RIGHTS AGREEMENT
Agreement,
dated as of June 29, 2000, between The Exploration Company of Delaware, Inc.,
a
Delaware corporation (the "Company"),
and
Fleet National Bank, a national banking association (the "Rights
Agent").
The
Board
of Directors of the Company has authorized and declared a dividend of one
preferred share purchase right (a "Right")
for
each share of Common Stock, par value $0.01 per share, of the Company (a
"Common
Share")
outstanding on the Close of Business on July 19, 2000 (the "Record
Date")
and
has authorized the issuance of one Right with respect to each additional Common
Share that shall become outstanding between the Record Date and the earliest
of
Close of Business on the Distribution Date, the Redemption Date and the Close
of
Business on the Final Expiration Date, each Right representing the right to
purchase one one-thousandth of a Preferred Share, or such different amount
and/or kind of securities as shall be hereinafter provided.
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 have the meanings
indicated:
"Acquiring
Person"
shall
mean any Person who or which, together with all Affiliates and Associates of
such Person, shall be the Beneficial Owner of 15%, or more of the Common Shares
of the Company then outstanding but shall not include (i) the Company, (ii)
any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or
any
Subsidiary of the Company, or (iv) any entity holding Common Shares for or
pursuant to the terms of any such employee benefit plan. Notwithstanding the
foregoing, (1) no Person shall become an "Acquiring Person" as the result of
an
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% (or such other percentage as would otherwise result
in such person becoming an Acquiring Person) or more of the Common Shares of
the
Company then outstanding; provided,
however,
that if
a Person shall so become the Beneficial Owner of 15% (or such other percentage)
or more of the Common Shares of the Company then outstanding by reason of an
acquisition of Common Shares by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of an additional 1% of
the
outstanding Common Shares of the Company, then such Person shall be an
"Acquiring Person"; and (2) if the Board of Directors of the Company determines
in good faith that a Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph, has become
such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph,
then
such Person shall not have become an "Acquiring Person" for any purposes of
this
Agreement.
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"Affiliate"
and
"Associate"
shall
have the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended
(the
"Exchange
Act"),
as in
effect on the date of this Agreement.
A
Person
shall be the "Beneficial
Owner"
of and
shall "beneficially
own"
any
securities:
(i) which
such Person or any of such Person's Affiliates or Associates beneficially owns,
directly or indirectly;
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(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), written
or
otherwise, or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided,
however,
that a
Person shall not be deemed to be the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or exchange offer made pursuant
to, and in accordance with, the applicable rules and regulations promulgated
under the Exchange Act by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided,
however,
that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any
security if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which
are
beneficially owned, directly or indirectly, by any other Person with which
such
Person or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), written or otherwise, for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to section
(B)
of the immediately preceding paragraph (ii)) or disposing of any securities
of
the Company.
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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.
"Business
Day"
shall
mean any day other than a Saturday, Sunday, or a day on which banking
institutions in the Commonwealth of Massachusetts are authorized or obligated
by
law or executive order to close.
"Close
of Business"
on any
given date shall mean 5:00 P.M., Eastern time, on such date; provided,
however,
that if
such date is not a Business Day it shall mean 5:00 P.M., Eastern time, on
the next succeeding Business Day.
"Common
Shares"
when
used with reference to the Company shall mean the shares of Common Stock, par
value $.01 per share, of the Company. "Common Shares" when used with reference
to any Person other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
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"common
stock equivalents"
shall
have the meaning set forth in Section 11(a)(iii)(B)(3) hereof.
"Current
Value"
shall
have the meaning set forth in Section 11(a)(iii)(A)(1) hereof.
"Distribution
Date"
shall
have the meaning set forth in Section 3(a) hereof.
"equivalent
preferred shares"
shall
have the meaning set forth in Section 11(b) hereof.
"Exchange
Ratio"
shall
have the meaning set forth in Section 24(a) hereof.
"Final
Expiration Date"
shall
mean June 29, 2010.
"Person"
shall
mean any individual, firm, corporation, partnership, limited partnership,
limited liability partnership, business trust, limited liability company,
unincorporated association or other entity, and shall include any successor
(by
merger or otherwise) of such entity.
"Purchase
Price"
shall
have the meaning set forth in Section 7(b) hereof.
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"Preferred
Shares"
shall
mean shares of Series A Junior Participating Preferred Stock, par value $0.01
per share, of the Company having such rights, preferences and powers upon
adoption as are set forth in the form of Certificate of Designation set forth
as
Exhibit A hereto.
"Redemption
Date"
shall
have the meaning set forth in Section 23 hereof.
"Right
Certificate"
shall
mean a certificate evidencing a Right in substantially the form of Exhibit
B
hereto.
"Section
11(a)(ii) Trigger Date"
shall
have the meaning set forth in Section 11(a)(iii) hereof.
"Shares
Acquisition Date"
shall
mean the earlier of the date of (i) the public announcement by the Company
or an
Acquiring Person that an Acquiring Person has become such or (ii) the public
disclosure of facts by the Company or an Acquiring Person indicating that an
Acquiring Person has become such.
"Spread"
shall
have the meaning set forth in Section 11(a)(iii)(A) hereof.
"Subsidiary"
of any
Person shall mean any Person of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by
such Person.
"Substitution
Period"
shall
have the meaning set forth in Section 11(a)(iii) hereof.
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"Summary
of Rights"
shall
mean the Summary of Rights to Purchase Preferred Shares in substantially the
form of Exhibit C hereto.
Section
2. Appointment
of Rights Agent.
The
Company hereby appoints the Rights Agent to act as agent for the Company and
the
holders of the Rights (who, in accordance with Section 3 hereof, shall prior
to
the Distribution Date also be the holders of the Common Shares) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents
as
it may deem necessary or desirable upon ten (10) days prior written notice
to
the Rights Agent. The Rights Agent shall have no duty to supervise, and in
no
event shall be liable for, the acts or omissions of any such co-Rights Agent.
Section
3. Issue
of Right Certificates.
(a) Until
the
earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth
Business Day (or such later date as may be determined by action of the Board
of
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant
to
the terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than any of the Persons referred to in the
preceding parenthetical) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial Owner
of Common Shares aggregating 15% or more of the then outstanding Common Shares
(such date being herein referred to as the "Distribution
Date"),
(x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates)
and
not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares. 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, at the
expense of the Company, 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 evidencing one Right for each Common Share so
held.
As of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
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(b) On
the
Record Date, or as soon as practicable thereafter, the Company will send a
copy
of 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
Close of Business on the Distribution Date, the Rights will be evidenced by
such
certificates registered in the names of the holders thereof together with a
copy
of the Summary of Rights attached thereto. Until the Close of Business on the
Distribution Date (or the earlier of the Redemption Date or the Close of
Business on 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 evidenced 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 Close of Business on
the
Distribution Date, the Redemption Date or the Close of Business on the
Final Expiration Date
shall have impressed on, printed on, written on or otherwise affixed to them
the
following legend:
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This
certificate also evidences and entitles the holder hereof to certain Rights
as
set forth in a Rights Agreement between The Exploration Company of Delaware,
Inc. and Fleet National Bank, as Rights Agent, dated as of June 29, 2000, as
it
may from time to time be amended or supplemented pursuant to its terms (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
The Exploration Company of Delaware, Inc. Under certain circumstances, as set
forth in the Rights Agreement, the Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Exploration Company of Delaware, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of
a
written request therefor. Under certain circumstances, Rights that are or were
acquired or beneficially owned by Acquiring Persons (as defined in the Rights
Agreement) may become null and void.
With
respect to such certificates containing the foregoing legend, until the Close
of
Business on the Distribution Date, the Rights associated with the Common Shares
represented by 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 Close of Business on 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.
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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 substantially
the
same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as
the
Company may deem appropriate and as are not inconsistent with the provisions
of
this Agreement, or as may be required to comply with any applicable law or
with
any rule or regulation made pursuant thereto or with any rule or regulation
of
any stock exchange on which the Rights may from time to time be listed, or
to
conform to usage. Subject to the other provisions of this Agreement, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-thousandths of a Preferred Share as shall be set forth therein at the
Purchase Price, but the number of one one-thousandths of a Preferred Share
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, its Chief Executive Officer, its President, any of its Vice
Presidents, or its Treasurer, 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 any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned, either manually or by facsimile. 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 Rights Agreement any such person was not such an
officer.
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Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office, books for registration of the transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses
of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section
6. Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates.
Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and prior to the earlier of the Redemption Date or
the
Close of Business on 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-thousandths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. 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
for
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
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Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and
upon surrender to the Rights Agent and cancellation of the Right Certificate
if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of
the
Right Certificate so lost, stolen, destroyed or mutilated.
Section
7. Exercise
of Rights; Purchase Price; Expiration Date of Rights.
(a) The
registered holder of any Right Certificate (other than a holder whose Rights
have become void pursuant to Section 11(a)(ii) hereof or have been exchanged
pursuant to Section 24 hereof) may exercise the Rights evidenced thereby in
whole or in part at any time after the Distribution Date upon surrender of
the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at its principal office, together
with payment of the Purchase Price for each one one-thousandth of a Preferred
Share as to which the Rights are exercised, prior to the earliest of (i) the
Close of Business on the Final Expiration Date,
(ii) the time at which the right to exercise the Rights terminates pursuant
to
Section 23 hereof, or (iii) the time at which the right to exercise the Rights
terminates pursuant to Section 24 hereof.
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(b) The
purchase price for each one one-thousandth of a Preferred Share to be purchased
upon the exercise of a Right shall initially be Twelve Dollars ($12.00) (the
"Purchase
Price"),
shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America
in
accordance with paragraph (c) below.
(c) Upon
receipt of a Right Certificate representing exercisable Rights, with the form
of
election to purchase and certificate duly executed, accompanied by payment
of
the Purchase Price for the number of one one-thousandths of a Preferred Share
to
be purchased and an amount equal to any applicable transfer tax required to
be
paid by the holder of such Right Certificate in accordance with Section 9 hereof
by cash, 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 one
one-thousandths of a Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests,
or
(B) requisition from any depositary agent for the Preferred Shares depositary
receipts representing such number of one one-thousandths of a Preferred Share
as
are to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with
the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional Preferred Shares
in
accordance with Section 14 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, after receipt,
deliver such cash to or upon the order of the registered holder of such Right
Certificate.
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(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 his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed
the
certificate following the form of election to purchase set forth on the reverse
side of the Right Certificate surrendered for such exercise and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section
8. Cancellation
and Destruction of Right Certificates.
All
Right Certificates surrendered for the purpose of exercise, transfer, split
up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted
by
any of the provisions of this Rights Agreement. The Company shall deliver to
the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case
shall
deliver a certificate of destruction thereof to the Company.
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Section
9. Status
and Availability of Preferred Shares.
(a) The
Company 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 and validly authorized
and
issued and fully paid and non-assessable shares.
(b) The
Company further covenants and agrees that it will pay when due and payable
any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however,
be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Shares in
a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares upon the exercise
of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until
it
has been established to the Company's reasonable satisfaction that no such
tax
is due.
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(c) The
Company covenants and agrees that it will cause to be reserved and kept
available, out of its authorized and unissued Preferred Shares or any Preferred
Shares held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding Rights in
accordance with Section 7 hereof.
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
transfer taxes) was made. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate shall not be entitled to any rights of a
holder of Preferred Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to
receive any notice of any proceedings of the Company, except as provided
herein.
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Section
11. Adjustment
of Purchase Price, Number of Shares or Number of Rights.
The
Purchase Price, the number of Preferred Shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In
the
event the Company shall at any time after the date of this Agreement (A) declare
a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares
into a smaller number of Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive
the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided,
however,
that in
no event shall the consideration to be paid upon the exercise of one Right
be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
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(ii)
Subject
to the following paragraph of this subparagraph (ii) and to 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-thousandths of 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 Common Shares of the Company as shall equal the result obtained
by (x) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable
and
dividing that product by (y) 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 or thereafter become
outstanding, the Company shall not take any action that would eliminate or
diminish the benefits intended to be afforded by the Rights.
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From
and
after the occurrence of such an event, any Rights that are or were acquired
or
beneficially owned by such Acquiring Person (or any Associate or Affiliate
of
such Acquiring Person) on or after the earlier of (x) the date of such event
and
(y) the Distribution Date shall be void and any holder of such Rights shall
thereafter have no 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 void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer
of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee
of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof shall be canceled.
(iii)
In
the
event that the number of Common Shares which are authorized by the Company's
certificate of incorporation and not outstanding or subscribed for, or reserved
or otherwise committed for issuance for purposes other than upon exercise of
the
Rights, are not sufficient to permit the holder of each Right to purchase the
number of Common Shares to which he would be entitled upon the exercise in
full
of the Rights in accordance with the foregoing subparagraph (ii) of paragraph
(a) of this Section 11, or should the Board of Directors so elect, the Company
shall: (A) determine the excess of (1) the value of the Common Shares issuable
upon the exercise of a Right (calculated as provided in the last sentence of
this subparagraph (iii)) pursuant to Section 11(a)(ii) hereof (the "Current
Value")
over
(2) the Purchase Price (such excess, the "Spread"),
and
(B) with respect to each Right, make adequate provision to substitute for such
Common Shares, upon payment of the applicable Purchase Price, any one or more
of
the following having an aggregate value determined by the Board of Directors
to
be equal to the Current Value: (1) cash, (2) a reduction in the Purchase Price,
(3) Common Shares or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board
of
Directors of the Company has determined to have the same value as shares of
Common Stock (such shares of preferred stock, "common
stock equivalents")),
(4)
debt securities of the Company, or (5) other assets; provided,
however,
if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the first occurrence of
an
event triggering the rights to purchase Common Shares described in Section
11(a)(ii) (the "Section
11(a)(ii) Trigger Date"),
then
the Company shall be obligated to deliver, upon the surrender for exercise
of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and
cash have an aggregate value equal to the Spread. If the Board of Directors
of
the Company shall determine in good faith that it is likely that sufficient
additional Common Shares could be authorized for issuance upon exercise in
full
of the Rights, the thirty (30) day period set forth above may be extended to
the
extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be extended,
the
"Substitution
Period").
To
the extent that the Company determines that some action need be taken pursuant
to the first and/or second sentences of this Section 11(a)(iii), the Company
(x)
shall provide, subject to Section 7(e) hereof and the last paragraph of Section
11(a)(ii) hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to
be
made pursuant to such first sentence and to determine the value thereof. In
the
event of any such suspension, the Company shall make a public announcement,
and
shall deliver to the Rights Agent a statement, stating that the exercisability
of the Rights has been temporarily suspended. At such time as the suspension
is
no longer in effect, the Company shall make another public announcement, and
deliver to the Rights Agent a statement, so stating. For purposes of this
Section 11(a)(iii), the value of the Common Shares shall be the current per
share market price (as determined pursuant to Section 11(d)(i) hereof) of the
Common Shares on the Section 11(a)(ii) Trigger Date and the value of any common
stock equivalent shall be deemed to have the same value as the Common Shares
on
such date.
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(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, powers 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 adjusted 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 shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be
paid
in a consideration part or all of which shall be in a form other than cash,
the
value of such consideration shall be as determined in good faith by the Board
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 adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not
so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
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(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 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 shares of capital stock of the Company
to be issued 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.
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(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 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 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. 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 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 Security 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.
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(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 method 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 1000. If neither
the
Common Shares nor the Preferred Shares are publicly held or so listed or traded,
"current
per share market price"
shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent.
(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 of a Preferred Share or one
ten-thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than three years from the
date of the transaction which requires such adjustment.
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(f) If
as a
result of an adjustment made pursuant to Section 11(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, the number of such
other shares so receivable upon exercise of any Right shall thereafter be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Shares
contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 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-thousandths of a Preferred Share
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
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(h) Unless
the Company shall have exercised its election as provided in Section 11(i),
upon
each adjustment of the Purchase Price as a result of the calculations made
in
Sections 11(b) and (c), each Right outstanding immediately prior to the making
of such adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-thousandths of a Preferred
Share
(calculated to the nearest one ten-millionth of a Preferred Share) obtained
by
(i) multiplying (x) the number of one one-thousandths of a share covered by
a
Right immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(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-thousandths of 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-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights
shall
become that number of Rights (calculated to the nearest one hundred-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been distributed, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been distributed, 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 to be so 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.
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(j) Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-thousandths of 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-thousandths of a Preferred Share
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 then par value 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 non-assessable Preferred Shares at
such
adjusted Purchase Price.
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27
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(l) In
any
case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the issuing to the holder
of any Right exercised after such record date of the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares and other capital stock or securities of
the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided,
however,
that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
upon
the occurrence of the event requiring such adjustment.
(m) Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that
it
in its sole discretion shall determine to be advisable in order that any (i)
combination or subdivision of the Preferred Shares, (ii) issuance wholly for
cash of any Preferred Shares at less than the current market price, (iii)
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, (iv) dividends on
Preferred Shares payable in Preferred Shares or (v) issuance of any rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made
by
the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
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28
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(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 or (ii) effect a subdivision, combination
or consolidation of the Common Shares (by reclassification or otherwise other
than by payment of dividends in Common Shares) into a greater or lesser number
of Common Shares, then in any such case (i) the number of one one-thousandths
of
a Preferred Share purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of one one-thousandths
of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
before such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (ii) each Common Share outstanding
immediately after such event shall have issued with respect to it that number
of
Rights which each Common Share outstanding immediately prior to such event
had
issued with respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared or paid or
such
a subdivision, combination or consolidation is effected.
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Section
12. Certificate
of Adjustment.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file
with
the Rights Agent and with each transfer agent for the Common Shares 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 not be obligated or responsible
for
calculating any adjustment nor shall it be deemed to have knowledge of such
an
adjustment unless and until it shall have received such
certificate.
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30
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Section
13. Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.
In
the
event that, at any time after a Person becomes an Acquiring Person, directly
or
indirectly, (i) the Company shall consolidate with, or merge with and into,
any
other Person, (ii) any Person shall consolidate with the Company, or merge
with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, 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 other Person
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 (A) 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-thousandths of 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 Common Shares of
such
other Person (including the Company as successor thereto or as the surviving
corporation) as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-thousandths of a Preferred
Share
for which a Right is then exercisable and dividing that product by (y) 50%
of
the then current per share market price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date of consummation
of such consolidation, merger, sale or transfer; (B) the issuer of such Common
Shares shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of
the
Company pursuant to this Agreement; (C) the term "Company"
shall
thereafter be deemed to refer to such issuer; and (D) such issuer shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation
to
the Common Shares thereafter deliverable upon the exercise of the Rights. The
Company covenants and agrees that it shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing. 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 or consolidations or sales or other transfers. For purposes hereof,
the
"earning
power"
of the
Company and its Subsidiaries shall be determined in good faith by the Company's
Board of Directors on the basis of the operating earnings of each business
operated by the Company and its Subsidiaries during the three fiscal years
preceding the date of such determination (or, in the case of any business not
operated by the Company or any Subsidiary during three full fiscal years
preceding such date, during the period such business was operated by the Company
or any Subsidiary).
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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 the purposes of this Section 14(a), the current market value of
a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of
the closing bid and asked prices, regular way, in either case as reported in
the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the 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.
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(b) The
Company shall not be required to issue fractions of Preferred Shares (other
than
fractions which are integral multiples of one one-thousandth of a Preferred
Share) upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral multiples
of one one-thousandth of a Preferred Share). Fractions of Preferred Shares
in
integral multiples of one one-thousandth of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided,
that
such agreement shall provide that the 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 Preferred Shares that are not integral multiples
of one one-thousandth of a Preferred Share, the Company shall pay to each
registered holder 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 as the fraction of one Preferred Share
that
such holder would otherwise receive upon the exercise of the aggregate number
of
rights exercised by such holder. For the 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 any right
to
receive fractional Rights or fractional shares upon exercise of a Right (except
as provided above).
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Section
15. Rights
of Action.
All
rights of action in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Shares); and any registered holder
of
any Right Certificate (or, prior to the Distribution Date, of the Common Shares)
may, 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), on
his
own behalf and for his own benefit, enforce, and may institute and maintain
any
suit, action or proceeding against the Company to enforce, or otherwise act
in
respect of, his right to exercise the Rights evidenced by such 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;
(b) after
the
Distribution Date, the Right Certificates are transferable only on the registry
books maintained by the Rights Agent if surrendered at the principal office
of
the Rights Agent, duly endorsed or accompanied by a proper instrument of
transfer with a completed form of certification; and
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(c) the
Company and the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated Common Shares certificate made
by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice
to
the contrary.
Section
17. Right
Certificate Holder Not Deemed a Stockholder.
No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby nor shall anything contained herein
or in any 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 or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
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Section
18. Concerning
the Rights Agent.
The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or
expense, incurred without gross negligence, bad faith or willful misconduct
on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim or liability
in
connection therewith. The indemnification provided for hereunder shall survive
the expiration of the Rights and the termination of this Agreement. The costs
and expenses of enforcing this right of indemnification shall also be paid
by
the Company.
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36
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The
Rights Agent may conclusively rely upon and shall be protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by
it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Preferred 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.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the Rights Agent be liable for special, indirect or consequential 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 and
regardless of the form of the action.
Section
19. Merger
or Consolidation or Change of Name of Rights Agent.
Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time
such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
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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.
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Section
20. Duties
of Rights Agent.
The
Rights Agent undertakes the duties and obligations expressly set forth in this
Agreement and no implied duties or obligations shall be read into this Agreement
against the Rights Agent. The Rights Agent shall perform those duties and
obligations 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) Before
the Rights Agent acts or refrains from acting, it may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent
as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action hereunder, such fact
or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the President, a Vice President, the Treasurer
or the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
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39
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(c) The
Rights Agent shall be liable hereunder only for its 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 as to its countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed to have been made
by the Company only.
(e) The
Rights Agent shall not be under any responsibility in respect of the validity
of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be responsible
for
any adjustment required under the provisions of Sections 11 or 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preferred Shares will,
when so issued, be validly authorized and issued, fully paid and
nonassessable.
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40
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(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
President, a Vice President, the Secretary or the Treasurer of the Company,
and
to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer. Any
application by the Rights Agent for written instructions from the Company may,
at the option of the Rights Agent, set forth in writing any action proposed
to
be taken or omitted by the Rights Agent under this Agreement and the date on
or
after which such action shall be taken or such omission shall be effective.
The
Rights Agent shall not be liable for any action taken 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 ten 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, in response to such application, written instructions with respect
to
the proposed action or omission specifying a different action to be taken or
omitted.
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41
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(h) The
Rights Agent and any stockholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or accountable for
any
act, default, neglect or misconduct of any such attorneys or agents or for
any
loss to the Company resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued employment
thereof.
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(j) No
provision of this Agreement shall require the Rights Agent to expend or risk
its
own funds or otherwise incur any financial liability in the performance of
any
of its duties hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(k) The
Rights Agent shall not be required to take notice or be deemed to have notice
of
any fact, event or determination (including, without limitation, any dates
or
events defined in this Agreement or the designation of any Person as an
Acquiring Person, Affiliate or Associate) under this Agreement unless and until
the Rights Agent shall be specifically notified in writing by the Company of
such fact, event or determination.
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Section
21. Change
of Rights Agent.
The
Rights Agent or any successor Rights Agent may resign and be discharged from
its
duties under this Agreement upon 30 days' notice in writing mailed to the
Company and to each transfer agent of the Common Shares and the Preferred Shares
by registered or certified mail, and, at the expense of the Company, 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 and the 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 any state of the United
States, in good standing, having an office in the State of Texas which is
authorized under such laws to exercise corporate trust powers and is subject
to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100 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 it hereunder, and execute and deliver
any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent
of
the Common Shares and the 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.
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44
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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
Board
of Directors of the Company may, at its option, at any time prior to such time
as any Person becomes an Acquiring Person, redeem all but not less than all
the
then outstanding Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption
Price").
The
redemption of the Rights by the Board of Directors may be made effective at
such
time, on such basis and subject to such conditions as the Board of Directors
in
its sole discretion may establish.
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45
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(b) Immediately
upon the time of the effectiveness of the redemption of the Rights pursuant
to
paragraph (a) of this Section 23 or such earlier time as may be determined
by
the Board of Directors of the Company in the action ordering such redemption
(although not earlier than the time of such action) (such time the "Redemption
Date"),
and
without any further action and without any notice, the right to exercise the
Rights shall terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided,
however,
that
the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after such action of the Board
of
Directors ordering the redemption of the Rights pursuant to paragraph (a),
the
Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice which is mailed
in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. If the payment of the Redemption Price is not included
with
such notice, each such notice shall 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, other than in connection with the purchase of Common Shares
prior to the Distribution Date.
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Section
24. Exchange.
(a) The
Board
of Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at
an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the
date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered
to
effect such exchange at any time after any Person (other than the Company,
any
Subsidiary of the Company, any employee benefit plan of the Company or any
such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms
of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of a majority of the Common Shares then
outstanding.
(b) Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be
to
receive that number of Common Shares equal to the number of such Rights held
by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided,
however,
that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear
upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata
based on
the number of Rights (other than Rights which have become void pursuant to
the
provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
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(c) In
any
exchange pursuant to this Section 24, the Company, at its option, may substitute
Preferred Shares or common stock equivalents for Common Shares exchangeable
for
Rights, at the initial rate of one one-thousandth of a Preferred Share (or
an
appropriate number of common stock equivalents) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, 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.
(d) In
the
event that there shall not be sufficient Common Shares, Preferred Shares or
common stock equivalents authorized by the Company's certificate of
incorporation and not outstanding or subscribed for, or reserved or otherwise
committed for issuance for purposes other than upon exercise of Rights, 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, Preferred Shares or common stock equivalents for
issuance upon exchange of the Rights.
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48
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(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 per share market value of a whole Common Share. For the purposes of
this
paragraph (e), the current per share market value of a whole Common Share shall
be the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior
to
the date of exchange pursuant to this Section 24.
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49
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Section
25. Notice
of Certain Events.
(a) In
case
the Company shall after the Distribution Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to
make
any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its 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 or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section
26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date
of participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given
in
the case of any action covered by clause (i) or (ii) above at least 10 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
10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
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(b) In
case
any event set forth in Section 11(a)(ii) hereof shall occur, then the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence
of
such event, which notice shall describe such event and the consequences of
such
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:
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The
Exploration Company of Delaware, Inc.
000
Xxxxx
Xxxx 0000 Xxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxx 00000
Attention:
Xxxxxxx X. Xxxxxx
Vice
President, Finance
Copy
to:
Xx.
Xxxxx
Xxxxxxx
Xxxxxx
& Xxxxxxxxx, L.L.P.
000
Xxxxx
Xxxxxx Xxxx'x, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxx 00000
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 registered or certified mail and shall be deemed given upon receipt
and,
addressed (until another address is filed in writing with the Company) as
follows:
Fleet
National Bank
c/o
EquiServe Limited Partnership
000
Xxxxxx Xxxxxx
Xxxxxx,
XX 00000
Attention:
Client Administration
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.
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52
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Section
27. Supplements
and Amendments.
The
Company may from time to time, and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Right Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with
any
other provisions herein, or to make any change to or delete any provision hereof
or to adopt any other provisions with respect to the Rights which the Company
may deem necessary or desirable; provided,
however,
that
from and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended or supplemented in any manner which would
adversely affect the interests of the holders of Rights (other than an Acquiring
Person and its Affiliates and Associates). Any supplement or amendment
authorized by this Section 27 will be evidenced by a writing signed by the
Company and the Rights Agent. Notwithstanding anything in this Agreement to
the
contrary, no supplement or amendment that changes the rights and duties of
the
Rights Agent under this Agreement will be effective against the Rights Agent
without the execution of such supplement or amendment by the Rights
Agent.
Section
28. Successors.
All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
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53
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Section
29. Benefits
of this Agreement.
Nothing
in this Agreement shall be construed to give to any person or entity other
than
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).
Section
30. Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section
31. Governing
Law.
This
Agreement and each Right Certificate issued hereunder shall be deemed to be
a
contract made under the laws of the State of Delaware and for all purposes
shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State.
Section
32. Counterparts.
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
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Section
33. 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
34. Administration.
The
Board of Directors of the Company shall have the exclusive power and authority
to administer and interpret the provisions of this Agreement and to exercise
all
rights and powers specifically granted to the Board of Directors or the Company
or as may be necessary or advisable in the administration of this Agreement.
All
such actions, calculations, determinations and interpretations which are done
or
made by the Board of Directors in good faith shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties and shall not subject the Board of Directors to any liability
to
the holders of the Rights.
IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be
duly
executed and their respective corporate seals to be hereunder affixed and
attested, all as of the day and year first above written.
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|
Attest:
|
THE
EXPLORATION COMPANY OF
DELAWARE,
INC.
|
||
|
By:
|
|
||
|
|
|
||
| Title: | Title: | ||
|
Attest:
|
FLEET
NATIONAL BANK,
as
Rights Agent
|
||
|
By:
|
|
||
|
|
|
||
| Title: | Title: | ||
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________________________________________________________
THE
EXPLORATION COMPANY OF DELAWARE, INC.
and
FLEET
NATIONAL BANK
Rights
Agent
Dated
as
of June 29, 2000
________________________________________________________
|
TABLE
OF CONTENTS
|
|
Page
|
||
|
Section 1.
|
Certain
Definitions
|
2
|
|
Section 2.
|
Appointment
of Rights Agent
|
8
|
|
Section 3.
|
Issue
of Right Certificates
|
8
|
|
Section 4.
|
Form
of Right Certificates
|
11
|
|
Section 5.
|
Countersignature
and Registration
|
11
|
|
Section 6.
|
Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates
|
12
|
|
Section 7.
|
Exercise
of Rights; Purchase Price; Expiration Date of Rights
|
13
|
|
Section 8.
|
Cancellation
and Destruction of Right Certificates
|
15
|
|
Section 9.
|
Status
and Availability of Preferred Shares
|
16
|
|
Section 10.
|
Preferred
Shares Record Date
|
17
|
|
Section 11.
|
Adjustment
of Purchase Price, Number of Shares or Number of Rights
|
18
|
|
Section 12.
|
Certificate
of Adjustment
|
30
|
|
Section 13.
|
Consolidation,
Merger or Sale or Transfer of Assets or Earning Power
|
31
|
|
Section 14.
|
Fractional
Rights and Fractional Shares
|
32
|
|
Section 15.
|
Rights
of Action
|
34
|
|
Section 16.
|
Agreement
of Right Holders
|
34
|
|
Section 17.
|
Right
Certificate Holder Not Deemed a Stockholder
|
35
|
|
Section 18.
|
Concerning
the Rights Agent
|
00
|
X-x
|
Xxxxxxx 00.
|
Merger
or Consolidation or Change of Name of Rights Agent
|
37
|
|
Section 20.
|
Duties
of Rights Agent
|
39
|
|
Section 21.
|
Change
of Rights Agent
|
44
|
|
Section 22.
|
Issuance
of New Right Certificates
|
45
|
|
Section 23.
|
Redemption
|
45
|
|
Section 24.
|
Exchange
|
47
|
|
Section 25.
|
Notice
of Certain Events
|
50
|
|
Section 26.
|
Notices
|
51
|
|
Section 27.
|
Supplements
and Amendments
|
53
|
|
Section 28.
|
Successors
|
53
|
|
Section 29.
|
Benefits
of this Agreement
|
54
|
|
Section 30.
|
Severability
|
54
|
|
Section 31.
|
Governing
Law
|
54
|
|
Section 32.
|
Counterparts
|
54
|
|
Section 33.
|
Descriptive
Headings
|
55
|
|
Section
34.
|
Administration
|
55
|
|
Exhibit
A
|
Form
of Certificate of Designation of Series A Junior Participating Preferred
Stock
|
A-1
|
|
Exhibit
B
|
Form
of Right Certificate
|
B-1
|
|
Exhibit
C
|
Summary
of Rights to Purchase Preferred Shares
|
C-1
|
A-ii
Exhibit
A
FORM
of
CERTIFICATE
OF DESIGNATION
of
SERIES
A
JUNIOR PARTICIPATING PREFERRED STOCK
of
THE
EXPLORATION COMPANY OF DELAWARE, INC.
_______________________________________________
(Pursuant
to Section 151 of the
Delaware
General Corporation Law)
________________________________________________
The
Exploration Company of Delaware, Inc., a Delaware corporation (hereinafter
called the "Corporation"), hereby certifies that the following resolution was
adopted by the Board of Directors of the Corporation as required by Section
151
of the General Corporation Law at a meeting duly called and held on June 29,
2000:
RESOLVED,
that pursuant to the authority granted to and vested in the Board of Directors
of this Corporation (hereinafter called the "Board
of Directors"
or the
"Board")
in
accordance with the provisions of the Certificate of Incorporation of the
Corporation (the "Certificate
of Incorporation"),
the
Board of Directors hereby creates a series of Preferred Stock, par value $0.01
per share (the "Preferred
Stock"),
of
the Corporation and hereby states the designation and number of shares, and
fixes the relative rights, preferences, and limitations thereof as
follows:
Section
1. Designation
and Amount.
The
shares of this series shall be designated as "Series A Junior Participating
Preferred Stock" (the "Series
A Preferred Stock")
and
the number of shares constituting the Series A Preferred Stock shall be 30,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided,
that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section
2. Dividends
and Distributions.
(A) Subject
to the rights of the holders of any shares of any series of Preferred Stock
(or
any other stock) ranking prior and superior to the Series A Preferred Stock
with
respect to dividends, the holders of shares of Series A Preferred Stock shall
be
entitled to receive, when, as and if declared by the Board of Directors out
of
funds legally available for the purpose, quarterly dividends payable in cash
on
the last 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 Preferred Stock, in an amount
(if
any) per share (rounded to the nearest cent), subject to the provision for
adjustment hereinafter set forth, equal to 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 $0.01 per share (the
"Common
Stock"),
of
the Corporation 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 Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise
than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to
such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is
the number of shares of Common Stock that were outstanding immediately prior
to
such event.
(B) The
Corporation shall declare a dividend or distribution on the Series A Preferred
Stock as provided in paragraph (A) of this Section immediately after it declares
a dividend or distribution on the Common Stock (other than a dividend payable
in
shares of Common Stock).
A-2
(C) Dividends
due pursuant to paragraph (A) of this Section shall begin to accrue and be
cumulative on outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares, 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 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 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 Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section
3.
Voting
Rights.
The
holders of shares of Series A Preferred Stock shall have the following voting
rights:
(A) Subject
to the provision for adjustment hereinafter set forth, each share of Series
A
Preferred Stock shall entitle the holder thereof to 1000 votes on all matters
submitted to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case
the
number of votes per share to which holders of shares of Series A Preferred
Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
A-3
(B) Except
as
otherwise provided the Certificate of Incorporation, including any other
Certificate of Designation creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) Except
as
set forth herein, or as otherwise required by law, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section
4. Certain
Restrictions.
(A) Whenever
quarterly dividends or other dividends or distributions payable on the Series
A
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 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 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 Preferred Stock, except dividends paid ratably
on
the Series A 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; or
(iii) redeem
or
purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up)
to the Series A Preferred Stock, provided that the Corporation may at any `time
redeem, purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior (as to
dividends and upon dissolution, liquidation or winding up) to the Series A
Preferred Stock.
A-4
(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 Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled 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 or in the Certificate of
Incorporation, including any Certificate of Designation creating a series of
Preferred Stock or any similar stock, or as otherwise required by
law.
Section
6. Liquidation,
Dissolution or Winding Up.
Upon
any liquidation, dissolution or winding up of the Corporation the holders of
shares of Series A Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 1000 times the aggregate amount to be distributed per share to holders
of shares of Common Stock plus an amount equal to any accrued and unpaid
dividends. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then
in each such case the aggregate amount to which holders of shares of Series
A
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
A-5
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 each share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into 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. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then
in each such case the amount set forth in the preceding sentence with respect
to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section
8. Amendment.
The
Certificate of Incorporation shall not be amended in any manner, including
in a
merger or consolidation, which would alter, change, or repeal the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
Section
9. Rank.
The
Series A Preferred Stock shall rank, with respect to the payment of dividends
and upon liquidation, dissolution and winding up, junior to all series of
Preferred Stock.
IN
WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the
Corporation by its duly authorized officer this 29th
day of
June, 2000.
|
THE
EXPLORATION COMPANY OF
|
||
|
DELAWARE,
INC.
|
||
|
By:
|
||
|
Xxxxx
X. Xxxxxx
|
||
|
President
|
||
A-6
Exhibit
B
Form
of
Right Certificate
|
Certificate
No. R-
|
_______
Rights
|
NOT
EXERCISABLE AFTER JUNE 29, 2010 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT
ARE
OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES
OR AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR
ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right
Certificate
THE
EXPLORATION COMPANY OF DELAWARE, INC.
This
certifies that _______________________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of June 29, 2000 the "Rights
Agreement"),
between The Exploration Company of Delaware, Inc., a Delaware corporation (the
"Company"),
and
Fleet National Bank (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 5:00 P.M., San Antonio
time, on June 29, 2010, at the principal office of the Rights Agent, or at
the
office of its successor as Rights Agent, one one-thousandth of a fully paid
non-assessable share of Series A Junior Participating Preferred Stock, par
value
$0.01 per share (the "Preferred
Shares"),
of
the Company, at a purchase price of $12.00 per one one-thousandth of a Preferred
Share (the "Purchase
Price"),
upon
presentation and surrender of this Right Certificate with the certification
and
the Form of Election to Purchase duly executed. The number of Rights evidenced
by this Right Certificate (and the number of one one-thousandths of 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 June
29,
2000, 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-thousandths
of 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.
From
and
after the occurrence of an event described in Section 11(a)(ii) of the Rights
Agreement, if the Rights evidenced by this Right Certificate are or were at
any
time on or after the earlier of (x) the date of such event and (y) the
Distribution Date (as such term is defined in the Rights Agreement) acquired
or
beneficially owned by an Acquiring Person or an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall become void, and any holder of such Rights shall thereafter have
no
right to exercise such Rights.
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 offices of the Rights Agent.
This
Right Certificate, with or without other Right Certificates, upon surrender
at
the principal office of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of 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, at the Company's option, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $0.01 per Right or (ii) may be exchanged in whole or in part for shares
of the Company's Common Stock, par value $0.01 per share, or Preferred
Shares.
No
fractional Preferred Shares will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples
of
one one-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.
B-2
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
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 as provided in the Rights Agreement.
This
Right Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal. Dated as of _______________, ____.
|
Attest:
|
THE
EXPLORATION COMPANY OF
|
|||
|
DELAWARE,
INC.
|
||||
|
By:
|
||||
|
Title:
|
Title:
|
|||
|
Countersigned:
|
||||
|
FLEET
NATIONAL BANK
|
||||
|
Rights
Agent
|
||||
|
By:
|
||||
|
Authorized
Signature
|
||||
B-3
Form
of
Reverse Side of Right Certificate
FORM
OF ASSIGNMENT
(To
be
executed by the registered holder if such
holder
desires to transfer the Right Certificate.)
FOR
VALUE
RECEIVED _________________________________ hereby sells, assigns and transfers
unto _____________________
______________________________________________________________
(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
Guaranteed:
Signatures
must be guaranteed by a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc.,
or a
commercial bank or trust company having an office or correspondent in the United
States.
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).
|
Signature
|
B-4
Form
of
Reverse Side of Right Certificate — continued
FORM
OF ELECTION TO PURCHASE
(To
be
executed if holder desires to
exercise
the Right Certificate.)
To
THE
EXPLORATION COMPANY OF DELAWARE, INC.:
The
undersigned hereby irrevocably elects to exercise ________________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please
insert social security
or
other
identifying number
(Please
print name and address)
If
such
number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please
insert social security
or
other
identifying number
(Please
print name and address)
Dated:
_____________ ___, _____
|
Signature
|
B-5
Signature
Guaranteed:
Signatures
must be guaranteed by a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc.,
or a
commercial bank or trust company having an office or correspondent in the United
States.
B-6
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).
|
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.
B-7
Exhibit
C
SUMMARY
OF RIGHTS TO PURCHASE
PREFERRED
SHARES
On
June
29, 2000, the Board of Directors of The Exploration Company of Delaware,
Inc.
(the "Company")
declared a dividend of one preferred share purchase right (a "Right")
for
each outstanding share of Common Stock, par value $0.01 per share (the
"Common
Shares")
outstanding on July 19, 2000 (the "Record
Date")
to the
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares"),
of
the Company, at a price of $12.00 per one one-thousandth of 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 Fleet National Bank, as Rights Agent (the "Rights
Agent").
Until
the
earlier to occur of (i) 10 days following a public announcement that a person
or
group of affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding Common Shares or (ii)
10
business days (or such later date as may be determined by action of the Board
of
Directors prior to such time as any Person becomes an Acquiring Person)
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 the outstanding Common Shares
(the earlier of such dates being called the "Distribution
Date"),
the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with
a copy
of this Summary of Rights attached thereto.
The
Rights Agreement provides that, until the Distribution Date, the Rights will
be
transferred with and only with the Common Shares. Until the Distribution
Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date or 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 or expiration
of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of
this
Summary of Rights being attached thereto, will also constitute the transfer
of
the Rights associated with the Common Shares represented by such certificate.
As
soon as practicable following the Distribution Date, separate 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 June 29, 2010 (the "Final Expiration Date"),
unless the Final Expiration Date
is
extended or unless the Rights are earlier redeemed by the Company, in each
case,
as described below.
The
Purchase Price payable, and the number of Preferred Shares or other securities
or property issuable, upon exercise of the Rights are subject to adjustment
from
time to time to prevent dilution (i) in the event of a stock dividend on,
or a
subdivision, combination or reclassification of, the Preferred Shares, (ii)
upon
the grant to holders of the Preferred Shares of certain rights or warrants
to
subscribe for 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 or (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-thousandths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case,
prior to the Distribution Date.
Preferred
Shares purchasable upon exercise of the Rights will not be redeemable. Each
Preferred Share will be entitled to a quarterly dividend payment of 1000
times
the dividend declared per Common Share. In the event of liquidation, the
holders
of the Preferred Shares will be entitled to an aggregate payment of 1000
times
the aggregate payment made per Common Share. Each Preferred Share will have
1000
votes, voting together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged,
each
Preferred Share will be entitled to receive 1000 times the amount received
per
Common Share. These rights are protected by customary antidilution
provisions.
C-2
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.
From
and
after the occurrence of an event described in Section 11(a)(ii) of the Rights
Agreement, if the Rights evidenced by this Right Certificate are or were
at any
time on or after the earlier of (x) the date of such event and (y) the
Distribution Date (as such term is defined in the Rights Agreement) acquired
or
beneficially owned by an Acquiring Person or an Associate or Affiliate of
an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall become void, and any holder of such Rights shall thereafter
have no
right to exercise such Rights.
In
the
event that, at any time after a Person becomes an Acquiring Person, the Company
is acquired in a merger or other business combination transaction or 50%
or more
of its consolidated assets or earning power are sold, proper provision will
be
made so that each holder of a Right will thereafter 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 that any person becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person and its Affiliates and Associates
(which will thereafter be void), will thereafter have the right to receive
upon
exercise that number of Common Shares having a market value of two times
the
exercise price of the Right. If the Company does not have sufficient Common
Shares to satisfy such obligation to issue Common Shares, or if the Board
of
Directors so elects, the Company shall deliver upon payment of the exercise
price of a Right an amount of cash or securities equivalent in value to the
Common Shares issuable upon exercise of a Right; provided that, if the Company
fails to meet such obligation within 30 days following the date a Person
becomes
an Acquiring Person, the Company must deliver, upon exercise of a Right but
without requiring payment of the exercise price then in effect, Common Shares
(to the extent available) and cash equal in value to the difference between
the
value of the Common Shares otherwise issuable upon the exercise of a Right
and
the exercise price then in effect. The Board of Directors may extend the
30-day
period described above for up to an additional 60 days to permit the taking
of
action that may be necessary to authorize sufficient additional Common Shares
to
permit the issuance of Common Shares upon the exercise in full of the
Rights.
C-3
At
any
time after any Person becomes an Acquiring Person and prior to the acquisition
by any person or group of a majority of the outstanding Common Shares, the
Board
of Directors of the Company may exchange the Rights (other than Rights owned
by
such person or group which have become void), in whole or in part, at an
exchange ratio of one 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 will be issued (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) 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 time any Person becomes an Acquiring Person, the Board
of
Directors of the Company may redeem the Rights in whole, but not in part,
at a
price of $0.01 per Right (the "Redemption
Price").
The
redemption of the Rights may be made effective at such time, on such basis
and
with such conditions as the Board of Directors in its sole discretion may
establish. 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.
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, except that from and after such
time
as any person becomes an Acquiring Person no such amendment may adversely
affect
the interests of the holders of the Rights (other than the Acquiring Person
and
its Affiliates and Associates).
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.
A
copy of
the Agreement has been filed with the Securities and Exchange Commission
as an
Exhibit to a Registration Statement on Form 8-A dated June __, 2000. A copy
of
the 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 Agreement, which is hereby incorporated
herein
by reference.
C-4
