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Exhibit (c)(10)
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
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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 (B) is not also then
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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
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shares or 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
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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 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
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to the terms of any such employee benefit plan.
(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
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Subsidiary of both or all of such joint venturers and the 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.
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Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
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
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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 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
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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, 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
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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 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
12
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.
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
13
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 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
14
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 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
15
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 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.
16
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 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)
17
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.
(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
18
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 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
19
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 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
20
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
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
21
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 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
22
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 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 bill 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
23
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 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
24
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.
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
25
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.
(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
26
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.
(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
27
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 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
28
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 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
29
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 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
30
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 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.
31
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.
(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
32
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.
(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.
33
(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 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
34
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.
35
(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; 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
36
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,
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.
8226 Park Meadows Drive
Littleton, CO 80124
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.
1825 Lawrence Street, Suite 444
Denver, CO 80202
37
Attention: Kathy Heagerty
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
38
registered holders of the Rights.
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
39
original, and both such counterparts shall together constitute but one and the
same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions 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/ John Wilkie By: /s/ Joel Friedman
- ----------------------------- -----------------------------
Name: Joel Friedman
Title: Chairman
AMERICAN SECURITIES TRANSFER
& TRUST, INC.
Attest:
/s/ K. Watson By: /s/ Kathy Heagerty
- ----------------------------- -----------------------------
Name: Kathy Heagerty
Title: Operations Officer
40
FIRST AMENDMENT
TO
RIGHTS AGREEMENT
FIRST AMENDMENT dated as of March 6, 1998 ("this Amendment") between
3-D Geophysical, Inc., a Delaware corporation (the "Company"), and American
Securities Transfer & Trust, Inc., as Rights Agent.
WHEREAS, the above-mentioned parties have previously entered into that
certain Rights Agreement dated as of July 17, 1997 (the "Rights Agreement")
governing certain preferred stock purchase rights (the "Rights") of the
Company's stockholders;
WHEREAS, the Company proposes to enter into an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of March 8, 1998, by and among the
Company, Western Atlas Inc., a Delaware corporation ("Parent"), and WAI
Acquisition Corp., a Delaware corporation and a subsidiary of Parent ("WAI"),
whereby WAI will make a tender offer (the "Tender Offer") to purchase all
outstanding shares of Common Stock of the Company for cash and upon consummation
of the Tender Offer WAI will merge with and into the Company (the "Merger") upon
the terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS, upon the execution and delivery of the Merger Agreement,
certain directors and officers of the Company will simultaneously enter into and
deliver, support agreements (each a "Support Agreement") in substantially the
form attached to the Merger Agreement as Annex II;
WHEREAS, the Board of Directors deems it desirable and in the best
interests of its stockholders that the transactions contemplated by the Merger
Agreement be consummated;
WHEREAS, Section 4.18 of the Merger Agreement provides that prior to
the Effective Time (as defined in the Merger Agreement), the Company shall amend
the Rights Agreement (without redeeming the Rights) so that none of the
transaction contemplated by the Merger Agreement will (i) cause any Rights
issued pursuant to the Rights Agreement to become exercisable or to separate
from the stock certificates to which they are attached, (ii) cause Parent, WAI
or any of their Affiliates or Associates to be an Acquiring Person (as each such
term is defined in the Rights Agreement), or (iii) trigger other provisions of
the Rights Agreement, including giving rise to a Distribution Date or a
Triggering Event (as each such term is defined in the Rights Agreement).
WHEREAS, such parties wish to amend the Rights Agreement in the manner
set forth below.
NOW, THEREFORE, the parties hereto agree as follows:
34. All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings given them in the Rights Agreement, and each reference
in the Rights Agreement to
41
"this Agreement," "hereof," "herein," "hereunder" or "hereby" and each other
similar reference shall be deemed to refer to the Rights Agreement as amended
hereby. All references to the Rights Agreement in any other agreement between or
among any of the parties hereto relating to the transactions contemplated by the
Rights Agreement shall be deemed to refer to the Rights Agreement as amended
hereby.
35. The definition of "Acquiring Person" in Section 1 is hereby amended by
adding the following provision to the end of paragraph (a)(i) of such
definition:
"and neither Parent nor WAI shall become an Acquiring Person by reason or
as a result of the execution or delivery of any Support Agreement or the Merger
Agreement or the consummation of the Tender Offer or of the Merger or any other
transaction contemplated by the Merger Agreement."
36. The definition of "Distribution Date" in Section 1 is hereby amended
by adding the following provision to the end of such definition:
"; provided that no Distribution Date shall occur by reason or as a result
of the execution or delivery of any Support Agreement or the Merger Agreement or
the consummation of the Tender Offer or Merger or any other transaction
contemplated by the Merger Agreement."
37. The following definitions are hereby added to Section 1:
""Merger" means the merger of WAI with and into the Company upon the terms
and conditions set forth in the Merger Agreement."
""Merger Agreement" means the Agreement and Plan of Merger, dated as of
March 8, among the Company, WAI and Parent."
""Parent" means Western Atlas Inc., a Delaware corporation."
""Support Agreement" means the Support Agreement in the form of Annex II
to the Merger Agreement, dated as of the date of the Merger Agreement and
executed by certain directors and officers of the Company."
""Tender Offer" means the offer by WAI to purchase all of the outstanding
shares of Common Stock (including the Right associated with each share of Common
Stock) pursuant to Article I of the Merger Agreement.
""WAI" means WAI Acquisition Corp., a Delaware corporation and a direct,
wholly owned subsidiary of Parent."
38. This Amendment shall be governed by and construed in accordance with
the internal laws of the State of Delaware applicable to contracts made and
performed entirely in Delaware.
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39. This Amendment may be signed in any number of counterparts, each of
which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
40. Except as expressly amended hereby, the Rights Agreement shall remain
in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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/ John M. Wilkie, Jr. By: /s/ Joel Friedman
- ----------------------------- -----------------------------
Name: Joel Friedman
Title: Chairman
AMERICAN SECURITIES TRANSFER
& TRUST, INC.
Attest:
/s/ Kimberly Hammond By: /s/ Kellie Gwinn
- ----------------------------- -----------------------------
Name: Kellie Gwinn
Title: Senior Vice President
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