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EXHIBIT 4.1
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PRIMA ENERGY CORPORATION
AND
COMPUTERSHARE TRUST COMPANY, INC.
Rights Agent
RIGHTS AGREEMENT
Dated as of May 23, 2001
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions...............................................................................1
Section 2. Appointment of Rights Agent.......................................................................4
Section 3. Issue of Right Certificates.......................................................................4
Section 4. Form of Right Certificate.........................................................................6
Section 5. Countersignature and Registration.................................................................6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates......................................................7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.....................................7
Section 8. Cancellation and Destruction of Right Certificates................................................9
Section 9. Availability of Preferred Share; Transfer Taxes; Securities Registrations.........................9
Section 10. Preferred Shares Record Date.....................................................................10
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights...............................10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.......................................16
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.............................16
Section 14. Fractional Rights and Fractional Shares..........................................................18
Section 15. Rights of Action.................................................................................19
Section 16. Agreement of Right Holders.......................................................................19
Section 17. Right Certificate Holder Not Deemed a Stockholder................................................20
Section 18. Concerning the Rights Agent......................................................................20
Section 19. Merger or Consolidation or Change of Name of Rights Agent........................................21
Section 20. Duties of Rights Agent...........................................................................21
Section 21. Change of Rights Agent...........................................................................23
Section 22. Issuance of New Right Certificates...............................................................24
Section 23. Redemption.......................................................................................24
Section 24. Exchange.........................................................................................25
Section 25. Notice of Certain Events.........................................................................26
Section 26. Notices..........................................................................................27
Section 27. Supplements and Amendments.......................................................................27
Section 28. Benefits of This Agreement.......................................................................28
Section 29. Severability.....................................................................................28
Section 30. Governing Law....................................................................................28
Section 31. Counterparts.....................................................................................28
Section 32. Descriptive Headings.............................................................................28
Section 33. Determinations and Actions by the Board of Directors.............................................28
EXHIBIT A Certificate of Designation, Powers, Preferences and Rights
of Series A Participating Preferred Stock of Prima Energy Corporation
EXHIBIT B Form of Right Certificate
EXHIBIT C Summary of Rights
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RIGHTS AGREEMENT
This Rights Agreement (this "Agreement") dated effective as of May 23,
2001, between Prima Energy Corporation, a Delaware corporation (the "Company"),
and Computershare Trust Company, Inc. a Colorado corporation, as Rights Agent
(the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend, and thereby directed the issuance, of one Preferred Share (as such
term is hereinafter defined) purchase right (a "Right") for and in respect of
each Common Share (as such term is hereinafter defined) outstanding on June 8,
2001 (the "Record Date"). Each right represents the right to purchase one
one-thousandth interest in a Preferred Share, upon the terms and subject to the
conditions herein set forth. The Board of Directors has further authorized and
directed the issuance of one Right with respect to each Common Share 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 or elsewhere herein) have
the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 15% or more of the Common Shares then outstanding, other
than as a result of a Permitted Offer, but does not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, (iv) any Person 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, (v) the Grandfathered Stockholder, or
(vi) any Person, who or which together with all Affiliates and Associates of
such Person becomes the Beneficial Owner of 15% or more of the then outstanding
Common shares as a result of the acquisition of Common Shares directly from the
Company. No Person shall be deemed to be an "Acquiring Person" either (X) as a
result of the acquisition of Common Shares by the Company which, by reducing the
number of Common Shares outstanding, increases the proportional number of shares
beneficially owned by such Person together with all Affiliates and Associates of
such Person; except that if (i) a Person would become an Acquiring Person (but
for the operation of this subclause (X)) as a result of the acquisition of
Common Shares by the Company, and (ii) after such share acquisition by the
Company, such Person, or an Affiliate or Associate of such Person, becomes the
Beneficial Owner of any additional Common Shares, then such Person shall be
deemed an Acquiring Person, or (Y) if (i) within 8 days after such person would
otherwise have become an Acquiring Person (but for the operation of this
subclause (Y)), such Person notifies the Board of Directors that such Person did
so inadvertently and (ii) within two Business Days after such notification, such
Person is the Beneficial Owner of less than 15% of the outstanding Common
Shares.
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(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or pursuant to the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote or consent to action pursuant to
any agreement, arrangement or understanding; 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 or
consent to action (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule 13D
promulgated under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting or consenting to action (except to the extent contemplated by
the proviso to Section 1(c)(ii)(B) hereof) 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 (to the
extent, and only to the extent, of the securities so held), 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. Further, notwithstanding anything
in this definition of Beneficial Ownership to the contrary, the phrase "then
outstanding", when used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially
hereunder.
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(d) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 p.m.,
Denver, Colorado time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 p.m., Denver, Colorado 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
$.015 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, of 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) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(i) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(j) "Grandfathered Stockholder" shall mean at any time Xxxxxxx
X. Xxxxx ("R Xxxxx"); provided, however, that R Xxxxx shall not be a
Grandfathered Stockholder if he makes an acquisition of Common Shares that would
cause him to be the Beneficial Owner of more than 20% of the outstanding Common
Shares.
(k) "Permitted Offer" shall mean a tender or exchange offer
which is for all outstanding Common Shares at a price and on terms determined,
prior to the purchase of shares under such tender or exchange offer, by at least
a majority of the members of the Board of Directors who are not officers of the
Company and who are not Acquiring Persons or Affiliates, Associates, nominees or
representatives of an Acquiring Person, to be adequate (taking into account all
factors that such Directors deem relevant including, without limitation, prices
that could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and otherwise in the best
interests of the Company and its stockholders (other than a Person or any
Affiliate or Associate thereof on whose basis the offer is being made) taking
into account all factors that such directors may deem relevant.
(l) "Person" shall mean any individual, trust, estate, firm,
corporation, incorporated or unincorporated association, limited liability
company, partnership or other entity, and shall include any successor (by merger
or otherwise) of any such Person.
(m) "Preferred Shares" shall mean shares of Series A
Participating Preferred Stock, par value $.001 per share, of the Company having
the rights and preferences set forth in the form of the Certificate of
Designation, Powers, Preferences and Rights attached to this Agreement as
Exhibit A.
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(n) "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.
(o) "Rights Certificate" shall have the meaning set forth in
Section 3 hereof.
(p) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(q) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(r) "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.
(s) "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.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for, the acts or omissions of any co-Rights Agent.
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 (or such specified or unspecified later date as may be
determined by the Board of Directors before the occurrence of a Distribution
Date) after the Shares Acquisition Date (or, if the tenth Business Day (or such
later date) after the Shares Acquisition Date occurs before the Record Date, the
close of business on the Record Date) and (ii) the Close of Business on the
tenth Business Day (or such specified or unspecified later date as may be
determined by the Board of Directors before the occurrence of a Distribution
Date) after the date of the commencement by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person holding Common Shares for or
pursuant to the terms of any such plan to the extent such Person is so acting
with the approval or consent of the Company) of, or of the first public
announcement of the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person holding Common Shares for or pursuant
to the terms of any such plan to the extent such Person is so acting with the
approval or consent of the Company) 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
which 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
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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 and
provided with all necessary information, 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 B 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 Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common Shares
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 and the Summary of Rights. Until the Distribution
Date (or the earlier of the Redemption Date or 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.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the 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 Prima
Energy Corporation and Computershare Trust Company, Inc. as Rights
Agent, dated effective as of May 23, 2001, as amended from time to
time (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 Prima Energy 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.
Prima Energy Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. As described in the Rights
Agreement, Rights issued to any Person who becomes an Acquiring
Person (as those terms are defined in the Rights Agreement) shall
become null and void and will no longer be transferable.
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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 which are
no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the Rights of any
holder of the Rights.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be in substantially the form of Exhibit B hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
which do not affect the duties or responsibilities of the Rights Agent 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 of this Agreement, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-thousandth
interests in a Preferred Share as shall be set forth therein at the price per
one one-thousandth interest in a Preferred Share set forth therein (the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right 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 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 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 and receipt by the Rights Agent of all
necessary information, the Rights Agent will keep or cause to be kept, at its
principal office, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the
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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 one one-thousandth
interests in a Preferred Share as the Right Certificate or Right Certificates
surrendered then entitle 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 office of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
such surrendered Right Certificate unless and until the registered holder shall
have (i) completed, executed and delivered a certificate contained in the form
of assignment set forth on the reverse side of such Right Certificate and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall have reasonably requested. 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 charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. The Rights Agent shall have no duty or obligation under this
Section unless and until it is satisfied that all such taxes and/or charges have
been paid.
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 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 completed and properly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each one
one-
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thousandth interest in a Preferred Share as to which the Rights are exercised,
at or prior to the earliest of (i) the Close of Business on May 22, 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 one one-thousandth interest in
a Preferred Share pursuant to the exercise of a Right shall initially be $150,
shall be subject to adjustment from time to time as provided in Section 11 and
Section 13 hereof, and shall be payable in lawful money of the United States of
America in accordance with Section 7(c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly properly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased (plus an amount equal to any applicable tax or charge 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) (A) requisition
from any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased, and the Company hereby irrevocably authorizes
and directs its transfer agent to comply with all such requests, or (B)
requisition from the depositary agent (if one exists as hereinafter
contemplated) depositary receipts representing such number of one one-thousandth
interests in a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent of the Preferred Shares with the depositary
agent), and the Company hereby directs the depositary agent to comply with all
such requests, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, and, if applicable, requisition from the Company, or any
transfer agent for securities thereof (any such transfer agent being hereby
authorized to comply with all such requests or both), the number of Common
Shares to be issued in lieu of the issuance of Preferred Shares in accordance
with Section 11(a)(ii) 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 or depositary receipts, 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 in
accordance with Section 11(a)(iii) hereof, 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 whatsoever with respect to a purported exercise of any Right as
contemplated by this Section 7 unless and until such registered holder shall
have (i) completed, executed and delivered a certificate contained in the form
of election to purchase set forth on the reverse side of the Right Certificate
surrendered
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in connection with such exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company or the Rights Agent shall have reasonably
requested.
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.
Section 9. Availability of Preferred Shares; Transfer Taxes; Securities
Registration.
(a) The Company covenants and agrees that it will cause to be
kept available out of its authorized and unissued Preferred Shares, the number
of Preferred Shares that will be sufficient to permit the exercise in full of
all outstanding Rights. The Company further covenants and agrees that it will
take all such action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly authorized and validly issued and fully paid and nonassessable
shares.
(b) The Company covenants and agrees that it will pay when due
and payable any and all taxes and charges that are payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred Shares (or
other securities which 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 tax or charge 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 or depositary receipts for the Preferred Shares (or
other securities that 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 or depositary receipts for Preferred
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 or charge
shall have been paid (any such tax or charge 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 or charge is due.
(c) The Company shall (i) prepare and file, as soon as
reasonably possible following the Distribution Date, a registration statement
under the Securities Act with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as reasonably possible after such filing,
and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until no
longer required to do so under the Securities Act
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with respect to securities purchasable upon exercise of the Rights. The Company
also shall 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.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
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 taxes or charge) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred 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
Preferred 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 Preferred Shares or interests therein
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 Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), 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 or interests therein 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 or interests therein which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares transfer
books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock or interests therein of the
Company issuable upon exercisable of one Right. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) Subject to Section 23 and Section 24 of this
Agreement, in the event any Person shall become an Acquiring Person, each holder
of a Right shall thereafter have a right to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the number of one
one-thousandth interests in a Preferred Share for which a Right
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is then exercisable, in accordance with the terms of this Agreement and in lieu
of interests in Preferred Shares, such number of Common Shares as shall equal
the result obtained by (A) multiplying the then current Purchase Price by the
number of one one-thousandth interests in a Preferred Share 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. In the
event that any Person shall become an Acquiring Person and the Rights shall then
be outstanding, the Company shall not take any action that would eliminate or
diminish the benefits intended to be afforded by the Rights. Notwithstanding 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 by the
Company, the Rights Agent, the Acquiring Person or any other Person, and any
holder of such Rights shall thereafter have no rights whatsoever with respect to
such Rights, whether under this Agreement or otherwise (including the right to
exercise such Rights under any provision of this Agreement). No Right
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be null and void
pursuant to the preceding sentence or by any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the transfer of any Rights to
an Acquiring Person whose Rights would be null and void pursuant to the
preceding sentence or to 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 null and 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 determines
that such action is necessary or appropriate, elect to issue or pay, upon the
exercise of the Rights, cash, property, Common Shares, shares of preferred
stock, notes, debentures or other securities, or any combination thereof, having
an aggregate value equal to the value of the Common Shares which otherwise would
have been issuable pursuant to Section 11(a)(ii) hereof, which value shall be
determined by a nationally recognized investment banking firm selected by the
Board of Directors; provided, however, that, except as provided in the second
and third sentences of subparagraph (ii) of this paragraph (a), all holders of
Rights must receive the same consideration upon the exercise of a Right. For
purposes of this subparagraph (iii), the value of Common Shares shall be as
determined pursuant to Section 11(d) hereof and the value of any preferred stock
or other securities that the Board of Directors determines to be the substantial
equivalent of Common Shares shall be deemed to have the same value as the Common
Shares of the Company.
(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
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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 Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred 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 Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the Preferred Shares issuable upon exercise
of one Right. In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a Statement filed with
the Rights Agent. Preferred Shares owned by or held for the account of the
Company 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 which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend paid out of earnings or
retained earnings or a dividend payable in Preferred Shares) or subscription
rights or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current per share market
price of the Preferred 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 Preferred Share and
the denominator of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the Preferred
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Shares issuable upon 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.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security") for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to but not
including such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading Days after but not including
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 such Security 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 Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on 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 Security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Securities
selected by the Board of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the methods set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand. If
neither the Common Shares nor the Preferred Shares are 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 or the Preferred Shares, "current per
share market price" shall mean the fair value per share as determined in good
faith by the Board of
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Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(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 which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one ten-millionth
interest in a Preferred Share or one ten-thousandth interest in any other share
or security, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction that
requires such adjustment and (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 stock of the Company
other than Preferred Shares or interests therein, 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 Preferred
Shares, and the provisions of Section 7, Section 9, Section 10, Section 12,
Section 13 and Section 14 with respect to the Preferred Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandth
interests in a Preferred Share 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(a), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and Section 11(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
one one-thousandth interests in a Preferred Share (calculated to the nearest one
ten-millionth of a Preferred Share) obtained by (i) multiplying (A) the number
of one one-thousandth interests in a Preferred 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.
(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 one one-thousandth interests in a Preferred
Share purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-thousandth interests in a Preferred Share for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest
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one ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement 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 with prompt notice thereof to the Rights
Agent. 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 ten 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 one one-thousandth interests in a Preferred Share
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number of
one one-thousandth interests in a Preferred Shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the par value, if any,
of the Preferred Shares issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer with prompt notice thereof to
the Rights Agent until the occurrence of such event the issuance to the holder
of any Right exercised after such record date of the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Company in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any Preferred Shares at less than
the current market price,
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issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to in Section 11(b) hereafter made by the Company to holders
of Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares, (ii) reclassify
the Common Shares or (iii) otherwise effect a split-up, division or combination
of the Common Shares, then in any such case (i) the number of one one-thousandth
interests in a Preferred Share purchasable after such event upon proper exercise
of each Right shall be determined by multiplying the number of one
one-thousandth interests in a Preferred Share so purchasable immediately prior
to such event by a fraction, the numerator of which shall be the number of
Common Shares that were outstanding immediately before such event and the
denominator of which shall be the number of Common Shares that are outstanding
immediately after such event, and (ii) each Common Share outstanding immediately
after such event shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever any such event occurs.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts and computation and accounting for
such adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred 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. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained and shall have no
duty with respect to, and shall not be deemed to have knowledge of, any such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event, directly or indirectly, (i) the Company shall
consolidate with, or 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,
and 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
other Person (or the Company) or cash or any other property, or (iii) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or 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 one one-thousandth interests in a Preferred
Share for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of Preferred Shares, such number of duly authorized
and validly issued, fully paid and non-assessable
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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 one one-thousandth interests in a Preferred Share 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
authorization by all necessary corporate action and the reservation of a
sufficient number of its Common Shares in accordance with Section 9 of 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.
(b) 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 Securities 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 Securities 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 which, 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.
(c) "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 are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other
party to the merger or consolidation; 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
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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 which 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 American Stock Exchange or,
if the Rights are not listed or admitted to trading on the American Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as 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 Preferred Shares (other than fractional interests which are
integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional interests in
Preferred Shares (other than fractional interests which are integral multiples
of one one-thousandth of a Preferred Share). Fractional interests in Preferred
Shares in integral multiples of one one-thousandth of a Preferred Share may, at
the election of the
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Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
however, that such agreement shall provide that holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional interests in Preferred Shares that
are not integral multiples of one one-thousandth of a Preferred Share, the
Company shall pay to the registered holders of Right 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 Preferred Share. For purposes of
this Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) 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 this
Agreement, 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
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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 Stockholder. Prior to
the exercise of the Rights evidenced thereby, no holder, as such, of any Right
Certificate shall be entitled to vote or receive dividends or be deemed for any
purpose the holder of the Preferred Shares or interests therein or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights evidenced 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 stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings, proceedings or other actions
affecting stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or to exercise any pre-emptive 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, preparation, delivery, amendment 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, demand, judgment, fine, penalty, claim, damage, settlement,
cost or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement, including without limitation the costs and expenses of
defending against any claim of liability in the premises. The indemnity provided
herein shall survive the termination of this Agreement and the termination and
the expiration of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage. Any liability of the
Rights Agent under this Rights Agreement will be limited to the amount of fees
paid by the Company to the Rights Agent.
The Rights Agent shall be authorized and protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement 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.
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Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the Shareholder Services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 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 only
the duties and obligations expressly imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion or advice 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
or advice.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including without limitation, the identity of any Acquiring Person and
the determination of current per share market price) be proved or established by
the Company prior to taking, suffering or omitting any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board 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
and protection to the Rights Agent and the Rights Agent shall incur no liability
for or in respect of any action taken, omitted or suffered in good faith by it
under the provisions of this Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for the Rights Agent's own gross negligence, bad faith
or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its 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 liability or
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 null and 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 Section 3, Section 11, Section
13, Section 23 or Section 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 Preferred Shares to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preferred 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, President, any Senior Vice
President or 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, suffered or omitted by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken, suffered or
omitted by the Rights Agent under this Agreement and the date on and/or after
which such action shall be taken or suffered or such omission shall be
effective. The Rights Agent shall not be liable for any action taken or suffered
by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which
date shall not be less than five Business Days after the date any officer of the
Company actually receives such application unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken, suffered or omitted.
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(h) The Rights Agent and any stockholder, director, affiliate,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
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 Person.
(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, absent gross negligence, bad faith or willful misconduct
in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if it believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed to certify the holder is not
an Acquiring Person (or any Affiliate or Associate thereof), the Rights Agent
shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
Section 21. 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 or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the 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 Colorado (or of any other state of the United
States so long as such corporation is authorized to do business under such
laws), in good standing, 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
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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 or
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 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.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board of
Directors of the Company pursuant to Section 23(b) 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 earlier of (i) the close of business on the tenth
Business Day (or such specified or unspecified later date as may be determined
by the Board of Directors before the Rights cease being redeemable) after the
Shares Acquisition Date (or, if the Stock Acquisition Date shall have occurred
prior to the Record Date, the close of business on the tenth Business Day
following the Record Date), or (ii) the Final Expiration Date, redeem all, but
not less than all, the then outstanding Rights at a redemption price of $.001
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 Section 23(b), 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 ten days after such action of the Board of Directors
ordering the redemption of the Rights pursuant to Section 23(b), the Company
shall mail a notice of
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redemption to the Rights Agent and 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 that is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption 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 null and 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 Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of the 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 with prompt notice
thereof to the Rights Agent; 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 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 null and void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute interests in Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 11(b) hereof) for Common
Shares exchangeable for Rights, at the initial rate of one one-thousandth
interest in a Preferred Share (or equivalent preferred share) for each Common
Share, as appropriately adjusted to reflect adjustments in the voting rights of
the Preferred Shares pursuant to Section 3 of the Certificate of Designation,
Powers, Preferences and Rights attached hereto as Exhibit A, so that the
fraction of a Preferred Share delivered in lieu of each Common Share shall have
the same voting rights as one Common Share.
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(d) In the event that there shall not be sufficient Common
Shares or Preferred 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 or Preferred Shares for issuance upon exchange of the
Rights. In the event that the Company, after good faith effort, shall be unable
to take shall such action as may be necessary to authorize such additional
Common Shares or Preferred Shares, the Company shall substitute, for each Common
Share or Preferred Share that would otherwise be issuable upon exchange of a
Right, a number of Common Shares, Preferred Shares or shares of preferred stock,
notes, debentures or other securities, or any combination thereof, having an
aggregate value equal to the Rights to be exchanged, which value shall be
determined by a nationally recognized investment banking firm selected by the
Board of Directors.
(e) 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 Section 24(e), 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 sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of Preferred Shares or to make any
other distribution to the holders of Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of Preferred Shares
rights (preemptive or otherwise) or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Preferred 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, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares, to reclassify the
Common Shares, or to otherwise effect a split-up, division or combination of the
Common Shares, then, in each such case, the Company shall give to each holder of
a Right Certificate and the Rights Agent, 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 and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action described by clause (i) or (ii) above at least ten days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least ten
days prior to the date of the taking of
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such proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever shall be the earlier.
(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 and the Rights Agent, 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 or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Prima Energy Corporation
Xxxxxxx X. Xxxxx, Chairman and Chief Executive Officer
0000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: President and 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:
Computershare Trust Company, Inc.
00000 Xxxx Xxxxxxx Xxxxxxx, Xxxxx X-0
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
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 amend,
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) prior to the Distribution
Date, to change or supplement any 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 the percentage of beneficial ownership by the Grandfathered Stockholder) or
(iv) after the Distribution Date, to change or supplement the provisions hereof
in any manner
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which the Company may deem necessary or desirable and which 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; provided, however, that the Rights Agent receive a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the provisions of this Section 27,
and such supplement or amendment does not change or increase the Rights Agent's
duties, liabilities or obligations under this Agreement.
(a) 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 28. 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 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 29. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 30. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State, provided, however, that all provisions
regarding the rights, duties and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of Colorado
applicable to contracts made and to be performed entirely within such State.
Section 31. 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 32. 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.
Section 33. Determinations and Actions by the Board of Directors. 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
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31
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) that 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 (z) not subject the Board of Directors of the
Company to any liability to the holders of the Rights.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested on this 23rd day of May, 2001, to be effective as of
the day and year first above written.
PRIMA ENERGY CORPORATION
By /s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx
Chairman and Chief Executive Officer
COMPUTERSHARE TRUST COMPANY, INC.
as Rights Agent
By /s/ X. Xxxxx
------------
Printed Name: X. Xxxxx
Title: President
By /s/ Xxxxxxx Xxxxxxx
-------------------
Printed Name: Xxxxxxx Xxxxxxx
Title: Secretary / Treasurer
--------------------------------------------------------------------------------
Page 29
32
Exhibit A
CERTIFICATE OF DESIGNATION, POWERS, PREFERENCES
AND RIGHTS OF SERIES A PARTICIPATING PREFERRED STOCK
of
Prima Energy Corporation
It is hereby certified that:
1. The name of the corporation is Prima Energy Corporation
(hereinafter called the "Corporation");
2. The Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), is hereby amended so that the designation and
number of shares of the class and series acted upon in the following resolution
and the relative rights, preferences and limitations of such class and series,
are as stated in such resolution; and
3. The following resolution was duly adopted by the Board of
Directors of the Corporation as required by Section 151 of the Delaware General
Corporation Law at a meeting duly called and held on May 23, 2001;
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation in accordance with the provisions
of the Certificate of Incorporation, the Board of Directors hereby creates a
series of Series A Preferred Stock, $.001 par value, of the Corporation and
hereby states the designation and number of shares, and fixes the relative
rights, preferences and limitations thereof (in addition to the provisions set
forth in the Certificate of Incorporation which are applicable to the Preferred
Stock of all classes and series) as follows:
Section 1. Designation, Par Value and Amount. The shares of
such series shall be designated as "Series A Participating Preferred Stock"
(hereinafter referred to as "Series A Participating Preferred Stock"), the
shares of such series shall have a par value of $.001 per share, and the number
of shares constituting such series shall be 300,000; provided, however, that, if
more than a total of 300,000 shares of Series A Participating Preferred Stock
shall be issuable upon the exercise of Rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of May 23, 2001, between the Corporation and
Computershare Trust Company, Inc. a Colorado corporation, as Rights Agent (as
amended from time to time) (the "Rights Agreement"), the Board of Directors of
the Corporation, pursuant to Section 151 of the Delaware General Corporation
Law, shall direct by resolution or resolutions that a certificate be properly
executed, acknowledged and filed providing for the total number of shares of
Series A Participating Preferred Stock authorized to be issued to be increased
(to the extent that the Certificate of Incorporation then permits) to the
largest number of whole shares (rounded up to the nearest whole number) issuable
upon exercise of the Rights.
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33
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Participating Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of assets
legally available for the purpose, quarterly dividends payable in cash on the
last business day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Participating Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set forth, 1000
times the aggregate per share amount of all cash dividends, and 1000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions (other than a dividend payable in shares of Common Stock, par
value $.015 per share, of the Corporation (the "Common Stock") or a subdivision
of the outstanding shares of Common Stock by reclassification or otherwise)
declared on the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A
Participating Preferred Stock.
(B) The Corporation shall declare a dividend or distribution on
the Series A Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 15 days prior to the date fixed for the
payment thereof.
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34
Section 3. Voting Rights. The holders of shares of Series A
Participating Preferred Stock shall have the following voting rights:
(A) Except as provided in paragraph C of this Section 3 and
subject to the provision for adjustment hereinafter set forth, each share of
Series A Participating Preferred Stock shall entitle the holder thereof to 1000
votes on all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) (i) If, on the date used to determine stockholders of
record for any meeting of stockholders for the election of directors, a default
in preference dividends (as defined in subparagraph (v) below) on the Series A
Participating Preferred Stock shall exist, the holders of the Series A
Participating Preferred Stock shall have the right, voting as a class as
described in subparagraph (ii) below, to elect two directors (in addition to the
directors elected by holders of Common Stock of the Corporation). Such right may
be exercised (a) at any meeting of stockholders for the election of directors or
(b) at a meeting of the holders of shares of Voting Preferred Stock (as
hereinafter defined), called for the purpose in accordance with the By-laws of
the Corporation, until all such cumulative dividends (referred to above) shall
have been paid in full or until noncumulative dividends have been paid regularly
for at least one year.
(ii) The right of the holders of Series A Participating
Preferred Stock to elect two directors, as described above, shall be exercised
as a class concurrently with the rights of holders of any other series of
Preferred Stock upon which voting rights to elect such directors have been
conferred and are then exercisable. The Series A Participating Preferred Stock
and any additional series of Preferred Stock which the Corporation may issue and
which may provide for the right to vote with the foregoing series of Preferred
Stock are collectively referred to herein as "Voting Preferred Stock."
(iii) Each director elected by the holders of shares of
Voting Preferred Stock shall be referred to herein as a "Preferred Director." A
Preferred Director so elected shall continue to serve as such director for a
term of one year, except that upon any termination of the right of all of such
holders to vote as a class for Preferred Directors, the term of office of such
directors shall terminate. Any Preferred Director may be removed by, and shall
not be removed except by the vote of the holders of record of a majority of the
outstanding shares of Voting Preferred Stock then entitled to vote for the
election of directors. present (in person or by proxy) and voting together as a
single class (a) at a meeting of the stockholders, or (b) at a meeting of the
holders of shares of such Voting Preferred Stock, called for the purpose in
accordance with the By-laws of the Corporation, or (c) by written consent signed
by the holders of a majority of the then outstanding shares of Voting Preferred
Stock then entitled to vote for the election of directors, taken together as a
single class.
(iv) So long as a default in any preference dividends on
the Series A Participating Preferred Stock shall exist or the holders of any
other series of Voting Preferred Stock shall be entitled to elect Preferred
Directors, (a) any vacancy in the office of a Preferred
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Page A-3
35
Director may be filled (except as provided in the following clause (b)) by an
instrument in writing signed by the remaining Preferred Director and filed with
the Corporation and (b) in the case of the removal of any Preferred Director,
the vacancy may be filled by the vote or written consent of the holders of a
majority of the outstanding shares of Voting Preferred Stock then entitled to
vote for the election of directors, present (in person or by proxy) and voting
together as a single class, at such time as the removal shall be effected. Each
director appointed as aforesaid by the remaining Preferred Director shall be
deemed, for all purposes hereof, to be a Preferred Director. Whenever (x) no
default in preference dividends on the Series A Participating Preferred Stock
shall exist and (y) the holders of other series of Voting Preferred Stock shall
go longer be entitled to elect such Preferred Directors, then the number of
directors constituting the Board of Directors of the Corporation shall be
reduced by two.
(v) For purposes hereof, a "default in preference
dividends" on the Series A Participating Preferred Stock shall be deemed to have
occurred whenever the amount of cumulative and unpaid dividends on the Series A
Participating Preferred Stock shall be equivalent to six full quarterly
dividends or more (whether or not consecutive), and, having so occurred, such
default shall be deemed to exist thereafter until, but only until, all
cumulative dividends on all shares of the Series A Participating Preferred Stock
then outstanding shall have been paid through the last Quarterly Dividend
Payment Date or until, but only until, non-cumulative dividends have been paid
regularly for at least one year.
(E) Except as set forth herein (or as otherwise required by
applicable law), holders of Series A Participating Preferred Stock shall have no
general or special voting rights and their consent shall not be required for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration (except as provided in (iv) below) shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Participating Preferred Stock, provided
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Page A-4
36
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Participating Preferred Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Participating Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall he retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Certificate of Incorporation. in any other
Certificate of Designation creating a series of Preferred Stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Subject to the prior and superior rights of holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Participating Preferred Stock with respect to rights upon
liquidation, dissolution or winding up (voluntary or otherwise), no distribution
shall be made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Participating Preferred Stock unless, prior thereto, the holders of shares of
Series A Participating Preferred Stock shall have received $1.00 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Series A Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Capital Adjustment") equal to the quotient obtained by dividing (i) the Series
A Liquidation Preference by (ii) 1000 (the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation Preference and the
Capital Adjustment in respect of all outstanding shares of Series A
Participating Preferred Stock and Common Stock, respectively, holders of Series
A Participating Preferred Stock and holders of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be
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Page A-5
37
distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series A Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of
Series A Participating Preferred Stock and the holders of such parity shares in
proportion to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in full of the
Capital Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged.
Section 8. No Redemption. The shares of Series A Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Participating Preferred Stock, voting separately as a class.
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38
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation by its Chairman of the Board and attested
by its Secretary as of May ___, 2001.
---------------------------------
Xxxxxxx X. Xxxxx, Chairman
and Chief Executive Officer
Attest:
------------------------------
Xxxxxx X. Xxxxxxx
Secretary
--------------------------------------------------------------------------------
Page A-7
39
Exhibit B
FORM OF RIGHT CERTIFICATE
Certificate No. R ________Rights
NOT EXERCISABLE AFTER MAY 22, 2011, OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
Prima Energy Corporation
This certifies that _________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of May 23, 2001 (the "Rights
Agreement"), between Prima Energy Corporation, a Delaware corporation (the
"Company"), and Computershare Trust Company, Inc. as rights agent (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 23, 2011, at the principal
offices of the Rights Agent, or at the offices of its successor as Rights Agent,
one one-thousandth interest in one share of Series A Participating Preferred
Stock, par value $.001 per share (the "Preferred Shares"), of the Company, at a
purchase price of $150 per one one-thousandth interest in a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-thousandth
interests in a Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of May 23, 2001, based on the Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number of
one one-thousandth interests in a Preferred Share which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon 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
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40
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of interests in Preferred Shares as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.001 per Right payable in cash, Preferred Shares or other consideration or (ii)
may be exchanged in whole or in part for Preferred Shares or shares of the
Company's Common Stock, par value $.015 per share.
No fractional interests in Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractional
interests which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings, proceedings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised in accordance with the provisions of
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 , .
-------------------- -----
PRIMA ENERGY CORPORATION
By
----------------------------------
Countersigned:
By
---------------------------------
Authorized Signature
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Page B-2
41
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED_________________________ hereby sells, assigns and
transfers unto ________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint_________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ,
-------------------- ----
--------------------------------------
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
================================================================================
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Page B-3
42
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: Prima Energy Corporation
The undersigned hereby irrevocably elects to exercise___________ Rights
represented by this Right Certificate to purchase the interests in Preferred
Shares issuable upon the exercise of such Rights and requests that certificates
for such interests in Preferred Shares be issued in the name of:
---------------------------------------------------------------
(Please print name and address)
---------------------------------------------------------------
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
---------------------------------------------------------------
(Please print name and address)
---------------------------------------------------------------
(Please insert social security or other identifying number)
Dated: ,
-------------------- ----
--------------------------------------
Signature
Signature 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.
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Page B-4
43
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.
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Page B-5
44
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On May 23, 2001, the Board of Directors of Prima Energy Corporation
(the "Company") declared a dividend of one Preferred Share purchase right (a
"Right") for each outstanding share of common stock, par value $.015 per share
(the "Common Shares"), of the Company and authorized the issuance of one Right
for each Common Share which 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 June 8, 2001 (the
"Record Date") to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one share of Series A
Participating Preferred Stock, par value $.001 per share (the "Preferred
Shares"), of the Company at a price of $150 per one one-thousandth interest in a
Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and Computershare Trust Company, 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 (except pursuant to a Permitted Offer, as hereinafter
defined) 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. 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 also will 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 23, 2011, (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.
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The Purchase Price payable, and the number of interests in Preferred
Shares or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights, options or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred Shares with a
conversion price, less than the then current market price of the Preferred
Shares of (iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those referred to
above).
The number of outstanding Rights and the number of one one-thousandth
interests in a Preferred Share issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Preferred Shares or a
stock dividend on the Preferred Shares payable in Preferred Shares or
subdivisions, consolidations or combinations of the Preferred Shares occurring,
in any such case, prior to the Distribution Date.
Interests in Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled to
an aggregate dividend of 1,000 times the dividend declared per Common Share. In
the event of a liquidation, the holders of the interests in Preferred Shares
will be entitled to a minimum preferential liquidation payment of $1.00 per
Preferred Share but will be entitled to an aggregate payment of 1,000 times the
payment made per Common Share; thereafter, and after the holders of the Common
Shares receive a liquidation payment of $.001 per share, the holders of the
Preferred Shares and the holders of the Common Shares will share the remaining
assets in the ratio of 1000 to 1 (as adjusted) for each Preferred Share and
Common Shares so held, respectively. Each Preferred Share will have 1,000 votes,
voting together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the amount received per
Common Share. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event 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 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 (except pursuant to a tender offer
or an exchange offer which is for all outstanding Common Shares at a price and
on terms which a majority of certain members of the Board of Directors
determines to be adequate and in the best interests of the Company, its
stockholders and other relevant constituencies, other than an Acquiring Person,
its
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affiliates and associates (a "Permitted Offer"), 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 Preferred
Shares having a market value of two times the exercise price of the Right. Under
some circumstances, in lieu of Preferred Shares, other equity and debt
securities, property, cash or combinations thereof, including combinations with
Preferred Shares, may be issued upon payment of the exercise price if of equal
value to the number of Preferred Shares for which the Right is exercisable.
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 Preferred Shares (other than fractions which
are integral multiples of one one-thousandth of a Preferred Share, which may, at
the election of the Company be evidenced by depositary receipts) will be issued,
and in lieu thereof, an adjustment in cash will be made based on the market
price of the Preferred 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 first date of public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such (a "Shares Acquisition Date"),
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per right (the "Redemption Price"), which may be paid
in cash or with Preferred 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.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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 has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
June ___, 2001. 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.
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