3-D Geophysical, Inc.
and
American Securities Transfer & Trust, Inc.
Rights Agent
RIGHTS AGREEMENT
Dated as of July 17, 1997
TABLE OF CONTENTS
Page
Section 1. Certain Definitions.............................................................................1
Section 2. Appointment of Rights Agent.....................................................................8
Section 3. Issuance of Rights Certificates.................................................................8
Section 4. Form of Rights Certificates.....................................................................9
Section 5. Execution, Countersignature and Registration...................................................10
Section 6. Transfer, Division, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.......................................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..................................12
Section 8. Cancellation and Destruction of Rights Certificates............................................14
Section 9. Reservation and Availability of Preferred Stock................................................14
Section 10. Preferred Stock Record Date....................................................................15
Section 11. Adjustments to Purchase Price, Number of Shares or Number of Rights............................16
Section 12. Certification of Adjustments...................................................................23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................24
Section 14. Fractional Rights and Fractional Shares........................................................27
Section 15. Rights of Action...............................................................................28
Section 16. Agreement of Rights Holders Concerning Transfer and Ownership of
Rights.........................................................................................28
Section 17. Rights Holder Not Deemed a Stockholder.........................................................29
Section 18. Concerning the Rights Agent....................................................................29
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................30
Section 20. Duties of Rights Agent.........................................................................30
Section 21. Change of Rights Agent.........................................................................32
Section 22. Issuance of New Rights Certificates............................................................33
Section 23. Redemption.....................................................................................33
Section 24. Notice of Certain Events.......................................................................34
Section 25. Notices........................................................................................35
Section 26. Amendments and Supplements.....................................................................36
Section 27. Successors.....................................................................................37
Section 28. Benefits of this Agreement; Determinations and Actions by the Board of
Directors......................................................................................37
Section 29. Severability...................................................................................37
Section 30. Governing Law..................................................................................38
Section 31. Counterparts...................................................................................38
Section 32. Descriptive Headings...........................................................................38
Section 33. Grammatical Construction.......................................................................38
-i-
RIGHTS AGREEMENT
Rights Agreement (this "Agreement") dated as of July 17, 1997, between
3-D Geophysical, Inc., a Delaware corporation (the "Company"), and American
Securities Transfer & Trust, Inc. (the "Rights Agent").
R E C I T A L S
The Board of Directors of the Company has authorized and declared the
payment of a dividend of one preferred share purchase right (the "Right") for
each share of Common Stock (as defined in Section 1) outstanding on the Record
Date (as defined in Section 1) and has authorized the issuance of one Right for
each share of Common Stock issued between the Record Date and the Distribution
Date (as defined in Section 1), and, in certain cases following the Distribution
Date. Each Right represents, as of the Record Date, the right to purchase one
one-thousandth of a share of Preferred Stock (as defined in Section 1) upon the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) (i) "Acquiring Person" means any Person who or which, together with
all Affiliates and Associates of such Person, is (or has previously been, at any
time after the date of this Agreement, whether or not such Person(s) continues
to be) the Beneficial Owner of 15% or more of the Common Stock then outstanding
(determined without taking into account any securities exercisable or
exchangeable for, or convertible into, Common Stock, other than any such
securities beneficially owned by the Acquiring Person and Affiliates and
Associates of such Person). However, "Acquiring Person" shall not include any
Exempt Person.
(ii) A Person does not become an "Acquiring Person" solely as the
result of (A) an acquisition of Common Stock by the Company or any of its
Subsidiaries which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Stock then outstanding as determined pursuant to Section 1(a)(i),
or (B) such Person becoming the Beneficial Owner of 15% or more of the Common
Stock then outstanding as determined pursuant to Section 1(a)(i) solely as a
result of an Exempt Event; provided, however, that if a Person becomes the
Beneficial Owner of 15% or more of the Common Stock then outstanding as
determined pursuant to Section 1(a)(i) solely by reason of such a share
acquisition by the Company or the occurrence of such an Exempt Event and such
Person shall, after becoming the Beneficial Owner of such Common Stock, become
the Beneficial Owner of additional shares of Common Stock constituting 1% or
more of the then outstanding shares of Common Stock by any means whatsoever
(other than as a result of the subsequent occurrence of an Exempt Event, a stock
dividend or a subdivision of the Common Stock into a larger number of shares or
a similar transaction), then such Person shall be deemed to be an "Acquiring
Person; or (C) the
inadvertent acquisition of beneficial ownership of 15% or more of the Common
Stock of the Company if the Board of Directors determines in good faith that
such acquisition was inadvertent and such Person immediately divests itself of a
sufficient number of shares of Common Stock so that such Person could no longer
be an "Acquiring Person"; or (D), if such Person is an Institutional Investor,
such Institutional Investor becoming the Beneficial Owner of 15% or more of the
Common Stock then outstanding as determined pursuant to Section 1(a)(i) solely
by reason of such Institutional Investor's Regular Trading Activities; provided,
however, that if an Institutional Investor becomes the Beneficial Owner of 20%
or more of the Common Stock other than solely as the result of the events
described in clause (B) or (C) of this Section 1(a)(ii) (and in the case of
clause (C), such Institutional Investor immediately divests itself of a
sufficient number of shares of Common Stock as that it is no longer the
Beneficial Owner of 20% or more of the Common Stock), then such Institutional
Investor shall be deemed an "Acquiring Person."
(b) "Affiliate" of a Person has the meaning given to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Agreement.
(c) "Associate" of a Person has the meaning given to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Agreement.
(d) Except as provided below, a Person is the "Beneficial Owner" of,
and "beneficially owns," any securities:
(i) which such Person or any Affiliate or Associate of such Person
beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such Person
has, directly or indirectly, the right or obligation (whether or not then
exercisable or effective) to acquire pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants or options,
or otherwise; provided, however, that a Person will not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any Affiliate or Associate
of such Person until such tendered securities are accepted for purchase or
exchange; and provided further, that prior to the occurrence of a Triggering
Event, a Person will not be deemed the Beneficial Owner of, or to beneficially
own, securities obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of such Person
has, directly or indirectly, the right (whether or not then exercisable or
effective) to vote, or to direct the voting of, pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security pursuant to this clause (iii) if the agreement, arrangement or
understanding to vote, or to direct the voting of, such security (A) arises
solely from a revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the Exchange Act
and applicable rules and regulations thereunder and
-2-
(B) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor schedule or report);
(iv) which such Person or any Affiliate or Associate of such Person
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act or any successor
provision); or
(v) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate of such other Person with whom such
Person or any Affiliate or Associate of such Person has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
subparagraph (iii) of this Section 1(d)) or disposing of any securities of the
Company.
Nothing in this Section 1(d) causes a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in good faith
in a firm commitment underwriting until the expiration of 40 days after the date
of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person is to be treated as the "Beneficial Owner"
of, or to "beneficially own," any securities owned by any other Person that is
an Exempt Person.
(e) "Board of Directors" means the Board of Directors of the Company,
as the same is constituted from time to time, or if the Company ceases to exist
as a result of a Business Combination or otherwise, the board of directors of
the Company's successor, if any.
(f) "Business Combination" has the meaning set forth in Section 13(a).
(g) "Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the States of New York or Colorado are
authorized or obligated by law or executive order to close.
(h) "Close of Business" on any given date means 5:00 p.m., Denver,
Colorado time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Denver, Colorado time, on the next
succeeding Business Day.
(i) "Common Stock" when used in any context applicable prior to a
Business Combination means the Common Stock, par value $.01 per share, of the
Company (as the same may be changed by reason of any combination, subdivision or
reclassification of the Common Stock). "Common Stock" when used with reference
to any Person (other than the Company prior to a Business Combination) means
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which shares or units do
not limit (as a fixed amount and not merely in proportional terms) the amount of
dividends or income payable or distributable on such shares or units or the
amount of assets distributable on such shares or
-3-
units upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person and do not provide that such shares or units are subject to
redemption at the option of such Person, or any shares of capital stock or units
of equity interests into which the foregoing shall be reclassified or changed;
provided, however, that if at any time there are more than one such class or
series of capital stock of or equity interests in such Person, "Common Stock" of
such Person will include all such classes and series substantially in the
proportion of the total number of shares or other units of each such class or
series outstanding at such time.
(j) "Current Market Price" per share of Common Stock, Preferred Stock
or Equivalent Shares on any date is the average of the daily closing prices per
share of such Common Stock, Preferred Stock or Equivalent Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) ending on the
last Trading Day immediately prior to such date for the purpose of any
computation under this Agreement except computations made pursuant to Section
11(a)(iv), and for the last Trading Day immediately prior to such date for the
purpose of any computation under Section 11(a)(iv); provided, however, that in
the event that the Current Market Price per share of Common Stock, Preferred
Stock or Equivalent Shares is determined during a period following the
announcement by the issuer of such Common Stock, Preferred Stock or Equivalent
Shares of (i) a dividend or distribution on such Common Stock, Preferred Stock
or Equivalent Shares other than a regular quarterly cash dividend, or (ii) any
subdivision, combination or reclassification of such Common Stock, Preferred
Stock or Equivalent Shares, and prior to the expiration of 30 Trading Days after
the "ex-dividend" date for such dividend or distribution or the record date for
such subdivision, combination or reclassification, then, and in each such case,
the "Current Market Price" must be appropriately adjusted to take into account
such dividend, distribution, subdivision, combination or reclassification. The
closing price for each Trading Day shall be the last sale price, regular way, on
such day, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, on such day, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq") National Market
or, if the Common Stock, Preferred Stock or Equivalent Shares are not listed or
admitted to trading on the Nasdaq National Market, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal United States national securities exchange on which the Common
Stock, Preferred Stock or Equivalent Shares are listed or admitted to trading
or, if the Common Stock, Preferred Stock or Equivalent Shares are not listed or
admitted to trading on any United States national securities exchange, the last
quoted sale price on such day or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market on such day, as reported by
Nasdaq or such other system then in use. If on any such day the Common Stock,
Preferred Stock or Equivalent Shares are not quoted by any such organization,
the average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Common Stock, Preferred Stock
or Equivalent Shares selected by a majority of the Board of Directors shall be
used. If no such market maker is making a market, the fair market value of such
shares on such day as determined in good faith by a majority of the Board of
Directors or the Board of Directors of the issuer of such Common Stock,
Preferred Stock or Equivalent Shares must be used, which determination must be
described in a statement filed with the Rights Agent and shall be final, binding
and conclusive for all purposes. The term "Trading Day" means a day on which the
principal United States
-4-
national securities exchange on which the Common Stock, Preferred Stock or
Equivalent Shares are listed or admitted to trading is open for the transaction
of business or, if the Common Stock, Preferred Stock of Equivalent Shares are
not listed or admitted to trading on any United States national securities
exchange, but are traded in the over-the-counter market and reported by Nasdaq,
then any day for which Nasdaq reports the high bid and low asked prices in the
over-the-counter market, or if the Common Stock, Preferred Stock or Equivalent
Shares are not traded in the over-the-counter market and reported by Nasdaq,
then a Business Day. If the Common Stock, Preferred Stock or Equivalent Shares
have not been so listed or admitted to trading for 30 or more Trading Days or
traded in the over-the-counter market and reported by Nasdaq for 30 or more
Trading Days, "Current Market Price" per share means the fair market value per
share as determined in good faith by a majority of the Board of Directors, whose
determination must be described in a statement filed with the Rights Agent and
shall be final, binding and conclusive for all purposes.
(k) "Distribution Date" means the earlier of (i) the day after the
Company's right to redeem the Rights pursuant to Section 23(a)(i) expires, and
(ii) the tenth Business Day after the Tender Offer Date. The Board of Directors
may, at its election, defer the date set forth in clause (ii) of the preceding
sentence to a specified later date or to an unspecified later date to be
determined by a subsequent action or event.
(l) "Equivalent Shares" means any class or series of capital stock of
the Company, other than the Preferred Stock, which is entitled to participate on
a proportional basis with the Preferred Stock in dividends and other
distributions, including distributions upon the liquidation, dissolution or
winding up of the Company. In calculating the number of any class or series of
Equivalent Shares for purposes of Section 11, the number of shares, or fractions
of a share, of such class or series of capital stock that is entitled to the
same dividend or distribution as a whole share of Preferred Stock shall be
deemed to be one share.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(n) "Exchange Date" means the time at which the Rights are exchanged
pursuant to Section 11(a)(iv).
(o) "Exempt Event" means with respect to any Person, the acquisition by
such Person of Beneficial Ownership of Common Stock of the Company solely as a
result of the occurrence of a Triggering Event and the effect of such Triggering
Event on the last proviso of clause (ii) of the definition of Beneficial Owner,
other than a Triggering Event in which such Person becomes an Acquiring Person.
(p) "Exempt Person" means (i) the Company, (ii) any Subsidiary of the
Company, (ii) any employee benefit plan of the Company or of any Subsidiary of
the Company, and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.
-5-
(q) "Expiration Date" means the Close of Business on July 17, 2007.
(r) "Institutional Investor" shall mean a Person who is principally
engaged in the business of managing investment funds for unaffiliated securities
investors and, as part of such Person's duties as agent for fully managed
accounts, holds or exercises voting or dispositive power over shares of Common
Stock.
(s) "Person" means any individual, firm, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity, and shall include any "group" as that term is used
in Rule 13d-5(b) under the Exchange Act (or any successor provision).
(t) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, par value $.01 per share, having the rights and preferences set
forth in the Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock attached hereto as Exhibit A.
(u) "Principal Party" means (i) in the case of any Business Combination
described in clause (i), (ii) or (iii) of the first sentence of Section 13(a),
(A) the Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted or for which they are exchanged in such
Business Combination or, if there is more than one such issuer, the issuer of
the Common Stock which has the greatest aggregate market value or (B) if no
securities are so issued, the Person that survives or results from such Business
Combination or, if there is more than one such Person, the Person the Common
Stock of which has the greatest aggregate market value; and (ii) in the case of
any Business Combination described in clause (iv) of the first sentence in
Section 13(a), the Person that receives the greatest portion of the assets or
earning power transferred pursuant to such Business Combination or, if each
Person that is a party to such Business Combination receives the same portion of
the assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot reasonably be determined,
whichever of such Persons is the issuer of the Common Stock which has the
greatest aggregate market value; provided, however, that in any such case, if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act; (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value; or (z)
if the Common Stock of none of such other Persons has been so registered,
"Principal Party" refers to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. In case such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a Subsidiary of both or all of such joint venturers and the
-6-
Principal Parties in each such chain shall bear the obligations set forth in
Section 13 in the same ratio as their direct or indirect interests in such
Person bear to the total of such interests.
(v) "Purchase Price" with respect to each Right is initially $50.00 per
one one-thousandth of a share of Preferred Stock, shall be subject to adjustment
from time to time as provided in Sections 11 and 13, and shall be payable in
lawful money of the United States of America in cash or by certified check or
bank draft payable to the order of the Company.
(w) "Record Date" means the Close of Business on July 18, 1997.
(x) "Redemption Date" means the time at which the Rights are scheduled
to be redeemed as provided in Section 23.
(y) "Redemption Price" has the meaning given to such term in Section
23.
(z) "Regular Trading Activities" means trading activities undertaken in
the Institutional Investor's normal course of business and not for the purpose
of exercising, either alone or in concert with any other Person, power to direct
or cause the direction of the management and policies of the Company.
(aa) "Rights Agent" means American Securities Transfer & Trust, Inc. or
any Co-Rights Agent or Successor Rights Agent appointed by the Company pursuant
to Section 2.
(bb) "Securities Act" means the Securities Act of 1933, as amended, and
any successor statute.
(cc) "Stock Acquisition Date" means the first date (including, without
limitation, any such date which is on or after the date of this Agreement and
prior to the issuance of the Rights) of public disclosure by the Company, an
Acquiring Person or otherwise that a Person has become an Acquiring Person.
(dd) "Subsidiary" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
(ee) "Tender Offer Date" means the date of commencement or public
disclosure of an intention to commence (including any such commencement or
public disclosure which occurs on or after the date of this Agreement and prior
to the issuance of the Rights) a tender offer or exchange offer by a Person if,
after acquiring the maximum number of securities sought pursuant to such offer,
such Person, or any Affiliate or Associate of such Person, would be an Acquiring
Person.
(ff) "Triggering Event" occurs when a Person becomes an Acquiring
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions
-7-
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights shall be issued in
respect of and shall be evidenced by the certificates representing the shares of
Common Stock issued and outstanding on the Record Date and shares of Common
Stock issued or which become outstanding after the Record Date and prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date (which certificates for Common Stock shall be deemed to also
be certificates evidencing the Rights), and not by separate certificates; (ii)
the registered holders of such shares of Common Stock shall also be the
registered holders of the Rights associated with such shares; and (iii) the
Rights shall be transferable only in connection with the transfer of shares of
Common Stock and the surrender for transfer of any certificate for such shares
of Common Stock shall also constitute the surrender for transfer of the Rights
associated with the shares of Common Stock represented thereby. As soon as
practicable after the Company has notified the Rights Agent of the occurrence of
the Distribution Date, the Company will prepare and execute, and the Company
will deliver to the Rights Agent to be countersigned, which the Rights Agent
shall do, and the Rights Agent shall mail, by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, as shown by the records of the Company, at
the address of such holder shown on such records, one or more certificates
evidencing the Rights ("Rights Certificates"), in substantially the form of
Exhibit B hereto, evidencing one Right (as adjusted from time to time pursuant
to this Agreement) for each share of Common Stock so held. From and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates. In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(o), at the time of
distribution of the Rights Certificates, the Company may make the necessary and
appropriate adjustments (in accordance with Section 14(a)) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Stock as of
the close of business on the Record Date (other than any Acquiring Person or any
Associate or Affiliate of any Acquiring Person), at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Stock outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the names of the holders
thereof together with the Summary of Rights. Until the Distribution Date (or the
earlier of the Redemption Date and the Expiration Date), the surrender for
transfer of any certificate for Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued or sold by the Company after the Record Date but prior to the
earliest of the Distribution
-8-
Date, the Redemption Date, the Exchange Date or the Expiration Date. In
addition, in connection with the issuance or sale of Common Stock by the Company
following the Distribution Date and prior to the earliest of the Redemption
Date, the Exchange Date or the Expiration Date, the Company shall, with respect
to Common Stock so issued or sold pursuant to (i) the exercise of stock options
issued prior to the Distribution Date or under any employee plan or arrangement
created prior to the Distribution Date, or (ii) upon the exercise, conversion or
exchange of securities issued by the Company prior to the Distribution Date,
issue Rights and Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (x) no
such Rights and Rights Certificates shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificates would be issued; and (y) no such Rights
and Rights Certificates shall be issued, if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Certificates issued after the Record Date representing shares of Common Stock
outstanding on the Record Date or shares of Common Stock issued after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date,
the Exchange Date and the Expiration Date shall have impressed, printed, or
written on, or otherwise affixed to them a legend substantially in the following
form:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between 3-D
Geophysical, Inc. and American Securities Transfer & Trust, Inc., as
Rights Agent, dated as of July 17, 1997 (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 3-D
Geophysical, Inc. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. 3-D
Geophysical, 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, as set forth in the Rights
Agreement, Rights that were, are or become beneficially owned by
Acquiring Persons or their Associates or Affiliates (as such terms are
defined in the Rights Agreement) may become null and void and the
holder of any of such Rights (including any subsequent holder) shall
not have any right to exercise such Rights.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase
shares and form of assignment to be printed on the reverse thereof) shall be in
substantially the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
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 any securities association on whose interdealer quotation system the
Rights may be from time to time authorized for quotation, or to conform to
usage. Subject to the provisions of this Agreement,
-9-
the Rights Certificates, whenever issued, shall be dated as of the Distribution
Date, and on their face shall entitle the holders thereof to purchase such
number of shares of Preferred Stock as shall be set forth therein at the
Purchase Price set forth therein, but the number and kind of such securities and
the Purchase Price shall be subject to adjustment as provided in this Agreement.
(b) Notwithstanding any other provision of this Agreement, (i) any
Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned or formerly beneficially owned, on or after the earlier of
the Distribution Date and the Stock Acquisition Date, by a Person known by the
Company to be: (A) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person; (B) a direct or indirect transferee of an Acquiring Person (or
of an Associate or Affiliate of such Acquiring Person) who becomes or becomes
entitled to be a transferee after the Acquiring Person becomes such; or (C) a
direct or indirect transferee of an Acquiring Person (or of an Associate or
Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (x) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in an Associate or
Affiliate of such Acquiring Person) or to any Person with whom such Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (y) a direct or indirect transfer which a majority of the Board of
Directors has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of Section 7(e); or (ii) any
Rights Certificate issued pursuant to this Agreement upon transfer, exchange,
replacement or adjustment of any other Rights Certificate beneficially owned by
a Person referred to in this Section 4(b), shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the Company
by the Company's Chairman, Chief Executive Officer, President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Company's Secretary or an Assistant Secretary, either manually or by facsimile
signature. Each Rights Certificate shall be countersigned by the Rights Agent
either manually or, if permitted by the Company, by facsimile signature and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed a Rights Certificate shall cease to be such
officer of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Rights Certificate nevertheless may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the Person who signed such Rights Certificate had not
-10-
ceased to be such officer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any Person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution of this
Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced by each Rights Certificate, and the
certificate number and the date of issuance of each Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14, at any time after the
Close of Business on the Distribution Date and at or prior to the Close of
Business on the earliest of the Redemption Date, the Exchange Date or the
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or, following a Triggering Event or a Business
Combination, other securities, cash or other property, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to such
transfer, division, combination or exchange, the Company may require payment by
the surrendering holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection therewith. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have duly completed and executed the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or such former or proposed Beneficial
Owner) thereof or such Beneficial Owner's Affiliates or Associates as the
Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature by the Rights Agent and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
-11-
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date or the Redemption Date, one one-thousandth (1/1000) of a share of Preferred
Stock (or, following a Triggering Event or a Business Combination, other
securities, cash or other assets, as the case may be), subject to adjustment
from time to time as provided in Sections 11 and 13.
(b) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time after the Distribution Date and prior to the earliest of the Expiration
Date, the Exchange Date or the Redemption Date, by surrendering the Rights
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal corporate trust office of
the Rights Agent, together with payment of the Purchase Price for each one
one-thousandth of a share of Preferred Stock (or, following a Triggering Event
or a Business Combination, other securities, cash or other assets, as the case
may be) as to which the Rights are exercised.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each one one-thousandth of a share of
Preferred Stock (or, following a Triggering Event or a Business Combination,
other securities, cash or other assets, as the case may be) to be purchased and
an amount in cash, certified bank check or bank draft payable to the order of
the Company equal to any applicable transfer tax required to be paid by the
surrendering holder pursuant to Section 9(d), the Rights Agent shall, subject to
the provisions of this Agreement, thereupon promptly (i)(A) requisition from any
transfer agent for the Preferred Stock (or make available, if the Rights Agent
is the transfer agent for the Preferred Stock) certificates for the total number
of one one-thousandths of a share of Preferred Stock to be purchased (and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests), or (B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of Preferred Stock as
are to be purchased (in which case certificates for the Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company shall direct the depositary agent to comply
with such request; (ii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder; and (iii) if appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 and, promptly after receipt thereof, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated to issue other
securities (including shares of Common Stock) of the Company, pay cash and/or
distribute other property pursuant to this Agreement, the Company will make all
arrangements necessary
-12-
so that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate or to his duly authorized assigns, subject to
the provisions of Section 6 and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date and the Stock Acquisition Date by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person; (ii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee after the
Acquiring Person becomes such; or (iii) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or to holders of equity
interests in any Associate or Affiliate of such Acquiring Person) or to any
Person with whom the Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (B) a direct or indirect transfer which a
majority of the Board of Directors determines is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall, immediately upon the occurrence of a Triggering Event and
without any further action, be null and void and no holder of such Rights shall
have any rights whatsoever with respect to such Rights whether under this
Agreement or otherwise; provided, however, that, in the case of transferees
described in clause (ii) or clause (iii) of this Section 7(e), any Rights
beneficially owned by such transferee shall be null and void only if and to the
extent such Rights were formerly beneficially owned by a Person who was, at the
time such Person beneficially owned such Rights, or who later became, an
Acquiring Person or an Affiliate or Associate of such Acquiring Person. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) are complied with, but shall have no liability to
any holder of a Rights Certificate or to any other Person as a result of the
Company's failure to make, or any delay in making (including any such failure or
delay by the Board of Directors), any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees under this Section
7(e) or any other provision of this Agreement.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to the registered holder of a Rights Certificate 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 contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former or proposed Beneficial Owner)
thereof or the
-13-
Affiliates or Associates of such Beneficial Owner (or former or proposed
Beneficial Owner) as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, division,
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 Rights
Certificates shall be issued in lieu therefor except as expressly permitted by
the provisions of this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury (and, following the occurrence of a Triggering Event or a Business
Combination, out of its authorized and unissued shares of Common Stock and/or
other securities or out of its authorized and issued shares of Common Stock
and/or other securities held in its treasury) free from preemptive rights or any
right of first refusal, a sufficient number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event or a Business Combination, shares
of Common Stock and/or other securities) to permit the exercise in full of all
Rights from time to time outstanding.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event or a Business
Combination, shares of Common Stock and/or other securities) issuable upon the
exercise of Rights may be listed on any United States national securities
exchange or quoted on any automated quotation system, to use its best efforts to
cause, from and after the time that the Rights become exercisable, all such
shares and/or other securities reserved for such issuance to be listed on such
exchange or quoted on such automated quotation system upon official notice of
issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and,
following the occurrence of a Triggering Event or a Business Combination, shares
of Common Stock and/or other securities) delivered upon the exercise of Rights
shall, at the time of delivery of the certificates for such shares and/or such
other securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued, fully paid, nonassessable, freely tradeable, not subject
to liens or encumbrances, and free of preemptive rights, rights of first refusal
or any other restrictions or limitations on the transfer or ownership thereof,
of any kind or nature whatsoever.
(d) 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
-14-
of the original issuance or delivery of the Rights Certificates or of any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to (i) pay any transfer tax which may be payable in
respect of any transfer involved in the issuance or delivery of any Rights
Certificates or the issuance or delivery of any certificates for shares of
Preferred Stock (or Common Stock and/or other securities as the case may be) to
a Person other than, or in a name other than that of, the registered holder of
the Rights Certificate evidencing Rights surrendered for exercise; or (ii)
transfer or deliver any Rights Certificate or issue or deliver any certificates
for shares of Preferred Stock (or Common Stock and/or other securities as the
case may be) upon the exercise of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) as soon as practicable
following a Triggering Event (provided the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii)), or as soon as is required by law following the Distribution
Date, as the case may be, to prepare and file a registration statement on an
appropriate form under the Securities Act with respect to the securities
purchasable upon exercise of the Rights; (ii) to cause such registration
statement to become effective as soon as practicable after such filing; and
(iii) to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which Rights are no longer exercisable for
such securities or (B) the Expiration Date. The Company shall also use its best
efforts to take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date of a
Triggering Event, the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective under the Securities Act.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (or Common Stock and/or such other
securities, as the case may be) on, and such certificate shall be dated, the
next succeeding
-15-
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustments to Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number and kind of securities, cash and other
property obtainable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time on or after the date
of this Agreement (A) pay a dividend or make a distribution on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide (by a stock split or
otherwise) the outstanding Preferred Stock into a larger number of shares, (C)
combine (by a reverse stock split or otherwise) the outstanding Preferred Stock
into a smaller number of shares, or (D) issue any securities in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the surviving
corporation), then in each such event the Purchase Price and the Redemption
Price set forth in Section 23, as each is in effect at the time of the record
date for such dividend or distribution, or of the effective date of such
subdivision, combination or reclassification, shall be proportionately adjusted
by multiplying the Purchase Price and such Redemption Price by a fraction the
numerator of which shall be the total number of shares of Preferred Stock
outstanding immediately prior to the occurrence of such event and the
denominator of which shall be the total number of shares of Preferred Stock
outstanding immediately following the occurrence of such event. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Upon the first occurrence of a Triggering Event, proper
provision shall be made so that each holder of a Right, except as otherwise
provided in this Agreement, shall thereafter have the right to receive, and the
Company shall issue, upon exercise thereof at the then-current Purchase Price
required to be paid in order to exercise a Right in accordance with the terms of
this Agreement, in lieu of the number of one one-thousandths of a share of
Preferred Stock or other securities receivable upon exercise of a Right prior to
the occurrence of the Triggering Event, such number of shares of Common Stock of
the Company as shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the number of one-thousandths of a share of
Preferred Stock or other securities for which a Right was then exercisable
(without giving effect to such Triggering Event) and (y) dividing that product
by 50% of the Current Market Price per share of Common Stock on the date of the
occurrence of the Triggering Event (such number of shares being referred to as
the "Adjustment Shares"); provided, however, that if the transaction or event
that would otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13, then only the provisions of Section 13 shall apply
and no adjustment shall be made pursuant to this Section 11(a)(ii). Upon the
occurrence of such Triggering Event, the Purchase Price required to be paid in
order to exercise a Right shall be unchanged, and the Purchase Price shall be
appropriately adjusted to reflect, and shall thereafter mean, the amount
required to be paid per share of Common Stock upon exercise of a Right.
-16-
(iii) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii), the Company may, if a majority of the Board of Directors
determines that such action is necessary or appropriate and not contrary to the
interests of holders of Rights (and, in the event that the number of shares of
Common Stock which are authorized by the Company's certificate of incorporation,
but which are not outstanding or reserved for issuance for purposes other than
upon exercise of the Rights, are not sufficient to permit the exercise in full
of the Rights in accordance with Section 11(a)(ii), the Company shall) take one
or more of the following actions: (A) reduce (but in no event less than the
Current Market Price per share of Common Stock) the Purchase Price required to
be paid in order to exercise a Right by any amount (the "Reduction Amount"), in
which event the number of Adjustment Shares and/or the amount of any Substitute
Consideration (as hereinafter defined) issuable in respect of each Right (the
Adjustment Shares, if any, and the Substitute Consideration, if any, issuable in
respect of a Right are herein collectively referred to as the "Total
Consideration") shall be reduced so that the aggregate value of the Total
Consideration issuable in respect of each Right is equal to the Current Value
(as hereinafter defined) less the Reduction Amount (such difference, the
"Adjusted Current Value"); and/or (B) make adequate provision with respect to
each Right to substitute for all or part of the Adjustment Shares otherwise
obtainable upon exercise of a Right: (1) cash, (2) other equity securities of
the Company (including, without limitation, shares, or units of shares, of
preferred stock which a majority of the Board of Directors have determined
(which determination shall be final, binding and conclusive for all purposes) to
have the same value as shares of Common Stock (such shares or units of preferred
stock being referred to as "Common Stock Equivalents")), (3) debt securities of
the Company, (4) other assets, or (5) any combination of the foregoing
(collectively, "Substitute Consideration") having an aggregate value which, when
added to the value of the Adjustment Shares (if any) in respect of which no
substitution is being made, is equal to the Adjusted Current Value. If a
majority of the Board of Directors determines to issue or deliver any equity
securities (other than Common Stock or Common Stock Equivalents), debt
securities and/or other assets pursuant to this Section 11(a)(iii), the value of
such securities and/or assets shall be determined by a majority of the Board of
Directors based upon the advice of a nationally recognized investment banking
firm selected by a majority of the Board of Directors (which determination shall
be final, binding and conclusive for all purposes). If the Company is required
to make adequate provision to deliver value pursuant to the first sentence of
this Section 11(a)(iii) and the Company shall not have made such adequate
provision to deliver value within ninety (90) days following the first
occurrence of a Triggering Event (the "Substitution Period"), then
notwithstanding any provision of Section 11(a)(ii) or this Section 11(a)(iii) to
the contrary, 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/or cash have an aggregate value equal to the excess of the Current
Value over the Purchase Price. If both Common Stock and cash are to be delivered
pursuant to the preceding sentence, amounts of both Common Stock and cash shall
be delivered upon surrender of each Right in a ratio of Common Stock to cash
that bears the same ratio as the total value of all Common Stock to be delivered
(as determined pursuant to this Section 11(a)(iii)) bears to the total value of
all cash to be delivered; provided, however, that the Company may adjust such
ratio to avoid issuing any fractional shares of Common Stock so long as the
method of adjustment is applied consistently to each holder of Rights entitled
to receive value thereon pursuant to this Section 11(a)(iii). To the extent that
the Company determines that some action
-17-
is to be taken pursuant to the first and/or third sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights but in no event to a time later than the
expiration of the Substitution Period. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. Upon any change in the Adjustment
Shares obtainable upon exercise of a Right pursuant to this Section 11(a)(iii),
the Purchase Price shall thereafter mean the amount, if any, required to be paid
upon exercise of a Right for the Adjustment Shares, if any, and the Substitute
Consideration, if any, then issuable or deliverable upon exercise of a Right,
and a majority of the Board of Directors shall make any necessary provisions to
ensure that the provisions of Section 11(e) shall thereafter apply as
appropriate to the Total Consideration. For purposes of this Section 11(a)(iii),
(A) "Current Value" shall be the product derived by multiplying (x) the number
of Adjustment Shares issuable in respect of each Right determined under Section
11(a)(ii), by (y) the Current Market Price per share of Common Stock on the date
of the Triggering Event; and (B) the value of each share of Common Stock and
each share or unit of any "Common Stock Equivalent" shall be deemed conclusively
to be equal to the Current Market Price per share of the Common Stock on the
date of the Triggering Event.
(iv) A majority of the Board of Directors may, at its option, at any
time and from time to time after the first occurrence of a Triggering Event,
cause the Company to exchange, for 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 7(e)), shares of Common Stock or Common
Stock Equivalents at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Any partial exchange
shall be effected on a pro rata basis based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e)) held
by each holder of Rights.
Immediately upon the action of a majority of the Board of Directors
ordering the exchange of any Rights pursuant to this Section 11(a)(iv) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock and/or Common Stock
Equivalents 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 and, in addition, the Company shall promptly mail a notice of any such
exchange to all of the holders of such Rights in accordance with Section 25;
provided, however, that the failure to give, any delay in giving or any defect
in, such notice shall not affect the validity of such exchange. Each such notice
of exchange will state the method by which the exchange of the Common Stock or
Common Stock Equivalents for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. In the event
that the number of shares of Common Stock which is authorized but not
outstanding or reserved for issuance for a purpose other than exercise of the
Rights is not sufficient to permit any exchange of Rights as contemplated in
accordance with this Section 11(a)(iv), the Board of Directors shall take all
such action within its power as may be necessary to authorize additional shares
of
-18-
Common Stock for issuance upon exchange of the Rights. The Company shall not be
required to issue fractions of shares of Common Stock or Common Stock
Equivalents or to distribute certificates which evidence fractional shares of
Common Stock or Common Stock Equivalents. In lieu of such fractional shares of
Common Stock or Common Stock Equivalents, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock or Common Stock Equivalents would otherwise be
issuable an amount in cash equal to the product derived by multiplying (x) the
subject fraction, by (y) the last sale price of the Common Stock on the fifth
Trading Day following the public announcement of the exchange by the Company,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices on such day, in either case on a when issued basis (taking into
account the exchange), as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
Nasdaq National Market (or, if the Company's Common Stock is not so listed or
traded, then as determined in the manner provided under the definition of
"Current Market Price," adjusted to take into account the exchange). For the
purposes of this Section 11(a)(iv), the value of any Common Stock Equivalent on
any date shall be the same as the value of the Common Stock, as determined
pursuant to the previous sentence, on such date.
(b) If the Company shall at any time on or after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
holders of Preferred Stock entitling them to subscribe for or purchase Preferred
Stock or Equivalent Shares (or securities convertible into or exchangeable for
Preferred Stock or Equivalent Shares) at a price per share of Preferred Stock or
Equivalent Shares (or, in the case of a convertible or exchangeable security,
having a conversion or exchange price per share of Preferred Stock or Equivalent
Shares) less than the Current Market Price per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock and Equivalent Shares (if any) outstanding on such record
date, plus the number of shares of Preferred Stock or Equivalent Shares, as the
case may be, which the aggregate exercise, conversion and/or exchange price for
the total number of shares of Preferred Stock or Equivalent Shares, as the case
may be, which are obtainable upon exercise, conversion and/or exchange of such
rights, options, warrants or convertible or exchangeable securities would
purchase at such Current Market Price, and the denominator of which shall be the
number of shares of Preferred Stock and Equivalent Shares (if any) outstanding
on such record date, plus the number of additional shares of Preferred Stock or
Equivalent Shares, as the case may be, which may be obtained upon exercise,
conversion and/or exchange of such rights, options, warrants or convertible or
exchangeable securities. 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 a majority of the
Board of Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be final, binding and conclusive for all
purposes. Preferred Stock and Equivalent Shares owned by or held for the account
of the Company or any Subsidiary 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 issued following such adjustment, the Purchase Price shall be
-19-
readjusted to be the Purchase Price that would have been in effect if such
record date had not been fixed.
(c) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to holders of
Preferred Stock (including any such distribution made in connection with a
reclassification of the Preferred Stock or a consolidation or merger in which
the Company is the surviving corporation) of securities (other than Preferred
Stock and rights, options, warrants or convertible or exchangeable securities
referred to in Section 11(b)), cash (other than a regular periodic cash dividend
at an annual rate not in excess of: (x) 125% of the annual rate of the regular
cash dividend paid on the Preferred Stock during the immediately preceding
fiscal year (or, if the Preferred Stock was not outstanding during such
preceding fiscal year, then 125% of the annual rate of the regular cash dividend
paid on the Common Stock during such year), or (y) in the event that a regular
cash dividend was not paid on the Preferred Stock (or Common Stock) during such
preceding fiscal year, 5% of the Current Market Value of the Preferred Stock on
the date such regular cash dividend was first declared), property, evidences of
indebtedness, or assets, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
Current Market Price per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be final, binding and conclusive for all purposes) of the
portion of such securities, cash, property, evidences of indebtedness or assets
to be so distributed in respect of one share of Preferred Stock, and the
denominator of which shall be such Current Market Price per share of Preferred
Stock on such record date. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not made
following such adjustment, the Purchase Price shall be readjusted to be the
Purchase Price that would have been in effect if such record date had not been
fixed.
(d) Except as provided below, 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(d) 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, to the nearest one
hundred-thousandth of a share of Common Stock, or to the nearest one
hundred-thousandths of a share of Preferred Stock. Notwithstanding the first
sentence of this Section 11(d), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment and (ii) the Expiration Date.
(e) If, as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any securities of the Company other than shares of Preferred
Stock, thereafter the Purchase Price and the number of such other securities so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Preferred Stock contained in this
Section 11 and the
-20-
provisions of Sections 7, 9, 10, 12, 13, 14 and 24 with respect to the shares of
Preferred Stock shall apply on like terms to any such other securities.
(f) 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 shares of Preferred
Stock or other securities, cash or other property purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(g) Unless the Company shall have exercised its election as provided in
Section 11(h), upon each adjustment of the Purchase Price as a result of any
calculation made pursuant to Sections 11(a)(i), 11(b) and 11(c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a share of Preferred Stock (calculated to the nearest one
hundred-thousandths of a share of Preferred Stock) obtained by (i) multiplying
the number of one one-thousandths of a share of Preferred Stock covered by a
Right immediately prior to adjustment pursuant to this Section 11(g) by 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.
(h) The Company may elect, on or after the date of any adjustment of
the Purchase Price or any adjustment to the number of shares of Preferred Stock
for which a Right may be exercised, to adjust the number of Rights, in lieu of
an adjustment in the number of one one-thousandths of a share of Preferred Stock
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 share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right outstanding 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 such adjustment by the Purchase
Price in effect immediately after such adjustment. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 10 days after the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(h) the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date a new Rights Certificate evidencing, subject to
Section 14, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record, in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment and
upon surrender thereof (if required by the Company), new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for in this Agreement (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall
-21-
be registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number or kind of shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-thousandth of a share of Preferred Stock and the
number of shares of Preferred Stock which were expressed in the initial Rights
Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of one one-thousandth of a
share of Preferred Stock issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable one one-thousandth shares of such Preferred Stock at such adjusted
Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the shares of Preferred
Stock and other securities, cash or property of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and other
securities, cash or property 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 (fractional or otherwise) or other securities, cash or property upon the
occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Board of Directors in its sole discretion shall determine to
be advisable in order that any combination or subdivision of the Preferred
Stock, issuance wholly for cash of any Preferred Stock at less than the Current
Market Price per share of Preferred Stock, issuance wholly for cash of Preferred
Stock or securities which by their terms are convertible into or exchangeable or
exercisable for Preferred Stock, stock dividends or issuance of rights, options
or warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock, shall not be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not (i) consolidate
with, (ii) merge with or into, or (iii) directly or indirectly sell, lease or
otherwise transfer or dispose of (in one transaction or a series of related
transactions) assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries taken as a whole, to any other
Person if (A) at the time of or immediately after such consolidation, merger,
sale, lease, transfer or disposition there are any rights, warrants, securities
or other instruments outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights; (B) prior to, simultaneously with or
-22-
immediately after such consolidation, merger, sale, lease, transfer or
disposition the stockholders (or equity holders) of the Person who constitutes,
or would constitute, the Principal Party in such transaction shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates; or (C) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights. The
Company shall not consummate any such consolidation, merger, sale, lease,
transfer or disposition unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 11(m).
(n) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Section 11(a)(iv), 26 or 29(b), take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will, directly or
indirectly, diminish or otherwise eliminate the benefits intended to be afforded
by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, if the
Company shall at any time prior to the Distribution Date (i) pay a dividend or
distribution on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then the number of
Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, and the Purchase Price
under, and the number of one one-thousandths of a share of Preferred Stock
issuable in respect of, the Rights, shall be proportionately adjusted, so that
following such event one Right (with the Purchase Price and the number of one
one-thousandths of a share of Preferred Stock proportionately adjusted
thereunder) shall thereafter be associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date. For example, if the Company effects a two-for-one stock split at a time
when each Right (if it becomes exercisable) would entitle the holder to purchase
one one-thousandth of a share of Preferred Stock for a Purchase Price of $"Z",
then following such stock split each previous Right would be split into two
current Rights and thereafter each such current Right, upon becoming
exercisable, would (subject to further adjustment) entitle the holder to
purchase one one-thousandth of a share of Preferred Stock at a Purchase Price of
1/2 x $"Z".
Section 12. Certification of Adjustments. Whenever an adjustment is
made as provided in Section 11 or 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Stock a copy of such certificate, and (c)
mail or cause the Rights Agent to mail a brief summary thereof to each holder of
a Rights Certificate (or, if no Rights Certificates have been issued, to each
holder of a certificate representing shares of Common Stock) in accordance with
Section 25. Notwithstanding the foregoing sentence, the failure of the Company
to give such notice shall not affect the validity of or the force or effect of
or the requirement for such adjustment. Any adjustment to be made pursuant to
Section 11 or 13 shall be effective as of the date of the event giving rise to
such adjustment.
-23-
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) A "Business Combination" shall be deemed to occur in the event
that, on or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(m) and Section 11(n)) in a transaction in which the Company is not the
continuing, resulting or surviving corporation of such merger or consolidation;
(ii) any Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m) and Section 11(n)) shall, directly or indirectly,
consolidate with the Company, or shall merge with and into the Company, in a
transaction in which the Company is the continuing, resulting or surviving
corporation of such merger or consolidation and, in connection with such merger
or consolidation, all or part of the Common Stock shall be changed (including,
without limitation, any conversion into or exchange for securities of the
Company or of any other Person, cash or any other property); (iii) the Company
shall, directly or indirectly, effect a share exchange in which all or part of
the Common Stock shall be changed (including, without limitation, any conversion
into or exchange for securities of any other Person, cash or any other
property); or (iv) the Company shall, directly or indirectly, sell, lease,
exchange, mortgage, pledge (other than pledges in the ordinary course of the
Company's financing activities) or otherwise transfer or dispose of (or one or
more of its Subsidiaries shall directly or indirectly sell, lease, exchange,
mortgage, pledge (other than pledges in the ordinary course of the Company's
financing activities) or otherwise transfer or dispose of), in one transaction
or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company or any of its
Subsidiaries in one or more transactions each and all of which comply with
Section 11(m) and Section 11(n)).
In the event of a Business Combination, proper provision shall be made
so that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise thereof at the
Purchase Price immediately prior to the first occurrence of a Triggering Event
multiplied by the number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first occurrence of a
Triggering Event (without giving effect to the Triggering Event) in accordance
with the terms of this Agreement, such number of shares of Common Stock of the
Principal Party as shall be equal to the result obtained by (x) multiplying the
Purchase Price immediately prior to the first occurrence of a Triggering Event
by the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Triggering
Event (without giving effect to the Triggering Event), and (y) dividing that
product by 50% of the Current Market Price per share of the Common Stock of such
Principal Party immediately prior to the consummation of such Business
Combination. All shares of Common Stock of any Person for which any Right may be
exercised after consummation of a Business Combination as provided in this
Section 13(a) shall, when issued upon exercise thereof in accordance with this
Agreement, be duly and validly authorized and issued, fully paid, nonassessable,
freely tradeable, not subject to liens or encumbrances, and free of preemptive
rights, rights of first refusal or any other restrictions or limitations on the
transfer or ownership thereof of any kind or nature whatsoever.
-24-
(b) After consummation of any Business Combination, (i) the Principal
Party shall be liable for, and shall assume, by virtue of such Business
Combination and without the necessity of any further act, all the obligations
and duties of the Company pursuant to this Agreement, (ii) the term "Company" as
used in this Agreement shall thereafter be deemed to refer to such Principal
Party, and (iii) such Principal Party shall take all steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such Business Combination as is
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable, as nearly equivalent as practicable, in relation to the shares of
its Common Stock thereafter deliverable upon the exercise of the Rights.
(c) The Company shall not consummate any Business Combination unless
prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13; (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such Business Combination,
the Principal Party, at its own expense, shall (A) prepare and file, if
necessary, a registration statement on an appropriate form under the Securities
Act with respect to the Rights and the securities purchasable upon exercise of
the Rights; (B) use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date; (C) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; (D) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the Rights
under the state securities or "blue sky" laws of such jurisdictions as may be
necessary or appropriate; (E) use its best efforts to list the Rights and the
securities purchasable upon exercise of the Rights on a United States national
securities exchange; and (F) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights; (iii) the Company and the
Principal Party shall have furnished to the Rights Agent an opinion of
independent counsel stating that such supplemental agreement is a legal, valid
and binding agreement of the Principal Party enforceable against the Principal
Party in accordance with its terms; and (iv) the Company and the Principal Party
shall have filed with the Rights Agent a certificate of a nationally recognized
firm of independent accountants setting forth the number of shares of Common
Stock of such issuer which may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). Following a
Business Combination, the provisions of Section 11(a)(ii) shall be of no effect.
-25-
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number of shares of Preferred Stock (or fractions of a share)
or other securities, cash or other property for which a Right is exercisable or
the number of Rights outstanding or associated with each share of Common Stock
or any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 13, unless the terms of this
Agreement are amended so as to preserve such benefits.
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the event
the nature of the organization of any Principal Party shall preclude or limit
the acquisition of Common Stock of such Principal Party upon exercise of the
Rights as required by Section 13(a) as a result of a Business Combination, it
shall be a condition to such Business Combination that such Principal Party
shall take such steps (including, but not limited to, a reorganization) as may
be necessary to ensure that the benefits intended to be derived under this
Section 13 upon the exercise of the Rights are assured to the holders thereof.
(h) In addition to, and without limiting, any other provision of this
Section 13, in case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has provision in any of its authorized securities
or in its certificate of incorporation or by-laws or other instrument governing
its corporate affairs, which provision would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to this
Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Common Stock of such Principal Party
at less than the then Current Market Price per share or securities exercisable
for, or convertible into, Common Stock of such Principal Party at less than such
then Current Market Price, or (ii) providing for any special payment, tax or
similar provisions in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of this Section 13, then, in such
event, the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, the Company may at its option pay to the registered holders
of the Rights Certificates with respect to which such fractional Rights would
otherwise be issuable an amount in cash equal to
-26-
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 a Right for the Trading Day immediately prior to the date on
which such fractional Rights otherwise would have been issuable. The closing
price for any Trading Day shall be the last sale price on such day, regular way,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, on such day, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the Nasdaq National Market or, if the Rights
are not listed or admitted to trading on the Nasdaq National Market, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal United States 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 United States national securities exchange,
the last quoted sale price on such day or, if not so quoted, the average of the
high bid and low asked prices on such day in the over-the-counter market, as
reported by Nasdaq or such other system then in use or, if on such day the
Rights are not quoted by any such system, the average of the closing bid and
asked prices on such day as furnished by a professional market maker making a
market in the Rights selected by a majority of the Board of Directors. If on
such day no such market maker is making a market in the Rights, the current
market value of the Rights on such day shall be determined in good faith by a
majority of the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be final, binding and conclusive
for all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock 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 Stock. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-thousandth
of a share of Preferred Stock, the Company may at its option (i) issue scrip or
warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive a full one one-thousandth of a share of Preferred
Stock upon the surrender of such scrip or warrants aggregating a full one
one-thousandth of a share of Preferred Stock, or (ii) pay to the registered
holders of Rights Certificates at the time such Rights Certificates are
exercised as provided in this Agreement an amount in cash equal to the same
fraction of the current market value of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of a share of Preferred Stock
shall be the closing price of a share of Preferred Stock (as determined pursuant
to the second sentence of the definition of "Current Market Price" in Section 1)
for the Trading Day immediately prior to the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Stock Equivalents or to distribute certificates which
evidence fractional shares of Common Stock or Common Stock Equivalents. In lieu
of such fractional shares of Common
-27-
Stock or Common Stock Equivalents, the Company shall pay to the registered
holders of the Rights Certificates with regard to which such fractional shares
of Common Stock or Common Stock Equivalents would otherwise be issuable an
amount in cash equal to the product derived by multiplying (x) the subject
fraction, by (y) Current Market Price of the Company's Common Stock.
(d) The holder of a Right by his acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided, all rights
of action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, any
registered holders of associated Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, any share of associated
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right, may, on his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
Principal Party to enforce, or otherwise act in respect of, his rights pursuant
to 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 any actual or threatened violation of the obligations
of any Person subject to, this Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights. 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificate or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the Common Stock
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; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of
-28-
any preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote or to receive dividends or
distributions or shall be deemed for any purpose the holder of Preferred Stock
or any other securities, cash or other property which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right (i) to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, (ii) to give or withhold consent to any corporate action,
(iii) to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24), (iv) to receive dividends, distributions or
subscription rights, (v) to institute, as a holder of Preferred Stock or other
securities issuable on exercise of the Rights represented by any Rights
Certificate, any derivative action on behalf of the Company, or otherwise, until
and only to the extent that the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions of this
Agreement.
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, willful misconduct or breach of this Agreement on the
part of the Rights Agent for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises. This indemnification shall survive the termination of this Agreement.
The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Preferred Stock or Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document reasonably believed by it to be genuine and to be signed,
executed and, when necessary, verified or acknowledged, by the proper Person or
Persons, or otherwise upon the advice of counsel as set forth in Section 20.
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
-29-
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 document 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
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificate so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificate either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes and
agrees to perform the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted to be taken 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
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) 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 specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman,
the President, the Chief Executive Officer, any 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 omitted by it in good faith under this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for the gross
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agents.
-30-
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except 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 of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any change in the
transferability or exercisability of the Rights or any change or adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13 or 23 or any other provision of this Agreement
or the ascertaining of the existence of facts that would require any such change
or adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any change or adjustment is required); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Preferred Stock, Common
Stock or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock, Common Stock or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance by the Rights Agent of
its duties and obligations under this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman, the Chief Executive Officer, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or omitted to be taken by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for such instructions. When applying to any such officer for instructions, the
Rights Agent may set forth in writing (i) any proposed action or omission of the
Rights Agent with respect to its duties or obligations under this Agreement and
(ii) the date on or after which the Rights Agent proposes such action will be
taken or omitted. Such date shall not be less than three Business Days after any
such officer receives such application for instructions from the Rights Agent.
Unless the Rights Agent has received written instructions from the Company
(including any such officer) with respect to such proposed action or omission
prior to such date (or, if longer, in the case of a proposed action to be taken,
prior to the Rights Agent actually taking such action), the Rights Agent shall
not be liable for the actions or omissions set forth in such application,
provided that such action or omission does not violate any express provision of
this Agreement.
-31-
(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 the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement 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 such attorney or
agent, provided that the Rights Agent exercised reasonable care in the selection
and continued employment of such attorney or agent.
(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
hereunder 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 the Rights Agent.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. Notwithstanding any other provision of this Agreement, in no
event shall the resignation or removal of a Rights Agent be effective until a
successor Rights Agent shall have been appointed and have accepted such
appointment. If the Company shall fail to make such appointment within a period
of 30 days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
any holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the incumbent Rights
Agent or the registered holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or any state of the United States so long as such corporation is
authorized
-32-
to conduct a corporate trust or banking business under the laws of such state
and is in good standing, 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 $100,000,000. 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
such purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock and mail a notice
thereof in writing to the registered holders of the Rights Certificates. Neither
the failure to give any notice provided for in this Section 21, however, nor any
defect therein, shall affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing new
Rights in such form as may be approved by a majority of the Board of Directors
of the Company to reflect any adjustment or change in the Purchase Price per
share and the number or kind or class of securities, cash or other property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
Common Stock following the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date, the Company may with respect to Common
Stock so issued or sold pursuant to (i) the exercise of stock options, (ii)
under any employee plan or arrangement, (iii) upon the exercise, conversion or
exchange of securities notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Rights Certificates representing the appropriate number
of Rights in connection with such issuance or sale.
Section 23. Redemption
(a) The Board of Directors may, at its option, at any time prior to the
earlier of (i) the Stock Acquisition Date and (ii) the Expiration Date, redeem
all but not less than all of the then-outstanding Rights at a redemption price
of $.01 per Right (the "Redemption Price") appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date of
this Agreement. The Company may, at its option, pay the Redemption Price in
cash, shares (including fractional shares) of Common Stock (based on the Current
Market Price of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) At the time and date of effectiveness set forth in any resolution
of the Board of Directors ordering the redemption of the Rights (the "Redemption
Date"), without any further action and without any further notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price;
-33-
provided, however, that such resolution of the Board of Directors may be
revoked, rescinded or otherwise modified at any time prior to the time and date
of effectiveness set forth in such resolution, in which event the right to
exercise will not terminate at the time and date originally set for such
termination by the Board of Directors. As soon as practicable after the action
of the Board of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and to the holders of
the then-outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the issuance of Rights Certificates, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
provided in this Agreement shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. In any case, failure to
give such notice by mail, or any defect in the notice, to any particular holder
of Rights shall not affect the sufficiency of the notice to other holders of
Rights. In the case of a redemption permitted under this Section 23, the Company
may, at its option, discharge all of its obligations with respect to the Rights
by (i) issuing a press release announcing the manner of redemption of the Rights
and (ii) mailing payment of the Redemption Price to the registered holders of
the Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the issuance of the Rights Certificates, on the
registry books of the transfer agent for the Common Stock, and upon such action,
all outstanding Rights Certificates shall be null and void without any further
action by the Company. 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 as specifically set forth in this Section 23, and other
than in connection with the purchase of shares of Common Stock prior to the
earlier of the Distribution Date and the Expiration Date.
Section 24. Notice of Certain Events. In case the Company, on or after
the Distribution Date, shall propose to (a) pay any dividend payable in stock of
any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
periodic cash dividend at an annual rate not in excess of 125% of the annual
rate of the cash dividend paid on the Preferred Stock during the immediately
preceding fiscal year, or if the Preferred Stock was not outstanding during such
preceding fiscal year, then 125% of the annual rate of the cash dividend paid on
the Common Stock during such year); or (b) offer to the holders of its Preferred
Stock rights, options or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options; or (c) effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock, a change in the par value of such
Preferred Stock or a change from par value to no par value); or (d) directly or
indirectly effect any consolidation or merger into or with, or effect any sale,
lease, exchange or other transfer or disposition (or to permit one or more of
its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition), in one transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person; or (e) effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 25, a notice of
such proposed action, which shall specify any record date for the purposes of
such stock dividend, distribution or rights, or the date on which such
reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition,
-34-
liquidation, dissolution, or winding up is to take place and if such holders
will or may participate therein, the date of participation therein by the
holders of Common Stock and/or Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(a) or (b) above at least 20 days prior to the record date for determining
holders of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein, if any, by the holders of
Preferred Stock, whichever shall be the earlier.
In case any Triggering Event or Business Combination shall occur, then,
in any such case, the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, in accordance with Section 25, notice of
the occurrence of such Triggering Event or Business Combination, which shall
specify the Triggering Event or Business Combination and include a description
of the consequences of such event to holders of Rights under Section 11(a)(ii)
or 13.
The failure to give notice as required by this Section 24 or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the vote upon any such action.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address (or another person's
attention) is filed in writing with the Rights Agent) as follows:
3-D Geophysical, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address (or
another person's attention) is filed in writing with the Company) as follows:
American Securities
Transfer & Trust, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
-35-
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to the holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
Section 26. Amendments and Supplements. This Agreement may not be
amended or supplemented except as permitted in Section 26(a) or 26(b) or as
contemplated by Section 11(a)(iii).
(a) At any time prior to the Distribution Date, a majority of the Board
of Directors may, and the Rights Agent shall, if so directed, amend or
supplement any provision of this Agreement without the approval of any holders
of Rights.
(b) From and after the Distribution Date, a majority of the Board of
Directors may, and the Rights Agent shall, if so directed, amend or supplement
this Agreement without the approval of any holders of Rights Certificates (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained in
this Agreement which may be defective or inconsistent with any other provision
of this Agreement, or (iii) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person).
(c) Immediately upon the action of a majority of the Board of Directors
providing for any amendment or supplement pursuant to this Section 26, and
without any further action and without notice, such amendment or supplement
shall be deemed effective. Promptly following the adoption of any amendment or
supplement pursuant to this Section 26, the Company shall deliver to the Rights
Agent a copy, certified by the Secretary or any Assistant Secretary of the
Company, of resolutions of a majority of the Board of Directors adopting such
amendment or supplement. Upon such delivery, the amendment or supplement shall
be administered by the Rights Agent as part of this Agreement in accordance with
the terms of this Agreement, as so amended or supplemented.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Benefits of this Agreement; Determinations and Actions by
the Board of Directors. Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and the registered holders
of Rights any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent and the registered holders of the Rights.
-36-
For purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act (or any successor provision); provided,
however, that any such calculation made for purposes of determining the
particular percentage of outstanding shares of Common Stock of which any Person
is the Beneficial Owner shall also include any such other securities not then
actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section 1(d). The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights, to exchange or not exchange the Rights for Common Stock or
other securities of the Company, or to amend or supplement this Agreement). All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other Persons, and (y) not subject the Board of Directors to any
liability to the holders of the Rights.
Section 29. Severability.
(a) If any term, provision, covenant or restriction of this Agreement
or the application thereof to any Person or to any circumstance 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.
(b) If legal counsel to the Company delivers to the Company a written
opinion to the effect that, as a result of changes in federal law or Delaware
law, any term, provision, covenant or restriction of this Agreement may be
invalid, void or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
Section 30. Governing Law. This Agreement and each Rights 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 internal laws of such state applicable to contracts to be
made and performed entirely within such State.
Section 31. Counterparts. This Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
-37-
Section 32. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
Section 33. Grammatical Construction. Throughout this Agreement, where
such meanings would be appropriate, (a) any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms (e.g., references to "he"
shall also include "she" and "it" and references to "who" and "whom" shall also
include "which"), (b) the plural form of nouns and pronouns shall include the
singular and vice-versa, (c) reference to a Section means a Section of this
Agreement, and (d) the word "including" means "including, without limitation,"
whether expressly stated or not.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
3-D GEOPHYSICAL, INC.
Attest:
/s/ Xxxx Xxxxxx By: /s/ Xxxx Xxxxxxxx
---------------- -----------------
Name: Xxxx Xxxxxxxx
Title: Chairman
AMERICAN SECURITIES TRANSFER
& TRUST, INC.
Attest:
/s/ X. Xxxxxx
---------------- By: /s/ Xxxxx Xxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxx
Title: Operations Officer
-38-
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK
OF
3-D GEOPHYSICAL, INC.
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, Xxxx Xxxxxxxx, Chairman of 3-D Geophysical, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 151 thereof, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation of the Corporation (the
"Restated Certificate"), the Board of Directors on July 17, 1997, adopted the
following resolution creating a series of 100,000 shares of Preferred Stock
designated as Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board by ARTICLE
IV of the Restated Certificate and out of the Preferred Stock authorized
therein, the Board hereby authorizes that a series of Preferred Stock of the
Corporation be, and it hereby is, created and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount; Rank. The shares of such series
shall be designated as "Junior Participating Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting such series shall be
100,000. 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 Junior 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 or exchange of
any outstanding securities issued by the Company convertible into or
exchangeable for Junior Preferred Stock. The Junior Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, junior to all other
series of Preferred Stock and to all other classes preferred or special stock,
and all series of any thereof, and senior to the Common Stock.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock and of any shares of any other class of
preferred or special stock, and any series of any thereof, ranking prior and
superior to the shares of Junior Preferred Stock with respect to dividends, the
holders of shares of Junior Preferred Stock, in preference to the holders of
Common Stock (as referred to and defined in Article IV of the Restated
Certificate)
and of any other junior 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 fifteenth 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 Junior Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $100.00 and (b) the sum of (i) the
Adjustment Number (as defined below) times the aggregate per share amount of all
cash dividends, and (ii) the Adjustment Number 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 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 Junior Preferred Stock.
The "Adjustment Number" shall be 1000, as adjusted from time to time pursuant to
this paragraph (A). In the event the Corporation shall at any time after July
18, 1997 (i) declare or pay any dividend on the Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock into a greater
number of shares, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in like shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $50.00 per share on
the Junior Preferred Stock shall, when, as and if declared by the Board of
Directors out of funds legally available for such purpose, nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Junior Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior 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 Junior 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
-2-
determination of holders of shares of Junior Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be no more than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Junior Preferred
Stock shall have the following voting rights:
(A) Each share of Junior Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number (as adjusted from
time to time pursuant to Section 2(A) hereof) on all matters submitted to a vote
of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in the Restated Certificate or
by-laws, the holders of shares of Junior Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Junior Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the occurrence
of such contingency shall xxxx the beginning of a period (herein called a
"default period") that shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly period on all shares of Junior Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During each default
period, (1) the number of Directors shall be increased by two, effective as of
the time of election of such Directors as herein provided, and (2) the holders
of Junior Preferred Stock and the holders of other Preferred Stock upon which
these or like voting rights have been conferred and are exercisable (the "Voting
Preferred Stock") with dividends in arrears equal to six quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect such two Directors.
(ii) During any default period, such voting right of the holders of
Junior Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that
such voting right shall not be exercised unless the holders of at least
one-third in number of the shares of Voting Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Voting Preferred Stock of
such voting right.
(iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than 10% of the total number of shares of
Voting Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Voting Preferred Stock, which
meeting shall thereupon be called by the Chairman, the President, the Chief
Executive Officer, any Vice President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Voting
Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall
be given to each holder of record of Voting Preferred Stock by mailing a copy of
such notice to him at his last address as the same appears on the books of the
-3-
Corporation. Such meeting shall be called for a time not earlier than 10 days
and not later than 60 days after such order or request or, in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of Voting Preferred
Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no
such special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a class, (x)
the Directors so elected by the holders of Voting Preferred Stock shall continue
in office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class or classes of stock which
elected the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class or
classes of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of Voting
Preferred Stock as a class shall terminate and (z) the number of Directors shall
be such number as may be provided for in or pursuant to the Restated Certificate
or By-Laws irrespective of any increase made pursuant to the provisions of this
paragraph (C) (such number being subject, however, to change thereafter in any
manner provided by law or in the Restated Certificate or By-Laws). Any vacancies
in the Board of Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Junior 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 Junior 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 Junior Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
dividends paid ratably on the Junior
-4-
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior 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
Junior Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Junior Preferred Stock, or any shares of stock ranking on a parity with the
Junior Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior 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, without serial designation, and may be reissued as part of a
new series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of Common Stock or shares of other stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Junior Preferred Stock unless, prior thereto, the holders of shares of
Junior Preferred Stock shall have received per share an amount equal to the
Adjustment Number times $1.00, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (B) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except distributions made ratably on the Junior Preferred Stock
and all other such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Junior Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment
-5-
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Junior Preferred Stock shall
not be redeemable.
Section 9. Amendment. The Restated Certificate shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Junior Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Junior Preferred Stock, voting together as a single class.
Section 10. Fractional Shares. At the Corporation's sole discretion,
Junior Preferred Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Junior Preferred Stock.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this 18th day of
July, 1997.
/s/ Xxxx Xxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxx
Title: Chairman
-6-
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER JULY 17, 2007 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.
Rights Certificate
3-D GEOPHYSICAL, 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 July [__], 1997 (the "Rights Agreement")
between 3-D Geophysical, Inc., a Delaware corporation (the "Company"), and
American Securities Transfer & Trust, Inc. (the "Rights Agent"), unless notice
of redemption shall have been previously given by the Company, 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., Denver, Colorado time on July 17,
2007, at the principal corporate trust office of the Rights Agent, or at the
office of its successor as Rights Agent, one one-thousandth of a fully paid and
nonassessable share of the Junior Participating Preferred Stock, par value $0.01
per share, of the Company (the "Preferred Stock"), at a purchase price (the
"Purchase Price") of $50.00 per one one-thousandth share, upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase duly
executed. The Purchase Price may be paid in cash or by certified bank check or
bank draft payable to the order of the Company.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities, cash or other property which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
If the Rights evidenced by this Rights Certificate are or were formerly
beneficially owned, on or after the earlier of the Distribution Date and the
Stock Acquisition Date, by (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, or (ii) a direct or indirect transferee of an Acquiring
Person (or of any Associate or Affiliate of an Acquiring
Person), such Rights may become null and void, in which event the holder of any
such Right (including any subsequent holder) shall not have any rights with
respect to such Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal corporate trust office of the Rights Agent, may
be exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (a) may be redeemed by the Board of Directors of the Company
at its option at a redemption price of $.01 per Right, subject to adjustment,
payable, at the election of the Company, in cash or shares (including fractional
shares) of Common Stock or such other consideration as the Board of Directors
may determine at any time prior to the earlier of (i) 12:00 a.m. (midnight,
Denver, Colorado time) on the Stock Acquisition Date, and (ii) the Expiration
Date, or (b) may be exchanged after the Stock Acquisition Date by the Board of
Directors of the Company at its option in whole or in part for shares of the
Company's Common Stock or other Company securities.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
but in lieu thereof the Company may elect to (i) evidence fractional shares by
depositary receipts, (ii) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or in bearer form (represented
by a certificate) which shall entitle the holder to receive a full share upon
the surrender of such scrip or warrants aggregating a full share, or (iii) make
a cash payment, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or to receive dividends on, or shall be deemed for any purpose the holder
of, Preferred Stock or of any other securities, cash or property which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Certificate be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company, including,
without limitation, any right to vote for the election of directors or upon any
matter submitted to stock-
-2-
holders 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 to institute, as a holder of Preferred Stock or other
securities issuable on the exercise of the Rights represented by this
Certificate, any derivative action, or otherwise, until and only to the extent
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of July __, 1997.
3-D GEOPHYSICAL, INC.
By: ______________________________
Name:
Title:
Countersigned:
[------------]
By: __________________________
Authorized Officer
[Form of Reverse Side of Rights Certificate]
-3-
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights
Certificate.)
FOR VALUE RECEIVED the undersigned ________________ hereby sells,
assigns and transfers unto _____________________________________________________
________________________________________________________________________________
(Please print name and address of transferee) _________ Rights evidenced by this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________________ with a
power of Attorney to transfer the said Rights and a Rights Certificate
evidencing such Rights on the books of 3-D Geophysical, Inc., with full power of
substitution.
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the name of the undersigned):
Please insert Social Security or
other identifying number of transferee: _________________________
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
-4-
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate or any Rights evidenced hereby __ are __
are not being sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned __ did __did not acquire any of the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ___________________________ ____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
-5-
NOTICE
The signature on the foregoing Form of Assignment must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company 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, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
-6-
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: 3-D Geophysical, Inc.
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Rights Certificate to purchase
the shares of Preferred Stock or other securities, cash or other property
issuable upon the exercise of such Rights and requests that certificates for
such shares or other securities be issued in the name of, and such cash or other
property be paid to:
Please insert social security
or other identifying number: ________________________
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
A new Rights Certificate evidencing the remaining balance, if
any, of such Rights not hereby exercised shall be mailed to and registered in
the name of the undersigned unless such person requests that such Rights
Certificate be registered in the name of and mailed to (complete only if Rights
Certificate evidencing any remaining balance of Rights is to be registered in a
name other than the name of the undersigned):
Please insert social security
or other identifying number: ________________________
----------------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------------
-7-
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate __are __are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned __ did __ did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________________________ __________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
-8-
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election
to Purchase is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
-9-
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On July 17, 1997, the Board of Directors of 3-D Geophysical, Inc. (the
"Company") authorized the issuance of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $0.01 per share
(the "Common Stock"), of the Company. The distribution is payable to the
stockholders of record at the close of business on July 18, 1997 (the "Record
Date"), which is also the payment date, and with respect to all shares of Common
Stock that become outstanding after the Record Date and prior to the earliest of
the Distribution Date (as defined below), the redemption of the Rights, the
exchange of the Rights, or the expiration of the Rights (and, in certain cases,
following the Distribution Date). Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of a Junior
Participating Preferred Stock, par value $0.01 per share, of the Company (the
"Preferred Stock") at an exercise price of $50.00 per one one-thousandth of a
share of Preferred Stock (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights, and certain defined terms used herein, are
set forth in a Rights Agreement (the "Rights Agreement") between the Company and
American Securities Transfer & Trust, Inc. as Rights Agent (the "Rights Agent"),
dated as of July 17, 1997.
Until the earlier to occur of (i) the expiration of the Company's
redemption rights on the date of public disclosure that a person or group other
than certain Exempt Persons (an "Acquiring Person"), together with persons
affiliated or associated with such Acquiring Person (other than those that are
Exempt Persons), has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more (20% or more in the case of certain acquisitions by
institutional investors) of the outstanding Common Stock (the "Stock Acquisition
Date") and (ii) the tenth business day after the date (the "Tender Offer Date")
of commencement or public disclosure of an intention to commence a tender offer
or exchange offer by a person other than an Exempt Person if, upon consummation
of the offer, such person could acquire beneficial ownership of 15% or more of
the outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by Common Stock certificates
and not by separate certificates. The Rights Agreement provides that, until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
the Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after July 18, 1997, upon transfer or new
issuance of shares of Common Stock, will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption, exchange or expiration of the Rights) the surrender for transfer of
any certificate for Common Stock will also constitute the transfer of the Rights
associated with the Common Stock 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 Stock as of the close of business on the Distribution Date, and such
separate Right Certificates alone will evidence the Rights.
-1-
The Rights will first become exercisable on the Stock Acquisition Date
(unless sooner redeemed or exchanged). The Rights will expire at the close of
business on July 17, 2007 (the "Expiration Date"), unless earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities, cash or other 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 or distribution on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights, options or warrants to subscribe for
Preferred Stock or securities convertible into or exchangeable for Preferred
Stock at less than the current market price of the Preferred Stock or (iii) upon
the distribution to holders of the Preferred Stock of evidences of indebtedness
or assets (excluding regular periodic cash dividends, subject to certain
limitations set forth in the Rights Agreement) or of subscription rights or
warrants (other than those referred to above). In addition, the Purchase Price
payable, and the number of shares of Preferred Stock purchasable, on exercise of
a Right is subject to adjustment in the event that the Company should (i)
declare or pay any dividend on the Common Stock payable in Common Stock or (ii)
effect a subdivision or combination of the Common Stock into a different number
of shares of Common Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
In the event that there is public disclosure that an Acquiring Person
has become such, proper provision would be made so that each holder of a Right,
other than Rights that are or were beneficially owned by the Acquiring Person
and certain related persons and transferees (which will thereafter be void),
will thereafter have the right to receive upon exercise that number of shares of
Common Stock (or other securities) having at the time of such transaction a
market value of two times the Purchase Price of the Right. In addition, the
Company's Board of Directors has the option of exchanging all or part of the
Rights (excluding void Rights) for an equal number of shares of Common Stock in
the manner described in the Rights Agreement.
In the event that, at any time following public disclosure that an
Acquiring Person has become such, the Company is involved in a merger or other
business combination transaction where the Company is not the surviving
corporation or where the Common Stock is changed or exchanged or in a
transaction or transactions as a result of which 50% or more of its consolidated
assets or earning power are sold, proper provision would be made so that each
holder of a Right (other than such Acquiring Person and certain related persons
or transferees) shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price of the Right, that number of shares
of common stock of the acquiring
-2-
company or the Company, as the case may be, which at the time of such
transaction would have a market value of two times the Purchase Price of the
Right.
At any time prior to public disclosure that an Acquiring Person has
become such, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price"),
payable in cash, shares (including fractional shares) of Common Stock or any
other form of consideration deemed appropriate by the Board of Directors.
At any time prior to the Distribution Date, the Board of Directors of
the Company may amend or supplement the Rights Agreement without the approval of
the Rights Agent or any holder of the Rights. From and after the Distribution
Date, the Board of Directors of the Company may generally only amend or
supplement the Rights Agreement without such approval only to cure ambiguity,
correct or supplement any defective or inconsistent provision or change or
supplement the Rights Agreement in any manner which shall not adversely affect
the interests of the holders of the Rights (other than an Acquiring Person or an
affiliate or associate thereof). Immediately upon the action of the Board of
Directors providing for any amendment or supplement, such amendment or
supplement will be deemed effective.
The Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment, when, as and if declared by the Board
of Directors of the Company, equal to the greater of $100 per share and 1,000
times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to a
preferential liquidation payment equal to $1,000 per share, plus accrued and
unpaid dividends. Each share of Preferred Stock will have 1,000 votes per share,
voting together with the Common Stock. In the event of any merger, consolidation
or other transaction in which the Common Stock is exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount received per
share of Common Stock.
Exempt Persons include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.
The Rights may have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group (except as described above with
respect to an Exempt Person) that attempts to acquire the Company on terms not
approved by the Board. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors prior to the time a
person or group other than an Exempt Person has acquired beneficial ownership of
15% or more of the Common Stock, because until such time the Rights may
generally be redeemed by the Company at $.01 per Right.
-3-
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 Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to an Application for Registration on Form 8-A
and as an Exhibit to the Company's Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.
-4-
