RIGHTS AGREEMENT Dated as of March 9, 2006 between CANWEST PETROLEUM CORPORATION and COMPUTERSHARE INVESTOR SERVICES, INC.
Dated
as of March 9, 2006
between
CANWEST
PETROLEUM CORPORATION
and
COMPUTERSHARE
INVESTOR SERVICES, INC.
TABLE
OF
CONTENTS
|
Page
|
|
| Section 1. Certain Definitions |
1
|
| Section 2. Appointment of Rights Agent |
5
|
| Section 3. Issue of Rights Certificates |
5
|
| Section 4. Form of Rights Certificates |
6
|
| Section 5. Countersignature and Registration |
7
|
|
Section 6. Transfer, Split Up, Combination and
Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates
|
7
|
| Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights |
8
|
| Section 8. Cancellation of Rights Certificates |
10
|
| Section 9. Reservation and Availability of Capital Stock |
11
|
| Section 10. Preferred Stock Record Date |
12
|
|
Section 11. Adjustment of Purchase Price, Number
and Kind of Shares or
Number of Rights
|
13
|
| Section 12. Certificate of Adjusted Purchase Price or Number of Shares |
21
|
| Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power |
21
|
| Section 14. Fractional Rights and Fractional Shares |
25
|
| Section 15. Rights of Action |
26
|
| Section 16. Agreement of Rights Holders |
27
|
| Section 17. Rights Certificate Holder Not Deemed a Stockholder |
27
|
| Section 18. Duties of Rights Agent |
28
|
| Section 19. Compensation and Indemnification of the Rights Agent |
30
|
| Section 20. Merger or Consolidation or Change of Name of Rights Agent |
31
|
| Section 21. Change of Rights Agent |
31
|
| Section 22. Issuance of New Rights Certificates |
32
|
| Section 23. Redemption and Termination |
33
|
| Section 24. Exchange |
33
|
| Section 25. Notice of Certain Events |
35
|
| Section 26. Notices |
35
|
| Section 27. Supplements and Amendments |
36
|
| Section 28. Successors |
37
|
| Section 29. Determinations and Actions by the Board, Etc. |
37
|
| Section 30. Benefits of this Agreement |
37
|
| Section 31. Severability |
37
|
| Section 32. Governing Law |
38
|
| Section 33. Counterparts |
38
|
| Section 34. Descriptive Headings |
38
|
i
Rights
Agreement, dated as of March 9, 2006 (the “Agreement”), between CanWest
Petroleum Corporation, a Colorado corporation (the “Company”), and Computershare
Investor Services, Inc. (the “Rights Agent”).
For
purposes of this Agreement, the following terms have the meanings
indicated:
(a)
“Acquiring Person” shall mean any Person that, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 20% or more of
the
shares of Common Stock of the Company then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary of the Company, or (iii) any employee
benefit plan of the Company or any Subsidiary of the Company, or any Person
holding shares of Common Stock for or pursuant to the terms of any such employee
benefit plan to the extent, and only to the extent, of such shares of Common
Stock so held. Notwithstanding anything in this definition of “Acquiring Person”
to the contrary:
1
(i)
no
Person shall become an “Acquiring Person” as the result of an acquisition of
shares of Common Stock by the Company which, by reducing the number of shares
of
Common Stock outstanding, increases the proportionate number of shares of Common
Stock beneficially owned by such Person to 20% or more of the shares of Common
Stock of the Company then outstanding; provided, however, that if a Person
shall
become the Beneficial Owner of 20% or more of the shares of Common Stock of
the
Company then outstanding by reason of share acquisitions by the Company and
shall, after such share acquisitions by the Company, become the Beneficial
Owner
of any additional shares of Common Stock of the Company (other than pursuant
to
a dividend or distribution paid or made by the Company on the outstanding Common
Stock or pursuant to a split or subdivision of the outstanding Common Stock),
then such Person shall be deemed to be an “Acquiring Person” if such Person is
then the Beneficial Owner of 20% or more of the Common Stock then outstanding;
and
(ii)
if
the Board determines in good faith that a Person who would otherwise be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently (including, without limitation,
because (A) such Person was unaware that it beneficially owned a percentage
of
Common Stock that would otherwise cause such Person to be an “Acquiring Person”
or (B) such Person was aware of the extent of its Beneficial Ownership of Common
Stock but had no actual knowledge of the consequences of such Beneficial
Ownership under this Agreement), and such Person divests as promptly as
practicable (as determined in good faith by the Board) a sufficient number
of
shares of Common Stock so that such Person would no longer be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed an “Acquiring Person” for any purposes of
this Agreement unless and until such Person shall again become an “Acquiring
Person.” (b)
“Affiliate” and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b−2 of the General Rules and Regulations under the Exchange Act
as in effect on the date of this Agreement.
(c)
A
Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own,” any securities:
(i)
which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has 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, other rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person shall not
be
deemed the “Beneficial Owner” of, or to “beneficially own,” (A) 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, (B) securities issuable upon
exercise of Rights at any time prior to the occurrence of a Triggering Event,
or
(C) securities issuable upon exercise of Rights from and after the occurrence
of
a Triggering Event which Rights were acquired by such Person or any of such
Person’s Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the “Original Rights”) or pursuant to Section
11(a)(i) hereof in connection with an adjustment made with respect to any
Original Rights;
2
(ii)
which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of
(as determined pursuant to Rule 13d−3 of the General Rules and Regulations under
the Exchange Act), including 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
under this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii)
which are beneficially owned, directly or indirectly, by any other Person or
any
of such Person’s Affiliates or Associates 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 pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (c)) or disposing of any
securities of the Company; provided, however, that nothing in this paragraph
(c)
shall cause a Person engaged in business as an underwriter of securities to
be
the “Beneficial Owner” of, or to “beneficially own,” any securities acquired
through such Person’s participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition; provided further, however, that no Person who is an officer,
director or employee of the Company or any Subsidiary of the Company shall
be
deemed, solely by reason of such Person’s status or authority as such, to be the
“Beneficial Owner” of, or to “beneficially own,” any securities that are
“beneficially owned” (as defined in this paragraph (c)), including, without
limitation, in a fiduciary capacity, by the Company or any Subsidiary of the
Company, or by any other such officer, director or employee of the Company
or
any Subsidiary of the Company.
(d)
“Board” shall mean the Board of Directors of the Company.
(e)
“Business Day” shall mean any day other than a Saturday, a Sunday, or a day on
which banking or trust institutions in the City of Denver, Colorado are
authorized or obligated by law or executive order to close.
(f)
“Close of Business” on any given date shall mean 5:00 P.M. MST, Denver,
Colorado, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M. MST, Denver, Colorado, on the next succeeding
Business Day.
(g)
“Common Stock” when used with reference to the Company shall mean the shares of
the common stock, par value $0.001 per share, of the Company. “Common Stock”
when used with reference to any Person other than the Company shall mean the
class of capital stock with the greatest aggregate voting power, or the class
of
equity securities or other equity interests having power to control or direct
the management of such Person.
(h)
“Company” shall mean CanWest Petroleum Corporation, a Colorado
corporation.
(i)
“Current Value” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(j)
“Distribution Date” shall mean the earlier of (i) the Close of Business on the
tenth Business Day after the Stock Acquisition Date (or, if the tenth Business
Day after the Stock Acquisition Date occurs before the Record Date, the Close
of
Business on the Record Date), or (ii) the Close of Business on the tenth
Business Day (or, if such tenth Business Day occurs before the Record Date,
the
Close of Business on the Record Date), or such specified or unspecified later
date on or after the Record Date as may be determined by action of the Board
prior to such time as any Person becomes an Acquiring Person, after the date
of
the commencement by any Person (other than the Company, any Subsidiary of the
Company or any employee benefit plan of the Company or of any Subsidiary of
the
Company or any Person holding shares of Common Stock for or pursuant to the
terms of any such employee benefit plan) of, or of the first public announcement
of the intention of any Person (other than any of the Persons referred to in
the
preceding parenthetical) to commence, a tender or exchange offer the
consummation of which would result in such Person becoming the beneficial owner
of 20% or more of the outstanding shares of Common Stock.
3
(k)
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, as in
effect on the date of this Agreement.
(l)
“Exchange Date” shall have the meaning set forth in Section 7(a)
hereof.
(m)
“Expiration Date” shall have the meaning set forth in Section 7(a)
hereof.
(n)
“Final Expiration Date” shall have the meaning set forth in Section 7(a)
hereof.
(o)
“NASDAQ” shall have the meaning set forth in Section 11(d)(i).
(p)
“Person” shall mean any individual, firm, corporation, partnership or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
(q)
“Preferred Stock” shall mean shares of Series A Junior Participating Preferred
Stock, par value $0.001 per share, of the Company.
(r)
“Principal Party” shall have the meaning set forth in Section 13(b)
hereof.
(s)
“Purchase Price” means $20.00 US per one one-thousandth share of Preferred
Stock, as adjusted hereunder.
(t)
“Record Date” shall mean the Close of Business on March 23, 2006.
(u)
“Redemption Date” shall have the meaning set forth in Section 7(a)
hereof.
(v)
“Redemption Period” shall have the meaning set forth in Section 23(a)
hereof.
(w)
“Right” shall have the meaning set forth in the recitals hereof.
(x)
“Rights Agent” shall mean Computershare Investor Services, Inc.
(y)
“Rights Certificate” shall have the meaning set forth in Section 3(d)
hereof.
(z)
“Rights Distribution Declaration Date” shall have the meaning set forth in the
recitals hereof.
(aa)
“Section 11(a)(ii) Event” shall mean any event described in Section 11(a)(ii)
hereof.
(bb)
“Section 11(a)(ii) Trigger Date” shall have the meaning set forth in Section
11(a)(iii) hereof.
(cc)
“Section 13 Event” shall mean any event described in clause (x), (y) or (z) of
Section 13(a) hereof.
(dd)
“Securities Act” shall mean the Securities Act of 1933, as amended, as in effect
on the date of this Agreement.
(ee)
“Spread” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ff)
“Stock 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) of the Exchange Act) by the Company
or an
Acquiring Person that an Acquiring Person has become such, or such earlier
date
as a majority of the Board shall become aware of the existence of such an
Acquiring Person.
4
(gg)
“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 interests
is owned, directly or indirectly, by such Person, or is otherwise controlled
by
such Person.
(hh)
“Substitution Period” shall have the meaning set forth in Section
11(a)(iii).
(ii)
“Trading Day” shall have the meaning set forth in Section 11(d)(i).
(jj)
“Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.
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 Common Stock) 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.
(a)
As
promptly as practicable following the Record Date, the Company shall make
available a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit B (the “Summary of Rights”),
to each record holder of Common Stock who may so request from time to time
prior
to the Expiration Date. With respect to certificates for shares of Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights
shall
be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier Expiration Date
or Final Expiration Date), the transfer of any certificate representing shares
of Common Stock in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with the shares of Common
Stock
represented thereby. The Rights shall be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer
to
the Company).
(b)
Rights shall be issued in respect of all shares of Common Stock issued and
outstanding after the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date; provided, however,
Rights shall also be issued to the extent provided in Section 22 hereof in
respect of all shares of Common Stock which are issued after the Distribution
Date and prior to the Expiration Date. Certificates representing such shares
of
Common Stock shall also be deemed to be certificates for Rights and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
(c)
As
soon as practicable after the Distribution Date, the Company shall prepare
and
execute, the Rights Agent shall countersign and the Company shall send or cause
to be sent by first−class, insured, postage−prepaid mail, to each record holder
of Common Stock 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 C hereto (the “Rights
Certificate”), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the
number of Rights per share of Common Stock has been made pursuant to Section
11
hereof, at the time of distribution of the Rights Certificates, the Company
shall make necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights shall be evidenced
solely by such Rights Certificates.
5
(a)
The
Rights Certificates (and the forms of election to purchase and of assignment
to
be printed on the reverse thereof) shall be substantially the same as Exhibit
C
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate, and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law 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 Section 11 and Section 22 hereof, the Rights
Certificates, whenever issued, shall show the date of countersignature, and
on
their face shall entitle the holders thereof to purchase such number of one
one−thousandths of a share of Preferred Stock as shall be set forth therein at
the price set forth therein (such exercise price per one one−thousandth of a
share, the “Purchase Price”), but the amount and type of securities purchasable
upon exercise of each Right and the Purchase Price thereof shall be subject
to
adjustment as provided herein.
(b)
Any
Rights Certificate issued pursuant to Section 3(d) 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 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 a majority of the members of the Board has determined is part of an
agreement, arrangement or understanding which has as 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:
6
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 such
Rights Agreement.
The
Company shall instruct the Rights Agent in writing of the Rights which should
be
so legended and shall supply the Rights Agent with such legended Rights
Certificates.
(a)
The
Rights Certificates shall be executed on behalf of the Company by its Chief
Executive Officer, President, Chief Financial Officer or General Counsel and
by
its Secretary or Assistant Secretary either manually or by facsimile signature.
The Rights Certificates shall be manually countersigned by the Rights Agent
and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the 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 Rights Certificate, although at
the
date of the execution of this Rights Agreement any such person was not such
an
officer.
(b)
Following the Distribution Date, the Rights Agent shall keep or cause to be
kept, at its principal office or at offices designated as the appropriate place
for surrender of Rights Certificates upon exercise or transfer, 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 Rights Certificates.
(a)
Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate
or
Certificates, entitling the registered holder to purchase a like number of
one
one−thousandths of a share of Preferred Stock (or following a Triggering Event,
Common Stock, other securities, cash, or other assets, as the case may be)
as
the Rights Certificate or Certificates surrendered then entitled such holder
(or
former holder in the case of a transfer) to purchase.
7
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 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 properly 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 Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate
or
Certificates, as the case may be, as so requested. The Company may require
payment by the holder 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, 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 Rights Certificate so lost, stolen, destroyed
or
mutilated.
(a)
Subject to Section 7(e) hereof, the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, in the restrictions on exercisability set forth
in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) 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 and the certificate on the
reverse side thereof duly and properly 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−thousandth of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) as to which the
Rights are exercised, at or prior to the earliest of (i) the close of business
on March 9, 2007 if the Company’s shareholders do not approve the Agreement
before that date; (ii) March 9, 2016 (the “Final Expiration Date”), (iii) the
time at which the Rights are redeemed (the “Redemption Date”) as provided in
Section 23 hereof or (iv) the time at which the Rights are exchanged (the
“Exchange Date”) as provided in Section 24 hereof (the earliest of (i), (ii),
(iii) and (iv) being herein referred to as the “Expiration Date”).
8
(b)
Each
Right shall entitle the registered holder thereof to purchase one one−thousandth
of a share of Preferred Stock. The Purchase Price for each one one−thousandth of
a share of Preferred Stock pursuant to the exercise of a Right shall initially
be $20, and shall be subject to adjustment from time to time as provided in
Section 11 and Section 13 hereof and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) of this Section
7.
(c)
Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate duly and properly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one−thousandth of a share of Preferred Stock (or Common Stock,
other securities, cash or other assets, as the case may be) to be purchased
and
an amount equal to any applicable transfer tax or governmental charge in cash,
or by certified check or cashier’s check payable to the order of the Company,
the Rights Agent shall, subject to Section 18(k) hereof, thereupon promptly
(i)
(A) requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent) certificates for
the
total number of one one−thousandths of a share of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer agent
to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Preferred Stock issuable upon exercise
of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one−thousandths of a
share of Preferred Stock as are to be purchased (in which case certificates
for
the shares of Preferred Stock represented by such receipts shall be deposited
by
the transfer agent with the depositary agent), and the Company shall direct
the
depositary to comply with such request, (ii) 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 depositary 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) after receipt
thereof, promptly deliver such cash, if any, 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 (including Common Stock) 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 securities, cash
and/or other property are available for distribution by the Rights Agent, if
and
when appropriate. The Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a number
of
Rights be exercised so that only whole shares of Preferred Stock would be
issued.
(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 and 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, subject to the provisions of Section 14 hereof.
9
(e)
Notwithstanding anything in this Agreement to the contrary, from and after
the
first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned
by
(i) an 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 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 a majority of the members of the Board has
determined is part of an agreement, arrangement or understanding which has
as a
primary purpose or effect the avoidance of this Section 7(e), shall become
null
and void without any further action, and no holder of such Rights shall have
any
rights whatsoever with respect to such Rights, whether under any provision
of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and of Section 4(b) hereof
are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. The Rights Agent shall endeavor to comply with the provisions hereof
to the extent it has received instructions from the Company concerning such
matters.
(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 unless such registered holder shall have (i) properly
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered
for
such exercise, and (ii) provided such additional evidence of the identity of
the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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 provisions of this Rights 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.
10
(a)
The
Company shall cause to be reserved and kept available out of its authorized
and
unissued shares of Preferred Stock (and following the occurrence of a Triggering
Event, out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its treasury),
the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, shares of Common Stock and/or other securities) that, as
provided in this Agreement, including Section 11(a)(iii) hereof, shall be
sufficient to permit the exercise in full of all outstanding
Rights.
(b)
In
the event the shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) issuable upon the
exercise of Rights become listed on any national securities exchange or the
NASDAQ Stock Market, the Company shall use its reasonable best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange or the NASDAQ Stock Market
upon
official notice of issuance upon such exercise.
(c)
The
Company shall use its reasonable best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement,
or
as soon as is required by law following the Distribution Date, as the case
may
be, a registration statement under the Securities Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are
no
longer exercisable for such securities, and (B) the Expiration Date. The Company
shall also take such action as may be appropriate under, or to ensure compliance
with, the securities or “blue sky” laws of the various states in connection with
the exercisability of the Rights. The Company may temporarily suspend, for
a
period of time not to exceed 90 days after the date set forth inclause
(i) of the first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Upon any suspension of
exercisability of Rights referred to in this Section 9(c), the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as
the
suspension is no longer in effect, in each case with simultaneous written notice
to the Rights Agent. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable and shall be null and void so
long
as held by a holder in any jurisdiction where the requisite qualification to
the
issuance to such holder, or the exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be obtainable, or the exercise
thereof shall not be permitted under applicable law or a registration statement
shall not have been declared effective. The Rights Agent may assume that any
Right exercised is permitted to be exercised under applicable law and shall
have
no liability for acting in reliance upon such assumption.
11
(d)
The
Company shall take all such action as may be necessary to ensure that all one
one−thousandths of a share of Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and non−assessable.
(e)
The
Company 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 certificates for a number of one
one−thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax or charge 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 for a number of one
one−thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) 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 a number of one one−thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) in a name other than that of the registered holder upon the exercise
of
any Rights until any such tax or charge shall have been paid (any such tax
or
charge being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company’s satisfaction that
no such tax or charge is due.
Each
Person in whose name any certificate for a number of one one−thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of such fractional shares of Preferred
Stock
(or Common Stock and/or other securities, as the case may be) 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 and charges) was made;
provided, however, that if the date of such surrender and payment is a date
upon
which the Preferred Stock (or Common Stock and/or other securities as the case
may be) transfer books of the Company are closed, such Person shall be deemed
to
have become the record holder of such shares (fractional or otherwise) on,
and
such certificate shall be dated, the next succeeding Business Day on which
the
Preferred Stock (or Common Stock and/or other securities as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled
to
any rights of a stockholder of the Company with respect to 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.
12
The
Purchase Price, the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)
(i)
In the event the Company shall at any time after the date of this Agreement
(A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock,
(B) subdivide the outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of shares or (D) issue any shares of
its
capital stock in a reclassification of the Preferred Stock (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 Preferred Stock or the number and kind of shares of capital stock
issuable on such date, as the case may be, shall be proportionately adjusted
so
that the holder of any Right exercised after such time shall be entitled to
receive, upon payment of the aggregate adjusted Purchase Price then in effect
necessary to exercise a Right in full, the aggregate number and kind of shares
of Preferred Stock or the number and kind of shares of capital stock, as the
case may be, which, if such Right had been exercised immediately prior to such
date and at a time when the transfer books of the Company for the Preferred
Stock (or other capital stock, as the case may be) were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
that
in no event shall the consideration to be paid upon the exercise of one Right
be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs which would require
an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii)
Subject to Section 23 and Section 24 of this Agreement, in the event that any
Person, alone or together with its Affiliates and Associates, shall become
an
Acquiring Person, unless the event causing such Person to become an Acquiring
Person is a transaction set forth in Section 13(a) hereof, or is an acquisition
of shares of Common Stock pursuant to a cash tender offer made pursuant to
Section 14(d) of the Exchange Act for all outstanding shares of Common Stock
(other than shares of Common Stock beneficially owned by the Person making
the
offer or by its Affiliates or Associates) at a price and on terms determined
by
at least a majority of the Board, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair to stockholders
(taking into account all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be achieved if
the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of the Company and its
stockholders; then, proper provision shall be made so that promptly following
the Redemption Period (as defined in Section 23(a)), each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter have
the
right to receive, upon exercise thereof and payment of an amount equal to the
then current Purchase Price in accordance with the terms of this Agreement,
in
lieu of a number of one one−thousandths of a share of Preferred Stock, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one−thousandths of a share of Preferred Stock for which a Right was or
would have been exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, whether or not such Right was then exercisable, and
(y)
dividing that product (which, following such first occurrence, shall thereafter
be referred to as the “Purchase Price” for each Right and for all purposes of
this Agreement except to the extent set forth in Section 13 hereof) by 50%
of
the current market price per share of Common Stock (determined pursuant to
Section 11(d) hereof) on the date of such first occurrence (such number of
shares, the “Adjustment Shares”).
13
(iii)
The
Company at its option may substitute for a share of Common Stock issuable upon
the exercise of Rights in accordance with the foregoing subparagraph (ii) such
number or fractions of shares of Preferred Stock having an aggregate market
value equal to the current market price (as determined pursuant to Section
11(d)
hereof) per share of the Common Stock. In the event that the number of shares
of
Common Stock which is authorized by the Company’s Articles of Incorporation but
not outstanding, or reserved for issuance for purposes other than upon exercise
of the Rights, is not sufficient to permit the exercise in full of the Rights
in
accordance with the foregoing subparagraph (ii), the Board shall, to the extent
permitted by applicable law and by any agreements or instruments then in effect
to which the Company is a party, (A) determine the excess of (1) the value
of
the Adjustment Shares issuable upon the exercise of a Right (the “Current
Value”) over (2) the Purchase Price (such excess, the “Spread”), and (B) with
respect to each Right (subject to Section 7(e) hereof), make adequate provision
to substitute for some or all of the Adjustment Shares, upon exercise of a
Right
and payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the
Purchase Price, (3) Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of Preferred Stock
which the Board has deemed to have the same value as shares of Common Stock)
(such shares of equity securities being herein called “common stock
equivalents”), (4) debt securities of the Company, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board based upon
the advice of an investment banking firm selected by the Board; provided,
however, if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within 30 days following the later of (x) the
first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s
right of redemption pursuant to Section 23(a) hereof expires (the later of
(x)
and (y) being referred to herein as the “Section 11(a)(ii) Trigger Date”), then
the Company shall be obligated to deliver, upon the surrender for exercise
of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available), and then, if necessary such number of fractions
of shares of Preferred Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the Spread.
14
If,
upon
the occurrence of a Section 11(a)(ii) Event, the Board shall determine in good
faith that it is likely that sufficient additional shares of Common Stock could
be authorized for issuance upon exercise in full of the Rights, then if the
Board so elects, the thirty (30) day period set forth above may be extended
to
the extent necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval
for the authorization of such additional shares (such period, as it may be
extended, the “Substitution Period”). To the extent that action is to be taken
pursuant to the preceding provisions of this Section 11(a)(iii), the Company
(x)
shall provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability
of
the Rights until the expiration of the Substitution Period in order to seek
any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to the first sentence of this Section
11(a)(iii) and to determine the value thereof.
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,
as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common Stock
shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock on the Section 11(a)(ii) Trigger Date
and
the value of any “common stock equivalent” shall be deemed to have the same
value as the Common Stock on such date. The Board may, but shall not be required
to, establish procedures to allocate the right to receive shares of Common
Stock
upon the exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).
(b)
In
case the Company shall fix a record date for the issuance of rights, options
or
warrants to all holders of Preferred Stock entitling them (for a period expiring
within forty−five (45) calendar days after such record date) to subscribe for or
purchase Preferred Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock (“equivalent preferred stock”)) or
securities convertible into Preferred Stock or equivalent preferred stock at
a
price per share of Preferred Stock or per share of equivalent preferred stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or equivalent preferred stock) less than the current market
price per share of the Preferred Stock (as determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock or equivalent preferred stock
outstanding on such record date, plus the number of shares of Preferred Stock
or
equivalent preferred stock which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent preferred stock 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 shares of Preferred Stock or
equivalent preferred stock outstanding on such record date, plus the number
of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no
event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in
a
consideration part or all of which shall be in a form other than cash, the
value
of such consideration shall be as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent
and
shall be conclusive for all purposes. Shares of Preferred Stock or equivalent
preferred stock 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, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
15
(c)
In
case the Company shall fix a record date for a distribution to all holders
of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock), 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 market price per share of the Preferred
Stock (as determined pursuant to Section 11(d) hereof) on such record date,
less
the fair market value (as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent
and
shall be conclusive for all purposes) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights
or
warrants applicable to a share of Preferred Stock, and the denominator of which
shall be such current market price per share of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital
stock
of the Company issuable upon exercise of one Right. Such adjustment 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.
16
(d)
(i)
For the purpose of any computation hereunder, the “current market price” of the
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the 30 consecutive Trading Days (as
such term is hereinafter defined) immediately prior to, but not including,
such
date, and for purposes of computations made pursuant to Section 11(a)(iii)
hereof, the “current market price” per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices per share of Common
Stock for the ten (10) consecutive Trading Days immediately following such
date;
provided, however, that in the event that the current market price of the Common
Stock is determined during a period following the announcement by the issuer
of
such Common Stock of (i) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into such Common Stock
(other than the Rights), or (ii) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day periods, as set forth
above, after the ex−dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and
in
each such case, the “current market price” shall be appropriately adjusted to
take into account ex−dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with
respect to securities listed or admitted to trading on the American Stock
Exchange or, if the shares of Common Stock are not listed or admitted to trading
on the American Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are listed
or
admitted to trading or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, the last quoted price or, if
not
so quoted, the average of the high bid and low asked prices in the
over−the−counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System (“NASDAQ”) or such other system then
in use, or, if on any such date the shares of Common Stock are not quoted by
any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the shares of Common Stock
selected by the Board.
If
on any
such date no market maker is making a market in the Common Stock, the fair
value
of such shares on such date as determined in good faith by the Board shall
be
used. The term “Trading Day” shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business, or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange,
the term “Trading Day” shall mean a Monday, a Tuesday, a Wednesday, a Thursday
or a Friday on which banking or trust institutions in the Denver, Colorado
are
not authorized or obligated by law or executive order to close. If the Common
Stock is not publicly held or not listed or traded, “current market price” shall
mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent
and
shall be conclusive for all purposes.
17
(ii)
For
the purpose of any computation hereunder, the “current market price” per share
of the Preferred Stock shall be determined in the same manner as set forth
above
for the Common Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the current market price per share of the Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock
is
not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the “current market price” per share of the Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such number
may
be appropriately adjusted for such events as stock splits, stock dividends
and
recapitalizations with respect to the Common Stock occurring after the date
of
this Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held
or
so listed or traded, the “current market price” per share of the Preferred Stock
shall mean the fair value per share as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all purposes of this
Agreement, the “current market price” of one one−thousandth of a share of
Preferred Stock shall be equal to the “current market price” of one share of
Preferred Stock divided by 1,000.
(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 one percent (1%) in such price; provided, however, that
any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or
to
the nearest one−thousandth of a share of Common Stock or other share or
one−thousandth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), an 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)(ii) or Section 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 Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time
to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
(b),
(c), (e), (g), (h), (i), (j), (k), (l) and (m) hereof, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock 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 one one−thousandths of a share of Preferred Stock
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), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the
right to purchase, at the adjusted Purchase Price, that number of one
one−thousandths of a share of Preferred Stock (calculated to the nearest
one−thousandths of a share) obtained by (i) multiplying (x) the number of one
one−thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained
by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
18
(i)
The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of
one
one−thousandths of a share of Preferred Stock issuable 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−thousandths of a share of
Preferred Stock 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−thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make
a
public announcement 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 (10) business 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
one one−thousandths of a share of Preferred Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one−thousandth of a share and the
number of one one−thousandths of a share 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 the then−par value, if any, of the number of one one−thousandths of
a share of Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue, as fully
paid
and non−assessable, such number of one one−thousandths of a share of Preferred
Stock at such adjusted Purchase Price.
19
(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 issuance
to
the holder of any Right exercised after such record date the number of one
one−thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one−thousandths of a share of Preferred Stock 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 ▇▇▇▇ 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
the
Board in its sole discretion shall determine to be advisable in order that
any
(i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly
for cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for Preferred Stock, (iv)
stock dividends or (v) issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders of
its
Preferred Stock shall not be taxable to such stockholders.
(n)
The
Company shall not, at any time after the Distribution Date, (i) consolidate
with
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power
of the Company and its Subsidiaries (taken as a whole) to any other Person
or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements
in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with
or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the “Principal Party” for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o)
Except as permitted by Section 23, Section 24 or Section 27 hereof, the Company
shall not take (or permit any Subsidiary to take) after the Distribution Date
any action if at the time such action is taken it is reasonably foreseeable
that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
20
(p)
Anything in this Agreement to the contrary notwithstanding, in the event that
the Company, at any time after the Rights Distribution Declaration Date and
prior to the Distribution Date, shall (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock or (iii) combine the outstanding shares
of
Common Stock into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each share of Common
Stock following any such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Common Stock immediately
prior to such event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of shares
of
Common Stock outstanding immediately following the occurrence of such
event.
Whenever
an adjustment is made as provided in Section 11 or Section 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts and computations accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent
for the Preferred Stock and the Common Stock a copy of such certificate and
(c)
mail or deliver a brief summary thereof to each holder of a Rights Certificate
(or, if prior to the Distribution Date, to each holder of a certificate
representing shares of Common Stock) in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to prepare
such certificate or statement or make such filings or mailings shall not affect
the validity of, 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 therein contained and shall not be deemed to have knowledge
of
any adjustment unless and until it shall have received such
certificate.
(a)
Subject to Section 23 of this Agreement, in the event that, following the Stock
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 which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or of the Company) or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more
of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the Company and
its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
and/or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case (except as
may
be contemplated by Section 13(e) hereof), proper provision shall be made so
that:
21
(i)
each
holder of a Right, except as provided in Section 7(e) hereof, shall, upon the
expiration of the Redemption Period (as defined in Section 23(a)), 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, non−assessable and freely tradable
shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by
(1)
multiplying the then current Purchase Price by the number of one one−thousandths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of one one−thousandths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of
a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and
(2)
dividing that product (which product, following the first occurrence of a
Section 13 Event, shall be referred to as the “Purchase Price” for each Right
and for all purposes of this Agreement) by 50% of the current market price
per
share of the shares of Common Stock of such Principal Party on the date of
consummation of such Section 13 Event (or the fair market value on such date
of
other securities or property of the Principal Party, as provided for
herein);
(ii)
such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of
such Section 13 Event, all the obligations and duties of the 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
only to such Principal Party following the first occurrence of a Section 13
Event;
(iv)
such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure
that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and
(v)
the
provisions of Section 11(a)(ii) hereof shall be of no effect following the
first
occurrence of any Section 13 Event.
22
(vi)
notwithstanding any other provisions of this Section 13, in no event will Rights
be exercisable under this section if the Board determines by majority vote
that
the transaction is in the best interests of the Company.
(b)
“Principal Party” shall mean
(i)
in
the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a), (A) the Person (including the Company as successor thereto
or
as the surviving corporation) that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer of Common
Stock that has the highest aggregate current market price (determined pursuant
to Section 11(d) hereof) and (B) if no securities or other equity interests
are
so issued, the Person (including the Company as successor thereto or as the
surviving corporation) that is the other constituent party to such merger or
consolidation, or, if there is more than one such Person, the Person that is
a
constituent party to such merger or consolidation whose Common Stock has the
highest aggregate current market price (determined pursuant to Section 11(d)
hereof); and
(ii)
in
the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion
of
the assets, cash flow or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of such assets or earning power cannot be
determined, the Person that has received such assets or earning power whose
Common Stock has the highest aggregate current market price (determined pursuant
to Section 11(d) hereof); provided, however, that in any such case: (1) if
the
Common Stock of such Person is not at such time and has not been continuously
over the preceding twelve (12) month period registered under Section 12 of
the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, “Principal
Party” shall refer to such other Person; (2) if the Common Stock of such Person
is not and has not been so registered and such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common Stocks of two or more of
which are and have been so registered, “Principal Party” shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest
aggregate market value; and (3) if the Common Stock of such Person is not and
has not been so registered and 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 or all of such joint
venturers, and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct
or
indirect interests in such Person bear to the total of such
interests.
(c)
The
Company shall not consummate any Section 13 Event unless the Principal Party
shall have a sufficient number of authorized shares of its Common Stock which
have not been issued or reserved for issuance to permit the exercise in full
of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and such Principal Party 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 such Section 13 Event, the Principal Party
shall:
23
(i)
prepare and file a registration statement under the Securities Act, with respect
to the Rights and the securities purchasable upon exercise of the Rights on
an
appropriate form, and use its best efforts to cause such registration statement
to (A) become effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(ii)
deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates that comply in all respects with
the
requirements for registration on Form 10 under the Exchange Act;
(iii)
use
its best efforts to obtain any necessary regulatory approvals in respect of
the
securities purchasable upon exercise of outstanding Rights; and
(iv)
use
its best efforts, if such Common Stock of the Principal Party shall be listed
or
admitted to trading on the American Stock Exchange or on another national
securities exchange or on the NASDAQ Stock Market, to list or admit to trading
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on the American Stock Exchange or on such securities
exchange or on the NASDAQ Stock Market, or if the securities of the Principal
Party purchasable upon exercise of the Rights shall not be listed or admitted
to
trading on the American Stock Exchange or a national securities exchange or
on
the NASDAQ Stock Market, to cause the Rights and the securities purchasable
upon
exercise of the Rights to be reported by such other system then in
use.
(d)
In
case the Principal Party that is to be a party to a transaction referred to
in
this Section 13 has at the time of such transaction, or immediately following
such transaction shall have, a provision in any of its authorized securities
or
in its certificate or articles of incorporation or by−laws or other instrument
governing its affairs, or any other agreements or arrangements, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal
Party
at
less than the then current market price per share (as determined pursuant to
Section 11(d) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then current market price (other
than to holders of Rights pursuant to this Section 13), (ii) providing for
any
special payment, tax or similar provisions in connection with the issuance
of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13 or (iii) otherwise eliminating or substantially diminishing the
benefits intended to be afforded by the Rights in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, then, in such event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been cancelled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision shall have no effect in connection with, or as a
consequence of, the consummation of such transaction.
24
(e)
Notwithstanding anything in this Agreement to the contrary, Section 13 shall
not
be applicable to a transaction described in subparagraphs (x) and (y) of Section
13(a) if (i) such transaction is consummated with a Person or Persons (or a
wholly owned subsidiary of any such Person or Persons) who acquired shares
of
Common Stock pursuant to a cash tender offer for all outstanding shares of
Common Stock which complies with the provisions of Section 11(a)(ii) hereof,
(ii) the price per share of Common Stock offered in such transaction is not
less
than the price per share of Common Stock paid to all holders of Common Stock
whose shares were purchased pursuant to such cash tender offer and (iii) the
form of consideration being offered to the remaining holders of shares of Common
Stock pursuant to such transaction is the same as the form of consideration
paid
pursuant to such cash tender offer. Upon consummation of any such transaction
contemplated by this Section 13(e), all Rights hereunder shall
expire.
(f)
The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13
Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a) hereof.
(a)
The
Company shall not be required to issue fractions of Rights except prior to
the
Distribution Date as provided in Section 11(p) hereof, 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 the
whole Right. For the purposes of this Section 14(a), the current market value
of
a whole Right shall be the closing price of the Rights for the
Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day shall be the last sale
price, or, in case no such sale takes place on such day, the average of the
high
bid and low asked prices, in either case as reported by the American Stock
Exchange or, if the Rights are not listed or admitted to trading on the American
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or such other
system then in use or, if on any such date the Rights are not quoted by any
such
organization, the average of the closing bid and asked prices as furnished
by a
professional market maker making a market in the Rights selected by the Board.
If on any such date no such market maker is making a market in the Rights,
the
fair value of the Rights on such date as determined in good faith by the Board
shall be used. In the event the Rights are listed or admitted to trading on
a
national securities exchange, the closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day,
the
average of the high bid and low asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to the national securities exchange on which the Rights are listed or admitted
to trading.
25
(b)
The
Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one one−thousandth of a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one−thousandth of a share of
Preferred Stock). In lieu of fractional shares of Preferred Stock that are
not
integral multiples of one one−thousandth of a share of Preferred Stock, 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−thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of
one one−thousandth of a share of Preferred Stock shall be one one−thousandth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date
of
such exercise.
(c)
Following the occurrence of one of the events specified in Section 11 giving
rise to the right to receive Common Stock, common stock equivalents or other
securities upon the exercise of a Right, the Company shall not be required
to
issue fractions of shares of Common Stock, common stock equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock, common stock equivalents or other
securities. In lieu of fractional shares of Common Stock, common stock
equivalents or other securities, 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
(1) share of Common Stock, common stock equivalents or other securities. For
purposes of this Section 14(c), the current market value of one share of Common
Stock
shall
be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date
of
such exercise.
(d)
The
holder of a Right by the acceptance of the Rights expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise
of
a Right, except as permitted by this Section 14.
All
rights of action in respect of this Agreement, except the rights of action
vested in the Rights Agent pursuant to Section 18 and Section 19 hereof, are
vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock);
and
any registered holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date,
of
the Common Stock), may, in his own behalf and for his own benefit, enforce,
and
may institute and maintain any suit, action or proceeding against the Company
to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such 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 specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations hereunder of any Person subject to this
Agreement.
26
Every
holder of a Right by accepting such Right 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 shall be transferable only in connection
with the transfer of the Common Stock;
(b)
after
the Distribution Date, the Rights Certificates shall be transferable only on
the
registry books of the Rights Agent if surrendered at the office of the Rights
Agent designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate form of assignment and the
certificate contained therein duly completed and executed;
(c)
subject to Section 6(a) and Section 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 Stock 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 Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last
sentence
of Section 7(e) hereof, shall be affected by any notice to the contrary;
and
(d)
notwithstanding anything in this Agreement to the contrary, neither the Company
nor the Rights Agent shall have any liability to any holder of a Right or other
Person as a result of its inability to perform any of its obligations under
this
Agreement by reason of any preliminary or permanent injunction or other order,
decree, judgment or ruling (whether interlocutory or final) issued by a court
of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company shall use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as practicable.
No
holder, as such, of any Rights Certificate shall be entitled to vote, to receive
dividends or to be deemed for any purpose the holder of the Preferred Stock
or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
27
The
Rights Agent undertakes only the duties and obligations expressly 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 of its selection (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability, for or in respect of any action taken
or
omitted by it in good faith and in accordance with such advice or
opinion.
(b)
Whenever in the performance of its duties under this Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
“current market price”) be proved or established by the Company prior to taking
or suffering or omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed)
may
be deemed to be conclusively proved and established by a certificate signed
by
any person believed by the Rights Agent to be any one of the Chief Executive
Officer, President, Chief Financial Officer or General Counsel of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent, and the Rights Agent shall incur no
liability, for or in respect of any action taken, omitted or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c)
The
Rights Agent shall be liable hereunder 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 as to 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 is serving as an administrative agent and shall not be under any
responsibility in respect of the validity of any provision of this Agreement
or
the execution and delivery of this Agreement (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 (including the Rights becoming null
and void pursuant to Section 7(e) hereof) or any adjustment required under
any
of the provisions hereof or responsible for the manner, method, or amount of
any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced
by
Rights Certificates after the Rights Agent’s actual receipt of notice of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock or shares of Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common Stock
or shares of Preferred Stock will, when so issued, be validly authorized and
issued, fully paid and non−assessable, nor shall the Rights Agent be responsible
for the legality of the terms hereof in its capacity as an administrative
agent.
28
(f)
The
Company shall perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other
acts,
instruments and assurances as may reasonably be required by the Rights Agent
for
the carrying out or performing by the Rights Agent of the provisions of this
Agreement.
(g)
The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any person believed
by
the Rights Agent to be any one of the Chairman of the Board, the Chief Executive
Officer, President, Chief Financial Officer or General Counsel of the Company,
and to apply to such officers for advice or instructions in connection with
its
duties, and it shall not be liable for any action taken, omitted to be taken
or
suffered to be taken by it in good faith in accordance with instructions of
any
such officer or for any delay in acting while waiting for those instructions.
Any application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action proposed
to be taken, suffered or omitted by the Rights Agent under this Agreement and
the date on or after which such action shall be taken or suffered or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken or suffered by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in
such
application (which date shall not be less than five Business Days after the
date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission),
the
Rights Agent shall have received written instruction in response to such
application specifying the action to be taken, suffered or omitted.
(h)
The
Rights Agent and any stockholder, affiliate, director, officer or employee
of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which
the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting
in
any other capacity for the Company or for any other Person or legal
entity.
29
(i)
The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or accountable for
any
act, default, neglect or misconduct of any such attorneys or agents or for
any
loss to the Company resulting from any such act, default, neglect or misconduct;
provided, however, that the Rights Agent exercised reasonable care 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 or
form
of election to purchase, as the case may be, has either not been properly
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.
(a)
The
Company agrees to pay to the Rights Agent such compensation as shall be agreed
to in writing between the Company and the Rights Agent 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 expenses 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, its officers, employees, agents and directors for, and to
hold
each of them harmless against, any loss, liability or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for
any action taken, suffered or omitted by the Rights Agent or such other
indemnified party in connection with the acceptance and administration of this
Agreement and the exercise of its duties hereunder, including, but not limited
to, the costs and expenses of defending against any claim (whether asserted
by
the Company, a holder of Rights, or any other Person) of liability in the
premises. The indemnity provided for hereunder shall survive the expiration
of
the Rights and the termination of this Agreement.
30
(b)
The
Rights Agent shall be authorized and protected and shall incur no liability
for
or in respect of any action taken, suffered or omitted by it in connection
with
its administration of this Agreement or the exercise of its duties hereunder
in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power
of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed and executed by the proper person or persons.
(a)
Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger
or
consolidation to which the Rights Agent or any successor Rights Agent shall
be a
party, or any Person succeeding to all or substantially all the stock transfer
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at
the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the 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 any 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 Rights 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.
The
Rights Agent or any successor Rights Agent may resign and be discharged from
its
duties under this Agreement upon thirty (30) days’ notice in writing mailed to
the Company. The Company may remove the Rights Agent or any successor Rights
Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Stock 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 thirty (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 Rights Agent or the registered holder
of any Rights Certificate may, at the expense of the Company, apply to any
court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (i) a Person organized and doing business under the laws of Canada
or
the United States or the State of Colorado (or of any other state of the United
States so long as such Person is authorized to do business in the State of
Colorado), in good standing, having an office in the State of Colorado which
is
authorized under such laws to exercise corporate trust power and is subject
to
supervision or examination by federal or state authority and which at the time
of its appointment as Rights Agent a combined capital and surplus of at least
$50 million or (ii) an affiliate of such a Person. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties
and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder,
and
execute and deliver any further assurance, conveyance, act or deed necessary
for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and, if
such appointment occurs after the Distribution Date, 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.
31
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 the Board to reflect any adjustment or change
in
the Purchase Price per share and the number or kind of 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 of shares of Common Stock following the Distribution
Date (other than upon exercise of a Right) and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificates
would be issued, and (ii) no such Rights Certificates shall be issued if, and
to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
32
(a)
The
Board may, at its option, at any time during the period commencing on the Rights
Distribution Declaration Date and ending on the earlier of (i) the Close of
Business on the tenth Business Day following the Stock Acquisition Date (or,
if
the Stock Acquisition Date shall have occurred prior to the Record Date, the
Close of Business on the tenth Business Day following the Record Date), or
(ii)
the Close of Business on the Final Expiration Date (the “Redemption Period”),
cause the Company to redeem all but not less than all the then outstanding
Rights at a redemption price of $0.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”); provided, however, that, if
the Board authorizes redemption of the Rights on or after the time a Person
becomes an Acquiring Person, then such authorization shall require the
concurrence of a majority of the Directors. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable after
the
first occurrence of a Section 11(a)(ii) Event or a Section 13 Event until such
time as the Company’s right of redemption hereunder has expired. The redemption
of the Rights by the Board pursuant to this paragraph (a) may be made effective
at such time, on such basis and with such conditions as the Board in its sole
discretion may establish. The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock (based on the current market price of
the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board.
(b)
Immediately upon the action of the Board ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent, and without
any
further action and without any notice, the right to exercise the Rights shall
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Promptly after the action of the Board ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at their last addresses as they appear upon
the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock; provided, however,
that the failure to give, or any defect in, any such notice shall not affect
the
validity of such redemption. 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 shall state the method by which the payment
of
the Redemption Price will be made.
(a)
The
Board may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become null and void pursuant to
the
provisions of Section 7(e) hereof) for shares of Common Stock at an exchange
ratio of one share of Common Stock per each outstanding Right, as appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board shall not
be empowered to effect such exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding Common Stock for or
pursuant to the terms of any such employee benefit plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or
more of the Common Stock then outstanding. The exchange of the Rights by the
Board may be made effective at such time, on such basis and with such conditions
as the Board in its sole discretion may establish.
33
(b)
Immediately upon the action of the Board ordering the exchange of any Rights
pursuant to subsection (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 shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity=of
such
exchange. The Company promptly shall mail a notice of any such exchange to
all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the
exchange of Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights that 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
any exchange pursuant to this Section 24, the Company, at its option, may
substitute common stock equivalents (as defined in Section 11(a)(iii)) for
shares of Common Stock exchangeable for Rights, at the initial rate of one
common stock equivalent for each share of Common Stock, as appropriately
adjusted to reflect adjustments in dividend, liquidation and voting rights
of
common stock equivalents pursuant to the terms thereof, so that each common
stock equivalent delivered in lieu of each share of Common Stock shall have
essentially the same dividend, liquidation and voting rights as one share of
Common Stock.
(d)
In
the event that there shall not be sufficient shares of Common Stock 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
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
(e)
The
Company shall not be required to issue fractions of shares of Common Stock
or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the purposes of
this
paragraph (e), the current market value of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as determined pursuant to
the
second and the following sentences of Section 11(d) hereof) for the Trading
Day
immediately prior to the date of exchange pursuant to this Section
24.
34
(a)
In
case the Company shall propose, at any time after the Distribution Date, (i)
to
pay any dividend payable in capital stock of any class to the holders of
Preferred Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of earnings or retained
earnings) or (ii) to offer to the holders of Preferred Stock rights or warrants
to subscribe for or to purchase any additional shares of Preferred Stock or
shares of capital stock of any class or any other securities, rights or options,
or (iii) to effect any reclassification of its Preferred Stock (other than
a
reclassification involving only the subdivision of outstanding Preferred Stock),
or (iv) 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 (v) to effect the liquidation, dissolution
or
winding up of the Company, then, in each such case, the Company shall give
to
each holder of a Rights Certificate, to the extent feasible and 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, 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 shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of
any
action covered by clause (i) or (ii) above at least twenty (20) days prior
to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action and, in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or
the
date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier.
(b)
In
case any Section 11(a)(ii) Event shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible and 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) hereof,
and (ii) all references in the preceding paragraph to Preferred Stock shall
be
deemed thereafter to refer to Common Stock and/or, if appropriate, other
securities.
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:
35
CanWest
Petroleum Corporation
▇▇▇-▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇▇ ▇▇▇-▇▇▇
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:
Computershare
Investor Services, Inc.
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇▇ V6C-3B9
Attention:
Relationship Manager
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 any
such holder at the address of such holder as shown on the registry books of
the
Company.
Except
as
provided in the penultimate sentence of this Section 27, for so long as the
Rights are then redeemable, the Company may in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of the Rights. At any time when the Rights are no longer redeemable, except
as
provided in the penultimate sentence of this Section 27, the Company may, and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights; provided, however,
that
no such supplement or amendment may (a) adversely affect the interests of the
holders of Rights as such (other than an Acquiring Person or any Affiliate
or
Associate of an Acquiring Person), (b) cause this Agreement again to become
amendable other than in accordance with this sentence or (c) cause the Rights
again to become redeemable. Notwithstanding anything contained in this Agreement
to the contrary, no supplement or amendment shall be made which changes the
Redemption Price. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment; provided, however, that any supplement or amendment
that does not amend Section 18, 19, 20 or 21 hereof or this Section 27 in a
manner adverse to the Rights Agent shall become effective immediately upon
execution by the Company, whether or not also executed by the Rights
Agent.
36
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.
For
all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d−3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board (with, where specifically provided for herein, the
concurrence of a majority of the members of the Board) shall have the exclusive
power and authority to administer this Agreement and to exercise all rights
and
powers specifically granted to the Board (with, where specifically provided
for
herein, the concurrence of a majority of the members of the Board) or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including
without limitation a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations which are done or made by the Board (with, where specifically
provided for herein, the concurrence of a majority of the members of the Board)
in good faith, shall be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other Persons.
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 registered holders of the Common
Stock) any legal or equitable right, remedy or claim under this Agreement;
but
this Agreement shall be for the sole and exclusive benefit of the Company,
the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the registered holders of Common Stock). Prior to
the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of shares of Common
Stock.
If
any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that notwithstanding anything in
this Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board determines in its good faith judgment that severing
the invalid language from this Agreement would materially and adversely affect
the purpose or effect of this Agreement, the right of redemption set forth
in
Section 23 hereof shall be reinstated and shall not expire until the Close
of
Business on the tenth Business Day following the date of such determination
by
the Board.
37
This
Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the internal laws of the State of Colorado
and for all purposes shall be governed by and construed in accordance with
the
laws of such State.
This
Agreement may be executed in any number of counterparts. It shall not be
necessary that the signature of or on behalf of each party appears on each
counterpart, but it shall be sufficient that the signature of or on behalf
of
each party appears on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of or on behalf of all of
the
parties.
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.
38
IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be
duly
executed, all as of the day and year first above written.
| CANWEST PETROLEUM CORPORATION | ||
| |
|
|
| By: | ||
|
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President |
||
| COMPUTERSHARE INVESTOR SERVICES, INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
39
Exhibit
A
CERTIFICATE
OF DESIGNATION,
PREFERENCES
AND RIGHTS OF
SERIES
A
JUNIOR PARTICIPATING PREFERRED STOCK
of
CANWEST
PETROLEUM CORPORATION
CanWest
Petroleum Corporation, a corporation organized and existing under the Colorado
Business Corporation Act (the “Corporation”), hereby certifies that the
following resolution was duly adopted by the Board of Directors of the
Corporation on March 9, 2006 as required by Section ▇-▇▇▇-▇▇▇ of the Colorado
Business Corporation Act:
RESOLVED,
that
pursuant to the authority granted to and vested in the Board of Directors in
accordance with the provisions of the Corporation’s Articles of Incorporation
and Section ▇-▇▇▇-▇▇▇ of the Colorado Business Corporation Act, the Board hereby
amends the Corporation’s Articles of Incorporation to create a series of
Preferred Stock, par value $0.001 per share, (the “Preferred Stock”) and hereby
states the designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Section
1. Designation
and Amount.
The
shares of such series, par value $.001 per share, shall be designated as “Series
A Junior Participating Preferred Stock” and the number of shares constituting
such series shall be 250,000.
Section
2. Dividends
and Distributions.
(A)
Subject to the prior and superior rights of the holders of any shares of any
series of Preferred Stock ranking prior and superior to the shares of Series
A
Junior Participating Preferred Stock with respect to dividends, the holders
of
shares of Series A Junior Participating Preferred Stock 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 15th
day
of January, April, July and October, in each year (each such date being referred
to herein as a “Quarterly Dividend Payment Date”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $.01 or (b)
subject to the provision for adjustment hereinafter set forth, 1,000 times
the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non−cash dividends or other
distributions, other than a dividend payable in shares of common stock, par
value $.001 per share, of the Corporation (the “Common Stock”), or a subdivision
of the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock, since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at any time
after March 9, 2006 (the “Rights Declaration Date”) (i) declare or pay 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, then in each such case the amount to which holders
of
shares of Series A Junior Participating 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.
A-1
(B)
The
Corporation shall declare a dividend or distribution on the Series A Junior
Participating Preferred Stock as provided in paragraph (A) above 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 $.01 per share on the Series
A
Junior Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C)
Dividends shall begin to accrue and be cumulative on outstanding shares of
Series A Junior Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A Junior
Participating Preferred Stock, unless the date of issue of such shares is prior
to the record date set for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue
of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or
is a date after the record date for the determination of holders of shares
of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
event 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 A Junior Participating Preferred Stock
in
an amount less than the total amount of such dividends at the time accrued
and
payable on such shares shall be allocated pro rata on a share−by−share basis
among all such shares at the time outstanding. The Board of Directors may fix
a
record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section
3. Voting
Rights.
The
holders of shares of Series A Junior Participating Preferred Stock shall have
the following voting rights:
A-2
(A)
Subject to the provision for adjustment hereinafter set forth, each share of
Series A Junior Participating Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare 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, then in each such
case
the number of votes per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such
event and the denominator of which is the number of shares of Common Stock
that
were outstanding immediately prior to such event.
(B)
Except as otherwise provided by law, the holders of shares of Series A Junior
Participating Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of the
stockholders of the Corporation.
(C)
Except as set forth herein, holders of Series A Junior Participating Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section
4. Certain
Restrictions.
(A)
Whenever dividends or distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are not paid, thereafter and until
such
dividends and distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(i)
declare or pay dividends on, or 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 A Junior Participating Preferred Stock; or
(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 A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior Participating
Preferred Stock and all such parity stock on which dividends are payable in
proportion to the total amounts to which the holders of all such shares are
then
entitled; or
(iii)
redeem or purchase or otherwise acquire for consideration shares of any stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or
winding up) with the Series A Junior Participating Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior Participating Preferred Stock;
or
A-3
(iv)
purchase or otherwise acquire for consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of stock ranking on a parity with
the Series A Junior Participating 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.
Section
5. Reacquired
Shares.
Any
shares of Series A Junior Participating 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.
Section
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 stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $1,000 per share, plus any unpaid dividends and
distributions payable thereon, whether or not declared, to the date of such
payment (the “Series A Liquidation Preference”). Following the payment of the
full amount of the Series A Liquidation Preference, no additional distributions
shall be made to the holders of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the “Common Adjustment”) equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in subparagraph (C) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii) immediately above being referred to as the
“Adjustment Number”). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to one (1) with respect to such Preferred Stock and Common Stock, on
a
per share basis, respectively.
A-4
(B)
In
the event, however, that there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series A Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are sufficient assets available to permit payment in full
of
the Common Adjustment, then such remaining assets shall be distributed ratably
to the holders of Common Stock.
(C)
In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare 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, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is
the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section
7. Consolidation,
Merger, etc.
In case
the Corporation shall enter into any consolidation, merger, combination or
other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such
case the shares of Series A Junior Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share (subject
to
the provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock
is changed or exchanged. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare 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, then
in
each such case the amount set forth in the preceding sentence with respect
to
the exchange or change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section
8. Redemption.
The
Series A Junior Participating Preferred Stock shall not be subject to redemption
by the Corporation.
Section
9. Ranking.
Notwithstanding anything contained herein to the contrary, the Series A Junior
Participating Preferred Stock shall rank junior to all other series of the
Corporation’s Preferred Stock as to voting rights, the payment of dividends and
the distribution of assets in liquidation, unless the terms of any such series
shall provide otherwise.
A-5
Section
10. Amendment.
After
any shares of Series A Junior Participating Preferred Stock are outstanding,
this Certificate of Designation 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 A Junior Participating Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of a majority
of the outstanding shares of Series A Junior Participating Preferred Stock,
voting separately as a class. Prior to the issuance of any shares of Series
A
Junior Participating Preferred Stock the Board of Directors may amend this
Certificate of Designation by majority vote.
Section
11. Fractional
Shares.
Series A
Junior Participating Preferred Stock may be issued in fractions of a share
which
shall entitle the holders, in proportion to such holders fractional shares,
to
exercise voting rights, receive dividends, participate in distributions and
to
have the benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
A-6
Exhibit
B
SUMMARY
OF RIGHTS TO PURCHASE
SERIES
A
JUNIOR PARTICIPATING
PREFERRED
STOCK
On
March
9, 2006, the Board of Directors of CanWest Corporation (the “Company”) declared
a distribution of one right (“Right”) for each outstanding share of common
stock, par value $.001 per share (the “Common Stock”), of the Company, payable
to stockholders of record on March 23, 2006. Each Right, when exercisable,
entitles the registered holder to purchase from the Company one one−thousandth
of a share of Series A Junior Participating Preferred Stock (“Preferred Stock”)
at a price of $20 per one one−thousandth share (the “Purchase Price”), subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the “Rights Agreement”) dated as of March 9, 2006, between the
Company and Computershare Investor Services, Inc., as Rights Agent (the “Rights
Agent”).
Initially,
the Rights will be attached to all certificates representing shares of Common
Stock then outstanding, and no separate certificates evidencing the Rights
will
be distributed. The Rights will separate from the Common Stock and a
distribution of Rights Certificates (as defined below) will occur upon the
earlier to occur of (i) 10 days following a public announcement that a person
or
group of affiliated or associated persons (an “Acquiring Person”) has acquired
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the “Stock Acquisition Date”) or (ii) 10 business days (or such later date as
the Board of Directors of the Company may determine) following the commencement
of, or the first public announcement of the intention to commence, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person of 20% or more of the outstanding shares of Common Stock
(the earlier of such dates being called the “Distribution Date”).
Until
the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates, and will be transferred with and only with the Common Stock
certificates, and (ii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
The
Rights are not exercisable until the Distribution Date and will expire at the
close of business on (i) March 9, 2007 if the Company’s shareholders do not
approve the Agreement before that date; or, if the Agreement is approved, (ii)
on March 9, 2016, unless such date is extended, the Rights Agreement is
terminated, or the Rights are earlier redeemed or exchanged by the Company
as
described below. The Rights will not be exercisable by a holder in any
jurisdiction where the requisite qualification to the issuance to such holder,
or the exercise by such holder, of the Rights has not been obtained or is not
obtainable.
As
soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights (“Rights Certificates”) will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will evidence the Rights.
Except as otherwise determined by the Board of Directors of the Company, only
shares of Common Stock issued prior to the Distribution Date will be issued
with
Rights.
B-1
In
the
event that a Person becomes the beneficial owner of 20% or more of the then
outstanding shares of Common Stock, except pursuant to an offer for all
outstanding shares of Common Stock which the Directors determine to be fair
to
and otherwise in the best interests of the Company and its stockholders (a
“Qualifying Offer”), each holder of a Right will, after the end of a redemption
period referred to below, have the right to exercise the Right by purchasing,
for an amount equal to the Purchase Price, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
value
equal to two times such amount. Notwithstanding any of the foregoing, following
the occurrence of the events set forth in this paragraph, all Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void. Rights are
not
exercisable following the occurrence of the events set forth above until such
time as the Rights are no longer redeemable by the Company as set forth
below.
For
example, at a Purchase Price of $20 per Right, each Right not owned by an
Acquiring Person (or by certain related parties) following an event set forth
in
the preceding paragraph would entitle its holder to purchase $40 worth of Common
Stock (or other consideration, as noted above) for $20. Assuming that the Common
Stock had a per share value of $10 at such time, the holder of each valid Right
would be entitled to purchase four shares of Common Stock for $20.
In
the
event that at any time following the Stock Acquisition Date, (i) the Company
is
acquired in a merger or other business combination transaction (other than
a
merger that follows a Qualifying Offer), or (ii) 50% or more of the Company’s
assets or earning power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above) shall, after the
expiration of the redemption period referred to below, have the right to
receive, upon exercise, common stock of the acquiring company having a value
equal to two times the Purchase Price of the Right (e.g., common stock of the
acquiring company having a value of $40 for the $20 Purchase Price). At any
time
after a person or group of affiliated or associated persons becomes an Acquiring
Person and prior to the acquisition by such person of 50% or more of the
outstanding Common Stock, the Board of Directors of the Company may exchange
the
Rights (other than Rights owned by such person or group which have become void),
in whole or in part, at an exchange ratio of one share of Common Stock (or,
in
certain circumstances, other equity securities of the Company that are deemed
by
the Board of Directors of the Company to have the same value as shares of Common
Stock) per Right (subject to adjustment).
The
Purchase Price payable, and the number of one one−thousandths of a share of
Preferred Stock or other securities or property issuable, upon exercise of
the
Rights are subject to adjustment from time to time to prevent dilution under
certain circumstances.
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 shares will be issued (other than fractions which are
integral multiples of one one−thousandth of a share of Preferred Stock) and in
lieu thereof, an adjustment in cash will be made based on the market price
of
the Preferred Stock on the last trading date prior to the date of
exercise.
B-2
In
general, the Board of Directors of the Company, may cause the Company to redeem
the Rights in whole, but not in part, at any time during the period commencing
on March 9, 2006 and ending on the tenth business day following the Stock
Acquisition Date (the “Redemption Period”) at a price of $0.001 per Right
(payable in cash, Common Stock or other consideration deemed appropriate by
the
Board of Directors of the Company). Under certain circumstances set forth in
the
Rights Agreement, the decision to redeem the Rights will require the concurrence
of a majority of the Board of Directors. After the Redemption Period has
expired, the Company’s right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to 10% or less of the outstanding shares
of Common Stock in a transaction or series of transactions not involving the
Company and there are no other Acquiring Persons. Immediately upon the action
of
the Board of Directors of the Company ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $0.001 redemption price.
Until
a
Right is exercised, the holder thereof, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote
or
to receive dividends. While the distribution of the Rights will not be subject
to federal taxation to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the
Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company as set forth
above.
Except
with respect to the Redemption Price of the Rights, any of the provisions of
the
Rights Agreement may be amended by the Board of Directors of the Company prior
to the Distribution Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company in
order to cure any ambiguity, defect or inconsistency or to make changes which
do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen time period under the Rights
Agreement; provided however, no amendment to adjust the time period governing
redemption may be made at such time as the Rights are not
redeemable.
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, or
in a
manner or on terms not approved by the Board of Directors of the Company. The
Rights, however, should not deter any prospective offeror willing to negotiate
in good faith with the Board of Directors of the Company, nor should the Rights
interfere with any merger or other business combination approved by the Board
of
Directors of the Company.
A
copy of
the Rights Agreement has been filed with the Securities and Exchange Commission
as an exhibit to a Registration Statement on Form 8−A. A copy of the 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 Rights Agreement, which is hereby incorporated herein by
reference.
B-3
Exhibit
C
[Form
of
Rights Certificate]
Certificate
No. R− Rights
NOT
EXERCISABLE AFTER MARCH 9, 2016 OR EARLIER IF THE RIGHTS AGREEMENT IS NOT
APPROVED BY THE COMPANY’S SHAREHOLDERS BY MARCH 9, 2007 OR IF REDEEMED OR
EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF
THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
OR
AN AFFILIATE OR ASSOCIATE OF ANY SUCH PERSON (AS SUCH TERMS ARE DEFINED IN
THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND
VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD,
BY
A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE
TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH
JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. [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 SUCH
AGREEMENT.] *
*
The
portion of the legend in brackets shall be inserted only if applicable and
shall
replace the preceding sentence.
C-1
Rights
Certificate
CANWEST
PETROLEUM CORPORATION
This
certifies that __________, or its registered assigns, is the registered owner
of
the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement, dated
as of March 9, 2006, as the same may be amended from time to time (the “Rights
Agreement”), between CanWest Petroleum Corporation, a Colorado corporation (the
“Company”), and Computershare Investor Services, Inc. (the “Rights Agent”), to
purchase from the Company at any time prior to March 9, 2016, or prior to March
9, 2007 if the Rights Agreement is not approved by the Company’s shareholders
before that date, at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one−thousandth of a fully
paid, non−assessable share of Series A Junior Participating Preferred Stock, par
value $.001 per share (the “Preferred Stock”) of the Company, at a purchase
price of $20 per one one−thousandth share (the “Purchase Price”), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of ________, ____
,
based on the Preferred Stock as constituted at such date, and are subject to
adjustment upon the happening of certain events as provided in the Rights
Agreement. Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Rights Agreement.
From
and
after the occurrence of an event described in Section 11(a)(ii) of the Rights
Agreement, the Rights evidenced by this Rights Certificate beneficially owned
by
(i) an Acquiring Person or an Affiliate or Associate of any such Person (as
such
terms are defined in the Rights Agreement), which the Board, in its sole
discretion, determines is or was involved in or caused or facilitated, directly
or indirectly (including through any change in the Board), such Section
11(a)(ii) Event, (ii) a transferee of any such Acquiring Person, Associate
or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a Person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person shall become null and void and no holder hereof shall have
any
right with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
The
Rights evidenced by this Rights Certificate shall not be exercisable, and shall
be void so long as held, by a holder in any jurisdiction where the requisite
qualification to the issuance to such holder, or the exercise by such holder,
of
the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As
provided in the Rights Agreement, the Purchase Price and the number and kind
of
shares of Preferred Stock or other securities, 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, including
Triggering 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 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, which
limitations of rights include the temporary suspension of the exercisability
of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above−mentioned office of the
Rights Agent and are also available upon written request to the Rights
Agent.
C-2
This
Rights Certificate, with or without other Rights Certificates, upon surrender
at
the office or offices of the Rights Agent designated for such purpose, may
be
exchanged for another Rights Certificate or Right Certificates of like tenor
and
date evidencing Rights entitling the holder to purchase a like aggregate number
of one one−thousandths of a share of Preferred Stock 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 be redeemed by the Board at its option at a redemption price
of
$.001 per Right at any time during the period commencing on the Rights
Distribution Declaration Date and ending on the earlier of (i) the Close of
Business on the tenth business day following the Stock Acquisition Date (or,
if
the Stock Acquisition Date shall have occurred prior to the Record Date, the
Close of Business on the tenth business day following the Record Date), or
(ii)
the Close of Business on the Final Expiration Date. Under certain circumstances
set forth in the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Board. After the expiration of the Redemption
Period, the Company’s right of redemption may be reinstated if the Acquiring
Person reduces its beneficial ownership to 10% or less of the outstanding shares
of Common Stock in a transaction or series of transactions not involving the
Company, and such reinstatement is approved by a majority of the
Board.
At
any
time after a Person becomes an Acquiring Person and prior to the acquisition
by
such Person of 50% or more of the outstanding Common Stock, the Board may
exchange the Rights (other than Rights owned by such Acquiring Person which
have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock per Right each outstanding Right or, in certain circumstances, other
equity securities of the Company which are deemed by the Board to have the
same
value as shares of Common stock, subject to adjustment.
No
fractional shares of Preferred Stock will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one−thousandth of a share of Preferred Stock, 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, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable
on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice
of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
C-3
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
as
of ___________, ____.
| ATTEST: | CANWEST PETROLEUM CORPORATION | |
| |
|
|
| Date: | By: | /s/ |
|
Name: |
||
| Title: | ||
|
Countersigned:
|
||
| By: | ||
| Authorized Signature | ||
C-4
[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 Certificate.)
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
Guaranteed:
C-5
Certificate
The
undersigned hereby certifies by checking the appropriate boxes
that:
(1)
this
Rights Certificate [ ] is [ ] is 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 Person (as such terms are defined pursuant to the Rights
Agreement);
(2)
after
due inquiry and to the best knowledge of the undersigned, it [ ] 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
any such Person.
Dated:
_________, ____.
Signature
Signature
Guaranteed:
C-6
The
signature to the foregoing Assignment and Certificate 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.
C-7
(To
be
executed if the registered holder
desires
to exercise Rights represented
by
the
Rights Certificate.)
To:
___________________
The
undersigned hereby irrevocably elects to exercise Rights represented by this
Rights Certificate to purchase the shares of Preferred Stock issuable upon
the
exercise of the Rights (or such other securities of the Company or of any other
Person which may be issuable upon the exercise of the Rights) and requests
that
certificates for such shares be issued in the name of and delivered
to:
(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 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
Guaranteed:
C-8
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 Person (as such terms are defined in the Rights
Agreement);
(2)
after
due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did
not
acquire the Rights evidenced by this Rights Certificate from any Person who
is,
was or became an Acquiring Person or an Affiliate or Associate of any such
Person.
Dated:
___________, 20__.
Signature
Signature
Guaranteed:
C-9
NOTICE
The
signature to the foregoing Election to Purchase and Certificate 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.
C-10