EXHIBIT 4.1
RIGHTS AGREEMENT
between
STONE ENERGY CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
Dated as of October 15, 1998
RIGHTS AGREEMENT
This Rights Agreement, dated as of October 15, 1998, is between Stone
Energy Corporation, a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company, as Rights
Agent.
WHEREAS, the Board of Directors of the Company, having determined its
actions to be in the interests of the Company, has authorized the creation of
Rights, has authorized and directed the issuance to the holders of record of
Common Shares of the Company outstanding on October 26, 1998 of one Right with
respect to each Common Share of the Company outstanding on October 26, 1998, and
has further authorized and directed the issuance of one Right with respect to
each Common Share that shall become outstanding between October 26, 1998 and the
earlier of the Distribution Date, the Redemption Date and the Final Expiration
Date; and
WHEREAS, the Board of Directors of the Company has authorized and
directed that the terms and conditions under which the Rights are to be
distributed, including without limitation those affecting the exercise thereof,
the securities or other property to be acquired thereby and the purchase price
to be paid therefor, shall be set forth in a written agreement between the
Company and a rights agent made for the benefit of the holders of the Rights to
the extent so provided therein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
"Acquiring Person" shall mean any Person who or that, together
with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Voting Shares of the Company
then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, or (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding
Voting Shares for or pursuant to any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" solely as the
result of an acquisition of Voting Shares by the Company that, by
reducing the number of shares outstanding, increases the proportionate
number of shares Beneficially Owned by such Person to 15% or more of
the Voting Shares of the Company then outstanding; provided, however,
that, if a Person shall become the Beneficial Owner of 15% or more of
the Voting Shares of the Company then outstanding solely by reason of
share purchases by the Company and shall, after such share purchases by
the Company and at a time when such Person is the Beneficial Owner of
15% or more of the Voting Shares of the Company then outstanding,
become the Beneficial Owner of any additional Voting Shares of the
Company, then such Person shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
"Acquiring Person", as defined pursuant to the foregoing provisions of
this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Voting Shares
so that such Person would no
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longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
"Agreement" shall mean this Rights Agreement as hereafter
amended from time to time.
"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 amended and as in effect on the
date of this Agreement.
A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "Own Beneficially" any securities that (without
duplication):
(i) such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, within the
meaning of either Section 13 or 16 of the Exchange Act;
(ii) such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; or (B) the right to
vote pursuant to any agreement, arrangement or understanding; or
(iii) are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting or disposing
of any securities of the Company; provided, however, that, for purposes
of each clause of this definition, a Person shall not be deemed the
Beneficial Owner of, or to Own Beneficially, 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; provided,
further, that, for purposes of each clause of this definition, a Person
shall not be deemed the Beneficial Owner of, or to Own Beneficially,
any security as a result of any 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); and provided, further, that notwithstanding anything
to the foregoing to the contrary, a Person engaged in the business of
underwriting securities shall not be deemed the "Beneficial Owner" of,
or to "own beneficially", any securities acquired
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in good faith in a firm commitment underwriting until the expiration of
40 days after the date of such acquisition.
Notwithstanding anything in this definition to the contrary,
the phrase "then outstanding", when used with reference to a Person's
Beneficial Ownership of securities of the Company (or to the number of
such securities "beneficially owned"), shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding that such Person
would be deemed to own beneficially hereunder.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New
Jersey (or the state wherein the Corporate Trust Office is located) are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 P.M.,
Eastern time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., Eastern time, on the next
succeeding Business Day.
"Closing Price", with respect to any security, shall mean the
last sale price, regular way, on a specific Trading Day or, in case no
such sale takes place on such Trading Day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if such security is not then listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such security is listed
or admitted to trading or, if such security is not then listed or
admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations
System or such other system then in use, or, if on any such Trading Day
such 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 such security selected by the Board of
Directors of the Company. If such security is not publicly held or so
listed or traded, "Closing Price" shall mean the fair value per unit of
such security as determined in good faith by the Board of Directors of
the Company, whose determination shall be described and the Closing
Price set forth in a statement filed with the Rights Agent.
"Common Shares" when used with reference to the Company shall
mean shares of capital stock of the Company that have no preference
over any other class of stock with respect to dividends or assets, that
are not redeemable at the option of the Company and with respect to
which no sinking, purchase or similar fund is provided and shall
initially mean the shares of Common Stock, par value $ .01 per share,
of the Company. "Common Shares" when used with reference to any Person
other than the Company shall, if used with reference to a corporation,
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
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or Persons that ultimately control such first-mentioned Person and, if
used with reference to any Person other than a corporation, mean the
equity interest in such Person (or, if the net worth determined in
accordance with generally accepted accounting principles of another
Person (other than an individual) that controls such first-mentioned
Person is greater than such first-mentioned Person, then such other
Person) with the greatest voting power or managerial power with respect
to the business and affairs of such Person.
"Company" shall mean Stone Energy Corporation, a Delaware
corporation, and its successors.
"Company Order" means a written request or order signed in the
name of the Company by its Chairman of the Board, its President or a
Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Rights Agent.
"Continuing Director" shall mean a Person who was a member of
the Board of Directors of the Company elected by the public
stockholders of the Company prior to the date hereof, or a Person
recommended to succeed a Continuing Director by a majority of
Continuing Directors.
"Corporate Trust Office" means an office of the Rights Agent
at which it administers its shareholder services business, which, in
the case of ChaseMellon Shareholder Services, L.L.C., shall, until
hereafter changed, be its office at 00 Xxxxxxxxxx Xxxx, Xxxxxxxxxx
Xxxx, Xxx Xxxxxx 00000-0000, Attention: General Counsel.
"Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth day after the Shares Acquisition Date or (ii) the
Close of Business on the tenth Business Day (or such later date as may
be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of commencement
by any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity holding Voting Shares for or pursuant to the
terms of any such plan) of, or after the date of the first public
announcement of the intent of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any entity holding Voting Shares
for or pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would result in any Person
becoming an Acquiring Person; provided, however, that an occurrence
described in clause (ii) of this definition above shall not cause the
occurrence of the Distribution Date if the Board of Directors of the
Company shall, prior to such Close of Business on the tenth Business
Day (or such later date as described in clause (ii) above), determine
that such tender or exchange offer is spurious, unless, thereafter, the
Board of Directors of the Company shall make a contrary determination,
in which event the Distribution Date shall occur on the later to occur
of such Close of Business on the tenth Business Day (or such later date
as described in clause (ii) above) and the date of such latter
determination.
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"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and any successor statute thereto.
"Final Expiration Date" shall mean the Close of Business on
September 30, 2008.
"Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability company, trust or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
"Preferred Shares" shall mean shares of Junior Participating
Preferred Stock, par value $.01 per share, of the Company having the
rights and preferences set forth in the form of Statement of Resolution
Establishing Series of Shares of Junior Participating Preferred Stock
attached hereto as Exhibit A.
"Purchase Price" shall mean the initial price at which the
holder of a Right may, subject to the terms and conditions of this
Agreement, purchase one one-thousandth (1/1000) of a Preferred Share
(which initial price is set forth in Section 8(b) hereof), as such
price shall be adjusted pursuant to the terms of this Agreement.
"Redemption Date" shall mean the time at which the Rights are
redeemed pursuant to Section 24 hereof or the time at which all of the
Rights are mandatorily redeemed and exchanged pursuant to Section 25
hereof.
"Redemption Price" shall have the meaning specified in Section
24(b) herein.
"Right" shall mean one preferred share purchase right which
initially represents the right of the registered holder thereof to
purchase one one-thousandth (1/1000) of a Preferred Share upon the
terms and subject to the conditions herein set forth.
"Right Certificate" shall mean a certificate, in substantially
the form of Exhibit B attached to this Agreement, evidencing the Rights
registered in the name of the holder thereof.
"Rights Agent" shall mean ChaseMellon Shareholder Services,
L.L.C., and any successor thereto appointed in accordance with the
terms hereof, in its capacity as agent for the Company and the holders
of the Rights pursuant to this Agreement.
"Rights Register" and "Rights Registrar" shall have the
meanings specified in Section 6.
"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 Section 13(d) or Section
16(a) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such.
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"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the outstanding capital stock or other
equity interests having ordinary voting power in the election of
directors or similar officials is owned, directly or indirectly, by
such Person.
"Summary of Rights" shall mean a Summary of Rights to Purchase
Preferred Shares in substantially the form attached as Exhibit C to
this Agreement.
"Trading Day" shall mean a day on which the principal national
securities exchange or the NASDAQ National Market (or successor
thereto) on which any of the Voting Shares of the Company are listed or
admitted to trading is open for the transaction of business or, if none
of the Voting Shares of the Company is listed or admitted to trading on
any national stock exchange or the NASDAQ National Market (or successor
thereto), a Business Day.
"Transaction" shall mean any merger, consolidation or sale of
assets or earning power described in Section 14(a) hereof or any
acquisition of shares of Voting Shares of the Company which would
result in a Person becoming a Transaction Person.
"Transaction Person" with respect to a Transaction shall mean
(x) any Person who (i) is or will become an Acquiring Person if the
Transaction were to be consummated and (ii) directly or indirectly
proposed or nominated a director of the Company which director is in
office at the time of consideration of the Transaction, or (y) an
Affiliate or Associate of such a Person.
"Voting Shares" shall mean (i) the Common Shares of the
Company and (ii) any other shares of capital stock of the Company
entitled to vote generally in the election of directors or entitled to
vote together with the Common Shares in respect of any merger or
consolidation of the Company, any sale of all or substantially all of
the Company's assets or any liquidation, dissolution or winding up of
the Company. Whenever any provision of this Agreement requires a
determination of whether a number of Voting Shares comprising a
specified percentage of such Voting Shares is, was or will be
Beneficially Owned or has been voted, tendered, acquired, sold or
otherwise disposed of or a determination of whether a Person has
offered or proposed to acquire a number of Voting Shares comprising
such specified percentage, the number of Voting Shares comprising such
specified percentage of Voting Shares shall in every such case be
deemed to be the number of Voting Shares comprising the specified
percentage of all the Company's then outstanding Voting Shares.
"Wholly-Owned Subsidiary" of a Person shall mean any
corporation or other entity all the outstanding capital stock or other
equity interests of which having ordinary voting power in the election
of directors or similar officials (other than directors' qualifying
shares or similar interests) are owned, directly or indirectly, by such
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights
6
Agent hereby accepts such appointment. The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates. (a) From and after October
26, 1998 until the Distribution Date, (i) outstanding Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for outstanding Common Shares of the Company and not by separate
Right Certificates, and (ii) the Rights, including the right to receive Right
Certificates, will be transferable only in connection with the transfer of
Common Shares of the Company. As soon as practicable after the Distribution
Date, the Rights Agent will send, by first-class, insured, postage-prepaid mail,
to each record holder of Common Shares of the Company as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
stock transfer records of the Company, a Right Certificate evidencing one Right
for each Common Share so held. From and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates. The Company agrees to give
the Rights Agent written notice of the Distribution Date and all necessary
information to enable the Rights Agent to comply with this Section 3(a) and
agrees to pay all costs of such distribution.
(b) On October 27, 1998, or as soon thereafter as practicable,
the Company will send a copy of a Summary of Rights, by first-class,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the Close of Business on October 26, 1998, at the address of such holder
shown on the stock transfer records of the Company. With respect to Common
Shares of the Company outstanding on October 26, 1998, the certificates
evidencing such Common Shares shall, together with copies of such Summary of
Rights, thereafter also evidence the outstanding Rights (as such Rights may be
amended or supplemented) distributed with respect thereto until the earlier of
the Distribution Date or the date of surrender thereof to the Company's transfer
agent for registration of transfer or exchange of Common Shares of the Company.
Until the Distribution Date (or, if earlier, the Redemption Date or Final
Expiration Date), the surrender for registration of transfer or exchange of any
certificate for Common Shares of the Company out standing as of the Close of
Business on October 26, 1998 with or without a copy of the Summary of Rights
attached thereto, shall also constitute the surrender for registration of
transfer or exchange of the outstanding Rights associated with the Common Shares
represented thereby.
(c) The Company agrees that, at any time after October 26,
1998 and prior to the Distribution Date (or, if earlier, the Redemption Date or
Final Expiration Date) at which it issues any of its Common Shares upon original
issue or out of treasury, it will concurrently distribute to the holder of such
Common Shares one Right for each such Common Share, which Right shall be subject
to the terms and provisions of this Agreement and will evidence the right to
purchase the same number of one one-thousandths (1/1000) of a Preferred Share at
the same Purchase Price as the Rights then outstanding.
(d) Certificates for Common Shares of the Company issued after
October 26, 1998 but prior to the earliest of the Distribution Date, the
Redemption Date and the Final Expiration Date, whether upon registration of
transfer or exchange of Common Shares of the Company out standing on October 26,
1998 or upon original issue or out of treasury thereafter, shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
7
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between Stone
Energy Corporation and ChaseMellon Shareholder Services, L.L.C., dated
as of October 15, 1998 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of Stone Energy Corporation. 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. Stone Energy Corporation will mail to
the holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As described in the
Rights Agreement, Rights issued to or acquired by any Acquiring Person
or any Affiliate or Associate thereof (each as defined in the Rights
Agreement) shall, under certain circumstances, become null and void and
nontransferable.
Whether or not the certificates contain the foregoing legend, until the
Distribution Date, outstanding Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone,
and the surrender of any such certificate for registration of transfer or
exchange of the Common Shares evidenced thereby shall also constitute surrender
for registration of transfer or exchange of outstanding Rights (as such Rights
may be amended or supplemented) associated with the Common Shares represented
thereby.
(e) If the Company purchases or acquires any of its Common Shares after
October 26, 1998, but prior to the Distribution Date, any Rights associated with
such Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
that are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares (or other securities) and of
assignment to be printed on the reverse thereof) shall in form and substance be
substantially the same as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (which do not affect the
duties or responsibilities of the Rights Agent) and as are not inconsistent with
the provisions of this Agreement, 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 as may be necessary to conform to usage. Subject to the
provisions of Section 12 and Section 23 hereof, the Right Certificates, whenever
issued, shall be dated as of the date of authentication thereof, but, regardless
of any adjustments of the Purchase Price or the number of Preferred Shares (or
other securities) as to which a Right is exercisable (whether pursuant to this
Agreement or any future amendments or supplements to this Agreement), or both,
occurring after October 26, 1998 and prior to the date of such authentication,
such Right Certificates may, on their face, without invalidating or otherwise
affecting any such adjustment, expressly entitle the holders thereof to purchase
such number of Preferred Shares at the Purchase Price per one one-thousandth
(1/1000) of a Preferred Share as to which a Right would be exercisable if the
Distribution Date were October 26, 1998; no adjustment of the Purchase Price or
the number of Preferred Shares (or other securities) as to which a Right is
exercisable, or both, effected subsequent to the date of authentication of any
Right
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Certificate shall be invalidated or otherwise affected by the fact that such
adjustment is not expressly reflected on the face or in the provisions of such
Right Certificate.
Pending the preparation of definitive Right Certificates, the Company
may execute, and upon Company Order the Rights Agent shall authenticate and
send, by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares of the Company as of the Close of Business on the Distribution
Date, temporary Right Certificates that are printed, lithographed, typewritten,
mimeographed or otherwise produced substantially of the tenor of the definitive
Right Certificates in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Right Certificates may determine, as evidenced by their execution
of such Right Certificates.
If temporary Right Certificates are issued, the Company will cause
definitive Right Certificates to be prepared without unreasonable delay. After
the preparation of definitive Right Certificates, the temporary Right
Certificates shall be exchangeable for definitive Right Certificates, upon
surrender of the temporary Right Certificates at the Corporate Trust Office of
the Rights Agent, without charge to the holder. Upon surrender for cancellation
of any one or more temporary Right Certificates, the Company shall execute and
the Rights Agent shall authenticate and deliver in exchange therefor one or more
definitive Right Certificates, evidencing a like number of Rights. Until so
exchanged, the temporary Right Certificates shall in all respects be entitled to
the same benefits under this Agreement as definitive Right Certificates.
Section 5. Execution, Authentication and Delivery. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or one of its Vice Presidents, attested by its Secretary or
one of its Assistant Secretaries. The signature of any of these officers on the
Right Certificates may be manual or facsimile.
Right Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Right
Certificates or did not hold such offices at the date of authentication of such
Right Certificates. At any time and from time to time after the execution and
delivery of this Agreement and prior to the Distribution Date, the Company may
deliver Right Certificates executed by the Company to the Rights Agent for
authentication, together with a Company Order for the authentication and
delivery of such Right Certificates; and the Rights Agent in accordance with
such Company Order shall authenticate and deliver such Right Certificates as in
this Agreement provided and not otherwise.
No Right Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on such
Right Certificate a certificate of authentication substantially in the form
provided for herein executed by the Rights Agent by manual signature, and such
certificate upon any Right Certificate shall be conclusive evidence, and the
only evidence, that such Right Certificate has been duly authenticated and
delivered hereunder.
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Section 6. Registration, Registration of Transfer and Exchange. From
and after the Distribution Date and upon receipt by the Rights Agent of any
relevant information and prior to the earlier of the Close of Business on the
Redemption Date and the Close of Business on the Final Expiration Date, the
Company shall cause to be kept at the Corporate Trust Office of the Rights Agent
a Rights Register (a "Rights Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Right Certificates and of transfers of Rights. The Rights Agent is hereby
appointed the registrar and transfer agent (the "Rights Registrar") for the
purpose of registering Right Certificates and transfers of Rights as herein
provided and the Rights Agent agrees to maintain such Rights Register in
accordance with such regulations so long as it continues to be designated as
Rights Registrar hereunder.
Upon surrender to the Rights Agent for registration of transfer of any
Right Certificate, the Company shall execute, and the Rights Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Right Certificates evidencing a like number of
Rights.
At the option of the holder, Right Certificates may be exchanged for
other Right Certificates upon surrender of the Right Certificates to be
exchanged to the Rights Agent. Whenever any Right Certificates are so
surrendered for exchange, the Company shall execute, and the Rights Agent shall
authenticate and deliver, the Right Certificates that the holder making the
exchange is entitled to receive.
All Right Certificates issued upon any registration of transfer or
exchange of Right Certificates shall be the valid obligations of the Company,
evidencing the same Rights, and entitled to the same benefits under this
Agreement, as the Right Certificates surrendered upon such registration of
transfer or exchange.
Every Right Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Rights Agent)
be duly endorsed, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Rights Registrar duly executed, by the
holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Right Certificates, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Right Certificates,
other than exchanges not involving any transfer. The Rights Agent shall have no
duty or liability under this Section unless and until it is satisfied that all
such taxes and/or charges have been paid.
The provisions of this Section 6 shall be subject to the provisions of
Section 15 and Section 12(a)(ii).
Section 7. Mutilated, Destroyed, Lost and Stolen Right Certificates.
If any mutilated Right certificate is surrendered to the Rights Agent, the
Company shall execute and the Rights Agent shall
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authenticate and deliver in exchange therefor a new Right Certificate of like
tenor, for a like number of Rights and bearing a registration number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Rights Agent (i)
evidence to their satisfaction of the destruction, loss or theft of a Right
Certificate and (ii) such security or indemnity, if any, as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Rights Agent that such Right Certificate
has been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Rights Agent shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Right Certificate, a new Right Certificate of like
tenor, for a like number of Rights and bearing a registration number not
contemporaneously outstanding.
Upon the issuance of any new Right Certificate under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent) connected
therewith.
Every new Right Certificate issued pursuant to this Section in lieu of
any destroyed, lost or stolen Right Certificate shall constitute an additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Right Certificate shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Agreement equally and proportionately
with any and all other Right Certificates duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Right Certificates.
Section 8. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Section 12(a)(ii), 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
on the reverse side thereof duly executed, to the Rights Agent at its Corporate
Trust Office, together with payment of the Purchase Price for each one
one-thousandth (1/1000) of a Preferred Share (or other securities) as to which
the Rights are exercised, at or prior to the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the time on the Redemption Date such
Rights are optionally redeemed as provided in Section 24 hereof or (iii) the
time at which such Rights are mandatorily redeemed and exchanged as provided in
Section 25 hereof.
(b) The Purchase Price for each one one-thousandth (1/1000) of
a Preferred Share pursuant to the exercise of a Right shall initially be One
Hundred Twenty Five dollars ($125.00), shall be subject to adjustment from time
to time as provided in Sections 12 and 14 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the
11
securities to be purchased and an amount equal to any applicable tax or charge
required to be paid by the holder of such Right Certificate in accordance with
Section 10 in cash, or by certified check or cashier's check payable to the
order of the Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares (or other
securities) certificates for such number of one one-thousandths of a Preferred
Share (or other securities) as are to be purchased and registered in such name
or names as may be designated by the registered holder of such Right Certificate
or, if appropriate, in the name of a depositary agent or its nominee, and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, and (B) requisition from a depositary agent appointed by the Company,
if any, depositary receipts representing such number of one one-thousandths of a
Preferred Share as are to be purchased and registered in such name or names as
may be designated by such holder (in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer agent
with such depositary agent or its custodian), and the Company hereby directs
such depositary agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 15 hereof, (iii) promptly after
receipt of such certificates or depositary receipts registered in such name or
names as may be designated by such holder, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order of
such holder.
(d) If the registered holder of the Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equal 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 Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 8 unless such registered
holder shall have (i) properly completed and signed the certificate contained in
the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
Section 9. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer or exchange
shall, if surrendered to the Company or to any of its other agents, be delivered
to the Rights Agent for such purpose and for cancellation or, if surrendered to
the Rights Agent for such purpose, shall be canceled by it. No Right
Certificates shall be authenticated in lieu of or in exchange for any Right
Certificates canceled as provided in this Section 9 except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation, and the Rights Agent shall so cancel, any
other Right Certificate purchased or acquired by the Company. The Rights Agent
shall deliver all canceled Right Certificates to the Company or shall, at the
written request of the Company destroy such canceled Rights Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.
12
Section 10. Reservation and Availability of Shares. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any 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 in accordance with Section 8;
provided, however, that the Company will not be required to reserve and keep
available Common Shares or Preferred Shares sufficient to permit the exercise in
full of all outstanding Rights pursuant to the adjustments set forth in Section
12(a)(ii) or Section 14 until such time as the Rights become exercisable
pursuant to such adjustments.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares or Common Shares of the
Company issued upon exercise of Rights shall (subject to payment of the Purchase
Price) be duly authorized, validly issued, fully paid and nonassessable. The
Company further covenants and agrees that it will pay when due and payable any
and all taxes and governmental charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred Shares (or
depositary receipts therefor) or Common Shares of the Company upon the exercise
of Rights. The Company shall not, however, be required to pay any tax or charge
that may be payable in respect of any transfer or delivery of Right Certificates
to a Person other than, or in respect of the issuance or delivery of
certificates or depositary receipts for the Preferred Shares or Common Shares of
the Company upon exercise of Rights evidenced by Right Certificates in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for transfer or exercise or to issue or deliver any
certificates or depositary receipts for Preferred Shares or Common Shares of the
Company 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 thereof) or until it has been established
to the Company's satisfaction that no such tax or charge is due.
Section 11. Record Date. Each Person in whose name any certificate for
Preferred Shares or Common Shares of the Company is issued upon the exercise of,
or upon mandatory redemption and exchange of, Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares or Common
Shares represented thereby on, and such certificate shall be dated, (i) in the
case of the exercise of Rights, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable taxes and governmental charges) was made, or (ii) in the
case of the mandatory redemption and exchange of Rights, the date of such
mandatory redemption and exchange; provided, however, that, if the date of such
surrender and payment or mandatory redemption and exchange is a date upon which
the transfer books of the Company for its Preferred Shares or Common Shares, 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 such transfer books of the Company are open.
Prior to the exercise of (or the mandatory redemption and exchange of) the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares (or Common Shares of the
Company) for which the Rights shall be exercisable, including without limitation
the rights to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
13
Section 12. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of shares of capital stock of
the Company covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 12.
(a) (i) If the Company 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, (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 any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 12(a), the Purchase Price in
effect at the time of 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 thereafter shall be entitled to
receive, upon payment of the Purchase Price for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such date, the aggregate number and kind of shares of
capital stock that, if such Right had been duly exercised immediately prior to
such date (at a time when the Preferred Shares transfer books of the Company
were open), such holder would have acquired upon such exercise and been entitled
to receive upon payment or effectuation 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 Company issuable upon
exercise of one Right. If an event occurs that would require an adjustment under
both Section 12(a)(i) and Section 12(a)(ii), the adjustment provided for in this
Section 12(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 12(a)(ii).
(ii) Subject to the right of the Board of Directors of the
Company pursuant to Section 25 of this Agreement to effect a mandatory
redemption or exchange, if any Person shall become an Acquiring Person, each
holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the number
of one one-thousandths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined pursuant to Section
12(d)) on the date such Person became an Acquiring Person. If any Person shall
become an Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action that would eliminate or diminish the benefits intended
to be afforded by the Rights.
Notwithstanding anything in this Rights Agreement to the contrary, any
Rights that are at any time beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
14
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this provision, 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 Rights Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section are complied with, but shall have no liability to any
holder of any Right Certificate or any other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or its Affiliate
or Associate, or any transferee thereof, hereunder. No Right Certificate shall
be issued pursuant to this Agreement that represents Rights beneficially owned
by an Acquiring Person whose Rights would be null and void pursuant to the
preceding sentences or by any Associate or Affiliate thereof; no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be null and void pursuant to the preceding
sentences or to any Associate or Affiliate thereof or to any nominee (acting in
its capacity as such) of such Acquiring Person, Associate or Affiliate; and any
Right Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be null and void pursuant to the preceding sentences
or to any Associate or Affiliate thereof or to any nominee (acting in its
capacity as such) of such Acquiring Person, Associate or Affiliate shall be
canceled.
(iii) If on or after the Distribution Date there shall not be
sufficient Common Shares issued but not outstanding, or authorized but unissued,
to permit the exercise in full of all outstanding Rights in accordance with the
foregoing subparagraph (ii), the Company agrees to take all such action as is
within its power, including without limitation appropriate action by its Board
of Directors, as may be necessary to amend the Company's certificate of
incorporation to authorize additional Common Shares for issuance upon exercise
of the Rights. If, notwithstanding the foregoing, the stockholders shall not
approve an amendment to the Company's certificate of incorporation authorizing
such additional Common Shares, the adjustment prescribed in Section 12(a)(ii)
shall not be made but, in lieu thereof, each holder of a Right shall have the
right to receive, upon exercise thereof in accordance with the terms of this
Agreement, such number of one one-thousandths of Preferred Shares as shall
equal the result obtained by (x) multiplying the then current Purchase Price by
the number of one one-thousandths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the then current per share
market price of one one-thousandth of a Preferred Share (determined pursuant to
Section 12(d)) on the date such Person became an Acquiring Person.
(b) If the Company shall fix a record date for the issuance of 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 exchangeable for Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(together with any additional consideration required
15
upon conversion or exchange in the case of a security convertible into or
exchangeable for Preferred Shares or equivalent preferred shares), less than the
current per share market price of the Preferred Shares (determined pursuant to
Section 12(d) 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 that the aggregate offering price of the total number
of Preferred Shares and/or equivalent preferred shares so to be offered
(together with the aggregate of any additional consideration required upon
conversion or exchange in the case of any convertible or exchangeable securities
so to be offered) would purchase at such current 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 or for
which the convertible or exchangeable securities so to be offered are initially
convertible or exchangeable); 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 Company issuable upon
exercise of one Right. In case all or part of such subscription or purchase
price may be paid in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent. Preferred Shares owned by or held for the account of the Company or any
of its Subsidiaries shall not be deemed outstanding for the purpose of any
computation described in this Section 12(b). The adjustment described in this
Section 12(b) shall be made successively whenever such a record date is fixed;
and, if none of such rights, options or warrants is so issued, the Purchase
Price shall be adjusted to be the Purchase Price that would then be in effect if
such record date had not been fixed.
(c) If the Company 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
Company is the continuing or surviving corporation) of evidences of indebt-
edness or assets (other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 12(b)), 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 of the Preferred Shares
(determined pursuant to Section 12(d)) on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights 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 Company to be issued
upon the exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and, if such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price that would
then be in effect if such record date had not been fixed.
16
(d)(i) For the purpose of any computation hereunder, the "current per
share market price" of the Common Shares on any date shall be deemed to be the
average of the daily Closing Prices per share of such Common Shares for the 30
consecutive Trading Days immediately prior to and not including such date;
provided, however, that, if the issuer of such Common Shares shall announce (A)
a dividend or distribution on such Common Shares payable in such Common Shares
or securities convertible into such Common Shares or (B) any subdivision,
combination or reclassification of such Common Shares, and the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, shall occur during such period of 30 Trading
Days, then, and in each such case, the current per share market price of the
Common Shares shall be appropriately adjusted to reflect the current market
price per Common Share equivalent.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
the same manner as set forth above for Common Shares in paragraph (i) of this
Section 12(d). If the current per share market price of the Preferred Shares
cannot be determined in the manner provided above, 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 (determined in the manner provided
above) multiplied by one thousand.
(e) 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 that by reason of this Section
12(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 12
shall be made to the nearest cent or to the nearest ten-millionth of a Preferred
Share or one ten-thousandth of any other share or security, as the case may be,
and references herein to the "number of one one-thousandths of a Preferred
Share" (or similar phrases) shall be construed to include fractions of one
one-thousandth of a Preferred Share. Notwithstanding the first sentence of this
Section 12(e), any adjustment required by this Section 12 shall be made no later
than the earlier of (i) three years from the date of the transaction that
requires such adjustment or (ii) the thirtieth day preceding the Final
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 12(a), the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Shares, thereafter
the number of such 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 shares contained
in this Section 12, and the provisions of this Agreement, including without
limitation Sections 8, 10, 11 and 14, with respect to the Preferred Shares shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall, whether or not the Right
Certificate evidencing such Rights reflects such adjusted Purchase Price,
evidence the right to purchase, at the adjusted Purchase Price, the number of
one one-thousandths of a Preferred Share purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
17
(h) Unless the Company shall have exercised its election as provided in
Section 12(i), upon each adjustment of the Purchase Price pursuant to Section
12(b) or 12(c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price per one one-thousandth of a Preferred Share, that number of one
one-thousandths of a Preferred Share obtained by (i) multiplying (x) the number
of one one-thousandths of a share covered by a Right immediately prior to this
adjustment by (y) 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.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights outstanding in lieu of any
adjustment in the number of one one- thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each Right 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 of the Purchase Price. 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 Company shall make a public announcement (with prompt
written notice thereof 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. Until such record date, however, any adjustment in the
number of one one-thousandths of a Preferred Share for which a Right shall be
exercisable made as required by this Agreement shall remain in effect. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 12(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 15 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, 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 Company, 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
authenticated in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the 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 that were expressed in the initial Right Certificates
issued hereunder.
18
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-thousandth of the amount of consideration per
Preferred Share determined by the Board of Directors of the Company to be
capital, or below one one-thousandth of the par value, if any, per Preferred
Share issuable upon exercise of the Rights, the Company agrees to take such
corporate action as is within its power, including without limitation
appropriate action by its Board of Directors, and that is, in the opinion of its
counsel, necessary in order that the Company may validly and legally issue fully
paid and nonassessable one one-thousandths of Preferred Shares at such adjusted
Purchase Price.
(l) In any case in which this Section 12 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the Preferred Shares or other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares or other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
securities upon the occurrence of the event requiring such adjustment. The
Company shall notify the Rights Agent of any election made under this Section
12(l) to defer the issuance of any Right.
(m) Anything in this Section 12 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 12, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any combination or subdivision of the Preferred Shares, issuance
wholly for cash of any of the Preferred Shares at less than the current per
share market price, issuance wholly for cash of Preferred Shares or securities
that by their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to in subsection (b) of this Section 12, hereafter
effected by the Company to holders of its Preferred Shares shall not be taxable
to such stockholders.
(n) If at any time prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable in Common Shares or
(ii) effect a subdivision or combination 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 (i) the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision or combination shall be adjusted by
multiplying such Purchase Price by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (ii) the number of Rights outstanding immediately after
such event shall be adjusted, either through cancellation of outstanding Rights
or through distribution of additional Rights (but without duplication of the
Company's obligations under Section 3(c)), so that the certificate evidencing
each Common Share outstanding immediately after such event shall also evidence
the associated Right to purchase the same number of one one-thousandths of a
Preferred Share as to which a Right would have entitled the holder thereof to
purchase immediately prior to such event. The adjustment provided for in this
Section 12(n) shall be made successively whenever such a
19
dividend is declared or paid or such a subdivision or combination is effected.
If an event occurs that would require an adjustment under Section 12(a)(ii) and
this Section 12(n), the adjustments provided for in this Section 12(n) shall be
in addition and prior to any adjustment required pursuant to Section 12(a)(ii).
(o) The Company covenants and agrees that after the Distribution Date,
it will not, except as permitted by Sections 24, 25 and 29 hereof, take (or
permit any subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
Section 13. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 12 or 14 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief reasonably detailed statement of the facts computed and method of
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Common Shares of the Company and the Preferred
Shares a copy of such certificate and (c) mail a brief summary thereof to each
holder of record of a Right Certificate in accordance with Section 28 hereof.
The Rights Agent will be fully protected in relying on any such certificate and
on any adjustment therein contained and shall have no duty with respect to and
shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such a certificate.
Section 14. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) If, directly or indirectly, at any time after a Person has
become an Acquiring Person (i) the Company shall consolidate with, or merge with
and into, any Acquiring Person or any Affiliate or Associate of an Acquiring
Person, (ii) any Acquiring Person or any Affiliate or Associate of an Acquiring
Person shall merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with any
such merger, all or part of the Common Shares of the Company shall be changed
into or exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or a series of two or more transactions, assets of the Company
or its Subsidiaries that constitute more than 50% of the assets or that produce
more than 50% of the earning power or cash flow of the Company and its
Subsidiaries (taken as a whole) to any Acquiring Person or any Affiliate or
Associate of an Acquiring Person, then, and in each such case, the Company
agrees that, as a condition to engaging in any such transaction, it will make or
cause to be made proper provision so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to receive, upon the
exercise thereof in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Principal Party (as such
term is hereinafter defined) as shall be equal to the result obtained by (X)
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 12(a)(ii)) and
dividing that product by (Y) 50% of the current per share market price of the
Common Shares of the Principal Party (determined pursuant to Section 12(d)) on
the date of consummation of such consolidation, merger, sale or transfer; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant
20
to this Agreement; (iii) the term "Company", as used herein, shall thereafter be
deemed to refer to such Principal Party; and (iv) such Principal Party shall
take such steps (including without limitation the reservation of a sufficient
number of shares of its Common Shares in accordance with Section 10) in
connection with such consummation 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 the Principal Party thereafter
deliverable upon the exercise of the Rights. The Company shall not enter into
any transaction of the kind referred to in this Section 14 if at the time of
such transaction there are outstanding any rights, warrants, instruments or
securities or any agreement or arrangements that, as a result of the
consummation of such transaction, would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights. The Company shall
not consummate any such consolidation, merger, sale or transfer unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent an agreement supple mental to this Agreement complying with
the provisions of this Section 14. The provisions of this Section 14 shall
similarly apply to successive mergers or consolidations or sales or other
transfers. For the purposes of this Section 14, 50% of the assets of the Company
and its Subsidiaries shall be determined by reference to the book value of such
assets as set forth in the most recent consolidated balance sheet of the Company
and its Subsidiaries (which need not be audited) and 50% of the earning power or
cash flow of the Company and its Subsidiaries shall be determined by reference
to the mathematical average of the operating income or cash flow, respectively,
resulting from the continuing operations of the Company and its Subsidiaries for
the two most recent full fiscal years as set forth in the consolidated and
consolidating financial statements of the Company and its Subsidiaries for such
years; provided, however, that, if the Company has, during such period, engaged
in one or more transactions to which purchase accounting is applicable, such
determination shall be made by reference to the pro forma operating income of
the Company and its Subsidiaries giving effect to such transactions as if they
had occurred at the commencement of such two-year period.
(b) The term "Principal Party" shall mean: (i) in the case of any
transaction described in clause (i) or (ii) of the first sentence of Section
14(a), the Person that is the issuer of any securities into which Common Shares
of the Company are converted in such merger or consolidation, and, if no
securities are so issued, the Person that is the other party to such merger or
consolidation; and (ii) in the case of any transaction described in clause (iii)
of the first sentence of Section 14(a), the Person that is the party receiving
the greatest portion of the assets transferred pursuant to such transaction or
transactions; provided, however, that in any such case (1) if the Common Shares
of such Person are not at such time and have not been continuously over the
preceding twelve months 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, the term "Principal Party" shall refer to
such other Person; and (2) 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, the term "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Shares having the greatest
aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized Common Shares that have not been issued or reserved for issuance to
permit the exercise in full of the rights in accordance with
21
this Section 14 and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in subsections (a) and (b) of this Section 14
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets referenced in the first
sentence of Section 14(a), the Principal Party shall: (i) prepare and file a
registration statement under the Securities Act with respect to the Rights and
the securities purchasable upon exercise of the Rights on an appropriate form,
and shall 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
Securities Act) until the Final Expiration Date; and (ii) deliver to holders of
the Rights historical financial statements for the Principal Party and each of
its Affiliates that comply in all respects with the requirements for
registration of a class of securities under the Exchange Act. The provisions of
this Section 14 shall similarly apply to successive mergers, consolidations,
sales or other transfers of assets. If an event subject to this Section 14 shall
occur at any time after the occurrence of an event subject to Section 12(a)(ii),
the Rights that have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 14(a).
Section 15. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue or distribute Right Certificates that evidence
fractional Rights. If, on the Distribution Date or thereafter, as a result of
any adjustment effected pursuant to Section 12(i) or otherwise hereunder, a
Person would otherwise be entitled to receive a Right Certificate evidencing a
fractional Right, the Company shall, in lieu thereof, pay or cause to be paid to
such Person an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purpose of this Section 15(a), the current
market value of a whole Right shall be the Closing Price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
that evidence fractional Preferred Shares (other than fractions that are
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 Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares. If, on
the Distribution Date or thereafter, as a result of any adjustment effected
hereunder in the number of one one-thousandths of a Preferred Share as to which
a Right has become exercisable, a Person would otherwise be entitled to receive
a fractional Preferred Share that is not an integral multiple of one
one-thousandth of a Preferred Share, the Company shall, in lieu thereof, pay to
such Person at the time such Right is exercised as herein provided an amount in
cash equal to the same fraction (which is not an integral multiple of one
one-thousandth of a Preferred Share) of the current market value of one
Preferred Share. For purposes of this Section 15(b), the current market value of
a Preferred Share shall be the Closing Price of a Preferred Share for the
Trading Day immediately prior to the date of such exercise.
22
(c) Should any adjustment contemplated by Section 12(a)(ii) or any
mandatory redemption and exchange contemplated by Section 25 occur, the Company
shall not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates that evidence fractional Common Shares. If
after any such adjustment or mandatory redemption and exchange, a Person would
otherwise be entitled to receive a fractional Common Share of the Company upon
exercise of any Right or upon mandatory redemption and exchange as contemplated
by Section 25, the Company shall, in lieu thereof, pay to such Person at the
time such Right is exercised as herein provided or upon such mandatory
redemption and exchange an amount in cash equal to the same fraction of the
current market value of one Common Share. For purposes of this Section 15(c),
the current market value of a Common Share shall be the Closing Price of a
Common Share for the Trading Day immediately prior to the date of such exercise
or the date of such mandatory redemption and exchange.
(d) The holder of a Right by the acceptance thereof expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise or mandatory redemption and exchange of a Right (except as provided
above).
(e) Whenever a payment for fractional Rights or fractional shares is to
be made by the Rights Agent, the Company shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment 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 this Section 15, and shall not be deemed to have knowledge of any
payment for fractional Rights or fractional shares, unless and until it shall
have received such a certificate and sufficient monies.
Section 16. Rights of Action. (a) All rights of action in respect of
the obligations and duties owed to the holders of the Rights under this
Agreement are vested in the registered holders of the Rights; and, without the
consent of the Rights Agent or of the holder of any other Rights, any registered
holder of any Rights may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding, judicial or
otherwise, against the Company to enforce, or otherwise to act in respect of,
such holder's right to exercise such Rights in the manner provided in the Right
Certificate evidencing such Rights 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.
(b) Except as otherwise provided in the final paragraph of Section 7
hereof, no right or remedy herein conferred upon or reserved to the registered
holder of Rights is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy, whether hereunder or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
23
(c) No delay or omission of any registered holder of Rights to exercise
any right or remedy accruing hereunder shall impair any such right or remedy or
constitute a waiver of any default hereunder or an acquiescence therein. Every
right and remedy given hereunder or by law to such holders may be exercised from
time to time, and as often as may be deemed expedient, by such holders.
Section 17. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares
of the Company;
(b) after the Distribution Date, the Right Certificates will
be transferable only on the Rights Register if surrendered at the
Corporate Trust Office of the Rights Agent duly endorsed or accompanied
by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name 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 Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes,
and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary.
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree, 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 Company must use its best efforts to have any
such order, decree, judgment or ruling lifted or otherwise overturned
as soon as possible.
Section 18. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right (whether or not then evidenced by a Right
Certificate) shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of Preferred Shares, Common Shares of the Company or any
other securities of the Company that may at any time be issuable on the exercise
(or mandatory redemption and exchange) of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon any such holder, as such, any of the rights of a stockholder of the
Company, including without limitation any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
to give or withhold consent to any corporate action, to receive notice of
meetings or other actions affecting
24
stockholders (except as provided in Section 26) or to receive dividends or
subscription rights until the Right or Rights evidenced by such Right
Certificate shall have been exercised (or mandatorily redeemed and exchanged) in
accordance with the provisions hereof.
Section 19. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation,
execution, delivery, amendment, administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, damage, judgment, fine, penalty, claim, demand, settlement,
cost or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement, including without limitation, the costs and expenses of
defending against any claim of liability in the premises. In no case will the
Rights Agent be liable for special, indirect, incidental or consequential loss
or damage of any kind whatsoever (including but not limited to lost profits),
even if the Rights Agent has been advised of the possibility of such loss or
damage.
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 in reliance
upon any Right Certificate or certificate for Preferred Shares, Common Shares of
the Company or other securities of the Company, Company Order, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be executed and, where necessary, verified
or acknowledged, by the proper person or persons, or otherwise upon the advice
of its counsel as set forth in Section 20 hereof. The Rights Agent shall not be
deemed to have any duty hereunder unless it receives written instructions from
the Company with respect thereto.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations, and 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 Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting 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
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the
25
Company and delivered to the Rights Agent; and such certificate shall be full
authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of for any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company or any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its authentication thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any liability or responsibility
with respect to the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or with respect to
the validity or execution of any Right Certificate (except its authentication
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 12(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 3, 12, 14, 24 and 25, or the
ascertainment of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Shares 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 nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company, 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 incur no liability
for or in respect of any action taken, suffered or omitted by it in good faith
in accordance with instructions of any such officer. The Rights Agent may
conclusively rely on the most recent instructions given by any such officer.
(h) The Rights Agent and any stockholder, affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or
26
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other Person or legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss of the Company or any other Person resulting from any
such act, default, neglect or misconduct absent gross negligence, bad faith or
willful misconduct 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 the form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Merger or Consolidation or Change of Name of Rights Agent.
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 shareholder services 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 22. If at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Right Certificates
shall have been authenticated but not delivered, any such successor Rights Agent
may adopt the authentication of the predecessor Rights Agent and deliver such
Right Certificates so authenticated, and, if at that time any of the Right
Certificates shall not have been authenticated, any successor Rights Agent may
authenticate such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
If at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been authenticated but not
delivered, the Rights Agent may adopt the authentication under its prior name
and deliver Right Certificates so authenticated; and, in case at that time any
of the Right Certificates shall not have been authenticated, the Rights Agent
may authenticate 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.
27
Section 22. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
for the Common Shares of the Company and the Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent for the Common Shares of
the Company and the Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the registered holder of a
Right Certificate (or, prior to the Distribution Date, of Common Shares), then
any registered holder of a Right Certificate (or, prior to the Distribution
Date, of Common Shares) may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be either (A) a Person organized and
doing business under the laws of the United States or of any state of the United
States, that is subject to supervision or examination by federal or state
authority and that has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50 million or (B) an Affiliate of such a
Person. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent for the Common Shares
of the Company and the Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 22, 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 23. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price per share and the number or kind or class of shares or
other securities purchasable under the Right Certificates made in accordance
with the provisions of this Agreement.
Section 24. Redemption. (a) The Rights may be redeemed by action of the
Board of Directors of the Company pursuant to paragraph (b) of this Section 24,
or may be redeemed and exchanged by action of the Board of Directors of the
Company pursuant to Section 25 herein, but shall not be redeemed in any other
manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the Shares Acquisition Date redeem all but not less than all the
then outstanding Rights at a redemption
28
price of one cent ($.01) per Right then outstanding, appropriately adjusted to
reflect any adjustment in the number of Rights outstanding pursuant to Section
12(i) herein (such redemption price being hereinafter referred to as the
"Redemption Price"). Any such redemption of the Rights by the Company's Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Company's Board of Directors in its sole discretion may
establish.
(c) The right of the registered holders of Right Certificates to
exercise the Rights evidenced thereby or, if the Distribution Date has not
theretofore occurred, the inchoate right of the registered holders of Rights to
exercise the same shall, without notice to such holders or to the Rights Agent
and without further action, terminate and be of no further force or effect
effective as of the time of adoption by the Board of Directors of the Company of
a resolution authorizing and directing the redemption of the Rights pursuant to
paragraph (b) of this Section 24 (or, alternatively, if the Board of Directors
qualified such action as to time, basis or conditions, then at such time, on
such basis and with such conditions as the Board of Directors may have
established pursuant to such paragraph (b)); thereafter, the only right of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any redemption resolution pursuant to paragraph
(b) of this Section 24; 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 the adoption of any redemption resolution pursuant to
paragraph (b) of this Section 24, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agents for the Common Shares. Any notice
that is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be made.
(d) Neither the Company nor any of its Affiliates or Associates may
acquire (other than, in the case of such Affiliates and Associates, in their
capacity as holders of Common Shares of the Company), redeem or purchase for
value any Rights at any time in any manner other than as specifically set forth
in this Section 24 or in Section 25 herein, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
Section 25. Mandatory Redemption and Exchange. (a) The Board of
Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, issue Common Shares of the Company in mandatory
redemption of, and in exchange for, 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 12(a)(ii) hereof) at an exchange
ratio of one Common Share for each Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof. Notwithstanding the foregoing, the Company's Board of Directors shall
not be empowered to effect such redemption and exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any such Subsidiary, or any Person organized,
appointed or established by the Company for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Voting Shares then outstanding.
29
(b) Immediately upon the action of the Board of Directors of the
Company ordering the mandatory redemption and exchange of any Rights pursuant to
subsection (a) of this Section 25 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 such number of
Common Shares as is provided in paragraph (a) of this Section 25. The Company
shall promptly give public notice and notice to the Rights Agent of any such
redemption and exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such redemption and
exchange. The Company promptly shall mail a notice of any such redemption and
exchange to all the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of mandatory redemption and exchange shall
state the method by which the redemption and exchange of the Common Shares for
Rights will be effected and, in the event of any partial redemption and
exchange, the number of Rights that will be redeemed and exchanged. Any partial
redemption and exchange shall be effected pro rata based on the number of Rights
(other than Rights that have become null and void pursuant to the provisions of
Section 12(a)(ii) hereof) held by each holder of Rights.
(c) In any mandatory redemption and exchange pursuant to this Section
25, the Company, at its option, may substitute Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 12(b) hereof) for Common
Shares, at the initial rate of one one-thousandth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted.
Section 26. Notice of Certain Events. If the Company shall, on or after
the Distribution Date, propose (a) to pay any dividend or other distribution
payable in stock of any class of the Company or any Subsidiary of the Company to
the holders of its Preferred Shares, (b) to distribute 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, (c) to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), (d) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (e) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries
(determined as provided in Section 14 herein) to, any other Person (other than
the Company or a Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries), (f) to
effect the liquidation, dissolution or winding up of the Company or (g) if the
Rights have theretofore become exercisable with respect to Common Shares
pursuant to Section 12(a)(ii) herein, to declare or pay any dividend or other
distribution on the Common Shares payable in Common Shares or in stock of any
other class of the Company or any Subsidiary of the Company or to effect a
subdivision or combination of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) then, in each such
case, the Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 28 hereof, notice of such proposed
action, which shall specify the date of authorization by the Board of Directors
of the Company of, and record date for, such stock dividend or such distribution
of rights or warrants or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, winding up, subdivision or
combination is to take place and
30
the date of participation therein by the holders of the Common Shares of the
Company or the Preferred Shares, or both, if any such date is to be fixed. Such
notice shall be so given in the case of any action covered by clause (a), (b) or
(g) above at least 20 days prior to the record date for determining holders of
the Preferred Shares or of the Common Shares of the Company, as the case may be,
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 or Common Shares of
the Company, as the case may be, whichever shall be the earlier.
If any of the events set forth in Section 12(a)(ii) of this Agreement
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance with
Section 28 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
12(a)(ii) hereof.
Section 27. Securities Laws Registrations. To the extent legally
required, the Company agrees that it will prepare and file, no later than the
Distribution Date, and will use its best efforts to cause to be declared
effective, a registration statement under the Securities Act of 1933, as
amended, registering the offering, sale and delivery of the Preferred Shares
issuable upon exercise of the Rights, and the Company will, thereafter, use its
best efforts to maintain such registration statement (or another) continuously
in effect so long as any Rights remain outstanding and exercisable with respect
to Preferred Shares. Should the Rights become exercisable with respect to
securities of the Company or one of its Subsidiaries other than Preferred
Shares, the Company agrees that it will, to the extent legally required,
promptly thereafter prepare and file, or cause to be prepared and filed, and
will use its best efforts to cause to be declared effective, a registration
statement under such Act registering the offering, sale and delivery of such
other securities and the Company will, thereafter, use its best efforts to
maintain such registration statement (or another) continuously in effect so long
as any outstanding Rights are exercisable with respect to such securities. The
Company further agrees to use its best efforts, from and after the Distribution
Date, to qualify or register for sale the Preferred Shares or other securities
of the Company or one of its Subsidiaries issuable upon exercise of the Rights
under the securities or "blue sky" laws (to the extent legally required
thereunder) of all jurisdictions in which registered holders of Right
Certificates reside determined by reference to the Rights Register.
The Company may temporarily suspend, for a period of time not to exceed
90 calendar days after the Distribution Date, the exercisability of the Rights
in order to prepare and file a registration statement under the Securities Act,
on an appropriate form, with respect to the Preferred Shares purchasable upon
exercise of the Rights and permit such registration statement to become
effective; provided, however, that no such suspension shall remain effective
after, and the Rights shall without any further action by the Company or any
other Person become exercisable immediately upon, the effectiveness of such
registration statement. Upon any such suspension, the Company shall issue a
public announcement and give notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended and shall issue a
further public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision herein to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite qualification under the
blue sky or
31
securities laws of such jurisdiction shall not have been obtained or the
exercise of the Rights shall not be permitted under applicable law.
Section 28. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by registered
or certified mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
ChaseMellon Shareholder Services, L.L.C.
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
Subject to the provisions of Section 22 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Stone Energy Corporation
000 Xxxx Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, III
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the Rights
Register or, prior to the Distribution Date, on the stock transfer records for
the Common Shares of the Company.
Section 29. Supplements and Amendments. At any time prior to the
Distribution Date, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of this Rights Agreement (including,
without limitation, the date on which the Distribution Date shall occur, the
time during which the Rights may be redeemed) without the approval of any holder
of the Rights. From and after the Distribution Date and subject to applicable
law, the Company may, and the Rights Agent shall if the Company so directs,
amend this Rights Agreement without the approval of any holders of Right
Certificates (a) to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
of this Rights Agreement or (b) to make any other provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Right Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person). Any supplement or amendment adopted during any period
after any Person has become an Acquiring Person but prior to the Distribution
Date shall be null and void unless such supplement or amendment could have been
adopted under the prior sentence from and after the Distribution Date. Without
limiting the foregoing, the Board of Directors of the Company may by resolution
adopted at any time prior to such time as any Person
32
becomes an Acquiring Person amend this Agreement to lower the threshold set
forth in the definitions of Acquiring Person and Distribution Date herein from
15% to a percentage not less than the greater of (i) any percentage greater than
the largest percentage of the outstanding Voting Shares then known to the
Company to be beneficially owned by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or, any entity holding Voting Shares for or pursuant
to the terms of any such plan), and (ii) 10%. Upon the delivery of a certificate
from any officer of the Company specified in Section 20(b) hereof stating that a
proposed supplement or amendment complies with the terms of this Section, and if
requested by the Rights Agent an opinion of counsel, the Rights Agent shall
execute such supplement or amendment. Notwithstanding any other provision
hereof, the Rights Agent's consent must be obtained regarding any amendment or
supplement pursuant to this Section 29 which alters the Rights Agent's rights or
duties.
Section 30.Successors.All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
Section 31. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common 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 Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 32. 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 33. Governing Law. This Agreement and each Right Certificate
(and, prior to the Distribution Date, the Rights represented by certificates for
Common Shares) 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 to
be made and performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
State.
Section 34. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
33
Section 36. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of Common
Shares or any other class of capital stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3d(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purpose of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Company's Board of
Directors in good faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other Persons and
(y) not subject the Company's Board of Directors to any liability to the holders
of the Rights. The Rights Agent may assume that the Company's Board of Directors
acted in good faith.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
STONE ENERGY CORPORATION
By /s/ D. Xxxxx Xxxxx
---------------------------------
Name: D. Xxxxx Xxxxx
Title: President
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
As Rights Agent
By /s/ Xxxxx X. Xxxx
----------------------------------
Name: Xxxxx X. Xxxx
Title: Assistant Vice President
35
TABLE OF CONTENTS
Section 1. Certain Definitions................................................1
Section 2. Appointment of Rights Agent........................................6
Section 3. Issuance of Right Certificates.....................................7
Section 4. Form of Right Certificates.........................................8
Section 5. Execution, Authentication and Delivery.............................9
Section 6. Registration, Registration of Transfer and Exchange.............. 10
---------------------------------------------------
Section 7. Mutilated, Destroyed, Lost and Stolen Right Certificates..........10
Section 8. Exercise of Rights; Purchase Price; Expiration Date of Rights.....11
-------------------------------------------------------------
Section 9. Cancellation and Destruction of Right Certificates................12
Section 10. Reservation and Availability of Shares...........................13
Section 11. Record Date......................................................13
Section 12. Adjustment of Purchase Price, Number of Shares or Number
of Rights........................................................14
------------------------------------------------------------------
Section 13. Certificate of Adjusted Purchase Price or Number of Shares.......20
----------------------------------------------------------
Section 14. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................20
-------------------------------------------------------------------
Section 15. Fractional Rights and Fractional Shares..........................22
Section 16. Rights of Action.................................................23
Section 17. Agreement of Right Holders.......................................24
Section 18. Right Certificate Holder Not Deemed a Stockholder................24
Section 19. Concerning the Rights Agent......................................25
Section 20. Duties of Rights Agent...........................................25
Section 21. Merger or Consolidation or Change of Name of Rights Agent........27
---------------------------------------------------------
i
Section 22. Change of Rights Agent...........................................28
Section 23. Issuance of New Right Certificates...............................28
Section 24. Redemption.......................................................28
Section 25. Mandatory Redemption and Exchange................................29
Section 26. Notice of Certain Events.........................................30
Section 27. Securities Laws Registrations....................................31
Section 28. Notices..........................................................32
Section 29. Supplements and Amendments.......................................32
Section 30. Successors.......................................................33
Section 31. Benefits of this Agreement.......................................33
Section 32. Severability.....................................................33
Section 33. Governing Law....................................................33
Section 34. Counterparts.....................................................33
Section 35. Descriptive Headings.............................................33
Section 36. Determinations and Actions by the Board of Directors, etc........34
----------------------------------------------------------
Exhibits
Exhibit A - Certificate of Designation of Junior Participating Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
ii
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
JUNIOR PARTICIPATING PREFERRED STOCK
OF
STONE ENERGY CORPORATION
Pursuant to Section 151 of the
General Corporation Law
of the State of Delaware
Stone Energy Corporation (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware (the
"DGCL"), hereby certifies that the following resolution was adopted by the Board
of Directors of the Corporation as required by Section 151 of the DGCL at a
meeting duly called and held on October 9, 1998:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation in accordance with the
provisions of Article Fourth of the Certificate of Incorporation, as amended,
and Section 151 of the DGCL, a series of the Preferred Stock of the Corporation,
par value $.01 per share, be, and it hereby is, created and that the voting
powers, designations, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualification,
limitations or restrictions thereof (in addition to the provisions set forth in
the Certificate of Incorporation of the Corporation that are applicable to the
preferred stock of all series) are as follows:
Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Junior Participating Preferred Stock" (the "Junior Preferred
Stock") and the number of shares constituting the Junior Preferred Stock shall
be [ ]. Such number of shares may be increased or decreased by resolution of the
Board of Directors; provided, that no decrease shall reduce the number of shares
of Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Junior
Preferred Stock with respect to dividends, the holders of shares of Junior
Preferred Stock, in preference to the holders of Common Stock, $.01 par value
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for such purpose, quarterly dividends
payable on the first business day of February, May, August and November in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date") as provided in paragraphs (B) and (C) of this Section 2 in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 in cash or
(b) subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount (payable in cash) 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 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 Junior Preferred Stock. If the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Junior 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 was
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, if no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share payable in cash
on the Junior Preferred Stock shall nevertheless accrue and be cumulative on the
outstanding shares of Junior Preferred Stock as provided in paragraph (C) of
this Section 2.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Junior Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Junior Preferred Stock in an amount less than the total
amount of such dividends at the time
A-2
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
Junior Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Junior Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Junior Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
If the Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Junior 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 was outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in any other series
designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law, holders
of Junior Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Junior Preferred Stock outstanding shall have been
paid in full, or declared and a sum sufficient for the payment therefor be set
apart for payment and be in the process of payment, 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 Junior 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
Junior Preferred Stock, except dividends paid ratably on the Junior
Preferred
A-3
Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Junior
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 (as
to both dividends and upon dissolution, liquidation or winding up) to
the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Junior 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 holders of the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, as amended, or in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or as to amounts payable upon liquidation, dissolution or winding up)
to the Junior Preferred Stock unless, prior thereto, the holders of Junior
Preferred Stock shall have received an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1,000 per share, or (b) an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of Common
Stock, plus, in either case, an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(2) to the holders of stock ranking on a parity (either as to dividends or as to
amounts payable upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except distributions made ratably on the Junior Preferred Stock
and all such parity stock in proportion to the total amounts to which the
holders of all such Shares are entitled upon such liquidation, dissolution or
winding up. If the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of
A-4
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Junior Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1)(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 was outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. If 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 or any other property, or any combination thereof, then in any
such case each share of Junior Preferred Stock shall at the same time be
similarly exchanged or changed into 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 or any other property (payable in
kind), or any combination thereof, as the case may be, into which or for which
each share of Common Stock is changed or exchanged. If the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Junior 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 was outstanding immediately prior to
such event.
Section 8. Redemption. The shares of Junior Preferred Stock shall not
be redeemable. So long as any shares of Junior Preferred Stock remain
outstanding, the Corporation shall not purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless the
Corporation shall concurrently purchase or acquire for consideration a
proportionate number of shares of Junior Preferred Stock.
Section 9. Rank. The Junior Preferred Stock shall rank, with respect to
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's Preferred Stock.
Section 10. Amendment. At any time that any shares of Junior Preferred
Stock are outstanding, the Certificate of Incorporation of the Corporation, as
amended, shall not be amended
A-5
in any manner which would materially alter or change the powers, preferences,
privileges or special rights of the Junior Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority of the
outstanding shares of Junior Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its President, and attested by its Secretary, this
______ day of ______, 1998.
STONE ENERGY CORPORATION
By:
-----------------------
Name:
Title:
A-6
EXHIBIT B
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER SEPTEMBER 30, 2008 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN SECTION 1 OF THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE
NULL AND VOID.
Right Certificate
STONE ENERGY CORPORATION
This certifies that _____________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of October 15, 1998 (the "Rights
Agreement"), between STONE ENERGY CORPORATION, a Delaware corporation (the
"Company"), and CHASEMELLON SHAREHOLDER SERVICES L.L.C. (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m., Eastern time, on
September 30, 2008, at the designated office of the Rights Agent (or at the
office of its successor as Rights Agent), one one-thousandth (1/1000) of a fully
paid non-assessable share of Junior Participating Preferred Stock, par value
$.01 per share (the "Preferred Shares"), of the Company, at a purchase price of
$125.00 per one one-thousandth (1/1000) of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. 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 October 15, 1998
based on the Preferred Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of one one-thousandths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon that
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the Corporate Trust Office of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the Corporate Trust Office of the Rights Agent, 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 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 Company at a redemption price of
$.01 per Right or (ii) may be exchanged by the Company in whole or in part for
Preferred Shares or shares of the Company's common stock, $.01 par value per
share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depository 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 Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be entitled to any benefit under the
Rights Agreement or be valid or obligatory for any purpose until it shall have
been authenticated by the Right Agent.
B-2
WITNESS the facsimile signatures of the proper officers of the Company
and its corporate seal.
Dated as of ___________________, ____.
STONE ENERGY CORPORATION
By:
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Executive Vice President
Authentication:
This is one of the Right Certificates referred to in the within-mentioned Rights
Agreement.
__________________________, as Rights Agent
By:
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Authorized Signature
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)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated as of ___________________, ____.
----------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
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[To be executed if statement is correct]
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
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Signature
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B-4
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
TO _____________________
The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Right Certificate to purchase the Preferred Shares
(or other securities) issuable upon the exercise of such Rights and requests
that certificates for such Preferred Shares (or other securities) be issued in
the name of:
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 as of ___________________, ____.
---------------------
Signature
B-5
[Form of Reverse Side of Right Certificate -- continued]
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
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Signature
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NOTICE
The signature in the foregoing Form of Assignment or Form of Election
to Purchase 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 Company 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 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
On October 9, 1998, the Board of Directors of Stone Energy Corporation
(the "Company") adopted a stockholder rights plan. Set forth below is a summary
of such action.
Stockholder Rights Plan
On October 9, 1998, the Board of Directors of Stone Energy Corporation
(the "Company"), authorized the issuance of one preferred share purchase right
(a "Right") with respect to each out standing share of common stock, $.01 par
value per share (the "Common Shares"), of the Company. The rights were issued on
October 26, 1998 to the holders of record of Common Shares on that date. Each
Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Junior Participating Preferred Stock, $0.01 par
value per share (the "Preferred Shares"), of the Company at a price of $125.00
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 (the "Rights Agreement") dated as of October 15, 1998 between the
Company and ChaseMellon Shareholder Services L.L.C., as Rights Agent (the
"Rights Agent").
Detachment of Rights; Exercise.Initially, the Rights will attach to all
-------------------------------
Common Share certificates representing outstanding shares and no separate
Right Certificate will be distributed. The Rights will separate from the Common
Shares and a Distribution Date will occur upon the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding Voting Shares (as defined in the Rights
Agreement) of the Company, or (ii) 10 business days following the commencement
or announcement of an intention to commence a tender offer or exchange offer the
consummation of which would result in any person becoming an Acquiring Person.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced, with respect to any of the Common
Shares outstanding on October 26, 1998, by the certificates representing such
Common Shares with a copy of this Summary of Rights attached thereto, (ii) the
Rights will be transferred with and only with the Common Shares, (iii) new
Common Share certificates issued after October 26, 1998, upon transfer or new
issuance of the Common Shares will contain a notation incorporating the Rights
Agreement by reference, and (iv) the surrender for transfer of any certificates
for Common Shares outstanding as of October 26, 1998, 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 (the "Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will thereafter
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 30, 2008 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or the Rights are earlier redeemed or
exchanged by the Company as described below.
If a person or group were to acquire 15% or more of the Voting Shares
of the Company, each Right then outstanding (other than Rights beneficially
owned by the Acquiring Person which would become null and void) would become a
right to buy that number of Common Shares (or under certain circumstances, the
equivalent number of one one-thousandths of a Preferred Share) that at the time
of such acquisition would have a market value of two times the Purchase Price.
If, after a person or group were to acquire 15% or more of the Voting
Shares of the Company, the Company were acquired in a merger or other business
combination transaction or assets constituting more than 50% of its consolidated
assets or producing more than 50% of its earning power or cash flow were sold,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price, that number of shares of common stock of the acquiring company
which at the time of such transaction would have a market value of two times the
Purchase Price.
Preferred Shares. The dividend and liquidation rights, and the
non-redemption feature, of the Preferred Shares are designed so that the value
of one one-thousandth of a Preferred Share purchasable upon exercise of each
Right will approximate the value of one Common Share. The Preferred Shares
issuable upon exercise of the Rights will be non-redeemable and rank junior to
all other series of the Company's preferred stock. Each whole Preferred Share
will be entitled to receive a quarterly preferential dividend in an amount per
share equal to the greater of (i) $1.00 in cash, or (ii) in the aggregate, 1,000
times the dividend declared on the Common Shares. In the event of liquidation,
the holders of the Preferred Shares will be entitled to receive a preferential
liquidation payment equal to the greater of (i) $1,000 per share, or (ii) in the
aggregate, 1,000 times the payment made on the Common Shares. In the event of
any merger, consolidation or other transaction in which Common Shares are
exchanged for or changed into other stock or securities, cash or other property,
each whole Preferred Share will be entitled to receive 1,000 times the amount
received per Common Share. Each whole Preferred Share shall be entitled to 1,000
votes on all matters submitted to a vote of the stockholders of the Company, and
Preferred Shares shall generally vote together as one class with the Common
Stock and any other capital stock on all matters submitted to a vote of
stockholders of the Company.
The offer and sale of the Preferred Shares issuable upon exercise of
the Rights will be registered with the Securities and Exchange Commission and
such registration will not be effective until the Rights become exercisable.
Antidilution and Other Adjustments. The number of one one-thousandths
of a Preferred Share or other securities or property issuable upon exercise of
the Rights, and the Purchase Price payable, are subject to customary adjustments
from time to time to prevent dilution.
C-2
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right 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.
Exchange Option. At any time after the acquisition by a person or group
of affiliated or associated persons of beneficial ownership of 15% or more of
the outstanding Voting Shares of the Company and before the acquisition by a
person or group of 50% or more of the outstanding Voting Shares of the Company,
the Board of Directors may, at its option, issue Common Shares in mandatory
redemption of, and in exchange for, all or part of the then outstanding and
exercisable Rights (other than Rights owned by such person or group which would
become null and void) at an exchange ratio of one Common Share for each Right.
Redemption of Rights. At any time prior to the first public
announcement that a person or group has become the beneficial owner of 15% or
more of the outstanding Voting Shares, the Board of Directors of the Company may
redeem all but not less than all the then outstanding Rights at a price of $.01
per Right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon the action of
the Board of Directors ordering redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
No Rights as Stockholder. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
Amendment of Rights. The terms of the Rights may be amended by the
Board of Directors of the Company without the consent of the holders of the
Rights, including an amendment to extend the Final Expiration Date, and,
provided a Distribution Date has not occurred, to extend the period during which
the Rights may be redeemed, except that after the first public announcement that
a person has become an Acquiring Person, no such amendment may materially and
adversely affect the interests of the holders of the Rights. Furthermore, the
Rights Agent must consent to any supplement or amendment which alters the Rights
Agent's rights or duties under the Rights Agreement.
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.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
October 15, 1998. A copy of the Rights Agreement is available free of charge
from the Company.
C-3
