 14(c), the current market value
shall be determined in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise and, if such
capital stock equivalent is not traded, each such capital stock equivalent
shall have the value of one one-thousandth of a Preferred Share.
(d) The holder of a Right, by the acceptance of the Right, expressly
waives his right to receive any fractional Rights or any fractional share
upon exercise of a Right (except as permitted by this Section 14).
(e) Whenever a payment for fractional Rights or fractional shares is
to be made by the Rights Agent, the Corporation shall (i) promptly prepare
and deliver to the Rights Agent a certificate setting forth in reasonable
detail the facts related to such payments and the prices and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies
to the Rights Agent in the form of fully collected funds to make such
payments. The Rights Agent shall be fully protected in relying upon such a
certificate and shall have no duty with respect to, and shall not be deemed
to have knowledge of any payment for fractional Rights or fractional shares
under any Section of this Agreement relating to the payment of fractional
Rights or fractional shares unless and until the Rights Agent shall have
received such a certificate and sufficient monies.
Section 15. Rights of Action. All rights of action in respect of this
Agreement (except the rights of action given to the Rights Agent under Section
18 hereof) are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), 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 Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate (or, prior to the
Distribution Date, such Common Shares) in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right as follows:
(a) Prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares.
(b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated
25
for such purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate form or certificate fully executed.
(c) Subject to Sections 6 and 7(f) hereof, the Corporation 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
Shares 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 Shares
certificate made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall be
affected by any notice to the contrary.
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any liability to
any holder of a Right or a beneficial interest in a Right or other Person
as a result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other
order, decree, judgment or ruling (whether interlocutory or final) 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, the Corporation must use its best efforts to have any
such order, decree, judgment or ruling lifted or otherwise overturned as
soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder of
any Right Certificate, as such, shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Corporation which may at any time be issuable upon the
exercise or exchange 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 Corporation or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or to
receive dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised or exchanged in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by the Rights Agent hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the preparation,
delivery, amendment, administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Corporation also
agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense (including, without limitation, the reasonable
fees and expenses of legal counsel), incurred without gross negligence,
26
bad faith or willful misconduct on the part of the Rights Agent (which
gross negligence, bad faith or willful misconduct must be determined by a
final, non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction), for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement or the exercise or performance of its duties hereunder,
including, without limitation the reasonable costs and expenses of
defending against any claim of liability in the premises. The costs and
expenses incurred by the Rights Agent in enforcing this right of
indemnification shall be paid by the Corporation. The provisions of this
Section 18 and Section 20 below shall survive the expiration or exercise of
the Rights, the termination of this Agreement, and the resignation, removal
or replacement of the Rights Agent.
(b) The Rights Agent shall be authorized and protected and shall incur
no liability for, or in respect of, any action taken, suffered or omitted
by it in connection with the acceptance and administration of this
Agreement or the exercise or performance of its duties hereunder in
reliance upon any Right Certificate or certificate for Common Shares or for
other securities of the Corporation, 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, or
otherwise upon the advice of counsel as set forth in Section 20 hereof. The
Rights Agent shall not be deemed to have knowledge of any event of which it
was supposed to receive notice thereof hereunder, and the Rights Agent
shall be fully protected and shall incur no liability for failing to take
any action in connection therewith unless and until it has received such
notice.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
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 Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. 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 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
27
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 to perform
only the duties and obligations expressly imposed by this Agreement (and no
implied duties or obligations) upon the following terms and conditions, by all
of which the Corporation and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation or any employee of the Rights Agent), and the
advice or opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent with respect to, and the Rights Agent
shall incur no liability for or in respect of, any action taken, suffered
or omitted by it 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 an Acquiring Person
and the determination of the current market price of any Security) be
proved or established by the Corporation prior to the Rights Agent's
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 any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent
with respect to, and the Rights Agent shall incur no liability for or in
respect of, any action taken, suffered or omitted 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 (which gross negligence, bad
faith or willful misconduct must be determined by a final, non-appealable
order, judgment, decree or ruling of a court of competent jurisdiction).
Anything to the contrary notwithstanding, in no case will the Rights Agent
be liable for special, indirect, punitive, incidental or consequential loss
or damages of any kind whatsoever (including without limitation lost
profits), even if the Rights Agent has been advised of the possibility of
such damages. Any loss or liability of the Rights Agent under this
Agreement will be limited to the amount of fees paid by the Corporation to
the Rights Agent pursuant to this Agreement.
(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 on such Right Certificates)
or be required to verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not have any liability for or 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
28
of any Right Certificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Corporation of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any change in the exercisability of the Rights
(including without limitation the Rights becoming null and void pursuant to
Section 7(e) hereof) or any adjustment required under the provisions of
Section 3, 11, 13, 23 or 24 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after receipt by the Rights Agent
of a certificate pursuant to Section 12 hereof describing such change or
adjustment, upon which the Rights Agent may rely); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether
any Preferred Shares or Common Shares will, when issued, be duly
authorized, validly issued, fully paid and non-assessable.
(f) The Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the
Corporation, and to apply to such officers for advice or instructions in
connection with its duties, and such instructions shall be full
authorization and protection to the Rights Agent and the Rights Agent shall
not be liable for any action taken, suffered or omitted to be taken by it
in accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. Any application by the Rights
Agent for written instructions from the Corporation may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken,
suffered or omitted by the Rights Agent under this Rights Agreement and the
date on or after which such action shall be taken or suffered or such
omission shall be effective. The Rights Agent shall not be liable for any
action taken, suffered or omitted to be taken by 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 five
Business Days after the date any officer of the Corporation actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking, suffering or omitting
any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instruction in response to such
application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any stockholder, director, Affiliate, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Corporation or become pecuniarily interested in
any transaction in which the Corporation may be interested, or contract
with or lend money to the Corporation 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
Corporation or for any other Person.
29
(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
(through its directors, officers and employees) 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 Corporation or any other Person
resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct (which gross negligence, bad
faith or willful misconduct must be determined by a final, non-appealable
order, judgment, decree or ruling of a court of competent jurisdiction) in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
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 Corporation.
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 Corporation and to each transfer
agent of the Common Shares or Preferred Shares by registered or certified mail,
and, following the Distribution Date, to the holders of the Right Certificates
by first-class mail. The Corporation may remove the Rights Agent or any
successor Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and,
following the Distribution Date, to holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Corporation shall appoint a successor
to the Rights Agent. If the Corporation 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
Corporation), 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 Corporation or by such a
court, shall be (a) a Person organized and doing business under the laws of the
United States or the laws of any state of the United States or the District of
Columbia, in good standing, having an office in the State of New York, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
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 Person described in
clause (a) of this sentence. 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; however, the
predecessor Rights Agent shall deliver and
30
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 Corporation shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and, following 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, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Corporation
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
Section 23. Redemption and Termination.
(a) (i) The Board may, at its option, redeem all but not less than all
the then outstanding Rights at a redemption price of $0.01 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"),
at any time prior to the earlier of (A) the occurrence of a Section
11(a)(ii) Event, or (B) the Final Expiration Date. The Corporation may, at
its option, pay the Redemption Price either in Common Shares (based on the
"current per share market price," as defined in Section 11(d) hereof, of
the Common Shares at the time of redemption) or cash; provided, that if the
Corporation elects to pay the Redemption Price in Common Shares, the
Corporation shall not be required to issue any fractional Common Shares and
the number of Common Shares issuable to each holder of Rights shall be
rounded down to the next whole share.
(ii) In addition, the Board may, at its option, at any time following
the occurrence of a Section 11(a)(ii) Event and the expiration of any
period during which the holder of Rights may exercise the rights under
Section 11(a)(ii) but prior to any Section 13 Event, redeem all but not
less than all of the then outstanding Rights at the Redemption Price (A) in
connection with any merger, consolidation or sale or other transfer (in one
transaction or in a series of related transactions) of assets or earning
power aggregating 50% or more of the earning power of the Corporation and
its Subsidiaries (taken as a whole) in which all holders of Common Shares
are treated alike and not involving (other than as a holder of Common
Shares being treated like all other such holders) an Interested
Stockholder, or (B)(1) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of 10% or more of the Common Shares, and
(2) at the time of redemption no other Persons are Acquiring Persons.
(b) In the case of a redemption permitted under Section 23(a)(i)
hereof, immediately upon the date for redemption set forth (or determined
in the manner specified) in a resolution of the Board ordering the
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the
right to
31
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. In the case of a redemption permitted only under Section 23(a)(ii)
hereof, evidence of which shall have been filed with the Rights Agent, the
right to exercise the Rights will terminate and represent only the right to
receive the Redemption Price upon the later of 10 Business Days following
the giving of such notice or the expiration of any period during which the
rights under Section 11(a)(ii) may be exercised. The Corporation shall
promptly give written notice of any such redemption to the Rights Agent and
the holders of the Rights in the manner set forth in Section 26 hereof;
provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within 10 days
after such date for redemption set forth in a resolution of the Board
ordering the redemption of the Rights, the Corporation shall mail a notice
of redemption to all the holders of the then outstanding Rights 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 Shares. 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 Corporation
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof and other than in
connection with the purchase of Common Shares prior to the Distribution
Date.
(c) The Corporation may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights in accordance with this
Agreement (with prompt written notice thereof to the Rights Agent) and (ii)
mailing payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent of the Common Shares, and, upon such action, all
outstanding Rights and Right Certificates shall be null and void without
any further action by the Corporation.
Section 24. Exchange.
(a) The Board may, at its option, at any time after any Person becomes
an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null
and void pursuant to the provisions of Section 7(e) or 11(a)(ii) hereof)
for Common Shares of the Corporation at an exchange ratio of one Common
Share 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").
Notwithstanding the foregoing, the Board shall not be empowered to effect
such exchange at any time after any Person (other than the Corporation, any
Subsidiary of the Corporation, any employee benefit plan of the Corporation
or any such Subsidiary, any Person organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan or any
trustee, administrator or fiduciary of such a plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of
50% or more of the Common Shares then outstanding.
32
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to Section 24(a) hereof and without any further action
and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of the holders of such Rights shall be to
receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Corporation shall
promptly give public notice and written notice to the Rights Agent 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
Corporation shall promptly mail a notice of any such exchange to the Rights
Agent and to all of the holders of such Rights 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 Common Shares 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 null and
void pursuant to the provisions of Section 7(e) or 11(a)(ii) hereof) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Corporation, at
its option, may substitute Preferred Shares (or equivalent preferred
shares, as such term is defined in Section 11(b) hereof) for some or all of
the Common Shares exchangeable for Rights, at the initial rate of one
one-thousandth of a Preferred Share (or equivalent preferred share) for
each Common Share, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Shares pursuant to the terms thereof, so
that the fraction of a Preferred Share delivered in lieu of each Common
Share shall have the same dividend, liquidation and voting rights as one
Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this
Section 24, the Corporation shall take all such action as may be necessary
to authorize additional Common Shares or Preferred Shares for issuance upon
exchange of the Rights.
Section 25. Notice of Certain Events.
(a) In case the Corporation shall, at any time after the Distribution
Date, propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the
holders of its Preferred Shares (other than a regularly quarterly cash
dividend), (ii) to offer to the holders of its Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision or combination of
outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Corporation
in a transaction which does not violate Section 11(n) hereof), or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer) in one or more transactions, of 50% or
more of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to any
33
other Person or Persons (other than the Corporation and/or any of its
Subsidiaries in one or more transactions each of which does not violate
Section 11(n) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Corporation, then, in each such case, the Corporation
shall give to each holder of a Right Certificate (with prompt written
notice thereof to the Rights Agent), in accordance with Section 26 hereof,
a notice of such proposed action and shall file a certificate with the
Rights Agent to that effect, which shall specify the record date for the
purposes of such dividend, distribution or offering of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least
20 days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of the Preferred Shares, whichever
shall be the earlier. The failure to give notice required by this Section
25 or any defect therein shall not affect the legality or validity of the
action taken by the Corporation or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date, a public filing by the Corporation with the
Securities and Exchange Commission (with prompt written notice thereof to
the Rights Agent) shall constitute sufficient notice to the holders of
securities of the Corporation, including without limitation the Rights, for
purposes of this Agreement and no other notice need be given to such
holders.
(c) In case of a Section 11(a)(ii) Event, then (i) the Corporation
shall, as soon as practicable thereafter, give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event (with prompt written notice thereof to the Rights
Agent), which notice shall describe such event and the consequences of such
event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in Section 25(a) hereof to Preferred Shares shall be deemed
thereafter to refer also to Common Shares and/or, if appropriate, other
securities of the Corporation.
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 Corporation shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed as follows (or to such other address or
addresses as the Corporation shall specify in writing to the Rights Agent) or by
facsimile transmission:
Quicksilver Resources Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Corporation or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage
34
prepaid, addressed as follows (or to such other address or addresses as the
Rights Agent shall specify in writing to the Corporation) or by facsimile
transmission:
Mellon Investor Services LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Relationship Manager
Facsimile No.: (000) 000-0000
with a copy to:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of any Right Certificate or, if
prior to the Distribution Date, to the holder of certificates representing
Common Shares shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Corporation.
Section 27. Supplements and Amendments. Prior to the Distribution Date, the
Corporation and the Rights Agent shall, if the Corporation so directs,
supplement or amend any provision of this Agreement, subject to the other terms
and conditions of this Agreement, without the approval of any holders of
certificates representing Common Shares. From and after the Distribution Date,
the Corporation and the Rights Agent shall, if the Corporation 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
Corporation 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); provided, however,
that this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (c) of this sentence, (i) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (ii) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights. Upon the delivery of a certificate from an appropriate officer of the
Corporation which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment, provided that such supplement or amendment does
not adversely affect the rights, duties, liabilities or obligations of the
Rights Agent under this Agreement. Prior to the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
35
Section 28. Determination and Actions by the Board, etc. The Board shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or the
Corporation, or as may be necessary or advisable in the administration of this
Agreement, including without limitation the right and power to (a) interpret the
provisions of this Agreement, and (b) make all determinations deemed necessary
or advisable for the administration of this Agreement (including without
limitation a determination to redeem or exchange or not to redeem or exchange
the Rights or to amend this Agreement and whether any proposed amendment
adversely affects the interests of the holders of Right Certificates). For all
purposes of this Agreement, any calculation of the number of Common Shares or
other securities outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares or any
other securities of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Corporation, the Rights Agent, the holders
of the Right Certificates and all other Persons, and (y) not subject the Board
to any liability to the holders of the Right Certificates. The Rights Agent
shall always be entitled to assume that the Corporation's Board of Directors
acted in good faith and shall be fully protected and incur no liability in
reliance thereon.
Section 29. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Corporation or the Rights Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Corporation, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State; except that all provisions
regarding the rights, duties and obligations of the Rights Agent shall be
governed by and construed in accordance with the law of the State of New York
applicable to contracts made and to be performed entirely within such state.
36
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience of reference only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, all as of the day and
year first above written.
QUICKSILVER RESOURCES INC.
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
Mellon Investor Services LLC
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Client Service Manager
37
Exhibit A
Form of
Certificate of Designation
of
Series A Junior Participating Preferred Stock
of
Quicksilver Resources Inc.
(Pursuant to Section 151 of the General
Corporation Law of the State of Delaware)
Quicksilver Resources Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), in accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That, pursuant to the authority granted to and vested in the Board of
Directors of the Corporation in accordance with the provisions of the Restated
Certificate of Incorporation, as amended, of the Corporation (the "Certificate
of Incorporation"), the following resolution was duly adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law of the State of Delaware at a meeting duly called and held on
March 11, 2003.
RESOLVED, that, pursuant to the authority granted to and vested in the
Board of Directors of the Corporation (hereinafter called the "Board of
Directors") in accordance with the provisions of the Certificate of
Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, with a par value of $0.01 per share, of the Corporation and hereby
states the designation and number of shares, and fixes the relative rights,
preferences and limitations thereof (in addition to the provisions set
forth in the Certificate of Incorporation which are applicable to the
Preferred Stock of all classes and series) as follows:
Series A Junior Participating Preferred Stock
Section 1. Designation, Par Value and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock"
(hereinafter referred to as "Series A Preferred Stock"), the shares of such
series shall be with par value of $0.01 per share, and the number of shares
constituting such series shall be 40,000; provided, however, that, if more than
a total of 40,000 shares of Series A Preferred Stock shall be issuable upon the
exercise of Rights (the "Rights") issued pursuant to the Rights Agreement, dated
as of March 11, 2003, between the Corporation and Mellon Investor Services LLC,
as Rights Agent (as amended from time to time) (the "Rights Agreement"), the
Board of Directors, pursuant to Section 151 of the General Corporation Law of
the State of Delaware, shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged and filed providing for the total
number of shares of Series A Preferred Stock authorized to be issued to be
increased (to the extent that the Certificate of Incorporation then permits) to
the largest number of whole shares (rounded up to the nearest whole number)
issuable upon exercise of the Rights. Such number of shares of the Series A
Preferred Stock may be increased or decreased by resolution of the Board of
Directors;
A-1
provided, that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares issuable upon exercise or conversion of outstanding rights,
options or other securities issued by the Corporation.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of
shares of any class or series of stock of the Corporation ranking junior to
the Series A Preferred Stock in respect thereof, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on
the first business day of January, April, July and October of each year
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (A) $1.00 or (B) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all
cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock, par value $0.01 per share, of
the Corporation (the "Common Stock") or a subdivision of the outstanding
shares of Common Stock, by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any time after the
record date for the initial distribution of the Rights pursuant to the
Rights Agreement (the "Rights Declaration Date") (i) declare or pay any
dividend on the Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then, in each such case, the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (B) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock); provided, that, in
the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date (or, with respect
to the first Quarterly Dividend Payment Date, the period between the first
issuance of any share or fraction of a share of Series A Preferred Stock
and such first Quarterly Dividend Payment Date), a dividend of $1.00 per
share on the Series A
A-2
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred
Stock, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue and be cumulative from the date of issue
of such shares, or unless the date of issue is a date after the record date
for the determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and on or before such Quarterly
Dividend Payment Date, in which case dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights required
by law, the holders of shares of Series A Preferred Stock shall have the
following voting rights:
(a) Except as provided in paragraph (c) of this Section 3 and subject
to the provision for adjustment hereinafter set forth, each share of Series
A Preferred Stock shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall, at any time after the Rights Declaration Date.
(i) declare or pay any dividend on the Common Stock payable in
shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(c) (i) If, on the date used to determine stockholders of record for
any meeting of stockholders for the election of directors, a default in
preference dividends (as defined in subparagraph (v) below) on the Series A
Preferred Stock shall exist, the holders of the Series A Preferred Stock
shall have the right, voting as a class as described in subparagraph (ii)
A-3
below, to elect two directors (in addition to the directors elected by
holders of Common Stock). Such right may be exercised (A) at any meeting of
stockholders for the election of directors or (B) at a meeting of the
holders of shares of Voting Preferred Stock (as hereinafter defined),
called for the purpose in accordance with the By-laws of the Corporation,
until all such cumulative dividends (referred to above) shall have been
paid in full or until non-cumulative dividends have been paid regularly for
at least one year.
(ii) The right of the holders of Series A Preferred Stock to elect two
directors, as described above, shall be exercised as a class concurrently
with the rights of holders of any other series of Preferred Stock upon
which voting rights to elect such directors have been conferred and are
then exercisable. The Series A Preferred Stock and any additional series of
Preferred Stock which the Corporation may issue and which may provide for
the right to vote with the foregoing series of Preferred Stock are
collectively referred to herein as "Voting Preferred Stock."
(iii) Each director elected by the holders of shares of Voting
Preferred Stock shall be referred to herein as a "Preferred Director." A
Preferred Director so elected shall continue to serve as such director for
a term of one year, except that upon any termination of the right of all of
such holders to vote as a class for Preferred Directors, the term of office
of the Preferred Directors shall terminate. Any Preferred Director may be
removed by, and shall not be removed except by, the vote of the holders of
record of a majority of the outstanding shares of Voting Preferred Stock
then entitled to vote for the election of directors, present (in person or
by proxy) and voting together as a single class (A) at a meeting of the
stockholders, or (B) at a meeting of the holders of shares of such Voting
Preferred Stock, called for the purpose in accordance with the By-laws of
the Corporation, or (C) by written consent signed by the holders of a
majority of the then outstanding shares of Voting Preferred Stock then
entitled to vote for the election of directors, taken together as a single
class.
(iv) So long as a default in any preference dividends on the Series A
Preferred Stock shall exist or the holders of any other series of Voting
Preferred Stock shall be entitled to elect Preferred Directors, (A) any
vacancy in the office of a Preferred Director may be filled (except as
provided in the following clause (B)) by an instrument in writing signed by
the remaining Preferred Director and filed with the Corporation and (B) in
the case of the removal of any Preferred Director, the vacancy may be
filled by the vote or written consent of the holders of a majority of the
outstanding shares of Voting Preferred Stock then entitled to vote for the
election of directors, present (in person or by proxy) and voting together
as a single class, at such time as the removal shall be effected. Each
director appointed as aforesaid by the remaining Preferred Director shall
be deemed, for all purposes hereof, to be a Preferred Director. Whenever
(x) no default in preference dividends on the Series A Preferred Stock
shall exist and (y) the holders of other series of Voting Preferred Stock
shall no longer be entitled to elect such Preferred Directors, then the
number of directors constituting the Board of Directors of the Corporation
shall be reduced by two.
(v) For purposes hereof, a "default in preference dividends" on the
Series A Preferred Stock shall be deemed to have occurred whenever the
amount of cumulative and unpaid dividends on the Series A Preferred Stock
shall be equivalent to six full quarterly dividends or more (whether or not
consecutive), and, having so occurred, such default shall be
A-4
deemed to exist thereafter until, but only until, all cumulative dividends
on all shares of the Series A Preferred Stock then outstanding shall have
been paid through the last Quarterly Dividend Payment Date or until, but
only until, non-cumulative dividends have been paid regularly for at least
one year.
(d) Except as set forth herein (or as otherwise required by applicable
law), holders of Series A Preferred Stock shall have no general or special
voting rights and their consent shall not be required for taking any
corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 above are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for value any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock; provided, that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
A-5
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, in any other Certificate of Designations creating
a series of Preferred Stock or as otherwise required or permitted by law.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Subject to the prior and superior rights of holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares
of Series A Preferred Stock with respect to rights upon liquidation,
dissolution or winding up (voluntary or otherwise), upon any liquidation,
dissolution or winding up of the Corporation (voluntary or otherwise), no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received $1,000 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per
share (the "Capital Adjustment") equal to the quotient obtained by dividing
(i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in paragraph (c) of this Section 6) (such number in
clause (ii) being hereinafter referred to as the "Adjustment Number").
Following the payment of the full amount of the Series A Liquidation
Preference and the Capital Adjustment in respect of all outstanding shares
of Series A Preferred Stock and Common Stock, respectively, holders of
Series A Preferred Stock and holders of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(b) In the event, however that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series A Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of Series A
Preferred Stock and the holders of such parity shares in proportion to
their respective liquidation preferences. In the event, however, that there
are not sufficient assets available to permit payment in full of the
Capital Adjustment, then such remaining assets shall be distributed ratably
to the holders of Common Stock.
(c) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on the Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a
A-6
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, Combination, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare or pay any dividend on the Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall not
be redeemable.
Section 9. Ranking. The Series A Preferred Stock shall rank junior to all
other series of the Corporation's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall
provide otherwise.
Section 10. Amendment. At any time that any shares of Series A Preferred
Stock are outstanding, the Certificate of Incorporation shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, to receive dividends, to
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
A-7
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation by a duly authorized officer this 11th day of March, 2003.
Quicksilver Resources Inc.
By: ______________________________________
Name: ____________________________________
Title: ____________________________________
A-8
Exhibit B
Form of Right Certificate
Certificate
No. R- ____ Rights
NOT EXERCISABLE AFTER THE EARLIER OF MARCH 11, 2013, AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED AS SET FORTH IN THE RIGHTS
AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, ARE NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE NULL
AND VOID.]*
Right Certificate
QUICKSILVER RESOURCES INC.
This Right Certificate certifies that __________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of March 11, 2003, between Quicksilver Resources
Inc., a Delaware corporation (the "Corporation"), and Mellon Investor Services
LLC (the "Rights Agent"), as the same may be amended from time to time (the
"Rights Agreement"), to purchase from the Corporation at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M., Dallas, Texas time, on March 11, 2013, at the office of the Rights
Agent designated for such purpose, or at the office of its successor as Rights
Agent, one one-thousandth of a fully paid, non-assessable share of Series A
Junior Participating Preferred Stock, with a par value of $0.01 per share (the
"Preferred Shares"), of the Corporation, at a purchase price of $100.00 per one
one-thousandth of a Preferred Share (the "Purchase Price"), payable in lawful
money of the United States of America, upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed.
______________________
* If applicable, insert this portion of the legend and delete the preceding
sentence.
B-1
The number of Rights evidenced by this Right Certificate (and the number of
one one-thousandths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of March 26, 2003, based on the Preferred Shares as
constituted at such date and may have been or in the future be adjusted as a
result of the occurrence of certain events, as more fully provided in the Rights
Agreement.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person or any such Associate or Affiliate who becomes
a transferee after the Acquiring Person becomes such, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of an Acquiring
Person or any such Associate or Affiliate who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such, such Rights shall become
null and void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-thousandth of a Preferred Share or other securities which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Corporation and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Corporation and the office of the Rights Agent designated for such purpose.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares or other securities as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Corporation at a redemption price of
$0.01 per Right (subject to adjustment as provided in the Rights Agreement)
payable either in cash or the
B-2
Corporation's Common Shares, par value $0.01 per share, or (ii) may be exchanged
in whole or in part for Common Shares or Preferred Shares.
No fractional Preferred Shares or Common Shares will be issued upon the
exercise or exchange of any Right or Rights evidenced hereby (other than
fractions of Preferred Shares which are one one-thousandth or integral multiples
of one one-thousandth of a Preferred Share, which may, at the election of the
Corporation, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Corporation which may at any time be issuable on the
exercise or exchange hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Corporation or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or other
distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised or exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation
and its corporate seal. Dated as of _______________, _____.
ATTEST: QUICKSILVER RESOURCES INC.
_________________________________ By: ______________________________
Name: _____________________________
Title: _____________________________
Countersigned:
MELLON INVESTOR SERVICES LLC
as Rights Agent
By: _______________________________
Authorized Signatory
Name:_______________________________
Title: _____________________________
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto __________________________________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
__________ Rights represented by this Right Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _____________________ Attorney, to transfer said Rights on the books of
the within-named Corporation, with full power of substitution.
Dated: _____________________
___________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer or other
eligible institution participating in a recognized signature guarantee medallion
program.
_______________________________________________________________________________
CERTIFICATE
The undersigned hereby certifies, by checking the appropriate boxes and
signing below, that:
(1) The Rights evidenced by this Right Certificate _____ are _____ are not
being sold, assigned or transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Right Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned _____ did _____ did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
Dated: ______________________ _________________________________
Signature
B-4
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by the Right Certificate.)
To QUICKSILVER RESOURCES INC.:
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Right Certificate to purchase the Preferred Shares, Common
Shares or other securities issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares, Common Shares or other
securities be issued in the name of and delivered to:
Please insert social security or other identifying number._____________________
__________________________________
__________________________________
__________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number ____________________
__________________________________
__________________________________
__________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ______________________ _________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program.
B-5
CERTIFICATE
The undersigned hereby certifies, by checking the appropriate boxes and
signing below, that:
(1) The Rights evidenced by this Right Certificate _____ are _____ are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned _____ did _____ did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
Dated: ______________________ _________________________________
Signature
NOTICE
The signature on the foregoing Forms of Assignment and Election to Purchase
and certificates must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Corporation and the Rights Agent will deem the Beneficial Owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES OF
QUICKSILVER RESOURCES INC.
On March 11, 2003, the Board of Directors of Quicksilver Resources Inc.
(the "Corporation") declared a dividend distribution of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$0.01 per share (the "Common Shares"), of the Corporation. The dividend is
payable to the stockholders of record of the Corporation on March 26, 2003 (the
"Record Date"), and with respect to Common Shares issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances, with respect
to Common Shares issued after the Distribution Date. Except as set forth below,
each Right, when it becomes exercisable, entitles the registered holder to
purchase from the Corporation one one-thousandth of a share of Series A Junior
Participating Preferred Stock, with a par value of $0.01 per share, of the
Corporation (the "Preferred Shares") at a price of $100.00 per one
one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, as the same may be amended from time to time (the "Rights
Agreement"), between the Corporation and Mellon Investor Services LLC, as Rights
Agent, dated as of March 11, 2003.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares upon the earlier to
occur of (i) the first date of public announcement of a person or group of
affiliated or associated persons having acquired beneficial ownership of 15% or
more of the outstanding Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined); or (ii) 10 days (or such later date as the Board of
Directors of the Corporation (the "Board") may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group
becoming an Acquiring Person (as hereinafter defined) (the earlier of such dates
being called the "Distribution Date"). A person or group whose acquisition of
Common Shares causes a Distribution Date pursuant to clause (i) above is an
"Acquiring Person." The first date of public announcement that a person or group
has become an Acquiring Person is the "Shares Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights) new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date (and
to each initial record
C-1
holder of certain Common Shares issued after the Distribution Date), and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on March 11, 2013, unless earlier redeemed or exchanged
by the Corporation as described below.
In the event that any person or group becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding Common
Shares at a price and on terms which a majority of certain members of the Board
determines to be adequate and in the best interests of the Corporation, its
stockholders and other relevant constituencies, other than such Acquiring
Person, its affiliates and associates (a "Permitted Offer")), each holder of a
Right will thereafter have the right (the "Flip-In Right") to receive upon
exercise the number of Common Shares or of one one thousandths of a share of
Preferred Shares (or, in certain circumstances, other securities of the
Corporation) having a value (immediately prior to such triggering event) equal
to two times the exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or associate thereof
will be null and void.
In the event that, at any time following the Shares Acquisition Date, (i)
the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power is sold or transferred, then each holder
of a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right (the "Flip-Over Right") to receive, upon
exercise, common shares of the acquiring company having a value equal to two
times the exercise price of the Right. The holder of a Right will continue to
have the Flip-Over Right whether or not such holder exercises or surrenders the
Flip-In Right.
The Purchase Price payable, and the number of Preferred Shares, Common
Shares or other securities issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The Purchase Price and number of outstanding Rights are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
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Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but, if greater, will be entitled
to an aggregate dividend per share of 1,000 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of $1,000 per
share; thereafter, and after the holders of the Common Shares receive a
liquidation payment of $1.00 per share, the holders of the Preferred Shares and
the holders of the Common Shares will share the remaining assets in the ratio of
1,000 to 1 (as adjusted) for each Preferred Share and Common Share so held,
respectively. Each Preferred Share will have 1,000 votes, voting together with
the Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 1,000 times the amount received per Common Share. These
rights are protected by customary antidilution provisions. In the event that the
amount of accrued and unpaid dividends on the Preferred Shares is equivalent to
six full quarterly dividends or more, the holders of the Preferred Shares shall
have the right, voting as a class, to elect two directors in addition to the
directors elected by the holders of the Common Shares until all cumulative
dividends on the Preferred Shares have been paid through the last quarterly
dividend payment date or until non-cumulative dividends have been paid regularly
for at least one year.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are one one-thousandth or integral multiples of one
one-thousandth of a Preferred Share, which may, at the election of the Board, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain other
circumstances, the Corporation may redeem the Rights in whole, but not in part,
at a price of $0.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board. Additionally, following the Shares
Acquisition Date, the Corporation may redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price, provided that such redemption
is in connection with a merger or other business combination transaction or
series of transactions involving the Corporation in which all holders of Common
Shares are treated alike but not involving an Acquiring Person or its affiliates
or associates.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Common Shares, the Board may exchange the Rights (other than Rights owned by the
Acquiring Person, which will have become void), in whole or in part, at an
exchange ratio of one Common Share, or one one-thousandth of a Preferred Share
(or of a share of a class or series of the Corporation's preferred stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
All of the provisions of the Rights Agreement may be amended by the Board
prior to the Distribution Date. After the Distribution Date, the provisions of
the Rights Agreement may be
C-3
amended by the Board only in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or, subject
to certain limitations, to shorten or lengthen any time period under the Rights
Agreement.
Until a Right is exercised or exchanged, the holder thereof, as such, will
have no right to vote or receive dividends and will have no other rights as a
stockholder of the Corporation. While the distribution of the Rights will not be
taxable to stockholders of the Corporation, stockholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Corporation's Registration Statement on
Form 8-A dated March __, 2003. A copy of the Rights Agreement is available free
of charge from the Corporation. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.
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