_________________________________________________________
BOOTS & XXXXX INTERNATIONAL WELL CONTROL, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
RIGHTS AGREEMENT
November 27, 2001
_________________________________________________________
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 27, 2001 (the "Agreement"), between
Boots & Xxxxx International Well Control, Inc., a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Company (the "Rights Agent").
WITNESSETH:
WHEREAS on November 27, 2001 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one preferred share purchase right (a "Right") for each share of
common stock, par value $.00001 per share, of the Company (the "Common Stock")
as outstanding at the Close of Business (as hereinafter defined) on December 17,
2001 (the "Record Date"), and has authorized the issuance of one Right (as such
number may be adjusted pursuant to the provisions of Section 11(o)) for each
-------------
share of Common Stock issued between the Record Date (whether originally issued
or delivered from the Company's treasury) and the Distribution Date, each Right
initially representing the right to purchase one one-hundredth of a share of
Series I Junior Participating Preferred Stock, par value $.00001 per share, of
the Company (the "Preferred Stock"), having the powers, rights and preferences
set forth in the Certificate of Designation attached to this Agreement as
Exhibit C, upon the terms and subject to the conditions set forth below;
----------
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
--------------------
following terms have the meanings indicated, whether their use precedes or
follows the definition thereof in this Agreement:
(a) "Act" means the Securities Act of 1933, as in effect on the
date in question, unless otherwise specifically provided.
(b) "Acquiring Person" means any Person that, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, but does not include
(i) the Company; (ii) any Subsidiary of the Company; (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company; (iv) any
Person organized, appointed or established by the Company for or pursuant
to the terms of any such plan; or (v) a Grandfathered Shareholder or a
Grandfathered Transferee, unless and until such Grandfathered Shareholder
or Grandfathered Transferee, as applicable, without the prior approval of
the Board of Directors of the Company, shall after the date hereof become
the Beneficial Owner of more than the applicable Grandfathered Percentage
of the Common Stock of the Company. Notwithstanding the foregoing, no
Person (including, without limitation, any Grandfathered Shareholder or
Grandfathered Transferee) 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 15% or more of the shares of Common Stock then outstanding;
provided, however, that if a Person (including, without limitation, any
Grandfathered Shareholder or Grandfathered Transferee) shall become the
1
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company, become the Beneficial Owner of any
additional shares of Common Stock then such Person shall be deemed to be an
"Acquiring Person." Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person (including,
without limitation, any Grandfathered Shareholder or Grandfathered
Transferee) who would otherwise be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (b), has become such
inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (b), then such Person shall not be deemed to
be an "Acquiring Person" for any purposes of this Agreement. The word
"outstanding," whenever used with reference to a Person's Beneficial
Ownership of shares of Common Stock, shall mean the number of such shares
then issued and outstanding, together with the number of such shares not
then issued and outstanding which such Person would be deemed to own
beneficially hereunder.
(c) "Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act and in effect on the date of this Agreement.
(d) A Person will be deemed the "Beneficial Owner" of, and will be
deemed to "beneficially own," any securities that:
(i) 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 or upon the occurrence of certain events) pursuant to any
agreement, arrangement, or understanding (whether or not in writing)
or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person
will not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange offer
made by 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 Section 11(a)(ii) Event, or (C) securities
issuable upon exercise of Rights from and after a Section 11(a)(ii)
Event, which 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 (the "Original Rights") or pursuant to
------------- -----------
Section 11(i) in connection with an adjustment made with respect to
--------------
any Original Rights;
(ii) 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 will not
be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this Section 1(d)(ii) as a result of an agreement,
-----------------
arrangement, or understanding to vote such security if such agreement,
arrangement, or understanding: (1) arises solely from a revocable
2
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 (2) is not
also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such Person) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement, or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso in Section 1(d)(ii)), or
-----------------
disposing of any voting securities of the Company;
provided, however, that nothing in this Section 1(d) will 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 bona fide firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(e) "Board of Directors" means the Board of Directors of the
Company.
(f) "Business Day" means any day other than a Saturday, Sunday or
a day on which banking institutions in the City of Houston in the State of
Texas or in the city in which the office of the Rights Agent is located are
authorized or obligated by law or executive order to close.
(g) "Certificate of Designation" shall mean the Certificate of
Designation setting forth the powers, preferences, rights, qualifications,
limitations and restrictions of Series I Junior Participating Preferred
Stock of the Company, a copy of the form of which is attached to this
Agreement as Exhibit C.
-----------
(h) "Close of Business" on any given date will mean 5:00 p.m.,
Houston, Texas time, on such date; provided, however, that if such date is
not a Business Day it will mean 5:00 p.m., Houston, Texas time, on the next
succeeding Business Day.
(i) "Common Stock" when used with reference to the Company shall
mean the shares of Common Stock of the Company; "Common Stock" when used
with reference to any Person other than the Company will mean the capital
stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.
(j) "Distribution Date" means the Close of Business on the tenth
Business Day after the earlier to occur of (i) the Stock Acquisition Date
or (ii) the date any Person commences or publicly announces an intention to
commence a tender offer or exchange offer for the Common Stock which would
result in, upon the consummation of such offer, the Person making such
offer, together with all of its Affiliates and Associates, being the
Beneficial Owner of 15% or more of the Common Stock then outstanding
(including any such date that is after the date of this Agreement and prior
to the issuance of the Rights); provided, however, that if the tender offer
or exchange offer that gave rise to the Distribution Date is cancelled,
terminated or otherwise withdrawn within ten (10) Business Days of its
3
announcement, such offer shall be deemed never to have been made and no
Distribution Date shall occur with respect thereto.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
in effect on the date in question, unless otherwise specifically provided.
(l) "Grandfathered Percentage" shall mean, (A) with respect to any
Grandfathered Shareholder, the percentage of the outstanding Common Stock
that such Grandfathered Shareholder beneficially owned on the date hereof,
or (B) with respect to any Grandfathered Transferee, the percentage of the
outstanding Common Stock that such Grandfathered Transferee beneficially
owns immediately after giving effect to the transaction by which such
Grandfathered Transferee first becomes a Grandfathered Transferee; provided
that if the percentage of Common Stock beneficially owned by any
Grandfathered Shareholder or Grandfathered Transferee, as applicable, is
reduced for any reason subsequent to the date hereof, the Grandfathered
Percentage with respect to such Grandfathered Shareholder or Grandfathered
Transferee, as applicable, shall be reduced to the same extent.
(m) "Grandfathered Shareholder" shall mean any Person who as of
the Close of Business on the date hereof was the Beneficial Owner of 15% or
more of the Common Stock of the Company then outstanding. Any Grandfathered
Shareholder who subsequent to the date hereof becomes the Beneficial Owner
of less than 15% of the outstanding Common Stock shall cease to be a
Grandfathered Shareholder.
(n) "Grandfathered Transferee" shall mean any Person who or which,
together with all Affiliates and Associates of such Person:
(i) acquires directly from a Grandfathered Shareholder in
any one transaction Common Stock such that, after giving effect to
such acquisition, such Person is the Beneficial Owner of 15% or more
of the outstanding Common Stock; and
(ii) immediately prior to such acquisition beneficially owned
less than 1% of all then outstanding Common Stock. Any Grandfathered
Transferee who subsequent to the date hereof becomes the Beneficial
Owner of less than 15% of the outstanding Common Stock shall cease to
be a Grandfathered Transferee.
(o) "Person" means any individual, firm, corporation, partnership,
limited liability company or other public or private entity.
(p) "Preferred Stock" shall have the meaning set forth in the
introductory paragraph of this Agreement. Any reference in this Agreement
to Preferred Stock shall be deemed to include any authorized fraction of a
share of Preferred Stock, unless the context otherwise requires.
(q) "Redemption Price" with respect to each Right means $0.001, as
such amount may from time to time be adjusted in accordance with Section
-------
11. All references herein to the Redemption Price means the Redemption
---
Price as in effect at the time in question.
4
(r) "Section 11(a)(ii) Event" means any event described in Section
-------
11(a)(ii).
----------
(s) "Section 13 Event" means any event described in Clauses (i),
(ii), or (iii) of Section 13(a).
--------------
(t) "Stock Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, will include, without
limitation, a report filed pursuant to Sec. 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become
an Acquiring Person or such earlier date as a majority of the Board of
Directors shall become aware of the existence of an Acquiring Person.
(u) "Subsidiary" means, with reference to any Person, any entity
of which an amount of voting securities sufficient to elect at least a
majority of the directors or similar Persons of such entity is beneficially
owned, directly or indirectly, by such Person, or otherwise controlled by
such Person.
(v) "Trading Day" means a day on which the principal national
securities exchange or quotation system on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, a Business Day.
(w) "Triggering Event" means any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
-----------------------------
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions of this Agreement, 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. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for the acts or omissions of any such
co-Rights Agent.
Section 3. Issue of Rights Certificates.
-------------------------------
(a) Prior to the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of this Section 3(b)) by the
--------------
certificates for the Common Stock, registered in the names of the holders
of the Common Stock (which certificates for Common Stock will be deemed
also to be certificates for Rights) and not by separate certificates, and
(ii) the Rights will be transferable only in connection with the transfer
of the underlying shares of Common Stock including a transfer to the
Company. As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock of the Distribution Date, at the address
of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A (the "Rights
----------
Certificates"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided in this Agreement. In the event
that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11(o), at the time of distribution of the
-------------
Rights Certificates, the Company will make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a)) 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 will be evidenced solely by such Rights
Certificates.
5
(b) As soon as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form of
Exhibit B, by first-class, postage prepaid mail, to each record holder of
----------
the Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock will
also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date (as defined in Section 7),
----------
the transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued will also constitute the transfer
of the Rights associated with such shares of Common Stock.
(c) Rights will be issued in respect of all shares of Common Stock
that are issued (whether originally issued or from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or
the Expiration Date. Certificates representing such shares of Common Stock
will also be deemed to be certificates for Rights, and will bear the
following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO CERTAIN
RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN BOOTS & XXXXX
INTERNATIONAL WELL CONTROL, INC., (THE "COMPANY") AND (THE "RIGHTS
AGENT") DATED AS OF NOVEMBER 27, 2001 (AS AMENDED FROM TIME TO TIME,
THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED IN
THIS CERTIFICATE BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICES OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET
FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY
SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A
COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING,
WITHOUT CHARGE PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR BECOMES AN ACQUIRING
PERSON OR ANY AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY
OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME
NULL AND VOID.
With respect to the shares of Common Stock issued after the Record
Date, until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Stock represented by such
certificates will be evidenced by such certificates alone and registered
holders of Common Stock will also be the registered holders of the
6
associated Rights, and the transfer of any of such certificates will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
------------------------------
The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse of the rights certificates) will each be
substantially in the form set forth in Exhibit A and may have such marks of
---------
identification or designation and such legends, summaries, or endorsements 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 or quotation system 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, the Rights Certificates, whenever distributed, will be dated as
----------
of the Record Date and on their face will entitle the holders of such Rights
Certificates to purchase one one-hundredth of a share of Preferred Stock at the
price set forth in such Rights Certificates (such exercise price per share, the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price will be subject to adjustment as
provided in this Agreement.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates will be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
Chief Operating Officer, its President, or any Executive Vice President
either manually or by facsimile signature, will have affixed thereto the
Company's seal or a facsimile thereof, and will be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates will be countersigned by the
Rights Agent, either manually or by facsimile signature and will not be
valid for any purpose unless so countersigned. In case any officer of the
Company who has signed any of the Rights Certificates ceases 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, is 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 will keep or
cause to be kept, at its principal office or 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 under this Agreement. Subject to the provisions of Section 11 and
----------
Section 22, the Rights Certificates, whenever distributed, will be dated as
-----------
of the Record Date and on their face will entitle the holders of such
Rights Certificates to purchase one one-hundredth of a share of Preferred
Stock or other securities or property as provided herein, as the same may
from time to time be adjusted as provided herein, at the price per one
7
one-hundredth of a share set forth therein, as the same may from time to
time be adjusted as provided herein (the "Purchase Price").
Section 6. Transfer, Split Up, Combination and Exchange of Rights
-------------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost, or Stolen Rights
----------------------------------------------------------------
Certificates.
-------------
(a) Subject to the provisions of Section 7(e) and Section 14, at
------------ ----------
any time after the Distribution Date, and at or prior to the Expiration
Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of
one one-hundredths of a share of Preferred Stock (or, following a
Triggering Event, 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. Any
registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Rights Certificates will make such request in writing
delivered to the Rights Agent, and will surrender the Rights Certificate or
Rights Certificates to be transferred, split up, combined or exchanged at
the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company will be obligated to take
any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder has completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and has provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company requests in good faith. Thereupon, the
Rights Agent will, subject to Section 4, Section 7(e) and Section 14,
---------- ------------ ----------
countersign and deliver to the Person entitled thereto a Rights Certificate
or Rights Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of any Rights Certificate.
(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 satisfactory to them, and
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 will
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.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
-----------------------------------------------------------
Rights.
-------
(a) Subject to Section 7(e), the registered holder of any Rights
------------
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided in this Agreement including, without limitation, the restrictions
on exercisability set forth in Section 9(c), Section 11(a)(iii), Section
------------ ------------------ -------
23(a) and Section 24) in whole or in part at any time after the
----- ------------
Distribution Date upon surrender of the Rights Certificate, with the form
8
of election to purchase and the certificate on the reverse side of the
Rights Certificate duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price for each one one-hundredth of
a share of Preferred Stock (or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then exercisable,
at or prior to the earlier of (i) the Close of Business on December 31,
2011, (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 or (iii) the time at which such rights
----------
are exchanged as provided in Section 24 (the earlier of the times, the
----------
"Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right will initially be
$5.00, subject to adjustment from time to time as provided in Section 11,
-----------
and Section 13(a). The Purchase Price will be payable in accordance with
--------------
Section 7(c).
--------------
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment of the aggregate Purchase Price for the
number of one one-hundredths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) to be purchased and
an amount equal to any applicable transfer tax, the Rights Agent will,
subject to Section 20(k), 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 for such shares) certificates for the total
number of shares of Preferred Stock to be purchased (the Company hereby
irrevocably authorizing its transfer agent to comply with all such
requests) or (B) if the Company has elected to deposit the shares of
Preferred Stock with a depository agent, requisition from the depository
agent depository receipts representing such number of one one-hundredths of
a share of Preferred Stock as are to be purchased (in which case
certificates for the Preferred Stock represented by such receipts will be
deposited by the transfer agent with the depository agent) and the Company
will direct the depository agent to comply with such request; (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu
of fractional shares in accordance with Section 14; (iii) after receipt of
----------
such certificates or depository receipts, cause such certificates or
depository receipts 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, deliver such
cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii)) will be made in cash or by
--------------------
certified bank check or bank draft payable to the order of the Company. In
the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash or distribute other
property pursuant to Section 11(a), the Company will make all arrangements
-------------
necessary so that such other securities, cash or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) If the registered holder of any Rights Certificate exercises
less than all the Rights evidenced by such certificate, a new Rights
Certificate evidencing the unexercised Rights will 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.
-----------
8
(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 any Person referred to in Clauses (i) through
(iii) below will become null and void without any further action and no
holder of such Rights will have any rights whatsoever with respect to such
Rights, under any provision of this Agreement or otherwise: (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii)
a transferee from an Acquiring Person (or from any Associate or Affiliate
of an Acquiring Person) that becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee from an Acquiring Person (or of
any such Associate or Affiliate) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or
(B) a transfer that the Board of Directors of the Company has determined is
part of an agreement, plan, arrangement or understanding that has as a
substantial purpose or effect the avoidance of this Section 7(e). The
------------
Company will use reasonable efforts to insure that the provisions of this
Section 7(e) are complied with, but will have no liability under this
-------------
Agreement 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 any of its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company will 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 has (i) 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
requests in good faith.
Section 8. Cancellation and Destruction of Rights Certificates. All
-----------------------------------------------------
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, will be cancelled by it, and no Rights
Certificates will be issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company will deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent will so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent will deliver all
cancelled Rights Certificates to the Company, or will, at the written request of
the Company, destroy such cancelled Rights Certificates, and in such case will
deliver a certificate of destruction to the Company.
Section 9. Reservation and Availability of Capital Stock.
--------------------------------------------------
(a) The Company will use its best efforts to reserve and keep
available out of its authorized and unissued shares of Preferred Stock
(and/or other securities), the number of shares of Preferred Stock (and/or
other securities) that will be sufficient to permit the exercise in full of
all outstanding Rights, provided that the Company shall not be required to
10
reserve and keep available shares of Common Stock or other securities
sufficient to permit the exercise in full of all outstanding Rights
pursuant to the adjustments set forth in Section 11(a)(ii), Section
------------------ -------
11(a)(iii) or Section 13 hereof unless the Rights become exercisable
--------- -----------
pursuant to such adjustments, and then only to the extent the Rights become
exercisable pursuant to such adjustments.
(b) So long as the Preferred Stock (and, following the occurrence
of a Triggering Event, Common Stock or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange or automated quotation system, the Company will use its
reasonable 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 automated quotation system upon official notice of issuance
upon such exercise.
(c) The Company will use its best efforts to (i) file, as soon as
practicable following 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 Section 11(a)(iii), a
-------------------
registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights or issued in an exchange pursuant
to Section 24 on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the Expiration Date. The Company will also
take such action as may be appropriate under, or to ensure compliance with,
the applicable state securities laws in connection with the exercisability
of the Rights. The Company may temporarily suspend, for up to 120 days
after the date described in Clause (i) 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. Upon any such suspension, the
Company will 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 no longer remains in effect. In addition, if
the Company determines 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. Notwithstanding any provision of this
Agreement to the contrary, the Rights will not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction has not
been obtained, the exercise of such Rights is not permitted under
applicable law, or a registration statement has not been declared
effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
(Common Stock and/or other securities) delivered upon exercise of Rights
will, at the time of delivery of the certificates for such shares upon
payment of the Purchase Price, be duly and validly authorized and issued
and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Rights
Certificates and any shares of Preferred Stock or Common Stock or other
securities issued upon the exercise of Rights. The Company will not,
11
however, be required to pay any transfer tax that may be payable in respect
of any transfer or delivery of Rights Certificates to a Person other than,
or the issuance or delivery of Preferred Stock or Common Stock (or other
securities, as the case may be) in respect of a name other than that of the
registered holder of the Rights Certificates or to issue or deliver any
Preferred Stock or Common Stock or other certificates in a name other than
that of the registered holder until such tax has been paid (any such tax
being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
---------------------------
shares of Preferred Stock (Common Stock and/or other securities) is issued will,
for all purposes, be deemed to have become the record holder of such shares
represented thereby, and such certificate will be dated, on the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the aggregate Purchase Price therefor (and all applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the transfer books of the Company are closed, such Person will
be deemed to have become the record holder of the shares on, and such
certificate will be dated, the next succeeding Business Day on which the shares
of Preferred Stock (Common Stock and/or other securities) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
Rights Certificate holders will not be entitled to any stockholder rights with
respect to shares of Preferred Stock (Common Stock and/or other securities),
including, without limitation, the right to vote, to receive dividends or other
distributions, or to exercise any preemptive rights, and will not be entitled to
receive any notice of any proceedings of the Company, except as provided in this
Agreement.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
----------------------------------------------------------
Number of Rights. The Purchase Price, the number and kind of shares covered by
-----------------
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
-----------
12
(a)(i) In the event the Company at any time after the date of this
Agreement (A) declares a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivides the outstanding Preferred Stock, (C)
combines the outstanding Preferred Stock into a smaller number of shares,
or (D) issues any shares of its capital stock in a reclassification of the
Preferred Stock (including, without limitation, 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 Section 7(e), 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 (Common Stock and/or other securities), as the
case may be, issuable on such date, will be proportionately adjusted so
that the holder of any Right exercised after such time will be entitled to
receive, upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of capital stock, as the case may be, that, if
such Right had been exercised immediately prior to such date, such holder
would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification. If an event
occurs that would require an adjustment under both this Section 11(a)(i)
----------------
12
and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
----------------- ----------------
will be in addition to, and will be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
------------------
(ii) In the event that any Person, alone or together with its
Affiliates and Associates, at any time after the Rights Dividend
Declaration Date, becomes an Acquiring Person, then, proper provision will
be made so that each Right holder (except as provided in Section 7(e)) will
-------------
thereafter have the right to receive, upon exercise of such Right at the
then current aggregate Purchase Price with respect to the number of one
one-hundredths 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, in lieu of such number of one one-hundredths of a share of
Preferred Stock, such number of shares of Common Stock equal to the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preferred Stock for which a
Right is then exercisable and (y) dividing that product by 50% of the
Current Market Price (defined in Section 11(d)) per share of Common Stock
--------------
on the date such Person became an Acquiring Person (such number of shares,
the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock that
are authorized by the Company's certificate of incorporation but not issued
are not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii) and the Rights become so exercisable, the
-----------------
Company will, upon the exercise of a Right and payment of the applicable
Purchase Price, (A) determine the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value"), and (B) with respect to
each Right (subject to Section 7(e)), make adequate provision to substitute
for the Adjustment Shares (1) cash, (2) a reduction in the Purchase Price,
(3) other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock), that the Board of
Directors has deemed to have essentially the same rights, privileges and
preferences as shares of Common Stock ("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 conclusively determined by the Board of
Directors based upon the advice of a nationally recognized investment
banking firm; provided, however, that if the Company has not made adequate
provision to deliver value pursuant to Clause (B) above within 30 days
following the first occurrence of a Section 11(a)(ii) Event ("Section
---------
11(a)(ii) Trigger Date"), then the Company will be obligated to deliver,
---------
upon the surrender for exercise of a Right and without requiring payment of
the Purchase Price, Common Stock (to the extent available) and then, if
necessary, cash, which shares or cash have an aggregate value equal to the
Spread. The term "Spread" means the excess of (i) the Current Value over
(ii) the Purchase Price. If the Board of Directors determines in good faith
that it is likely that sufficient additional Common Stock could be
authorized for issuance upon exercise in full of the Rights, the 30-day
period set forth above may be extended to the extent necessary, but not
more than 120 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 30-day period, as it may be extended, being the
"Substitution Period"). To the extent that action is to be taken pursuant
to this Section 11(a)(iii), the Company (1) will provide, subject to
-------------------
Section 7(e), that such action will apply uniformly to all outstanding
-------------
Rights, and (2) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any required
stockholder approval or to decide the appropriate form of distribution to
be made and the value thereof. In the event of any such suspension, the
13
Company will 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 no longer remains in effect. For purposes of
this Section 11(a)(iii), the Current Value of each Adjustment Share will be
------------------
the Current Market Price per share of the Common Stock on the effective
date of the Section 11(a)(ii) Event and the per share or per unit value of
any Common Stock Equivalent will be deemed to equal the Current Market
Price per share of the Common Stock on such date.
(b) In case the Company fixes a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within 45 calendar
days after such record date) Preferred Stock (or shares having the same
rights, privileges and preferences as the Preferred Stock) ("equivalent
preferred stock") (or securities convertible into Preferred Stock or
equivalent preferred stock) at a price per Preferred Stock or 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 Preferred Stock on such record date,
the Purchase Price to be in effect after such record date will be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, (i) the numerator of which is the number of
Preferred Stock outstanding on such record date, plus the number of
Preferred Stock that the aggregate offering price of the total number of
Preferred Stock (and/or equivalent preferred stock) so to be offered (or
the aggregate initial conversion price of the convertible securities so to
be offered) would purchase at such Current Market Price, and (ii) the
denominator of which is the number of Preferred Stock outstanding on such
record date, plus the number of additional 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). In the event that the number of Preferred Stock issuable
under the terms of a convertible security, or the conversion or exercise
price of such convertible security, changes after the initial issuance of
such convertible security, an adjustment will be made to the Purchase Price
that conforms with the adjustment set forth in this Section 11(b). In case
-------------
such subscription price may be paid by delivery of consideration part or
all of which may be in a form other than cash, the value of such
consideration will be as conclusively determined in good faith by the Board
of Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent and will be binding on the Rights
Agent and the holders of the Rights. Preferred Stock owned by or held for
the account of the Company will be deemed not to be outstanding for the
purpose of any such computation. Such adjustment will be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price will be adjusted to be the
Purchase Price that would then be in effect if such record date had not
been fixed.
(c) In case the Company fixes 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 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)), the Purchase Price to be in effect after such record date will be
------
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, (i) the numerator of which is the Current
Market Price of Preferred Stock on such record date, less the fair market
14
value (as conclusively determined in good faith by the Board of Directors
of the Company, whose determination will be described in a statement filed
with the Rights Agent) of the portion of the cash, assets, or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Preferred Share and (ii) the denominator of
which is such Current Market Price per share of the Preferred Stock. Such
adjustments will be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the Purchase Price
will be adjusted to be the Purchase Price that would have been in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"Current Market Price" per share of the Common Stock on any date will be
deemed to be the average of the daily closing prices per share of such
Common Stock for the 30 consecutive Trading Days immediately prior to 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 shares of such Common Stock (other than the Rights), or
(ii) any subdivision, combination or reclassification of such Common Stock,
and the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification has not occurred
prior to the commencement of the requisite 30 Trading Day period, as set
forth above, then, and in each such case, the Current Market Price will be
properly adjusted to take into account ex-dividend trading. The closing
price for each day will 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 Common
Stock is 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 Common Stock is listed or admitted to trading or, if the
Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on
any such date the Common Stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors. If on any such date no market maker is making a market in the
Common Stock, the fair value of such shares on such date as determined in
good faith by the Board of Directors will be used. If the Common Stock is
not publicly held or not so listed or traded, Current Market Price per
share will mean the fair value per share as determined in good faith by the
Board of Directors, the determination of which will be described in a
statement filed with the Rights Agent and will be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the "Current
Market Price" per share of 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 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 Preferred Stock shall be conclusively
15
deemed to be an amount equal to one hundred (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalization 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, "Current Market Price" per share of
the Preferred Stock shall mean the fair value per share as determined in
good faith by the Board of Directors, which determination shall be
described in a statement filed with the Rights Agent. For all purposes of
this Agreement, the "Current Market Price" of one one-hundredth of a share
of Preferred Stock shall be equal to the "Current Market Price" of one
share of Preferred Stock divided by one hundred (subject to adjustment as
provided above). The "Current Market Price" per share of Equivalent
Preferred Stock shall be determined in the same manner as set forth above
for the Preferred Stock.
(e) Anything in this Agreement to the contrary notwithstanding, no
adjustment in the Purchase Price will be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments that by reason of
this Section 11(e) are not required to be made will be carried forward and
-------------
taken into account in any subsequent adjustment. All calculations under
this Section 11 will be made to the nearest cent or to the nearest one
-----------
one-millionth of a share of Preferred Stock or one ten-thousandth of any
other share or security as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11
------------- ----------
will be made no later than the earlier of (i) three (3) years from the date
of the transaction that mandates such adjustment or (ii) the Final
Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
-------
11(a)(ii) or Section 13(a), the holder of any Right thereafter exercised
--------- --------------
becomes entitled to receive any shares of capital stock other than
Preferred Stock, then the number of such other shares so receivable upon
exercise of any Right and the Purchase Price will 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), (m), and (p) and
------------------------------------------------------------ ---
the provisions of Sections 7, 9, 10, 13, and 14 with respect to the
-------------------------- --
Preferred Stock will 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 under this Agreement will evidence
the right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a share of Preferred Stock purchasable from time to time
under this Agreement, all subject to further adjustment as provided in this
Agreement.
(h) Unless the Company has 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), each Right outstanding
-------------- ---
immediately prior to the making of such adjustment will thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a share of Preferred Stock (calculated to the nearest one
one-millionth of a share of Preferred Stock) obtained by (i) multiplying
(x) the number of one one-hundredths of a share of Preferred Stock 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
16
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such an adjustment in the number of Rights will be
exercisable for the number of one one-hundredths 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 will become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company will 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, will 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 will,
-------------
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, the additional Rights to which such holders are
-----------
entitled as a result of such adjustment, or, at the option of the Company,
will 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 are
entitled after such adjustment. Rights Certificates so to be distributed
will be issued, executed, and countersigned in the manner provided for in
this Agreement (and may bear, at the option of the Company, the adjusted
Purchase Price) and will 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-hundredths of a share of Preferred Stock, the
Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-hundredths of a share of Preferred
Stock and the number of one one-hundredths of a share of Preferred Stock
that were expressed in the initial Rights Certificates issued under this
Agreement.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the
number of one one-hundredths of a share of Preferred Stock, the Company
will take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully
paid and nonassessable shares of Preferred Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 requires 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 shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock and other capital stock or securities
17
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 will deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
----------
the Company will 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, in its good faith judgment, the Board of Directors
of the Company determines it 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 share of Preferred Stock or
securities that by their terms are convertible into or exchangeable for
Preferred Stock, (iv) stock dividends, or (v) issuance of rights, options,
or warrants referred to in this Section 11, hereafter made by the Company
----------
to holders of its Preferred Stock will not be taxable to such stockholders.
(n) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27, take
---------- -----------
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded
by the Rights.
(o) Notwithstanding anything in this Agreement to the contrary, in
the event that the Company at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declares a dividend
on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivides the outstanding shares of Common Stock, or (iii)
combines 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, will be appropriately and proportionately adjusted so
that the number of Rights thereafter associated with each share of Common
Stock following any such event will 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 is the
total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which is the total number of
shares of Common Stock outstanding immediately following the occurrence of
such event.
(p) In the event that the Rights become exercisable following a
Section 11(a)(ii) Event, the Company, by action of the Board of Directors,
may permit the Rights, subject to Section 7(e), to be exercised for 50% of
------------
the shares of Common Stock (or cash or other securities or assets to be
substituted for the Adjustment Shares pursuant to Section 11(a)(iii)) that
-------------------
would otherwise be purchasable under Section 11(p) in consideration of the
-------------
surrender to the Company of the Rights so exercised and without other
payment of the Purchase Price. Rights exercised under this Section 11(p)
-------------
will be deemed to have been exercised in full and will be cancelled.
18
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or Section 13, the
---------- ----------
Company will (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Stock,
and the Preferred Stock, a copy of such certificate, and (c) mail 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. The Rights Agent will be fully protected
----------
in relying on any such certificate and on any adjustment contained in such
certificate.
19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
----------------------------------------------------------
Earning Power.
-------------
20
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (i) the Company consolidates with, or merges with,
or into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(n)), and the Company is not the
--------------
continuing or surviving Person of such consolidation or merger; (ii) any
Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(n)) consolidates with, or merges with, or into,
---------------
the Company, and the Company is 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 are changed
into or exchanged for stock or other securities of any other Person or cash
or any other property; or (iii) the Company sells or otherwise transfers
(or one or more of its Subsidiaries sells or otherwise transfers), 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 Person or Persons (other than
the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(n)), then, and in each such case
--------------
(except as contemplated by Section 13(d)), proper provision will be made so
--------------
that (A) each holder of a Right, except as provided in Section 7(e) or
-----------
Section 13(d), will thereafter have the right to receive, upon the exercise
-------------
of such Right at the then current Purchase Price multiplied times the
number of one one-hundredths of a share of Preferred Stock for which a
Right is then exercisable, in accordance with the terms of this Agreement
and in lieu of one one-hundredth of a share of Preferred Stock, such number
of validly authorized and issued, fully paid, nonassessable and freely
tradable shares of Common Stock of the Principal Party (as defined below),
not subject to any liens, encumbrances, preemptive rights, rights of first
refusal or other adverse claims, as are equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is 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 such one one-hundredths of a
Preferred Share 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, following the first occurrence of a Section 13 Event, will
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
Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (B) such Principal Party will thereafter be liable for,
and will assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement; (C) the term
"Company" will thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 will apply
----------
only to such Principal Party following the first occurrence of a Section 13
Event; (D) such Principal Party will 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 of this Agreement will
thereafter be applicable, as nearly as may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights; and
(E) the provisions of Section 11(a)(ii) will be of no effect following the
-----------------
first occurrence of any Section 13 Event.
(b) "Principal Party" means
21
(i) in the case of any transaction described in Clause (i) or
-------------
(ii) of the first sentence of Section 13(a), the Person that is the
---- -------------
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in Clause (iii)
------------
of the first sentence of Section 13(a), the Person that is the party
-------------
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (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" will
refer to such other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, with Common Stock that is
and has been so registered, "Principal Party" will refer to whichever of
such Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company will not consummate any such consolidation,
merger, sale or transfer unless the Principal Party has a sufficient number
of authorized shares of its Common Stock that have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and
----------
such Principal Party have executed and delivered to the Rights Agent a
supplemental agreement providing for the Principal Party to assume and
perform the terms set forth in Sections 13(a) and (b) and further providing
-------------- ---
that, as soon as practicable after the date of any consolidation, merger or
transfer mentioned in Section 13(a), the Principal Party will
--------------
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date; and
(ii) will 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.
(d) In the event that the Rights become exercisable under Section
-------
13(a), the Company, by action of the Board of Directors, may agree with the
-----
Principal Party that the Principal Party may permit the Rights to be
exercised for 50% of the Common Stock of the Principal Party that would
otherwise be purchasable under Section 13(a), in consideration of the
--------------
surrender to the Principal Party, as the successor to the Company under
Section 13(a)(ii), of the Rights so exercised and without other payment of
------------------
the Purchase Price. Rights exercised under this Section 13(d) will be
-------------
deemed to have been exercised in full and cancelled.
22
(e) The provisions of this Section 13 will similarly apply to
-----------
successive mergers, consolidations and sales or other transfers. In the
event that a Section 13 Event occurs at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore been
exercised will thereafter become exercisable in the manner described in
Section 13(a).
--------------
Section 14. Fractional Rights and Fractional Shares.
-------------------------------------------
(a) The Company will not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(o), or to
-------------
distribute Rights Certificates that evidence fractional Rights. In lieu of
such fractional Rights, there will be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a),
-------------
the current market value of a whole Right will be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of
the Rights for any day will be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the American Stock Exchange or, if the Rights are
not listed or admitted to trading on the American Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. 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 conclusively determined in good faith by the Board
of Directors of the Company will be used.
(b) The Company will not be required to issue fractions of shares
of Preferred Stock or other securities upon exercise of the Rights (other
than fractions of shares of Preferred Stock which are integral multiples of
one one-hundredth of a share) or to distribute certificates that evidence
fractional shares (other than fractions of shares of Preferred Stock which
are integral multiples of one one-hundredth of a share) of Preferred Stock.
In lieu of fractional shares of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as provided in this Agreement an amount in cash equal to the same
fraction of the Current Market Price of a share of Preferred Stock or other
securities of the Company as of the Trading Day immediately prior to the
date of such exercise, as determined pursuant to Section 11(d) hereof or in
-------------
the same manner as the closing price of a share of Preferred Stock shall be
determined pursuant to Section 11(d)(ii) hereof, (as the case may be).
------------------
23
(c) The holder of a Right, by the acceptance of the Rights,
expressly waives the right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement 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, on its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, its 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 will be entitled to specific performance of
the obligations under this Agreement and injunctive relief against actual or
threatened violations of the obligations under this Agreement of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
-----------------------------
accepting the Rights consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer,
and with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the
------------ ------------
Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated certificate
for Common Stock), is registered as the absolute owner of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Rights Certificates or the associated certificate for Common Stock made
by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, will 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 will have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however,
24
the Company will use its reasonable best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
-----------------------------------------------------
holder, as such, of any Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor will anything contained in this Agreement
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, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25), or to receive dividends or subscription rights, or
-----------
otherwise, until the Right or Rights evidenced by such Rights Certificate have
been exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent.
------------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties under this Agreement. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or
omitted to be done by the Rights Agent in connection with the acceptance
and administration of this Agreement, including, without limitation, the
costs and expenses of defending against any claim of liability. Anything to
the contrary notwithstanding, in no event shall the Rights Agent be liable
for special, indirect, consequential or incidental loss or damage of any
kind.
(b) The Rights Agent will be protected and will incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Preferred 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, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any Person into or with 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 is a party, or any corporation
succeeding to the corporate trust or stockholder services business of the
Rights Agent or any successor Rights Agent, will be the successor to the
Rights Agent under this Agreement without the execution or filing of any
25
paper or any further act on the part of any of the parties to this
Agreement; provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21.
-----------
In case at the time such successor Rights Agent succeeds to the agency
created by this Agreement, any of the Rights Certificates have been
countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
or in the name of the successor Rights Agent; and in all such cases such
Rights Certificates will 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 is changed
and at such time any of the Rights Certificates 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 have not 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
will have the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
------------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance of such Rights Certificates, will be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel will be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or
adverse person and the determination of "Current Market Price") be proved
or established by the Company prior to taking or suffering any action under
this Agreement, such fact or matter (unless other evidence in respect of
such fact or matter is specifically prescribed in this Agreement) may be
deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the Chief Executive Officer, the Chief Operating
Officer, the President or any Executive Vice President of the Company and
delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable under this Agreement only for
its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
26
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery of
this Agreement (except the due execution of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature); nor will it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor will it be responsible for any adjustment
required under the provisions of Section 11 or Section 13, 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 actual notice of any such adjustment); nor will it by any act under
this Agreement be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock (and/or other
securities) to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock (and/or other
securities) will, when so issued, be validly authorized or issued, fully
paid or nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this
Agreement from the Chairman of the Board, the Chief Executive Officer, the
Chief Operating Officer, the President, any Executive Vice President or the
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it will not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, contract with or lend
money to the Company, or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing in this Agreement will
preclude the Rights Agent from acting in any other capacity for the Company
or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers vested by this Agreement in it or perform any duty under this
Agreement either itself or by or through its attorneys or agents, and the
Rights Agent will 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, reasonable care was exercised in the selection and
continued employment of such Person.
(j) No provision of this Agreement will 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 under this Agreement or in the
exercise of its rights if there are reasonable grounds for believing that
27
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to Clause 1
or 2 of such certificate, the Rights Agent will not take any further action
with respect to such requested exercise of transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common Stock and/or Preferred Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and/or Preferred
Stock, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent resigns or is removed or
otherwise becomes incapable of acting, the Company will appoint a successor to
the Rights Agent. If the Company fails to make such appointment within a period
of 30 days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who will, with such
notice, submit such holder's Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, will be a
corporation organized and doing business under the laws of the United States or
a State of the United States, in good standing, that is authorized under such
laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$25,000,000. After appointment, the successor Rights Agent will 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, except that the
predecessor Rights Agent will deliver and transfer to the successor Rights Agent
any property at the time held by it under this Agreement 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 will file
notice of such appointment in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and/or Preferred Stock, and mail a notice of
such appointment 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 in such notice, will not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
------------------------------------
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, in its discretion, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number, kind or class of
shares or other securities or property purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock following the
28
Distribution Date and prior to the Expiration Date, the Company (a) will, 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, granted or awarded as
of the Distribution Date, or upon the exercise, conversion or exchange of
securities issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (y) no such Rights Certificate
will be issued if, and to the extent that, the Company is 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 Certificate would
be issued, and (z) no such Rights Certificate will be issued if, and to the
extent that, appropriate adjustment has otherwise been made in lieu of the
issuance of such Rights Certificate.
Section 23. Redemption.
----------
(a) The Company may, at its option, by action of the Board of
Directors, at any time prior to the earlier of (i) the close of business on
the tenth 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 day following the Record Date, or (ii) the Final
Expiration Date, redeem all but not fewer than all the then outstanding
Rights at the Redemption Price (the date of such redemption, the
"Redemption Date").
(b) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights, evidence of which has been filed with the
Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter
of the holders of Rights will be to receive the Redemption Price. Promptly
after the action of the Board of Directors ordering the redemption of the
Rights, the Company will give notice of such redemption to the Rights Agent
and to the holders of the then outstanding Rights by mailing such notice to
all such holders at each holder's last address as it appears 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. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Any notice that is mailed in the manner in
this Agreement provided will be deemed given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail, or
any defect in the notice, to any particular holder of Rights shall not
affect the sufficiency of the notice to other holders of Rights.
Section 24. Exchange.
--------
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which will not include
Rights that have become void pursuant to the provisions of Section 7(e)
------------
hereof) for shares of Common Stock, each Right being exchangeable for one
share of Common Stock, appropriately adjusted to reflect any transaction
specified in Section 11(a)(i) occurring after the Record Date (such number
----------------
of shares of Common Stock issuable in exchange for one Right being referred
to herein as the "Exchange Shares"). Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any of its
29
Subsidiaries or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such Plan), together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company 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 the Exchange Shares. 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 that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to 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 Preferred Stock (or equivalent preferred stock)
for Exchange Shares, at the initial rate of one one-hundredth of a share of
Preferred Stock (or equivalent preferred stock) for each Common Stock, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to the terms thereof, so that the fraction of a
share of Preferred Stock delivered in lieu of each Common Stock will have
the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient Common Stock
or Preferred Stock 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
Common Stock or Preferred Stock for issuance upon exchange of the Rights or
shall take such other action specified in Section 11(a)(iii) hereof.
(e) The Company shall not be required to issue fractions of shares
of Common Stock to distribute certificates which evidence fractional 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 Price of a whole share of Common
Stock. For the purposes of this subsection (d), the Current Market Value of
a share of Common Stock shall be determined pursuant to Section 11(d)(i)
----------------
hereof as of the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
------------
30
Section 25. Notice of Certain Events.
---------------------------
(a) In case the Company proposes, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of its Preferred Stock or to make any other distribution to the
holders of its Preferred Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of its Preferred Stock rights or warrants to subscribe
for or to purchase any additional Preferred Stock or shares of 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 shares), or (iv) to effect
any consolidation or merger into, or with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section
-------
11(n)), 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
transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(n)), or (v) to effect the liquidation, dissolution or winding up
-------------- ---
of the Company, or (vi) to declare or pay any dividend on the Common Stock
----
payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock) then, in each such case, the Company
will give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, a notice of such proposed action, which
----------
will 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 Common Stock, and/or Preferred
Stock, if any such date is to be fixed, and such notice will be so given in
the case of any action covered by Clause (i) or (ii) above at least 20 days
prior to the record date for determining holders of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least
20 days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of the shares of Common Stock
and/or Preferred Stock, whichever is the earlier.
(b) In case of a Triggering Event, then (i) the Company will as
soon as practicable give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26, a notice of the
-----------
occurrence of such event, which will specify the event and the consequences
of the event to holders of Rights under this Agreement, and (ii) all
references in Section 25(a) to Preferred Stock will be deemed thereafter to
-------------
refer to other securities, if appropriate.
Section 26. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company will 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:
Boots & Xxxxx International Well Control, Inc.
000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
31
Attention: Chief Executive Officer
with a copy to:
Xxxxxxxx & Knight LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx XX
Subject to the provisions of Section 21, any notice or demand authorized by
----------
this Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent will 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:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
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 (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) will be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplement and Amendments. At any time prior to the
---------------------------
Distribution Date and subject to the last sentence of this Section 27, the
----------
Company may by action of its Board of Directors, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Agreement
(including, without limitation, the date upon which the Distribution Date shall
occur, the time during which the Rights may be redeemed pursuant to Section 23
----------
or any provision of the Certificate of Designations) in any manner without the
approval of any holder of the Rights. From and after the Distribution Date and
subject to applicable law, the Company may by action of its Board of Directors,
and the Rights Agent shall if the Company so directs, from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order (i) to cure any ambiguity or to correct or supplement any
provision contained in this Agreement which may be defective or inconsistent
with any other provision of this Agreement or (ii) to make any other provisions
in regard to matters or questions arising hereunder which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of the Rights or Right Certificates (other than an Acquiring Person or
any Affiliate or Associate of an Acquiring Person). Any supplement or amendment
adopted during any period after any Person has become an Acquiring Person but
prior to the Distribution Date shall be null and void unless such supplement or
amendment could have been adopted under the preceding sentence from and after
the Distribution Date. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent shall execute
----------
such supplement or amendment; provided, however, that the Rights Agent may, but
shall not be obligated to, enter into any such supplement or amendment which
32
affects its own rights, duties or immunities under this Agreement. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of the Common Stock of the Company.
In addition, notwithstanding anything to the contrary contained in this
Agreement, no supplement or amendment to this Agreement shall be made which (i)
reduces the Redemption Price (except as required hereunder by appropriate
adjustment to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement) or (ii) provides for an earlier
Final Expiration Date.
Section 28. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent will bind and
inure to the benefit of their respective successors and assigns under this
Agreement.
Section 29. Determinations and Actions by the Board of Directors, etc.
---------------------------------------------------------
The Board of Directors will have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (a) interpret the provisions of this Agreement, and (b) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of Clause (Y) below,
all omissions with respect to the foregoing) that are done or made by the Board
of Directors in good faith, will (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board of Directors to any liability to the holders of the
Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement will
--------------------------
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, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; and this Agreement will
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, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement will remain in
full force and effect and will in no way be affected, impaired or invalidated.
Section 32. GOVERNING LAW. THIS AGREEMENT, EACH RIGHT, AND EACH RIGHTS
-------------
CERTIFICATE ISSUED UNDER THIS AGREEMENT WILL BE DEEMED TO BE A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED HOWEVER, THAT ALL
PROVISIONS REGARDING THE RIGHTS, DUTIES AND OBLIGATIONS OF THE RIGHTS AGENT
33
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
Section 33. Counterparts. This Agreement may be executed in any number
------------
of counterparts and each of such counterparts will for all purposes be deemed to
be an original, and all such counterparts will together constitute but one and
the same instrument.
Section 34. Interpretation. Descriptive headings of the several
--------------
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions of this
Agreement. References in this Agreement to Sections and Exhibits are references
to the Sections of and Exhibits to this Agreement unless the context requires
otherwise. In this Agreement, the word "or" is not exclusive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BOOTS & XXXXX INTERNATIONAL WELL CONTROL, INC.
By:
-----------------------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-----------------------------------------
-----------------------------------------
-----------------------------------------
34
Table of Contents
Section 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. . . . . . . . . . . . . . . . . . . . . 7
Section 5. Countersignature and Registration. . . . . . . . . . . . . . . . . . 7
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost, or Stolen Rights Certificates. . . . . . 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. . . . 8
Section 8. Cancellation and Destruction of Rights Certificates. . . . . . . . . 10
Section 9. Reservation and Availability of Capital Stock. . . . . . . . . . . . 10
Section 10. Preferred Stock Record Date. . . . . . . . . . . . . . . . . . . . . 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . 19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 20
Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . . . . . . 23
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 16. Agreement of Rights Holders. . . . . . . . . . . . . . . . . . . . . 24
Section 17. Rights Certificate Holder Not Deemed a Stockholder . . . . . . . . . 25
Section 18. Concerning the Rights Agent. . . . . . . . . . . . . . . . . . . . . 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent. . . . . . 25
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 26
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 28
Section 22. Issuance of New Rights Certificates. . . . . . . . . . . . . . . . . 28
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . 31
Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 27. Supplement and Amendments. . . . . . . . . . . . . . . . . . . . . . 32
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 29. Determinations and Actions by the Board of Directors, etc. . . . . . 33
Section 30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . 33
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 32. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 34. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Exhibit A Form of Rights Certificate
Exhibit B Form of Summary of Rights
Exhibit C Certificate of Designation
i
