EXHIBIT 5
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HARVEST NATURAL RESOURCES, INC.
AND
XXXXX FARGO BANK, N. A.
RIGHTS AGENT
SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
AS AMENDED AND RESTATED AS OF APRIL 15, 2005
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TABLE OF CONTENTS
Section 1. Certain Definitions............................................................................1
Section 2. Appointment of Rights Agent....................................................................3
Section 3. Issue of Right Certificates....................................................................3
Section 4. Form of Rights Certificates....................................................................4
Section 5. Countersignature and Registration..............................................................5
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates..................................................5
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights and Extension....................6
Section 8. Cancellation and Destruction of Rights Certificates............................................8
Section 9. Reservation and Availability of Preferred Shares...............................................8
Section 10. Preferred Shares Record Date...................................................................9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.............................9
Section 12. Certificate of Adjusted Purchase Price or Number of Shares....................................14
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power..........................15
Section 14. Fractional Rights and Fractional Shares.......................................................17
Section 15. Rights of Action..............................................................................17
Section 16. Agreement of Rights Holders...................................................................18
Section 17. Rights Certificate Holder Not Deemed a Shareholder............................................18
Section 18. Concerning the Rights Agent...................................................................18
Section 19. Merger or Consolidation or Change of Name of Rights Agent.....................................19
Section 20. Duties of Rights Agent........................................................................19
Section 21. Change of Rights Agent........................................................................21
Section 22. Issuance of New Rights Certificates...........................................................22
Section 23. Redemption....................................................................................22
Section 24. Exchange......................................................................................22
Section 25. Notice of Certain Events......................................................................23
Section 26. Notices.......................................................................................24
Section 27. Supplements and Amendments....................................................................25
Section 28. Successors....................................................................................25
Section 29. Determinations and Actions by the Board of Directors..........................................25
Section 30. Benefits of this Agreement....................................................................25
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Section 31. Severability..................................................................................25
Section 32. Governing Law.................................................................................26
Section 33. Counterparts..................................................................................26
Section 34. Descriptive Headings..........................................................................26
EXHIBITS
Exhibit A Form of Certificate of Designation, Rights and Preferences
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights
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SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED RIGHTS AGREEMENT (this "Agreement"),
dated as of April 15, 2005, is between Harvest Natural Resources, Inc. (formerly
named "Xxxxxx Oil and Gas Company"), a Delaware corporation (the "Company"), and
Xxxxx Fargo Bank, N. A. (formerly named "First Interstate Bank of California"),
a California corporation (the "Rights Agent").
W I T N E S S E T H:
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WHEREAS, on April 28, 1995, the Board of Directors of the Company
authorized and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as such term is hereinafter defined) of the
Company outstanding as of the close of business on May 19, 1995 (the "Record
Date"), each Right representing the right to purchase one one-hundredth of a
share of Series B Preferred Stock of the Company (subject to adjustment as
provided herein) having the rights, powers and preferences set forth in the form
of Certificate of Designation, Rights and Preferences attached hereto as Exhibit
A, upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right (subject to adjustment
as herein provided) with respect to each Common Share that shall become
outstanding between the Record Date and the earlier of the Distribution Date and
the Expiration Date (as such terms are hereinafter defined), and in certain
circumstances after the Distribution Date;
WHEREAS, the original Rights Agreement was entered into on April 28,
1995, and was amended and restated on September 16, 2003; and
WHEREAS, effective March 31, 2005, the Board of Directors of the
Company resolved to further amend and restate the amended and restated Rights
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
then outstanding, but shall not include the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall be deemed to be an Acquiring Person either (i) as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
Common Shares of the Company outstanding, increases the proportionate number of
Common Shares owned by such Person to 15% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be deemed to be an
Acquiring Person, or (ii) if within five Business Days (as such term is
hereinafter defined) after such Person would otherwise have become an Acquiring
Person (but for the operation of this clause (ii)), such Person notifies the
Board of Directors of the Company that such Person did so and
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within two Business Days after such notification such Person is the Beneficial
Owner of less than 15% of the outstanding Common Shares of the Company.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as is in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Rule 13d-3 thereunder (or any comparable or
successor law or regulation);
(ii) which 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 (whether or not in writing), or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, securities tendered pursuant to
a tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to vote such
security (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 of the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M., Texas
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Texas time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean
shares of Common Stock, $.01 par value, of the Company. "Common Shares" when
used with reference to any Person other than the Company shall mean the capital
stock (or voting equity interests, or in certain circumstances, cash, property
or other interests) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(g) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company, joint venture, association or other entity, and shall
include any successor (by merger or otherwise) of such entity.
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(h) "Preferred Shares" shall mean shares of Series B Preferred Stock,
$.01 par value, of the Company.
(i) "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) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such;
provided that, if such person is determined not to have become an Acquiring
Person pursuant to Section 1(a)(ii) hereof, then no Shares Acquisition Date
Should be deemed to have occurred.
(j) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person, or which is
otherwise controlled by such Person.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Shares)
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the tenth day after the Shares Acquisition
Date or (ii) the tenth Business Day (or such later date as may be determined by
action of the Board of Directors of the Company prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement of, or first
public announcement 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 Common Shares for or pursuant to the terms of any
such plan) of or of the first public announcement of the intention of any Person
(other than the Company, any wholly-owned Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or any
entity holding Common 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
beneficial ownership by a Person of 15% or more of the outstanding Common Shares
of the Company (including any such date which is on or after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(c) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Rights Certificates) and not by separate
Rights Certificates, and (y) the Rights (and the right to receive Rights
Certificates) will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agents will countersign, and the Company
will send or cause to be sent (and Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Rights Certificate, in
substantially the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held. As of and after the Distribution Date,
the Rights shall be evidenced solely by such Right Certificates.
(b) As soon as practicable after the date of this Agreement, the
Company will send a copy of a Summary of Rights, in substantially the form of
Exhibit C hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of business on
March 31, 2005, at the address of such holder shown on the records of the
Company. With respect to
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certificates for Common Shares outstanding as of March 31, 2005, until the
Distribution Date (or earlier redemption, expiration, exchange or termination of
the Rights), the Rights shall be evidenced by such certificates for Common
Shares registered in the names of the holders thereof together with a copy of
the Summary of Rights. Until the Distribution Date (or earlier redemption,
expiration, exchange or termination of the Rights), the surrender for transfer
of any certificate for Common Shares outstanding on March 31, 2005, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby.
(c) Certificates for Common Shares which become outstanding (including
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c)) after the date of this Agreement, but prior to the earlier
of the Distribution Date or the Expiration Date shall have impressed, printed,
written, stamped or otherwise affixed on to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Second Amended and Restated Rights
Agreement between Harvest Natural Resources, Inc. and Xxxxx Fargo Bank,
N. A., dated April 15, 2005 (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 Harvest Natural
Resources, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. Harvest Natural
Resources, Inc. will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, Rights issued to or held by any Person who becomes an
Acquiring Person or any Affiliates or Associates thereof (as such terms
are defined in the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or earlier redemption, expiration, exchange or termination of
the Rights), the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby. In the event that
the Company purchases or acquires any Common Shares after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Shares
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares which are no longer
outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of Election to Purchase and
of Assignment to be printed on the reverse thereof) shall be substantially in
the form of Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 11 and Section 22
hereof, the Rights Certificates, whenever issued, shall be dated as of the
Record Date (or, in the case of Rights issued with respect to Common Shares
issued by the Company after the Record Date, as of the date of issuance of such
Common Shares), and, on their face, shall entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share as shall be set
forth therein at the price per one one-hundredth of a Preferred Share set forth
therein (the "Purchase Price"), but the number and type of securities
purchasable upon the exercise of each Right and the Purchase Price shall be
subject to adjustment as provided herein.
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(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes such 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 such 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 a primary
purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
The provisions of Section 7(e) hereof shall be operative whether or not the
foregoing legend is contained on any such Rights Certificate.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its President or any
Vice President, either manually or by facsimile signature, and by the Secretary
or any Assistant Secretary of the Company, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof. The Rights Certificates shall be countersigned by the Rights Agent,
either manually or by facsimile signature, and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the Person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purpose, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at
any time after the close of business on the Distribution Date, and at or prior
to the close of business on the Expiration Date, any
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Rights Certificate or Rights Certificates may be transferred, split up, combined
or exchanged for another Rights Certificate or Rights Certificates, entitling
the registered holder to purchase a like number of one one-hundredths of a
Preferred Share as the Rights Certificate or Rights Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver
to the person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment by holders of
Rights of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate and such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliate or Associate thereof
as the Company shall reasonably request, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company shall
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS AND EXTENSION.
(a) Subject to the provisions of Section 7(e) hereof, the registered
holder of any Rights 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 Rights Certificate, with the form of
Election to Purchase on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each one one-hundredth of a Preferred
Share (or such other number of shares or other securities or property) as to
which the Rights are exercised, at or prior to the earliest of (i) the close of
business on April 28, 2015 (the "Final Expiration Date"), (ii) the date on which
the Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date"), (iii) the consummation of a transaction contemplated by Section 13(d)
hereof or (iv) the time at which the Rights are exchanged as provided in Section
24 hereof (such earliest time being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each one one-hundredth of a Preferred Share
pursuant to the exercise of a Right shall be $60, shall be subject to adjustment
from time to time as provided in Sections 11 and 13 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 Rights Certificate representing exercisable
Rights, with the form of Election to Purchase duly executed, accompanied by
payment of the Purchase Price for the shares (or other securities or property)
to be purchased and an amount equal to any applicable transfer tax required to
be paid by the holder of such Rights Certificate in accordance with Section 9
hereof in cash, or by
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certified check or cashier's check payable to the order of the Company, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Shares (or make available,
if the Rights Agent is the transfer agent for the Preferred Shares) certificates
for the number of Preferred Shares to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company, in its sole discretion, shall have elected to deposit the
total number of one one-hundredths of a Preferred Share issuable upon exercise
of the Rights hereto with a depositing agent, requisition from the depository
agent depository receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depository agent), and the Company hereby directs the depository
agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash, if any, to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) promptly after receipt of
such certificates or depository receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order of
the registered holder of such Rights Certificate. In the event that the Company
is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company shall
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, if
there occurs any of the events set forth in Section 11(a)(ii) or Section 13(a)
hereof, then any Rights that are or were on or after the Distribution Date
beneficially owned by an Acquiring Person or any Associate or Affiliate of any
Acquiring Person shall become null and void, without any further action, and any
holder of such Rights shall thereafter have no rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 hereof unless the certificate contained in the
appropriate form of Election to Purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise shall have been properly
completed and duly executed by the registered holder thereof and the Company
shall have been provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) 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
authorized and issued Preferred Shares held in its treasury, the number of
Preferred Shares and, after the occurrence of an event specified in Section 11
and 13 hereof, shall so reserve and keep available a sufficient number of Common
Shares (and/or other securities) that will be sufficient to permit the exercise
in full of all outstanding Rights.
(b) If the Company shall hereafter list the Preferred Shares on a
national securities exchange or on Nasdaq, then so long as the Preferred Shares
(and, after the occurrence of an event specified in Section 11 and 13 hereof,
any other securities) issuable upon the exercise of Rights may be listed on any
national securities exchange or Nasdaq, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all shares
(or other securities) reserved for such issuance to be listed on such exchange
or Nasdaq upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it shall take all such action
as may be necessary to ensure that all Preferred Shares and/or other securities
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares or other securities (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable.
(d) The Company further covenants and agrees that it shall pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates or
of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Rights Certificates to a person other than, or the
issuance or delivery of certificates or depository receipts for the Preferred
Shares in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or deliver
any certificates for Preferred Shares upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts to (i) file, if required by
law, as soon as practicable following the Distribution Date, a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act and the rules and regulations thereunder)
until the Expiration Date (unless and until the Company shall have received an
opinion of counsel to the effect that the maintenance of such registration
statement in effect is no longer necessary). The Company shall also
8
take such action as may be appropriate under the securities or "blue sky" laws
of the various states in connection with the exercise of the Rights.
SECTION 10. PREFERRED SHARES RECORD DATE.
Each Person in whose name any certificate for Preferred Shares (or
other securities) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Shares (or other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares (or other securities) transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or other securities)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF RIGHTS.
The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the 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 11(a) and in Section 7(e) hereof,
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 after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock and other securities which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares transfer
books of the Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to the provisions of Section 24 of this
Agreement, in the event any Person, alone or together with its Affiliates and
Associates, becomes an Acquiring Person (except pursuant to a tender or exchange
offer for all outstanding Common Shares at a price and on the terms determined
prior to the date of the first acceptance of payment for any of such shares by
at least a majority of the members of the Company's Board of Directors who are
not officers of the Company to be in the best interests of the Company and its
shareholders (other than the Person or an Affiliate or Associate thereof on
whose behalf the offer is being made) (a "Permitted Offer")), then, promptly
thereafter, proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right to
receive for each Right, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share
9
for which a Right is then exercisable in accordance with the terms of this
Agreement, 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 then number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, and (y) dividing that product by 50% of the
then current per share market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date of the occurrence of such event
(such number of shares being referred to as the "number of Adjustment Shares");
provided, however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
(iii) In lieu of issuing Common Shares in accordance with
Section 11(a)(ii) hereof, the Company may, if a majority of the Company's Board
of Directors determine that such action is necessary or appropriate and not
contrary to the interests of holders of Rights, elect to (and, in the event that
the Company has not exercised the exchange right set forth in Section 24 hereof
and there are not sufficient treasury shares and authorized but unissued Common
Shares to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Company shall) take all such action as may be
necessary to authorize, issue or pay, upon the exercise of the Rights, cash
(including by way of a reduction of the Purchase Price), property, Common
Shares, other securities or any combination thereof having an aggregate value
equal to the value of the Common Shares which otherwise would have been issuable
pursuant to Section 11(a)(ii), which aggregate value shall be determined by a
nationally recognized investment banking firm selected by a majority of the
Company's Board of Directors. For purposes of the preceding sentence, the value
of the Common Shares shall be determined pursuant to Section 11(d) hereof and
the value of any Preferred Shares or other preferred stock which a majority of
the Company's Board of Directors determines to be a "common shares equivalent"
shall be deemed to have the same value as the Common Shares. Any such election
by the Company's Board of Directors must be made and publicly announced within
60 days following the date on which the event described in Section 11(a)(ii)
hereof shall have occurred. Following the occurrence of the event described in
Section 11(a)(ii) hereof, a majority of the Company's Board of Directors may
suspend the exercisability of the Rights for a period of up to 60 days following
the date on which the event described in Section 11(a)(ii) hereof shall have
occurred to the extent that the Board of Directors of the Company has not
determined whether to exercise its rights of election under this Section
11(a)(iii). In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended.
(b) In case 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 or more
favorable rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible into Preferred Shares
or equivalent preferred shares at a price per Preferred Share or per equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current per share market price of the Preferred Shares (as defined in Section
11(d) hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
10
in a form other than cash, the value of such consideration shall be as
determined reasonable and in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes and binding on the Rights
Agent and the holders of Rights. Preferred Shares and equivalent preferred
shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or the retained earnings of the
Company) or assets (other than a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current per share
market price of the Preferred Shares (as defined in Section 11(d) hereof) on
such record date, less the fair market value (as determined reasonably and in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes and binding upon the Rights Agent and the holders of Rights) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants distributable in respect
of one Preferred Share and the denominator of which shall be the current per
share market price of the Preferred Shares (as defined in Section 11(d) hereof).
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, 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 (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the current per share
market price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (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 prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the current per share market price shall be appropriately
adjusted to reflect the current market price per Common Share equivalent. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Shares are
not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the Nasdaq Stock Market
("Nasdaq") or such other quotation system then in use, or, if on any such date
the Common Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Shares selected by the Board of Directors of the Company.
If on any such date no market
11
maker is making a market in the Common Shares, the fair value of such shares on
such date as determined reasonably and in good faith by the Board of Directors
of the Company shall be used and shall be conclusive for all purposes binding on
the Rights Agent and the holders of Rights. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the Common
Shares are listed or admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
the same manner as set forth above for Common Shares in clause (i) of this
Section 11(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 (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred.
(iii) If neither the Common Shares nor the Preferred Shares
are publicly held or so listed or traded, "current per share market price" shall
mean the fair value per share as determined reasonably and in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes
and binding upon the Rights Agent and the holders of Rights.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% of the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a Common Share or other share or
one-millionth of a Preferred Share as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section 11(a) or
13(a) hereof, 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 Sections 11(a), (b), (c), (e), (h), (i), (j) (k), (l) and
(n) hereof, inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price per one one-hundredth of a
Preferred Share, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of one one-hundredths of a Preferred Share covered by
a Right immediately prior to this adjustment by (y) the Purchase Price in effect
immediately
12
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, in substitution for any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one millionth) 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 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 Rights Certificates have been issued, shall be at least
ten days later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights 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 Preferred Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredth of a Preferred Share and the number of
Preferred Shares which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and 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
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order
13
that any consolidation or subdivision of the Preferred Shares, issuance wholly
for cash of any of Preferred Shares at less than the current per share market
price, issuance wholly for cash of Preferred Shares or securities which 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 hereinabove in subsection (b) of this Section 11, hereafter
made by the Company to holders of its Preferred Shares shall not be taxable to
such shareholders.
(n) Anything in this Agreement to the contrary notwithstanding, in the
event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (A) declare or pay any dividend on the
Common Shares payable in Common Shares, (B) subdivide, combine or consolidate
the outstanding Common Shares into a greater or lesser number of Common Shares
or (C) issue any shares of its capital stock in a reclassification of the
outstanding Common Shares, then, in any such case, except as otherwise provided
in this Section 11 and Section 7(c) hereof, (i) the number of one one-hundredths
of a Preferred Share purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event 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) each Common Share outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Sections 23, 24 or 27 hereof, take (or
permit to be taken) any action if at such 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 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares and the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate in accordance with
Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to make such certificate or give such notice shall not affect the
validity of such adjustment or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
14
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Shares Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction the
principal purpose of which is to change the state of incorporation of the
Company), (y) any Person shall consolidate with the Company, or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger, or (z) the Company shall sell, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, mortgage or otherwise
transfer), in one or more transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person, then, and in each such case, proper
provision shall be made so that (i) following the Distribution Date, each holder
of a Right (except as otherwise provided herein) shall thereafter have the right
to receive, upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid and nonassessable Common Shares of the Principal Party
(as hereinafter defined) as shall be equal to the result obtained by (A)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable (without taking into
account any adjustment previously made pursuant to Section 11(a)(ii) hereof) and
(B) dividing that product by 50% of the current per share market price of the
Common Shares of such Principal Party (determined pursuant to Section 11(d)
hereof) 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 to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply to
such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof, the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the
other party to the merger or consolidation (including, if applicable, the
Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in (z) of the
first sentence of Section 13(a) hereof, the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions;
Provided, however, that in any such case, (1) if the Common Shares of such
Person are not at such time and have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect subsidiary of Affiliate of another Person, "Principal
Party" shall refer to such other Person; (2) in cash such Person is a
subsidiary, directly or indirectly, or Affiliate of more than one person, the
Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value; and (3) in cash such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both of all of such venturers and the
15
Principal Parties in each such chain shall bear the obligations set forth in
this Section 13 in the same ratio as their direct or indirect interests in such
Person bear the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
its authorized Common Shares that have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and each Principal Party and each other
Person who may become a Principal Party as a result of such consolidation,
merger, sale or transfer shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger, sale or transfer of assets mentioned in
paragraph (a) of this Section 13, the Principal Party at its own expense 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, will use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and will use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and will
use its best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the securities
or "blue sky" laws of such jurisdictions as may be necessary or appropriate;
(iii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on Nasdaq; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of the affiliates which comply in
all material respects with the requirements for registration on Form 10 under
the Exchange Act.
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in clauses (x) and (y) of
Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired Common Shares pursuant to a Permitted Offer (or a wholly-owned
Subsidiary of any such Person or Persons), (ii) the price per Common Share
offered in such transaction is not less than the price per Common Share paid to
all holders of Common Shares whose shares were purchased pursuant to such
Permitted Offer and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction is the same as
the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this subsection(c), all
Rights hereunder shall expire.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. The Rights
under this Section 13 shall be in addition to the rights to exercise Rights and
adjustments under Section 11(a)(ii) and shall survive any exercise thereunder.
(f) The Company shall not enter into any transaction of the kind
referred to in clauses (x), (y) and (z) of Section 13(a) hereof if at the time
of such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
16
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 transaction unless prior thereto the Company and such
issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable, which closing price shall be determined in the
same manner as set forth for Common Shares in Section 11(d)(i) hereof.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depository receipts,
pursuant to an appropriate agreement between the Company and a depository
selected by it, provided that such agreement shall provide that the holders of
such depository receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares. In lieu
of fractional Preferred Shares that are not integral multiples of one
one-hundredth of a Preferred Share, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one one-hundredth of a Preferred Share. For purposes of this Section
14(b), the current market value of one-hundredth of a Preferred Share shall be
one one-hundredth of the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
(other than, in the case of fractional Preferred Shares, fractions which are
integral multiples of one one-hundredth of a Preferred Share) upon exercise of a
Right.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, excepting the rights
of actions given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to
17
specific performance of the obligations under, and injunctive relief against
actual or threatened violations of, the obligations of any Person subject to
this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS.
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;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights 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 Rights
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the Preferred
Shares, Common Shares or any other securities of the Company which may at any
time be issuable upon exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Shares or Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter,
18
notice, direction, consent, instruction, certificate, statement, or other paper
or document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of its counsel as set forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stockholder 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 action on
the part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights 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 Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of the "current per share market price") be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be 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 Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
19
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt by the Rights Agent of a certificate furnished
pursuant to Section 13 hereof describing any such change or adjustment); 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 other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any Preferred Shares or other securities will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
written 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 Chief Financial Officer, the Secretary or any Assistant Secretary of the
Company, and is authorized to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions of
any such officer. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent with respect to
its duties or obligations under this Agreement and the date on and/or after
which such action shall be taken and the Rights Agent shall not be liable for
any action taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall be not less
than five Business Days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking or omitting any such action, the Rights
Agent has received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, 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 peculiarly interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights
20
Agent shall not be answerable or accountable for any act, omission, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, omission, default, neglect or misconduct,
provided reasonable care was exercised 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
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(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 of 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 of transfer without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and to the holders of the
Rights 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, to each transfer
agent of the Common Shares and Preferred Shares by registered or certified mail,
and to the holders of the Rights 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 holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction or the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of the State of California or of
the State of New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of Texas or the State of New York), in good standing, having a principal
office in the State of California or the State of New York, which is authorized
under such laws to exercise corporate trust or stockholder services powers and
is subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an affiliate of a corporation denoted in
clause (a) of this sentence. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
21
22. ISSUANCE OF NEW RIGHTS 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 or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale by the
Company of Common Shares following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall with respect to
Common Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, which plan or arrangement is existing as
of the Distribution Date, or upon the exercise, conversion or exchange of any
other securities issued by the Company prior to the Distribution Date, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance and sale; provided, however,
that (i) no such Rights Certificate shall be issued if, and to the extent that,
in its good faith judgment the Board of Directors of the Company shall have
determined that the issuance of such Rights Certificate would create significant
risk of material adverse tax consequences to the Company or to the Person to
whom or which such Rights Certificate otherwise would be issued, and (ii) no
such Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment otherwise shall have been made in lieu of the issuance thereof.
SECTION 23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the close of business on the earlier of (i) the tenth day
following the Shares Acquisition Date, or (ii) the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price") and the Company
may, at its option, pay the Redemption Price either in Common Shares (based on
the current per share market price thereof (as determined pursuant to Section
11(d) hereof) at the time of redemption) or cash.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
Within ten days after the action of the Company's Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and to the holders of the then outstanding Rights by mailing
such notice to the Rights Agent and to all such holders at their last addresses
as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
SECTION 24. EXCHANGE.
(a) Subject to the provisions of applicable law, the Board of Directors
of the Company may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then
22
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for (A) Common
Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Company's Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares 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 Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24, and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agency. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such actions as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Shares that would otherwise be issuable upon exchange of a Right, a
number of Preferred Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share as of the date
of issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
In case the Company shall propose (a) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company),
(b) to offer to the holders of its Preferred Shares rights or warrants to
subscribe for or to purchase any additional Preferred Shares or shares of stock
of any class or any other securities, rights or options, (c) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of
23
outstanding Preferred Shares), (d) 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 (taken as a whole) to, any other Person, or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, in accordance
with Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (a) or (b) above at least 20
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other action, at least
20 days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
In case the event set forth in Section 11(a)(ii) or Section 13(a) of
this Agreement shall occur, then, in any such case, the Company or the Principal
Party, as the case may be, shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 26 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 11(a)(ii) or
Section 13(a) hereof, as the case may be.
SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Harvest Natural Resources, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights 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:
Xxxxx Fargo Bank, N. A.
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
24
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
The Company may, by resolution adopted by its Board of Directors, from
time to time supplement or amend this Agreement without the approval of any
holders of Right or Rights Certificates in order (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, (iii) prior to the
Distribution Date, to change or supplement any provision hereunder in any manner
which the Company may deem necessary or desirable, or (iv) on or after the
Distribution Date, to change or supplement any provision hereunder which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or as Associate of an Acquiring Person). Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall, if the Company so directs, execute such supplement
or amendment unless the Rights Agent shall have determined in good faith that
such supplement or amendment would adversely affect its interests under this
Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed consistent with the interests of the holders of Common
Shares.
SECTION 28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
For all purposes of this Agreement, any calculation of the number of
Common Shares 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-3(d)(1)(i) 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
Company's Board of Directors 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 purposes 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 Rights Certificates and
all other parties, and (y) not subject the Company's Board of Directors to any
liability to the holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the
Rights 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 Rights Certificates (and, prior to the
Distribution Date, the Common Shares).
SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any respect, the remainder of the
25
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;
it is hereby agreed that such provisions are severable and that this Agreement
or the Rights shall be construed in all respects as if such invalid, void or
unenforceable provisions were omitted.
SECTION 32. GOVERNING LAW.
This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
* * * * *
26
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.
HARVEST NATURAL RESOURCES, INC.
Attest:
By: By:
----------------------------------- ----------------------------------
Title: Title:
----------------------------------- ----------------------------------
XXXXX FARGO BANK, N. A.
Attest:
By: By:
----------------------------------- ----------------------------------
Title: Title:
----------------------------------- ----------------------------------
27
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION,
RIGHTS AND PREFERENCES
OF THE SERIES B PREFERRED STOCK
OF
XXXXXX OIL AND GAS COMPANY
28
============================================================
CERTIFICATE OF DESIGNATION,
RIGHTS AND PREFERENCES
OF THE
SERIES B PREFERRED STOCK
OF
XXXXXX OIL AND GAS COMPANY
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
============================================================
XXXXXX OIL AND GAS COMPANY, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that pursuant to the authority conferred upon the Board of
Directors of the Corporation by Article 4 of the Certificate of Incorporation,
as amended, of the Corporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, its Board of
Directors, at a meeting duly called and held on April 28, 1995, adopted, the
following resolution creating a series of authorized but unissued Preferred
Stock, $.01 par value, designated as Series B Preferred Stock:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, the Board of Directors hereby creates a series of
Preferred Stock of the Corporation and hereby fixes the designation and the
amount thereof and the powers, preferences and relative participating, optional
or other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof, as follows:
1. Designation and Amount. The shares of such series shall be
designated as "Series B Preferred Stock," par value $.01 per share, and the
number of shares constituting such series shall be 500,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of Series
B Preferred Stock to a number less than that of the shares then outstanding plus
the number of shares issuable upon exercise of outstanding rights, options or
warrants or upon conversion of outstanding securities issued by the Corporation.
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series B Preferred Stock with respect to dividends, the holders of
shares of Series B Preferred Stock, in preference to the holders of shares of
Common Stock, par value $.01 per share (the "Common Stock"), of the Corporation,
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on the first day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of
29
Series B Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series B Preferred Stock. In the event
the Corporation shall at any time after May 19, 1995 (the "Rights Declaration
Date") (i) declare or pay any dividend on Common Stock payable in shares of
Common Stock, or (ii) effect a subdivision, 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 Series B Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event,
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on
the Series B Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series B
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series B 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 Series
B Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series B Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 30 days
prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series B Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series B Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision, 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
number of votes per share to which holders of shares of Series B Preferred Stock
were
30
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event, and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise set forth herein or as required by
law, the holders of shares of Series B Preferred Stock and the holders of shares
of Common Stock shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(C) Except as otherwise set forth herein or as required by
law, the holders of Series B 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 the holders of Common Stock as set forth herein) for taking any
corporation action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series B Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or 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 Series B Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series B Preferred
Stock, except dividends paid ratably on the Series B Preferred Stock and all
such parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled.
(iii) redeem or purchase or otherwise acquire for
consideration shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B Preferred Stock or any shares of stock ranking on a
parity (either as to dividends or upon dissolution, liquidation or winding up)
with the Series B Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
31
5. Reacquired Shares. Any shares of Series B Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
6. Liquidation. Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the holders
of shares of Common Stock or of other stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received, per share, the greater of $100.00 or 100
times (subject to adjustment as hereinafter set forth) the aggregate amount to
be distributed per share of Common Stock, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series B Liquidation Preference").
(B) In the event that upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, there are not
sufficient assets remaining to permit payment in full of the Series B
Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity (either as to dividends or upon,
liquidation, dissolution or winding up) with the Series B Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
stock in proportion to the amount to which the holders of all such shares are
entitled to receive upon such liquidation, dissolution or winding up.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, by
reclassification or otherwise, then in each such case the aggregate amount to
which holders of Series B Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
7. Consolidation. Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series B
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision,
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 Series B 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
32
such event, and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
8. Redemption. The shares of Series B Preferred Stock shall not be
redeemable.
9. Ranking. The Series B Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.
10. Fractional Shares. Series B Preferred Stock may be issued in
fractions (including, but not limited to, one hundredths) of a share which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series B Preferred Stock.
11. Amendment. The Certificate of Incorporation and the Bylaws of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series B
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least 66-2/3% of the outstanding shares of Series B Preferred
Stock, voting separately as a class.
IN WITNESS WHEREOF, Xxxxxx Oil and Gas Company has caused this
Certificate of Designation, Rights and Preferences of the Series B Preferred
Stock to be duly signed by its President and attested to by its Secretary and
has caused its corporate seal to be affixed hereto this 28th day of April, 1995.
XXXXXX OIL AND GAS COMPANY
By:
------------------------------------
X.X. Xxxxxx, Chairman of the Board,
President and Chief Executive Officer
Attest:
-------------------------------
Xxxx X. Xxxxxxx, Secretary
33
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R-
-------------------------- ------------------
Rights
NOT EXERCISABLE AFTER APRIL 28, 2015 OR EARLIER IF NOTICE OF REDEMPTION
IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE SECOND AMENDED
AND RESTATED RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE SECOND AMENDED AND
RESTATED RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE SECOND AMENDED AND RESTATED RIGHTS
AGREEMENT.](1)
RIGHTS CERTIFICATE
HARVEST NATURAL RESOURCES, INC.
This certifies that _____________________________________________ ,or
registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Second Amended and Restated Rights Agreement,
dated as of April 15, 2005 (the "Rights Agreement"), between Harvest Natural
Resources, Inc., a Delaware corporation (the "Company"), and Xxxxx Fargo Bank,
N. A. (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
the Expiration Date (as such term is defined in the Rights Agreement) at the
office of the Rights Agent, or its successors as Rights Agent, designated for
such purpose, one one-hundredth of a fully-paid non-assessable share of Series B
Preferred Stock, $.01 par value (the "Preferred Shares"), of the Company (or
other securities or property, as provided in the Rights Agreement), at a
purchase price of $60 per one one-hundredth of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
appropriate Form of Election to Purchase and Certificate duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of
Preferred Shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
the close of business on April 15, 2005, based on the Preferred Shares as
constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of Preferred Shares (or other securities or property which may be purchased upon
the exercise of the Rights evidenced by this Rights Certificate) are subject to
modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made
-----------------------
(1) The portion of the legend in brackets shall be inserted only if applicable.
34
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
Rights Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and are also available upon written request to
the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may, but are not required to, be redeemed by the Company at
a redemption price of $.01 per Right.
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-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated:
---------------------------
ATTEST: HARVEST NATURAL RESOURCES, INC.
By:
---------------------------------- --------------------------------
Title: Title:
--------------------------- -----------------------------
Countersigned:
XXXXX FARGO BANK, N. A.,
as Rights Agent
By:
------------------------------
Authorized Signatory
35
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificates.)
FOR VALUE RECEIVED, ____________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.
Dated:
-----------------------------
----------------------------------- -----------------------------------
Signature Signature
Signature(s) Guaranteed:
-----------------------------------
36
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:
------------------------------
-----------------------------------
Signature
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
37
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate.)
TO: HARVEST NATURAL RESOURCES, INC.
The undersigned hereby irrevocably elects to exercise _________________
_____________________________________ Rights represented by this Rights
Certificate to purchase the Preferred Shares (or such other securities of the
Company) issuable upon the exercise of such Rights and requests that certificate
for such Preferred Shares (or other securities of the Company) be issued in the
name of:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
Dated:
----------------------------
----------------------------------- -----------------------------------
Signature Signature
Signature(s) Guaranteed:
-----------------------------------
38
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who, was or subsequently became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated:
-------------------------
-----------------------------------
Signature
NOTICE
The signature to the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the Certificate set forth above in the Forms of Assignment
and Election to Purchase is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement) and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for his Rights Certificate.
39
EXHIBIT C
HARVEST NATURAL RESOURCES, INC.
SUMMARY OF PREFERRED SHARE PURCHASE RIGHTS
On April 28, 1995, the Board of Directors of Harvest Natural Resources,
Inc. (the "Company") declared a dividend distribution of one preferred share
purchase right (the "Right") for each outstanding share of common stock, $.01
par value, of the Company (the "Common Shares") to shareholders of record as of
the close of business on May 19, 1995 (the "Record Date"). The Board of
Directors of the Company further declared that one Right be distributed with
each Common Share issued after the Record Date but prior to the Distribution
Date (as defined below) or the earlier expiration, exchange, redemption or
termination of the Rights. On September 16, 2003, the Board of Directors of the
Company approved an amendment and restatement of the rights agreement governing
the Rights. Effective March 31, 2005, the Board of Directors of the Company
approved a second amendment and restatement of the rights agreement governing
the Rights (the "Second Amended and Restated Rights Agreement"). The Second
Amended and Restated Rights Agreement extends the term of the original Rights
Agreement to April 28, 2015. Under the Second Amended and Restated Rights
Agreement, and except as set forth below, each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series B
Preferred Stock, $.01 par value, of the Company (the "Preferred Shares") at a
price of $60 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
the Second Amended and Restated Rights Agreement, with the Company and Xxxxx
Fargo Bank, N. A., as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to the Common Shares then
outstanding, and no separate certificates evidencing the rights ("Rights
Certificates") will be issued. The Rights will separate from the Common Shares,
Rights Certificates will be issued and the Rights will become exercisable upon
the earlier to occur of (i) 10 days following the first date (the "Shares
Acquisition Date") of a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% of more of the outstanding Common
Shares of the Company or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group becomes an Acquiring Person) following the commencement or announcement
of an intention to make a tender offer or exchange offer for Common Shares of
the Company the consummation of which would result in the beneficial ownership
by a person or group of affiliated or associated persons of 15 % or more of such
outstanding Common Shares (the earlier of such dates being referred to as the
"Distribution Date"). However, a person or group of affiliated or associated
persons who acquires the beneficial ownership of 15 % or more of the Common
Shares then outstanding either (i) by reason of share purchases by the Company
reducing the number of Common Shares outstanding (provided such person or group
does not acquire additional Common Shares), or (ii) inadvertently, if such
person or group notifies the Board of Directors of such inadvertent purchase
within five business days and within two business days after such notice divests
itself of enough Common Shares so as to no longer have the beneficial
ownership of 15% of the outstanding Common Shares, will not be an Acquiring
Person.
Until the Distribution Date, the Rights will be evidenced, with respect
to any of the Common Share certificates outstanding on or after the date of this
agreement, by such Common Share certificates with a copy of this Summary of
Rights attached thereto. The Second Amended and Restated Rights Agreement
provides that, until the Distribution Date, the Rights will be transferred with
and only with the Common Shares. Until the Distribution Date (or earlier
redemption, exchange, expiration or termination of the Rights), new Common Share
certificates issued after the date of this agreement upon transfer or new
issuance of
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the Common Shares will contain a notation incorporating the Second Amended and
Restated Rights Agreement by reference. Until the Distribution Date (or earlier
redemption, exchange, expiration or termination of the Rights), the surrender
for transfer of any certificates for Common Shares outstanding on or after the
date of this agreement, 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 Rights 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 Rights Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on April 28, 2015, unless earlier redeemed,
exchanged or terminated as provided below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for Preferred Shares, certain convertible securities or
securities having the same or more favorable rights, privileges and preferences
to the Preferred Shares at less than the current market price of the Preferred
Shares or (iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic cash dividends
out of earnings or retained earnings or dividends payable in Preferred Shares)
or of subscription rights or warrants (other than those referred to above).
In the event that a Person becomes an Acquiring Person (other than
pursuant to a tender offer or exchange offer for all outstanding Common Shares
at a price and on terms determined by at least a majority of the members of the
Company's Board of Directors who are not officers of the Company and are not
Acquiring Persons or affiliates or associates thereof to be both adequate and
otherwise in the best interests of the Company and its shareholders (a
"Permitted Offer"), then proper provision will be made so that each holder of a
Right (other than Rights beneficially owned by an Acquiring Person or affiliates
or associates thereof) will thereafter have the right to receive, upon exercise,
that number of Common Shares of the Company having a market value of two times
the exercise price of the Right. In the event that the Company does not have a
sufficient number of Common Shares available, the Company may, among other
things, instead substitute cash, assets or other securities for the Common
Shares into which the Rights would have otherwise been exercisable.
In the event that, after the Shares Acquisition Date, the Company
consolidates or merges with another entity (whether or not the Company is the
surviving corporation) or the Company sells or otherwise transfers 50% or more
of its consolidated assets or earnings power, proper provision will be made so
that each holder of a Right (other than Rights beneficially owned by an
Acquiring Person or affiliates or associates thereof) will thereafter have the
right to receive, upon exercise, that number of Common Shares of either the
Company, in the event that the Company is the surviving corporation of a merger
or consolidation, or of the acquiring company (or, in the event there is more
than one acquiring company, the acquiring company receiving the greatest portion
of the assets or earning power transferred), which at the time of such
transaction would have a market value of two times the exercise price of the
Right (unless the transaction satisfies certain conditions, and is consummated
with a person pursuant to a Permitted Offer, in which case the Rights will
terminate).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and, in lieu
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thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading date prior to the date of exercise.
At any time prior to the earliest to occur of: (i) the tenth day
following the Shares Acquisition Date or (ii) the Expiration Date, the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). Immediately upon the action of the Board of Directors
of the Company 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.
Subject to applicable law, the Board of Directors, at its option, may,
at any time after a person or group becomes an Acquiring Person but prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Shares, exchange all or part of the then outstanding Rights (other than Rights
beneficially owned by an Acquiring Person or affiliates or associates thereof)
for Common Shares at an exchange ratio of one Common Share per Right, subject to
adjustment.
The Preferred Shares purchasable upon exercise of the Rights will not
be redeemable and will be, in ranking as to dividend and liquidation
preferences, senior to the Common Shares. but junior to any other series of
preferred stock the Company may issue (unless otherwise provided in the terms of
such preferred stock). Each Preferred Share will have a preferential quarterly
dividend in an amount equal to 100 times the dividend declared on each Common
Share but in no event less than $10.00. In the event of liquidation, the holders
of Preferred Shares will be entitled to a preferred liquidation payment equal to
the greater of $100.00 or 100 times the payment made per each Common Share. Each
Preferred Share will have 100 votes, voting together with the Common Shares. In
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount and type of consideration received per Common Share. The rights of
the Preferred Shares as to dividends, liquidation and voting, and in the event
of mergers and consolidations, are protected by customary antidilution
provisions. Fractional Preferred Shares will be issuable; however, the Company
may elect to distribute depositary receipts in lieu of such fractional shares.
In lieu of fractional shares (other than fractions that are multiples of one
one-hundredth of a share), an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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 at any time to cure any
ambiguity or to correct or supplement any defective or inconsistent provisions
and may, prior to the Distribution Date, be amended to change or supplement any
other provision in any manner that the Company may deem necessary or desirable.
After the Distribution Date, the terms of the Rights may be amended (other than
to cure ambiguities or to correct or supplement defective or inconsistent
provisions) only so long as the amendment does not adversely affect the
interests of the holders of the Rights (other than the Acquiring Person).
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being acquired.
The Rights should not interfere with any merger or other business combination
approved by the Board of Directors of the Company because the Board of Directors
may, at its option, at any time prior to ten days after the Shares Acquisition
Date, redeem all but not less than all the then outstanding Rights at the
Redemption Price.
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A copy of the Second Amended and Restated Rights Agreement has been
filed with the Securities and Exchange Commission as an Exhibit to an amendment
to a Registration Statement on Form 8-A. A copy of the Second Amended and
Restated Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Second Amended and Restated Rights
Agreement, which is hereby incorporated herein by reference.
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