EXHIBIT 4.2
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MATADOR PETROLEUM CORPORATION
AND
X. X. XXXXXXX & SONS, INC.
Rights Agent
RIGHTS AGREEMENT
Dated as of May 17, 2001
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TABLE OF CONTENTS
Section 1. CERTAIN DEFINITIONS............................................................................. 1
Section 2. APPOINTMENT OF RIGHTS AGENT..................................................................... 4
Section 3. ISSUE OF RIGHT CERTIFICATES..................................................................... 4
Section 4. FORM OF RIGHT CERTIFICATES...................................................................... 5
Section 5. COUNTERSIGNATURE AND REGISTRATION............................................................... 5
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED,
LOST OR STOLEN RIGHT CERTIFICATES............................................................... 6
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS................................... 6
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.............................................. 7
Section 9. AVAILABILITY OF COMMON SHARES................................................................... 8
Section 10. COMMON SHARES RECORD DATE....................................................................... 8
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS.............................. 9
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES...................................... 14
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER............................ 15
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES......................................................... 16
Section 15. RIGHTS OF ACTION................................................................................ 17
Section 16. AGREEMENT OF RIGHT HOLDERS...................................................................... 17
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER............................................... 17
Section 18. CONCERNING THE RIGHTS AGENT..................................................................... 18
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT....................................... 18
Section 20. DUTIES OF RIGHTS AGENT.......................................................................... 18
Section 21. CHANGE OF RIGHTS AGENT.......................................................................... 20
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES.............................................................. 20
(i)
Section 23. REDEMPTION...................................................................................... 21
Section 24. EXCHANGE........................................................................................ 21
Section 25. NOTICE OF CERTAIN EVENTS........................................................................ 22
Section 26. NOTICES......................................................................................... 22
Section 27. SUPPLEMENTS AND AMENDMENTS...................................................................... 23
Section 28. SUCCESSORS...................................................................................... 23
Section 29. BENEFITS OF THIS AGREEMENT...................................................................... 23
Section 30. SEVERABILITY.................................................................................... 24
Section 31. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS............................................ 24
Section 32. GOVERNING LAW................................................................................... 24
Section 33. COUNTERPARTS.................................................................................... 24
Section 34. DESCRIPTIVE HEADINGS............................................................................ 24
Exhibit A - Form of Right Certificate...................................................................... A-1
Exhibit B - Summary of Rights to Purchase Common Shares.................................................... B-1
(ii)
RIGHTS AGREEMENT
This Rights Agreement, dated as of May 17, 2001 (this "AGREEMENT"),
is between Matador Petroleum Corporation, a Texas corporation (the "Company"),
and X. X. Xxxxxxx & Sons, Inc. (the "RIGHTS AGENT").
The Board of Directors of the Company has authorized and declared a
dividend of one Common Share (as hereinafter defined) purchase right (a "RIGHT")
for each Common Share of the Company outstanding on May 23, 2001 (the "RECORD
DATE"), each Right representing the right to purchase one Common Share, upon the
terms and subject to the conditions herein set forth, and has further authorized
and directed the issuance of one Right with respect to each Common Share of the
Company that shall become outstanding between the Record Date and the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms (in addition to those defined above) have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or that, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
then outstanding, but shall not include the Company, any wholly owned Subsidiary
(as such term is hereinafter defined) of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company, or any Person holding Common
Shares for or pursuant to the terms of any such plan to the extent, and only to
the extent, of the Common Shares so held. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company that, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the Common Shares then outstanding; PROVIDED, HOWEVER, that if
a Person becomes the Beneficial Owner of 15% or more of the Common Shares then
outstanding by reason of share acquisitions by the Company and shall, after such
share acquisitions by the Company, become the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Requisite Disinterested Directors (as such
term is hereinafter defined) of the Company determine in good faith that a
Person that would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement. Notwithstanding any other provision of this Agreement, any Person who
would otherwise already be an Acquiring Person on the date of this Agreement
shall not be deemed an Acquiring Person, and no Shares Acquisition Date shall be
deemed to have occurred, unless after the date hereof such Person and/or such
Person's Affiliates or Associates and/or any member of a Group of which such
Person or such Person's Affiliates or Associates is a part become the Beneficial
Owner of at least one additional Common Share (other than by reason of a stock
dividend, stock split or other corporate action effected by the Company) without
the approval of the Requisite Disinterested Directors not later than ten (10)
days after any of the Requisite Disinterested Directors first become aware that
such Person, Affiliate, Associate or Group member has become the Beneficial
Owner of such additional Common Share(s).
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing, but excluding customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange;
(iii) that such Person or any of such Person's Affiliates
or Associates has the right to vote pursuant to any agreement,
arrangement or understanding (whether or not in writing); PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, any security if the agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or
consent solicitation (which, if the Company is an Exchange Act -
reporting Person, shall mean a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act) and (B) is not also
then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report) (or, if the Company is not an Exchange
Act - reporting Person, such agreement, arrangement or understanding
that would not also be then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report) if the Company
were an Exchange Act - reporting Person); or
(iv) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(c) (iii)) or disposing of any securities of the Company.
Notwithstanding the foregoing, any securities that are owned or held by the
Company, by any Subsidiary of the Company, or by any employee benefit plan of
the Company or of any Subsidiary of the Company, and any securities that are
owned or held by any Person pursuant to the terms of any such plan, shall not be
deemed to be beneficially owned by any other Person and no other Person shall be
deemed to be the Beneficial Owner of such securities to the extent, and only to
the extent, of the securities so held.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Texas or the
State of New York are authorized or obligated by law or executive order to
close.
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(e) "close of business" on any given date shall mean 5:00
p.m., Dallas, Texas time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 p.m., Dallas, Texas time, on the next
succeeding Business Day.
(f) "Common Shares" when used with reference to the Company
(specifically or in context) shall mean the shares of common stock, par value
$.10 per share, of the Company. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock (or equity interest)
with the greatest voting power of such other Person or, if such other Person is
a Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(i) "Group" shall have the meaning ascribed to such term in
Rule 13d-5 under the Exchange Act as in effect on the date of this Agreement.
(j) "Person" shall mean any individual, firm, corporation,
incorporated or unincorporated association, limited liability company,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(k) "Purchase Price" shall have the meaning set forth in
Section 4 hereof, as the same may be adjusted from time to time in accordance
with the terms of this Agreement.
(l) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(m) "Requisite Disinterested Directors" shall mean, for
purposes of determining if an Acquiring Person exists (or would exist under the
last sentence of Section 1(a) hereof but for the approval by the Requisite
Disinterested Directors), a majority of the Board of Directors of the Company
present and voting other than any director of the Company employed or otherwise
in any way compensated by, or serving at the direction or as the representative
of, or otherwise having any financial or other material relationship with, the
Acquiring Person or any of its Affiliates or Associates or any member of any
Group of which the Acquiring Person or any of its Affiliates or Associates is a
part.
(n) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such, or such earlier date as a majority of the Board of Directors shall become
aware of the existence of the Acquiring Person; PROVIDED THAT, if such Person is
determined not to have become an Acquiring Person pursuant to the last sentence
of Section 1(a), then no Shares Acquisition Date shall be deemed to have
occurred.
(o) "Subsidiary" of any Person shall mean any corporation,
incorporated or unincorporated association, limited liability company,
partnership or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
such Person.
(p) "Unocal Agreement" shall mean the Stock Purchase Agreement
between Matador Petroleum Corporation and Union Oil Company of California dated
January 20, 1998.
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Certain additional terms used wholly within a subsequent Section of
this Agreement shall have the meaning given them in the relevant Section of this
Agreement for purposes of such Section.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares of the Company) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier (the earlier of such dates being herein
referred to as the "DISTRIBUTION DATE") of (i) the close of business on the
tenth Business Day after the Shares Acquisition Date and (ii) the close of
business on the tenth Business Day after the date of the commencement by any
Person (other than the Company, any wholly owned Subsidiary of the Company, any
employee benefit plan of the Company or of any wholly owned Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the terms of any
such plan to the extent such entity is so acting with the approval or consent of
the Company or as part of such entity's ordinary activities with respect to any
such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any wholly owned Subsidiary of the Company, any
employee benefit plan of the Company or of any wholly owned Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the terms of any
such plan to the extent such entity is so acting with the approval or consent of
the Company or as part of such entity's ordinary activities with respect to any
such plan) to commence, a tender or exchange offer the consummation of which
would result in any Person becoming the Beneficial Owner of 15% or more of the
Common Shares then outstanding, including any such date that is after the date
of this Agreement and prior to the issuance of the Rights, (x) the Rights will
be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares of
the Company. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first-class, insured, postage prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit A hereto (a "RIGHT CERTIFICATE"), evidencing
one Right for each Common Share of the Company so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Common Shares, in
substantially the form of Exhibit B hereto (the "SUMMARY OF RIGHTS"), by
first-class, postage prepaid mail, to each record holder of Common Shares as of
the close of business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common Shares of
the Company outstanding as of the Record Date, until the Distribution Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of the Redemption
Date and the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
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(c) Certificates for Common Shares that become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
Matador Petroleum Corporation and X. X. Xxxxxxx & Sons, Inc.
dated as of May 17, 2001 (the "RIGHTS AGREEMENT"), the
terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive
offices of Matador Petroleum Corporation. Under certain
circumstances, as set forth in the Rights Agreement, the
Rights described therein will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Matador Petroleum Corporation will mail to the
holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. As
described in the Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person (as those terms are defined in
the Rights Agreement) shall become null and void. The Rights
shall not be exercisable by a holder in any jurisdiction where
the requisite qualification to the issuance to such holder of
the Rights, or the exercise by such holder of the Rights in
such jurisdiction, shall not have been obtained or obtainable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares that are no
longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase Common Shares and of assignment to be printed on
the reverse thereof) shall be in substantially the form of Exhibit A hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of Common Shares as shall be set forth
therein at the price per Common Share set forth therein (the "PURCHASE PRICE"),
but the number of such Common Shares and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board of
Directors, its Chief Executive Officer, President or any Vice President, either
manually or by facsimile signature, shall have affixed thereto the Company's
seal or a facsimile thereof, and shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless countersigned. In case any officer of
the Company who
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shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right 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
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at the
date of the execution of this Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office or offices, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Section 14 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of business on the
earlier of the Redemption Date and the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Common Shares as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent and shall endorse and surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall countersign and
deliver to the person entitled thereto a Right Certificate or Right
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
Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time, subject to the last sentence of Section 23(a)
hereof, after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal office of
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the Rights Agent, together with payment of the Purchase Price for each Common
Share as to which the Rights are exercised, at or prior to the earliest of
(i) the close of business on May 16, 2011 (the "FINAL EXPIRATION DATE"), (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof
(the "REDEMPTION DATE"), and (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each Common Share pursuant to the
exercise of a Right shall initially be $275, shall be subject to adjustment from
time to time as provided in Sections 11 and 13 hereof, and shall be payable in
lawful money of the United States of America in accordance with paragraph (c)
below.
(c) Subject to the Company's rights under Section 11(a)(iii)
hereof, upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased (plus an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof) by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Common Shares
certificates for the number of Common Shares to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, or the amount of cash, property or other securities to be paid or
issued in lieu of the issuance of Common Shares in accordance with Section
11(a)(iii) hereof, (iii) after receipt of such certificates, cause the same to
be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt, deliver such cash, property or
other securities to or upon the order of the registered holder of such Right
Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed a certificate contained in
the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any Right Certificate representing Rights purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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Section 9. AVAILABILITY OF COMMON SHARES.
(a) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Common Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
Common Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(b) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which are payable in respect of the issuance or delivery of the Right
Certificates or of any Common Shares (or other securities that may become or be
issuable under the terms of this Agreement) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax that may be
payable in respect of any transfer or delivery of Right Certificates to a Person
other than, or the issuance or delivery of certificates for the Common Shares
(or other securities which may become or be issuable under the terms of this
Agreement) in a name other than that of, the registered holder of the Right
Certificates evidencing Rights surrendered for transfer, delivery or exercise or
to issue or to deliver any certificates for Common Shares (or other securities
that may become or be issuable under the terms of this Agreement) upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificates at the time of surrender)
or until it has been established to the Company's reasonable satisfaction that
no such tax is due.
(c) The Company covenants and agrees that, if the Common
Shares issuable and deliverable upon the exercise of Rights become listed on any
national securities exchange (and for so long as the Common Shares are so
listed), the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all Shares reserved for issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
(d) The Company shall (i) prepare and file, as soon as
possible following the Distribution Date, a registration statement under the
Securities Act of 1933 (the "ACT") with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as possible 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 no longer required to do so
under the Act with respect to securities purchasable upon exercise of the
Rights. The Company will also take all such action as may be required or as is
appropriate under the securities or blue sky laws of such jurisdictions as may
be necessary or appropriate with respect to the securities purchasable upon the
exercise of the Rights. The Company may temporarily suspend, for a period not to
exceed 90 days following the Distribution Date, the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension of exercisability of Rights referred to in
this paragraph, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision in this Agreement to the contrary, the
Rights shall not be exercisable by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder of the Rights in such jurisdiction, shall not have been obtained or be
obtainable, or the exercise thereof shall not be permitted under applicable law
or a registration statement shall not have been declared effective.
Section 10. COMMON SHARES RECORD DATE. Each Person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the
8
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Common Shares
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Shares transfer
books of the Company are open.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number of Common Shares that the
holder of a Right Certificate is entitled to purchase on the exercise of the
Rights evidenced thereby, and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Shares
payable in Common Shares, (B) subdivide the outstanding Common Shares,
(C) combine the outstanding Common Shares into a smaller number of
Common Shares or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or at the effective
date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock that, if such Right had been exercised
immediately prior to such date and at a time when the Common Shares
transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; PROVIDED,
HOWEVER, that in no event shall the consideration to be paid on
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable on exercise of one
Right. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof. The adjustments provided for
in this Section 11(a)(i) shall be made successively whenever any
such event occurs.
(ii) Subject to Section 23 and 24 of this Agreement,
in the event any Person shall become an Acquiring Person, proper
provision shall be made so that each holder of a Right shall thereafter
have a right to receive, upon exercise thereof in accordance with
Section 7 hereof at a price equal to the then current Purchase Price
multiplied by the number of Common Shares for which a Right is then
exercisable, in accordance with the terms of this Agreement, such
number of Common Shares as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of Common
Shares for which a Right is then exercisable and dividing that product
by (B) 50% of the then current per share market price of the Company's
Common Shares (determined pursuant to Section 11(d) hereof) on the date
such Person became an Acquiring Person (such resulting number of
shares, the "ADJUSTMENT SHARES"). Notwithstanding the foregoing or
anything in this Agreement to the contrary, from and after the time any
Person becomes an Acquiring Person, any Rights that are or were
acquired or beneficially owned by such Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be null and void
without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights,
whether under this Agreement (including the right to exercise such
Rights under any provision of this Agreement) or otherwise. No Right
Certificate shall be issued pursuant to Section 3 that
9
represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Right Certificate shall be issued
at any time upon the transfer of any Rights to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate delivered
to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be canceled.
(iii) In lieu of issuing Common Shares in accordance
with Section 11(a)(ii) hereof, the Company may, if the Board of
Directors of the Company determines that such action is necessary or
appropriate: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "CURRENT
VALUE") over (2) the Purchase Price (such excess, the "SPREAD") and (B)
with respect to each Right (subject to the provisions of Section
11(a)(ii) hereof), make adequate provision to substitute for the
Adjustment Shares, upon exercise of a Right in payment of the
applicable Purchase Price, cash, a reduction in the Purchase Price,
other equity securities of the Company (including, without limitation,
shares or units of shares, or preferred stock which the Board of
Directors has deemed to have the same value as the Common Shares (such
shares of preferred stock herein called "COMMON STOCK EQUIVALENTS")),
debt securities of the Company, other assets or any combination of the
foregoing, having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board of Directors
based upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors; PROVIDED, HOWEVER, if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) within 30 days following the later of (x) the
date on which any Person shall have become an Acquiring Person and (y)
the date on which the Company's right of redemption pursuant to Section
23(a) hereof expires (the later of (x) or (y) being referred to herein
as the "SECTION 11(a)(iii) TRIGGER DATE"), then the Company shall be
obligated to deliver, upon surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available, unless the Company has not obtained the
necessary shareholder or regulatory approval) and then, if necessary,
cash, which shares and cash would have an aggregate value equal to
the Spread. If the Board of Directors of the Company shall determine
in good faith that it is likely that sufficient additional Common
Stock could be authorized for issuance upon exercise in full of the
Rights or that any necessary regulatory approval for such issuance
will be obtained, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(iii) Trigger Date, in order that the Company
may seek shareholder approval for the authorization of such
additional shares or take action to obtain such regulatory approval
(such period, as it may be extended, the "SUBSTITUTION PERIOD"). To
the extent that the Company determines that some action need be
taken pursuant to the first or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section
11(a)(ii) hereof and the last sentence of this Section 11(a)(iii),
that such action shall apply uniformly to all outstanding Rights and
(y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any
required regulatory approval or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the current per share market price (as
determined pursuant to Section 11(d) hereof) of the Common Stock on
the Section 11(a)(iii) Trigger Date and the value of any "Common
Stock Equivalent" shall be deemed to have the same value as the
Common Stock on such date. The Board of Directors of the Company
10
may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock upon the exercise of the Rights among
holders of Rights pursuant to this Section 11(a)(iii).
(iv) Subject to subparagraph (iii) of this paragraph
(a), in the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with subparagraph (ii) of
this paragraph (a), the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon
exercise of the Rights or, if unable to do so, shall take action
permitted by subparagraph (iii) of this paragraph (a) in respect of
substitute consideration in order to satisfy fully its obligations to a
holder of Rights exercising such Rights as contemplated hereby.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares or securities convertible into
or exercisable for Common Shares at a price per Common Share (or having a
conversion or exercise price per share, if a security convertible into or
exercisable for Common Shares) less than the then current per share market price
of the Common Shares (as defined in Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common Shares which the
aggregate offering price of the total number of Common Shares so to be offered
(and/or the aggregate initial conversion or exercise price of the convertible or
exercisable securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of Common Shares
outstanding on such record date plus the number of additional Common Shares to
be offered for subscription or purchase (or into which the convertible or
exercisable securities so to be offered are initially convertible or
exercisable); PROVIDED, HOWEVER, that in no event shall be consideration to be
paid on exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable on exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Common Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price that would then be in effect
if such record date had not been fixed. The adjustments provided for in this
Section 11(b) shall be made successively whenever any such event occurs.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend paid out of earnings or
retained earnings or a dividend payable in Common Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market
price of the Common Shares on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one Common Share and the
denominator of which shall be such current per share market price of the Common
Shares; PROVIDED, HOWEVER, that in no event shall the consideration to be paid
on exercise of one Right be less than the
11
aggregate par value of the shares of capital stock of the Company issuable on
exercise of one Right. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not
so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed. The
adjustments provided for in this Section 11(c) shall be made successively
whenever any such event occurs.
(d) For the purpose of any computation hereunder, the "CURRENT
PER SHARE MARKET PRICE" of the Common Shares on any date shall be deemed to be
the average of the daily closing prices per share of such Common Shares for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; PROVIDED, HOWEVER, that in the event that the current per
share market price of the Common Shares is determined during a period following
the announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in Common Shares or securities
convertible into Common Shares, or (B) any subdivision, combination or
reclassification of the Common Shares and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of Common Shares taking
into account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the Nasdaq National Market or, if not so
listed, on the principal national securities exchange on which the Common Shares
are listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on either the Nasdaq National Market or any national
securities exchange, the last quoted sales price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use or, if on any such
date the Common Shares are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Board of Directors of the
Company. If the Common Shares are not publicly held or so listed or traded, and
no market maker is making, or has made during the relevant period, a market in
the Common Shares, "current per share market price" shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent. The term "Trading Day" shall mean a day on which the Nasdaq National
Market or the principal national securities exchange on which the Common Shares
are listed or admitted to trading is open for the transaction of business or,
if the Common Shares are not listed or admitted to trading on the Nasdaq
National Market or any national securities exchange, a Business Day.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; PROVIDED, HOWEVER, that any adjustments that by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
ten-thousandth interest in a Common Share. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction that
requires such adjustment or (ii) the date of the expiration of the right to
exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital
12
stock of the Company other than Common Shares, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of this Section 11 with respect to the Common
Shares and the provisions of Sections 7, 9, 10, 12, 13 and 14 with respect to
the Common Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), 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 shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Common Shares (calculated to the nearest one one-thousandth of a Common Share)
obtained by (i) multiplying (A) the number of Common Shares covered by a Right
immediately prior to such adjustment by (B) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price. The adjustments provided for in this Section
11(h) shall be made successively whenever any such event occurs.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of Common Shares purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one one-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election, if any, 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. Such record date
may be the date on which the Purchase Price is adjusted or any date thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Common Shares issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of Common Shares which were expressed in the
initial Right Certificates issued hereunder.
13
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Common
Shares issuable upon exercise of the Rights, the Company shall 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
Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the Common Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Common Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Company in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Common Shares, issuance wholly for cash of any Common Shares at less than the
current market price, issuance wholly for cash of Common Shares or securities
that by their terms are convertible into or exchangeable for Common Shares,
dividends on Common Shares payable in Common Shares or issuance of rights,
options or warrants referred to in Section 11(b) hereafter made by the Company
to holders of Common Shares shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a wholly owned Subsidiary of the Company in a transaction that complies
with Section 11(o) hereof), (ii) merge with or into any other Person (other than
a wholly owned Subsidiary of the Company in a transaction that complies with
Section 11(o) hereof), (iii) effect a share exchange with any other Person or
conversion of the Company into another entity (other than with a wholly owned
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), or (iv) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction or series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its wholly owned Subsidiaries in one or
more transactions, each of which complies with Section 11(o) hereof), if, at the
time of or immediately after such consolidation, merger, exchange, conversion or
sale, there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would materially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24 or
Section 27 hereof, take (or permit any Subsidiary to take) any action
if, at the time such action is taken, it is reasonably foreseeable that such
action will diminish in any material manner or otherwise eliminate the benefits
intended to be afforded by the Rights.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof.
14
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) If, following the Shares Acquisition Date, directly or
indirectly, (i) the Company shall consolidate with, merge with and into, or
effect a share exchange or conversion with or into any Person, (ii) any Person
shall merge with and into the Company or effect a share exchange or conversion
with or into the Company, the Company shall be the continuing or surviving
corporation in such transaction and, in connection with such transaction, all or
part of the Common Shares shall be changed into or exchanged for stock or other
securities of any Person (including the Company) or cash or any other property,
or (iii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more 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 one or more of its wholly owned Subsidiaries, then,
and in each such case, proper provision shall be made so that (i) each holder of
a Right (except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of Common Shares for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Common Shares, such number of validly authorized and issued, fully paid and
non-assessable Common Shares of the Principal Party (as defined in Section 13(b)
hereof) as shall equal the result obtained by (A) multiplying the then current
Purchase Price by the number of Common Shares for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per share
market price of the Common Shares of the Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such transaction; (ii) the
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such transaction, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company", as used in this Agreement, shall thereafter
be deemed to mean the Principal Party; and (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with this Agreement) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the Common Shares of the Principal Party thereafter deliverable upon the
exercise of the Rights. The Company shall not consummate any such transaction
unless prior thereto the Company and the Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement so providing and further
providing that, immediately after the date of any such transaction mentioned in
this paragraph (a) of this Section 13, the Principal Party at its own expense
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, will cause such registration statement to become effective as
soon as possible after such filing and will cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act) until no longer required under the Act with respect to securities
purchasable upon exercise of the Rights; and (ii) qualify or register the Rights
and the securities purchasable upon exercise of the Rights, and take all such
other action as may be required or as is appropriate, under the securities or
blue sky laws of such jurisdictions as may be necessary or appropriate. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements that, as
a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, exchanges, conversions, sales or other transfers.
(b) "Principal Party" shall mean
(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 Common Shares
15
are converted in such transaction, and if no securities are so issued,
the Person that is the other party to the transaction; and
(ii) in the case of any transaction described in
clause (iii) of the first sentence in 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 securities of such Person
are not at such time or have not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the securities of which are and
have been so registered, "Principal Party" shall mean such other Person; (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one other
Person, the securities of two or more of which are and have been so registered,
"Principal Party" shall mean whichever of such other Persons is the issuer of
the securities so registered having the greatest aggregate market value; and (3)
in case such Person is owned, directly or indirectly, by a joint venture formed
by two or more other Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a "Subsidiary" of both or all of such other Persons and the Principal
Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct and indirect interests in such Person bear
to the total of such interests.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates that evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would otherwise be issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the Nasdaq National Market or, if not so
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 the Nasdaq National Market or 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 determined in
good faith by the Board of Directors of the Company shall be used to determine
the current market value of a Right for purposes of this Section 14(a).
Notwithstanding anything in this Section 14(a) to the contrary, prior to the
Distribution Date, the current market value of the Right for purposes of this
Section 14(a) shall be deemed to be zero.
(b) The Company shall not be required to issue fractional
interests in Common Shares upon exercise of the Rights or to distribute
certificates which evidence fractional interests in Common Shares. In lieu
of fractional interests in Common Shares, the Company shall pay to the
registered holders of Right
16
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
Common Share. For purposes of this Section 14(b), the current market value of
a Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 and Section 20 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares of the Company); and any registered
holder of any Right Certificate (or, prior to the Distribution Date, of the
Common Shares of the Company), without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, prior to the Distribution Date, of
the Common Shares of the Company), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares of the
Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name any Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or
interests therein or any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 hereof), or to
17
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Common Shares 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, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case,
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned, and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
18
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board
of Directors, President, any Vice President, the Secretary or the Treasurer
of the Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for the Rights Agent's own negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including any Rights that become void pursuant to Section 11(a)(ii) hereof) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Sections 3, 11, 13, 23 or 24 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Common Shares will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board of Directors, Chief Executive Officer,
President, any Vice President, the Secretary or the Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily
19
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for
the Company (including, without limitation, acting as transfer agent for the
Common Shares of the Company) or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the States of New York or Texas (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of New York or the State of Texas), in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by the predecessor
Rights Agent hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares,
and mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right 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 or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
20
Section 23. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of
Directors of the Company pursuant to paragraph (b) of this Section 23 and shall
not be redeemed in any other manner. Notwithstanding anything contained or
implied in this Agreement to the contrary, the Rights shall not be exercisable
after the occurrence of an event described in Section 11(a)(ii) hereof until
such time as the Company's rights of redemption hereunder have expired.
(b) The Board of Directors of the Company may, at its option,
at any time prior to the close of business on the tenth Business Day after the
Shares Acquisition Date, redeem all, but not less than all, of the then
outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "REDEMPTION PRICE").
(c) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (b) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; PROVIDED, HOWEVER,
that the failure to give, or any defect in, any such notice shall not affect
the validity of such redemption. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights pursuant to
paragraph (b), the Company shall mail a notice of redemption to all the
holders of the then outstanding Rights at their addresses as they appear upon
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Shares of the
Company. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or any
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share of the
Company per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "EXCHANGE RATIO").
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24, and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly mail a notice
of any such exchange to all of the holders of such Rights at their addresses as
they appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the
21
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (d), the current market value of a whole Common Share
of the Company shall be the closing price of a Common Share of the Company (as
determined pursuant to the second and third sentences of Section 11(d) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of Common Shares or to make any
other distribution to the holders of Common Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of Common Shares rights
or warrants to subscribe for or to purchase any additional Common Shares or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of Common Shares (other than a reclassification
involving only the subdivision of outstanding Common Shares), (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action described by clause
(i) or (ii) above at least 10 days prior to the record date for determining
holders of the Common Shares for purposes of such action, and in the case of any
such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given
22
or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Matador Petroleum Corporation
Suite 158, Pecan Creek
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
X. X. Xxxxxxx & Sons, Inc.
0 Xxxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Attention: Director of Corporate Finance
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may (and the Rights
Agent shall at the direction of the Company) from time to time supplement or
amend this Agreement without the approval of any holders of Right Certificates
in order (i) at any time, to cure any ambiguity, (ii) at any time, to correct or
supplement any provision contained herein that may be defective or inconsistent
with any other provisions herein, (iii) prior to the Distribution Date, to
change or supplement any of the provisions hereof in any manner which the
Company may deem necessary or desirable (including, but without any limitation,
changing the percentage of ownership of Common Shares at which a Person becomes
an Acquiring Person, the Distribution Date, the time for redemption of Rights or
the time for, or limits on, amendment of this Agreement) or (iv) after the
Distribution Date, to change or supplement the provisions hereof in any manner
that the Company may deem necessary or desirable and that shall not adversely
affect the interests of the holders of the Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares of the Company) any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the
23
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares of the
Company).
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding the foregoing, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company,
determines in its good faith judgment that severing the invalid language from
this Agreement would materially and adversely affect the purpose and effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the Close of Business on the 10th day
following the date of such determination by the Board of Directors.
Section 31. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. For
all purposes of this Agreement, any calculation of the number of Common Shares
outstanding at a particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person is
the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights
and all other Persons, and (y) not subject the Board of Directors of the Company
to any liability to the holders of the Rights.
Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Texas and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: MATADOR PETROLEUM CORPORATION
By: /s/ C. Xxxxx Xxxxxxx By: /s/ Xxxxxx Xx. Xxxxx
----------------------------- -----------------------------
Attest: X. X. XXXXXXX & SONS, INC.
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxx Xxxx
----------------------------- -----------------------------
25
EXHIBIT A
FORM OF RIGHT CERTIFICATE
Certificate No. R ______ Rights
NOT EXERCISABLE AFTER MAY 16, 2011, OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
Matador Petroleum Corporation
This certifies that _____________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of May 17, 2001 (the "RIGHTS AGREEMENT"), between
Matador Petroleum Corporation, a Texas corporation (the "COMPANY"), and X. X.
Xxxxxxx & Sons, Inc. (the "RIGHTS AGENT"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to the close of business (as defined in the Rights
Agreement) on May 16, 2011, at the principal offices of the Rights Agent, or at
the offices of its successor as Rights Agent, one share of Common Stock, $.10
par value (the "COMMON SHARES"), of the Company, at a purchase price of $275 per
Common Share (the "PURCHASE PRICE"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of Common
Shares which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of May 23,
2001, based on the Common Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of Common Shares which may
be purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
interests in Common Shares as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
A-1
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right payable in cash, Common Shares or other consideration or (ii) may
be exchanged in whole or in part for Common Shares.
No fractional interests in Common Shares will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of May 17, 2001.
Attest: MATADOR PETROLEUM CORPORATION
By: By:
----------------------------- -----------------------------
Countersigned: X. X. XXXXXXX & SONS, INC.
By: By:
----------------------------- -----------------------------
A-2
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________ hereby sells, assigns and transfers
unto ____________________________________________ this Right Certificate,
(Please print name and address of transferee) together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
Xxxxx Xxxxxx Shareholder Services, as Attorney to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: , .
------------------ ---------
------------------------------
Signature
Signature Guarantee:
Signatures must be guaranteed by an "eligible guarantor institution"
(such as a bank, stockbroker, credit union or savings association) pursuant to
Rule 17Ad-15 of the Rules and Regulations of the Securities Exchange Act of
1934.
===============================================================================
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and that
after due inquiry and to the best of the knowledge of the undersigned, it did
not acquire the Rights evidenced by this Rights Certificate for any Person who
is, was or subsequently became an Acquiring Person or an Affiliate or Associate
of such Person.
------------------------------
Signature
===============================================================================
A-3
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE -- CONTINUED
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: Matador Petroleum Corporation
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Right Certificate to purchase the interests in Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such Common Shares be issued in the name of:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: , .
------------------------ ---------
------------------------------
Signature
Signature Guarantee:
Signatures must be guaranteed by an "eligible guarantor institution"
(such as a bank, stockbroker, credit union or savings association) pursuant to
Rule 17Ad-15 of the Rules and Regulations of the Securities Exchange Act of
1934.
A-4
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE -- CONTINUED
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and that
after due inquiry and to the best of the knowledge of the undersigned, it did
not acquire the Rights evidenced by this Rights Certificate for any Person who
is, was or subsequently became an Acquiring Person or an Affiliate or Associate
of such Person.
------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
A-5
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
On May 8, 2001, the Board of Directors of Matador Petroleum Corporation
(the "COMPANY") declared a dividend of one Common Share purchase right (a
"RIGHT") for each outstanding share of common stock, par value $.10 per share
(the "COMMON SHARES"), of the Company and authorized the issuance of one Right
for each Common Share that shall become outstanding between the Record Date and
the earlier of the Distribution Date (as hereinafter defined) or the final
expiration date of the Rights. The dividend is payable on May 23, 2001 (the
"RECORD DATE") to the shareholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one Common Share of the
Company at a price of $275 per share (the "PURCHASE PRICE"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "RIGHTS AGREEMENT") between the Company and X. X. Xxxxxxx & Sons,
Inc., as Rights Agent (the "RIGHTS AGENT").
Until the earlier to occur of (i) ten business days following a public
announcement that a person or group of affiliated or associated persons (an
"ACQUIRING PERSON") have acquired beneficial ownership of 15% or more of the
outstanding Common Shares and (ii) ten business days following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of 15% or more of such outstanding Common Shares (the earlier of such
dates being called the "DISTRIBUTION DATE"), the Rights will be evidenced, with
respect to any Common Share certificate outstanding as of the Record Date, by
such Common Share certificate together with a copy of this Summary of Rights
attached thereto. The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), new Common Share certificates issued after the Record
Date, upon transfer or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("RIGHT CERTIFICATES") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 16, 2001 (the "FINAL EXPIRATION DATE"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights,
options or warrants to subscribe for or purchase Common Shares at a price, or
securities convertible into or exercisable for common Shares with a conversion
or exercise price, less than the then current market price of the Common Shares
or (iii) upon the distribution to holders of the Common Shares of evidences of
indebtedness or assets (excluding regular
B-1
quarterly cash dividends paid out of earnings or retained earnings or
dividends payable in Common Shares) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
In the event, following the first date of the earlier of a public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such or a majority of the Board of Directors becoming aware of the
existence of an Acquiring Person (a "SHARES ACQUISITION DATE"), the Company is,
in effect, acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power is sold, proper provision
will be made so that each holder of a Right, other than Rights that were or are
beneficially owned by an Acquiring Person, will thereafter generally have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event any person becomes an Acquiring
Person, proper provision shall be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which will thereafter be
null and void for all purposes of the Rights Agreement and the holder thereof
shall thereafter have no rights with respect to such Rights, whether under the
Rights Agreement or otherwise), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right. Under some circumstances, in lieu of Common Shares,
other equity and debt securities, property, cash or combinations thereof,
including combinations with Common Shares, may be issued upon payment of the
exercise price if of equal value to the number of Common Shares for which the
Right is exercisable.
A shareholder of the Company who would otherwise have been deemed to
have become an Acquiring Person upon the effective date of the Rights Agreement
shall not be deemed to be an Acquiring Person unless such shareholder thereafter
directly or indirectly becomes the beneficial owner of at least one additional
Common Share without the approval of the Company's disinterested directors.
Under certain circumstances, after a Person has become an Acquiring
Person, the Board of Directors of the Company may exchange the Rights (other
than Rights that were or are beneficially owned by an Acquiring Person), in
whole or in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued, and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading day prior to the date of exercise.
At any time prior to the close of business on the tenth business day
after the Shares Acquisition Date, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per right (the
"REDEMPTION PRICE"), which may be paid in cash or with Common Shares or other
consideration deemed appropriate by the Board of Directors of the Company.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
B-2
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights at any time to cure any
ambiguity or to correct or supplement any defective or inconsistent provisions
and may, prior to the Distribution Date, be amended to change or supplement any
other provision in any manner which the Company may deem necessary or desirable.
After the Distribution Date, the terms of the Rights may be amended (other
than to cure ambiguities or correct or supplement defective or inconsistent
provisions) only so long as such amendment shall not adversely affect the
interests of the holders of the Rights (which may not be an Acquiring Person
in whose hands Rights are void).
A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
B-3
