RIGHTS AGREEMENT by and between PETROLEUM DEVELOPMENT CORPORATION and TRANSFER ONLINE, INC., as Rights Agent Dated as of September 11, 2007
Execution
Version
by
and between
PETROLEUM
DEVELOPMENT CORPORATION
and
TRANSFER
ONLINE, INC.,
as
Rights Agent
Dated
as of
September
11, 2007
TABLE
OF CONTENTS
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Page
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Section
1.
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Certain
Definitions.
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1
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Section
2.
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Appointment
of Rights Agent.
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6
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Section
3.
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Issue
of Rights Certificates.
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6
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Section
4.
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Form
of Rights Certificates.
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7
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Section
5.
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Countersignature
and Registration.
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8
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Section
6.
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Transfer,
Split-Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.
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9
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Section
7.
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Exercise
of Rights; Purchase Price; Expiration Date of Rights.
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9
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Section
8.
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Cancellation
and Destruction of Rights Certificates.
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11
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Section
9.
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Reservation
and Availability of Common Stock.
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11
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Section
10.
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Stock
Record Date.
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12
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Section
11.
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Adjustment
of Purchase Price, Number of Shares or Number of Rights.
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13
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Section
12.
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Certificate
of Adjusted Purchase Price or Number of Shares.
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21
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Section
13.
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Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.
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21
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Section
14.
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Fractional
Rights and Fractional Shares.
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24
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Section
15.
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Rights
of Action.
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25
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Section
16.
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Agreement
of Rights Holders.
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25
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Section
17.
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Rights
Certificate Holder Not Deemed a Stockholder.
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26
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Section
18.
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Concerning
the Rights Agent.
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26
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Section
19.
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Merger
or Consolidation or Change of Name of Rights Agent.
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27
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Section
20.
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Duties
of Rights Agent.
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27
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Section
21.
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Change
of Rights Agent.
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29
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Section
22.
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Issuance
of New Rights Certificates.
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30
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Section
23.
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Redemption
and Termination.
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30
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Section
24.
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Exchange.
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31
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Section
25.
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Notice
of Certain Events.
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33
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Section
26.
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Notices.
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33
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Section
27.
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Supplements
and Amendments.
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34
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Section
28.
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Successors.
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35
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Section
29.
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Determinations
and Actions by the Board of Directors.
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35
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Section
30.
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Benefits
of this Agreement.
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35
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Section
31.
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Severability.
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35
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Section
32.
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Governing
Law.
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35
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Section
33.
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Counterparts.
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36
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Section
34.
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Descriptive
Headings.
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36
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EXHIBITS
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Exhibit
A
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Form
of Rights Certificate
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Exhibit
B
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Summary
of Stockholder Rights Plan
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i
THIS
RIGHTS AGREEMENT, dated as of September 11, 2007 (the “Agreement”), is by
and between Petroleum Development Corporation, a Nevada corporation (the
“Company”), and Transfer Online, Inc., as Rights Agent (the “Rights
Agent”).
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INTRODUCTION:
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Effective
August 28, 2007 (the “Rights Dividend Declaration Date”), the board of
directors of the Company authorized and declared a distribution of one Right
(each, a “Right”) for each share of Common Stock (as hereinafter defined)
of the Company outstanding as of the Close of Business (as hereinafter defined)
on September 14, 2007 (the “Record Date”), each Right initially
representing the right to purchase one whole share of Common Stock (as
hereinafter defined) upon the terms and subject to the conditions set forth
in
this Agreement, and has further authorized and directed the issuance of one
Right with respect to each share of Common Stock of the Company that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).
AGREEMENT:
In
consideration of the foregoing and the mutual agreements herein set forth,
the
parties hereto, intending to be legally bound, hereby agree as
follows:
Section
1. Certain Definitions.
For
purposes of this Agreement, the following terms have the meanings
indicated:
“Acquiring
Person” shall mean any Person (as such term is hereinafter defined)
who, together with all Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the shares of Common Stock of the Company
then outstanding, but shall not include the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding shares of Common
Stock of the Company for or pursuant to the terms of any such
plan. Notwithstanding the foregoing:
(i) no
Person shall become an “Acquiring Person” solely as the result of the
acquisition of shares of Common Stock by the Company that, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the shares of Common Stock
of the Company then outstanding; provided, however, that if a Person
shall become the Beneficial Owner of 15% or more of the shares of Common Stock
of the Company then outstanding as a result of any such acquisition of shares
of
Common Stock by the Company and shall, after such acquisition of shares by
the
Company, become the Beneficial Owner of any additional shares of Common Stock
of
the Company (other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Common Stock of
the
Company are treated equally), such Person shall then become and be deemed to
be
an “Acquiring Person” hereunder;
1
(ii) no
Person who, alone or together with all Affiliates and Associates of such Person,
was, at the time of the public announcement by the Company of the declaration
by
its board of directors on August 31, 2007 of the dividend distribution of the
Rights, the Beneficial Owner of 15% or more of the Common Stock of the Company
then outstanding, including without limitation, FMR Corporation, shall be deemed
to have become an Acquiring Person unless and until such time as such Person
or
any Affiliate or Associate of such Person thereafter becomes the Beneficial
Owner of any additional Common Stock of the Company (other than as a result
of a
stock dividend, stock split or similar transaction effected by the Company
in
which all holders of Common Stock of the Company are treated equally), in which
case such Peson shall then become and be deemed to be an “Acquiring Person”
hereunder; and
(iii) if
the board of directors of the Company determines in good faith that a Person
who
would otherwise be an “Acquiring Person” became the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding inadvertently (including,
without limitation, because (A) such Person was unaware that it beneficially
owned a percentage of Common Stock that would otherwise cause such Person to
be
an “Acquiring Person” or (B) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and without
any
intention of changing or influencing control of the Company, then such Person
shall not be deemed to be or to have become an “Acquiring Person” for any
purposes of this Agreement unless and until such Person shall have failed to
divest itself, as soon as practicable (as determined, in good faith, by the
board of directors of the Company), of Beneficial Ownership of a sufficient
number of shares of Common Stock so that such Person would no longer otherwise
qualify as an “Acquiring Person”.
“Adjustment
Shares” shall have the meaning set forth in
Section 11(a)(ii).
“Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms
in Rule 12b-2 of the Exchange Act Regulations (as hereinafter defined) as in
effect on the date of this Agreement.
A
Person
shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own,” any securities:
(i) that
such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly, for purposes of Section 13(d) of the Exchange Act (as
hereinafter defined) and Rule 13d-3 thereunder (or any comparable or successor
law or regulation); or
2
(ii) that
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has (A) the right to acquire (whether such right is exercisable
immediately, contingently or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing, other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, (1) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person
or
any of such Person’s Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; (2) securities that such Person or any of
such Person’s Affiliates or Associates may acquire, does or do acquire or may be
deemed to have the right to acquire, pursuant to any merger or other acquisition
agreement between the Company and such Person (or one or more of his Affiliates
or Associates) if such agreement has been approved by the board of directors
of
the Company prior to such Person’s becoming an Acquiring Person; or (3)
securities that such Person has a right to acquire upon the exercise of Rights
at any time prior to the time that any Person becomes an Acquiring Person;
or
(B) the right to vote pursuant to any agreement, arrangement or
understanding; provided further, however, that a Person shall not be
deemed the “Beneficial Owner” of, or to “beneficially own,” any security under
this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (x) arises solely from a revocable proxy given in response to
a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the Exchange Act and the Exchange Act Regulations,
and (y) is not reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) that
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with whom such Person (or any of such Person’s
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing, other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), for the purpose of acquiring, holding, voting (except
to the extent contemplated by the proviso to clause (B) of subparagraph (ii)
above) or disposing of any securities of the Company; provided,
however, that in no case shall any officers or directors of the Company be
deemed (A) the Beneficial Owner of any securities beneficially owned by another
officer or director of the Company solely by reason of actions undertaken by
such persons in their capacity as officers or directors of the Company or (B)
the Beneficial Owners of securities held of record by the trustee of any
employee benefit plan of the Company or any Subsidiary of the Company for the
benefit of any employee of the Company or any Subsidiary of the Company, other
than such officers or directors, by reason of any influence that such officers
or directors may have over the voting of the securities held in the
plan.
Notwithstanding
anything in this definition of “Beneficial Owner” and “beneficially own” to the
contrary, the phrase “then outstanding,” when used with reference to a
Person who is the Beneficial Owner of securities of the Company, shall mean
the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding that such Person
would be deemed to beneficially own hereunder.
3
“Business
Day” shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in The City of New York are authorized or obligated by
law
or executive order to close.
“Close
of Business” on any given date shall mean 5:00 p.m., New York City
time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
“Common
Stock” when used with reference to the Company shall mean the shares of
common stock, par value $0.01, of the Company. “Common Stock” when
used with reference to any Person other than the Company shall mean the capital
stock (or other equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another Person, of the Person
or Persons that ultimately control such first-mentioned Person.
“Company”
shall have the meaning set forth in the preamble of this Agreement.
“Current
Per Share Market Price” shall have the meaning set forth in Section
11(d)(i).
“Current
Value” shall have the meaning set forth in Section 11(a)(iii).
“Distribution
Date” shall have the meaning set forth in Section 3(a).
“Equivalent
Common Stock” shall have the meaning set forth in Section
11(b).
“Exchange
Act” shall mean the Securities Exchange Act of 1934 or any successor
statute, in each case as amended and in effect from time to time.
“Exchange
Act Regulations” shall mean the Rules and Regulations under the Exchange
Act, as amended and in effect from time to time (including, without limitation,
any successor rules).
“Expiration
Date” shall have the meaning set forth in Section 7(a).
“Final
Expiration Date” shall have the meaning set forth in
Section 7(a).
“Flip-In
Event” shall mean any event described in Section 11(a)(ii)(A), (B) or
(C).
“Flip-In
Trigger Date” shall have the meaning set forth in Section
11(a)(iii).
“Flip-Over
Event” shall mean any event described in clause (x), (y) or (z) of Section
13(a).
“NASDAQ”
shall have the meaning set forth in Section 11(d)(i).
“Person”
shall mean any individual, firm, corporation or other entity, and shall include,
without limitation, any successor (by merger or otherwise) of such
entity.
4
“Common
Stock Equivalents” shall have the meaning set forth in
Section 11(a)(iii).
“Principal
Party” shall have the meaning set forth in Section 13(b).
“Purchase
Price” shall have the meaning set forth in Section 7(b).
“Record
Date” shall have the meaning set forth in the recitals to this
Agreement.
“Redemption
Date” shall have the meaning set forth in Section 7(a).
“Redemption
Price” shall have the meaning set forth in Section 23(a).
“Right”
shall have the meaning set forth in the recitals to this Agreement.
“Rights
Agent” shall have the meaning set forth in the preamble of this Agreement
and shall include, without limitation, any Person that shall become a successor
Rights Agent pursuant to the terms of this Agreement.
“Rights
Certificate” shall have the meaning set forth in
Section 3(a).
“Rights
Dividend Declaration Date” shall have the meaning set forth in the recitals
to this Agreement.
“Section 24(a)
Exchange Ratio” shall have the meaning set forth in Section
24(a).
“Securities
Act” shall mean the Securities Act of 1933 or any successor statute, in each
case, as amended and in effect from time to time.
“Spread”
shall have the meaning set forth in Section 11(a)(iii).
“Stock
Acquisition Date” shall mean the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, the date
of
filing of a report filed pursuant to Section 13(d) of the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such,
or
such earlier date as a majority of the board of directors of the Company shall
become aware of the existence of an Acquiring Person.
“Subsidiary”
of any Person shall mean any corporation or other entity of which a majority
of
the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
“Summary
of Rights” shall have the meaning set forth in
Section 3(b).
“Trading
Day” shall have the meaning set forth in Section 11(d)(i).
“Triggering
Event” shall mean any Flip-In Event or any Flip-Over Event.
5
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 of this Agreement, and the Rights
Agent
hereby accepts such appointment. The Company may from time to time
appoint co-Rights Agents as it may deem necessary or desirable upon not less
than five days’ prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for,
the
acts or omissions of any such co-Rights Agent.
Section
3. Issue of Rights Certificates.
(a) Until
the earlier of (i) the Close of Business on the tenth day after the
occurrence of a Stock Acquisition Date and (ii) the Close of Business on
the tenth Business Day (or such later date as may be determined by action of
the
Company’s board of directors prior to such time as any Person becomes an
Acquiring Person and of which the Company will give the Rights Agent prompt
written notice) after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
shares of Common Stock for or pursuant to the terms of any such plan) is
commenced within the meaning of Rule 14d-2(a) of the Exchange Act
Regulations or of the first public announcement of the intention of any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
shares of Common Stock for or pursuant to the terms of any such plan) to
commence a tender or exchange offer, if, in either case, upon consummation
thereof such Person would be the Beneficial Owner of 15% or more of the shares
of Common Stock of the Company then outstanding (the earlier of (i) and (ii)
above being the “Distribution Date”), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b)) by the certificates for
shares of Common Stock of the Company registered in the names of the holders
thereof (which certificates shall also be deemed to be Rights Certificates)
and
not by separate Rights Certificates, and (y) the right to receive Rights
Certificates will be transferable only in connection with the transfer of shares
of Common Stock of the Company. As soon as practicable after the
occurrence of a Distribution Date, the Company will notify the Rights Agent
of
the occurrence of the Distribution Date and the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested, send) by first-class,
postage-prepaid mail, to each record holder of shares of Common Stock of the
Company as of the Close of Business on the Distribution Date, at the address
of
such holder shown on the records of the Company, a Rights Certificate, in
substantially the form of Exhibit A (a “Rights Certificate”),
evidencing one Right for each share of Common Stock so held. From and
after the occurrence of a Distribution Date, the Rights will be evidenced solely
by such Rights Certificates.
(b) The
Company will make available a Summary of Rights to Purchase Common Stock, in
substantially the form of Exhibit B (the “Summary of Rights”), to
any holder of shares of Common Stock of the Company upon request of such
holder. Until the Distribution Date (or the Expiration Date), the
surrender for transfer of any certificate for shares of Common Stock of the
Company outstanding on the Record Date shall also constitute the transfer of
the
Rights associated with the shares of Common Stock represented
thereby.
6
(c) Certificates
evidencing shares of Common Stock that become outstanding (whether originally
issued or delivered from the Company’s treasury) after the Record Date but prior
to the earlier to occur of a Distribution Date and an Expiration Date shall
have
impressed on, printed on, written on or otherwise affixed to them the following
legend (or such other legend as the Company may deem appropriate that is not
inconsistent with the provisions of this Agreement):
This
certificate also evidences and entitles the holder hereof to certain “Rights” as
set forth in the Rights Agreement between Petroleum Development Corporation
and
Transfer Online, Inc., dated as of September 11, 2007, as it may be amended
from
time to time (the “Rights Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
executive offices of Petroleum Development Corporation. 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. Petroleum Development Corporation will mail to the
holder of this certificate a copy of the Rights Agreement, as in effect on
the
date of mailing, without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, Rights beneficially owned by any “Person” who becomes an “Acquiring
Person” (as such terms are defined in the Rights Agreement), whether held by or
on behalf of such Person or by any subsequent holder, may become null and
void.
If
the
Company purchases or acquires any shares of Common Stock of the Company after
the occurrence of a Record Date but prior to the occurrence of a Distribution
Date, any Rights associated with such shares of Common Stock of the Company
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with any shares of Common Stock of the Company
that are no longer outstanding.
Section
4. Form of Rights Certificates.
(a) The
Rights Certificates (and the forms of election to purchase shares of Common
Stock and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with
any
applicable law or with any rule or regulation made pursuant thereto or with
any
rule or regulation of any stock exchange or transaction reporting system on
which the Rights may from time to time be listed or traded, or to conform to
usage. Subject to the provisions of Sections 11 and 22, the
Rights Certificates shall entitle the holders thereof to purchase the numbers
of
shares of Common Stock set forth therein at the price per share of Common Stock
set forth therein, but the number of such shares of Common Stock and the
Purchase Price shall be subject to adjustment as provided herein.
7
(b) Any
Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate
of
an Acquiring Person; (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such; or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person
to
holders of equity interests in such Acquiring Person or to any Person with
whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the board of directors
of the Company determines to be part of a plan, arrangement or understanding
that has as a primary purpose or effect avoidance of Section 7(e); shall in
each
case 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 by and
between Petroleum Development Corporation and Transfer Online, Inc., as Rights
Agent, dated as of September 11, 2007 (the “Rights
Agreement”)). Accordingly, this Rights Certificate and the Rights
represented hereby may be or become null and void in the circumstances specified
in Section 7(e) of the Rights Agreement.
Section
5. Countersignature and Registration.
(a) The
Rights Certificates shall be executed on behalf of the Company by any officer
of
the Company, either manually or by facsimile signature, shall have affixed
thereto the Company’s seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned
by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery
by
the Company, such Rights Certificates, nevertheless, may be countersigned by
the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company. 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 this Agreement any
such
person was not such an officer.
(b) Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for such purpose, books for registration and transfer of
the
Rights Certificates issued under this Agreement. Such books shall
show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
8
Section
6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject
to the provisions of Sections 4(b), 7(e) and 14, at any time after the
Close of Business on a Distribution Date and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Rights Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates evidencing exercisable Rights, entitling
the
registered holder to purchase a like number of shares of Common Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Rights Certificates surrendered then
entitle such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer
of
any such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in 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 former Beneficial Owner)
or
Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon the Rights Agent shall, subject to Sections 4(b),
7(e) and 14, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any
transfer, split up, combination or exchange of Rights Certificates.
(b) Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and of indemnity or security reasonably satisfactory to them, and, at the
Company’s request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company will make
and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of and in replacement for the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The
registered holder of any Rights Certificate evidencing exercisable Rights may
exercise the Rights evidenced thereby (except as otherwise provided in this
Agreement) in whole or in part at any time after the occurrence of a
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the related certification duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each Right being exercised (as such
amount may be reduced (including, without limitation, to zero) pursuant to
Section 11(a)(iii)) and an amount equal to any applicable transfer tax required
to be paid by the holder of such Rights Certificate in accordance with Section
9, in cash, or by certified check, wire transfer or bank draft payable to the
order of the Company, at or prior to the earliest of (i) the Close of
Business on the tenth anniversary hereof (the “Final Expiration Date”),
(ii) the time at which the Rights are redeemed as provided in
Section 23 (the “Redemption Date”), and (iii) the time at which
such Rights are exchanged as provided in Section 24 (the earliest of (i),
(ii) and (iii) being the “Expiration Date”).
9
(b) The
“Purchase Price” for each share of Common Stock pursuant to the exercise
of a Right shall initially be $240, 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 accordance with paragraph (c)
below.
(c) Upon
receipt of a Rights Certificate evidencing exercisable Rights (with the form
of
election to purchase duly executed) accompanied by payment as provided in
Section 7(a), the Rights Agent shall, subject to Section 20(k), thereupon
promptly (i) (A) requisition from any transfer agent of the Common Stock a
certificate or certificates for the number of shares of Common 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 Common Stock issuable upon exercise of
the
Rights hereunder with a depositary agent, request from the depositary agent
a
depositary receipt or depositary receipts representing such number of shares
of
Common Stock as are to be purchased (in which case certificates for the shares
of Common Stock represented by such receipt or receipts shall be deposited
by
the transfer agent of the Common Stock with the depositary agent and the Company
hereby directs the depositary agent to comply with such requisition); (ii)
when
appropriate, requisition from the Company the amount of cash to be paid in
lieu
of issuance of fractional shares in accordance with Section 14; (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder; and (iv) when appropriate, after receipt thereof, deliver such cash
to
or upon the order of the registered holder of such Rights Certificate. If the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a), 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) If
the registered holder of any Rights Certificate shall exercise less than all
the
Rights evidenced thereby, a new Rights Certificate evidencing a number of Rights
equivalent to the number of Rights remaining unexercised shall be issued by
the
Rights Agent to the registered holder of such Rights Certificate or to such
registered holder’s duly authorized assigns, subject to Section 14.
(e) Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the board of directors of the Company determines
to be part of a plan, arrangement or understanding that has as a primary purpose
or effect the avoidance of this Section 7(e) or (iv) any subsequent transferee
of any of the foregoing shall become null and void without any further action,
and no holder of such Rights shall have any rights whatsoever with respect
to
such Rights or any Rights Certificate that formerly evidenced such Rights,
and
neither the Company nor the Rights Agent shall have any obligations whatsoever
with respect to such Rights or any Rights Certificate, whether under any
provision of this Agreement or otherwise. The Company shall use all
requisite commercially reasonable efforts to ensure that the provisions of
Section 4(b) and this Section 7(e) are complied with, but shall have no
liability to any holder of Rights Certificates or to any other Person as a
result of its making or failing to make any determinations with respect to
an
Acquiring Person or any of such Acquiring Person’s Affiliates, Associates or
transferees or taking or failing to take any actions with respect any Rights
or
Rights Certificates of any such Person.
10
(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 a registered
holder upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed
the
certificate 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 Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section
8. Cancellation and Destruction of Rights
Certificates.
All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof or in replacement thereof except
as
expressly permitted by 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 cancelled Rights Certificates to the Company, or shall, at
the
written request of the Company, destroy such cancelled Rights Certificates,
and
in such case shall deliver a certificate of destruction thereof to the
Company.
Section
9. Reservation and Availability of Common Stock.
(a) The
Company covenants and agrees that it will use its best efforts to cause to
be
reserved and kept available, out of and to the extent of its authorized and
unissued Common Stock, a number of shares of its Common Stock not reserved
for
another purpose that will be sufficient to permit the exercise in full of all
outstanding Rights. Upon the occurrence of any events resulting in an
increase in the aggregate number of shares of Common Stock (or other equity
securities of the Company) issuable upon exercise of all outstanding Rights
above the number then reserved, the Company shall make appropriate increases
in
the number of shares so reserved.
(b) If
the shares of Common Stock to be issued and delivered upon the exercise of
the
Rights are at any time listed on a national securities exchange or included
for
quotation on any transaction reporting system, the Company shall during the
period from the Distribution Date to the Expiration Date use its best efforts
to
cause all shares reserved for such issuance to be listed on such exchange or
included for quotation on any such transaction reporting system upon official
notice of issuance upon such exercise.
11
(c) The
Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the first occurrence of a Flip-In Event
in
which 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, a
registration statement under the Securities Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as reasonably
practicable after such filing, and (iii) cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements
of
the Securities Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities and (B) the Expiration
Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or “blue sky” laws of the
various states in connection with the exercisability of the
Rights. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction, unless
the
requisite qualification of the offering made upon exercise of the Rights
in such
jurisdiction shall have been obtained, or an exemption therefrom shall be
available and until a registration statement has been declared
effective.
(d) The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all shares of Common Stock (and, following the
occurrence of a Triggering Event, any other securities that may be delivered
upon exercise of Rights) shall, at the time of delivery of the certificates
for
such shares of Common Stock (subject to payment of the Purchase Price), be
duly
and validly authorized and issued and fully paid and nonassessable.
(e) The
Company further covenants and agrees that it will pay when due and payable
any
and all federal and state transfer taxes and charges that may be payable in
respect of the issuance or delivery of the Rights Certificates or of any shares
of Common Stock upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable in respect
of
any transfer or delivery of Rights Certificates to a person other than, or
the
issuance or delivery of certificates or depositary receipts for shares of Common
Stock in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for shares of Common Stock 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 reasonable satisfaction that
no such tax is due.
Section
10. Stock Record Date.
Each
person in whose name any certificate for shares of Common Stock (or, following
the occurrence of a Triggering Event, other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of
record of the shares of Common Stock (or, following the occurrence of a
Triggering Event, other securities) represented thereby at the Close of Business
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 Common Stock (or, following the occurrence of a Triggering Event,
other securities) transfer books of the Company are closed, such person shall
be
deemed to have become the record holder of such shares at the Close of Business
on, and such certificate shall be dated, the next succeeding Business Day on
which such transfer books are open; provided further, however,
that if delivery of shares of Common Stock (or such other securities) is delayed
pursuant to Section 9(c), such Persons shall be deemed to have become the
record holders of such shares of Common Stock (or such other securities) only
when such shares first become deliverable. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate shall not
be
entitled to any rights of a stockholder of the Company with respect to
securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions
or to
exercise preemptive rights (if any), and shall not be entitled to receive any
notice of any proceedings of the Company, except as expressly provided in this
Agreement.
12
Section
11. Adjustment of Purchase Price, Number of Shares or Number of
Rights.
The
Purchase Price, the number and kinds of securities covered by each Right and
the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In
the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Common Stock payable in shares of Common
Stock, (B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding Common Stock into a smaller number of shares of
Common Stock, or (D) issue any shares of its capital stock in a
reclassification of the Common Stock (including, without limitation, any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock for which the Rights shall be exercisable, shall be proportionately
adjusted so that the holder of any Rights exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of capital stock that, if such Rights had
been exercised immediately prior to such date and at a time when the applicable
transfer books were open, such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, combination
or
reclassification; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock issuable upon exercise of
one
Right. If an event occurs that 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, and shall be made prior, to any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject
to Section 24, if:
13
(A) any
Person shall become an Acquiring Person, unless the event causing the Person
to
become an Acquiring Person is a transaction to which the provisions of Section
13(a) apply; or
(B) any
Acquiring Person or any Associate or Affiliate of any Acquiring Person, at
any
time after the date of this Agreement, directly or indirectly, shall (1) merge
into the Company or otherwise combine with the Company and the Company shall
be
the continuing or surviving corporation of such merger or combination and shares
of Common Stock of the Company shall remain outstanding and unchanged, (2)
in
one transaction or a series of transactions, transfer any assets to the Company
or any of its Subsidiaries in exchange (in whole or in part) for shares of
Common Stock of the Company, for other equity securities of the Company or
any
of its Subsidiaries, or for securities exercisable for or convertible into
shares of equity securities of the Company or any of its Subsidiaries (whether
shares of Common Stock of the Company or otherwise) or otherwise obtain from
the
Company or any of its Subsidiaries, with or without consideration, any
additional shares of such equity securities or securities exercisable for or
convertible into such equity securities (other than pursuant to a pro rata
distribution to all holders of shares of Common Stock of the
Company), (3) sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of, in one transaction or a series of transactions,
to, from or with the Company or any of its Subsidiaries or any employee benefit
plan maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity, assets (including,
without limitation, securities) on terms and conditions less favorable to the
Company or such Subsidiary or plan than those that could have been obtained
in
arm’s-length negotiations with an unaffiliated third party, other than pursuant
to a transaction set forth in Section 13(a), (4) sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose of, in
one
transaction or a series of transactions, to, from or with the Company or any
of
its Subsidiaries or any employee benefit plan maintained by the Company or
any
of its Subsidiaries or any trustee or fiduciary with respect to such plan acting
in such capacity (other than transactions, if any, consistent with those engaged
in, as of the date hereof, by the Company and such Acquiring Person or such
Associate or Affiliate), assets (including, without limitation, securities
or
intangible assets) having an aggregate fair market value of more than
$10,000,000, other than pursuant to a transaction set forth in Section 13(a),
(5) receive, or any designee, agent or representative of such Acquiring
Person or any Affiliate or Associate of such Acquiring Person shall receive,
any
compensation from the Company or any of its Subsidiaries other than compensation
for full-time employment as a regular employee at rates in accordance with
the
Company’s (or its Subsidiaries’) past practices, or (6) receive the benefit,
directly or indirectly (except proportionately as a holder of shares of Common
Stock of the Company or as required by law or governmental regulation), of
any
loans, advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Company or any of its
Subsidiaries or any employee benefit plan maintained by the Company or any
of
its Subsidiaries or any trustee or fiduciary with respect to such plan acting
in
such capacity; or
14
(C) during
such time as there is an Acquiring Person, there shall be any reclassification
of securities (including, without limitation, any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the Company
with any of its Subsidiaries or any other transaction or series of transactions
involving the Company or any of its Subsidiaries, other than a transaction
or
transactions to which the provisions of Section 13(a) apply (whether or not
with or into or otherwise involving an Acquiring Person), that has the effect,
directly or indirectly, of increasing the number of outstanding shares of any
class of equity securities of the Company or any of its Subsidiaries that are
directly or indirectly beneficially owned by any Acquiring Person or any Person
or any Associate or Affiliate of any Acquiring Person by more than one percent
of the outstanding shares of such class of equity securities of the
Company;
then,
following the occurrence of an event described in Section 11(a)(ii)(A), (B)
or
(C) (a “Flip-In Event”), each holder of a Right, except as otherwise
provided in Section 7(e), shall thereafter have the right to receive for each
Right, upon exercise thereof in accordance with the terms of this Agreement
and
payment of the then-current Purchase Price, in lieu of the number of shares
of
Common Stock for which a Right was exercisable immediately prior to the first
occurrence of a Flip-In Event, such number of shares of Common Stock as shall
equal the result obtained by (x) multiplying the then-current Purchase
Price by the then number of shares of Common Stock for which a Right was
exercisable (or would have been exercisable if the Distribution Date had
occurred) immediately prior to the first occurrence of a Triggering Event,
and
dividing that product by (y) 50% of the Current Per Share Market Price for
shares of Common Stock on the date of occurrence of the Triggering Event (such
number of shares of Common Stock being hereinafter referred to as the
“Adjustment Shares”). Upon the occurrence of a Flip-Over
Event, any Rights that shall not have been previously exercised pursuant to
this
Section 11(a)(ii) shall thereafter be exercisable only pursuant to Section
13
and not pursuant to this Section 11(a)(ii).
(iii) In
the event that the number of shares of Common Stock that are authorized by
the
Company’s certificate of incorporation but 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, or if any necessary regulatory
approval for such issuance has not been obtained by the Company, the Company
shall, in lieu of issuing shares of Common Stock in accordance with Section
11(a)(ii) hereof: (A) determine the excess of (1) the value of the shares of
Common Stock issuable upon the exercise of a Right (the “Current Value”)
over (2) the Purchase Price (such excess being referred to as the
“Spread”) and (B) with respect to each Right, make adequate provision to
substitute for such shares of Common Stock upon exercise of the Rights, (1)
cash, (2) a reduction in the Purchase Price, (3) other equity securities of
the
Company (including, without limitation, Common Stock of the Company or shares
of
any series of stock that the board of directors of the Company shall have
conclusively deemed to have the same value as the shares of Common Stock (such
shares of stock are herein called “Common Stock Equivalents”)), except to
the extent that the Company has not obtained any necessary regulatory approval
for such issuance, (4) debt securities of the Company, except to the extent
that
the Company has not obtained any necessary regulatory approval for such
issuance, (5) other assets, or (6) any combination of the foregoing, having
an
aggregate value equal to the Current Value, as determined by the board of
directors of the Company based upon the advice of a nationally recognized
investment banking firm selected by the board of directors of the Company (which
determination shall be described in a statement filed with the Rights Agent
and
shall be conclusive and binding on the Rights Agent, the holders of the Rights
and all other Persons); provided, however, that if the Company shall
not have made adequate provision to deliver value pursuant to clause (B) above
within 30 days following the later of (x) occurrence of a Flip-In Event, and
(y)
the date on which the Company’s right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the “Flip-In
Trigger Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available), except to the extent
that the Company has not obtained any necessary regulatory approval for such
issuance, and then, if necessary, cash, having an aggregate value equal to
the
Spread.
15
(b) If
the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Common Stock entitling them (for a period expiring
within forty-five calendar days after such record date) to subscribe for or
purchase Common Stock (or shares having the same rights, privileges and
preferences as the Common Stock (“Equivalent Common Stock”)) or
securities convertible into Common Stock or Equivalent Common Stock at a price
per share of Common Stock or Equivalent Common Stock (or having a conversion
price per share, if a security convertible into shares of Common Stock or
Equivalent Common Stock) less than the then Current Per Share Market Price
(as
determined pursuant to Section 11(d)) of a share of Common 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 sum of the number
of shares of Common Stock outstanding on such record date plus the number of
shares of Common Stock that the aggregate offering price of the total number
of
shares of Common Stock and/or Equivalent Common Stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to
be
offered) would purchase at such Current Per Share Market Price and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock and/or Equivalent Common Stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). If such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value
of such consideration shall be as determined in good faith by the board of
directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive and binding on the Rights
Agent and the holders of the Rights. Shares of Common Stock owned by
or held for the account of the Company or its Subsidiaries 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 if such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted
to
be the Purchase Price that would then be in effect if such record date had
not
been fixed.
(c) If
the Company shall fix a record date for a distribution to all holders of shares
of Common Stock (including, without limitation, any such distribution made
in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend), assets (other than a dividend payable in
shares of Common Stock but including, without limitation, any dividend payable
in equity securities other than Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(d)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then Current Per Share Market Price (as
determined pursuant to Section 11(d)) of the Common Stock on such record
date, less the fair market value (as determined in good faith by the board
of
directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive and binding on the Rights
Agent and the holders of the Rights) of the cash, assets or evidences of
indebtedness to be distributed or of such subscription rights or warrants
distributable in respect of a share of Common Stock, and the denominator of
which shall be such Current Per Share Market Price of a share of Common
Stock. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price that would
then be in effect if such record date had not been fixed.
16
(d) (i) For
the purpose of any computation hereunder, the “Current Per Share Market
Price” of any security on any date shall be deemed to be the average of the
daily Closing Prices (as such term is hereinafter defined) per share of such
security for the thirty consecutive Trading Days (as such term is hereinafter
defined) ending on and including the Trading Day immediately prior to such
date;
provided, however, that in the event that the Current Per
Share Market Price of the security is determined during a period following
the
announcement by the issuer of such security of (A) a dividend or distribution
on
such security payable in shares of such security or securities convertible
into
such shares, or (B) any subdivision, combination or reclassification of such
security and prior to the expiration of thirty Trading Days after and not
including the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the Current Per Share Market Price shall be appropriately adjusted
to
reflect the current market price per share equivalent of such
security. The term “Closing Price” of a security for any day
shall mean the last sales 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
transaction reporting system with respect to securities listed or admitted
to
trading on the NASDAQ Global Select Market (being referred to herein as,
“NASDAQ”), or, if such security is not listed or admitted to trading on
the NASDAQ, on the principal national securities exchange on which such security
is listed or admitted to trading, or, if such security is not listed or admitted
to trading on any national securities exchange but sales price information
is
reported for such security, as reported by NASDAQ or such other self-regulatory
organization or registered securities information processor (as such terms
are
used under the Exchange Act) that then reports information concerning such
security, or, if sales price information is not so reported, 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 entity, or, if on such day such security is
not
quoted by any such entity, the average of the closing bid and asked prices
as
furnished by a professional market maker making a market in such security
selected by the board of directors of the Company, or, if on such day no market
maker is making a market in such security, the fair value of such security
on
such day as determined in good faith by the board of directors of the
Company. The term “Trading Day” with respect to a security
shall mean a day on which the principal national securities exchange on which
such security is listed or admitted to trading is open for the transaction
of
business, or, if such security is not listed or admitted to trading on any
national securities exchange but is quoted by NASDAQ, a day on which NASDAQ
reports trades, or, if such security is not so quoted, a Business
Day.
17
(ii) For
the purpose of any computation hereunder, the Current Per Share Market Price
of
the Common Stock shall be determined in accordance with the method set forth
in
Section 11(d)(i). If no shares of the Common Stock of the Company are
publicly held or so listed or traded, the Current Per Share Market Price of
the
Common Stock shall be conclusively deemed to be an amount equal to the fair
value per share as determined in good faith by the board of directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive and binding on the Rights Agent, the
holders of the Rights and all other Persons.
(e) No
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent of the Purchase Price;
provided, however, that any adjustments that by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest whole share
of Common Stock or to the nearest whole share of any other share or security
as
the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction that requires
such adjustment or (ii) the Expiration Date.
(f) If
as a result of an adjustment made pursuant to Section 11(a)(ii), the holder
of
any Rights thereafter exercised shall become entitled to receive any shares
of
capital stock of the Company other than shares of Common Stock, thereafter
the
number of such other shares so receivable upon exercise of any Rights and the
Purchase Price thereof 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 Common Stock contained in Sections 11(a), (b), (c), (d), (e),
(g), (h), (i), (j), (k), (l), (m) and (p), and the provisions of Sections 7,
9,
10, 13 and 14 with respect to the Common Stock shall apply on like terms to
any
such other shares.
(g) All
Rights originally issued by the Company subsequent to any adjustment made to
the
Purchase Price shall evidence the right to purchase, at the adjusted Purchase
Price, the number of sharess of Common Stock purchasable from time to time
upon
exercise of the Rights, all subject to further adjustment as provided in this
Agreement.
(h) Unless
the Company shall have exercised its election under Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made
in
Sections 11(b) and (c), each Right outstanding immediately prior to the making
of such adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of shares of Common Stock (calculated
to
the nearest whole share of Common Stock) obtained by dividing (i) the product
obtained by multiplying (x) the number of shares of Common Stock covered by
a
Right immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, by (ii) the Purchase
Price in effect immediately after such adjustment of the Purchase
Price.
18
(i) The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in substitution for any adjustment in the number
of shares of Common 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 shares of Common Stock
for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one one-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price
in
effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number
of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter,
but,
if the Rights Certificates have been issued, shall be at least ten days later
than 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(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates 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 herein and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective
of any adjustment or change in the Purchase Price or the number of shares of
Common Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase Price
per
share and the number of shares of Common Stock that were expressed in the
initial Rights Certificates issued hereunder.
(k) Before
taking any action that would cause an adjustment that would reduce the Purchase
Price below the then par value of the number of shares of Common Stock issuable
upon exercise of the Rights, the Company shall take any corporate action that
may, in the opinion of its counsel, be necessary in order that the Company
may
validly and legally issue fully paid and nonassessable number of shares of
Common Stock at such adjusted Purchase Price.
(l) In
any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event,
the
Company may elect to defer until the occurrence of such event the issuing to
the
holder of any Rights exercised after such record date of that number of shares
of Common Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such
holder a due ▇▇▇▇ or other appropriate instrument evidencing such holder’s right
to receive such additional shares (fractional or otherwise) upon the occurrence
of the event requiring such adjustment.
19
(m) Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled (but not required) to make such reductions in the Purchase Price,
in
addition to those adjustments expressly required by this Section 11, as and
to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Common Stock,
(ii) issuance wholly for cash of any share of Common Stock at less than the
Current Per Share Market Price, (iii) issuance wholly for cash of Common
Stock or securities that by their terms are convertible into or exchangeable
for
Common Stock, (iv) dividends on Common Stock payable in Common Stock, or
(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of shares of its Common Stock shall
not
be taxable to such stockholders.
(n) The
Company shall not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o)), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction that complies with
Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction, or a series of transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each
of which complies with Section 11(o)), if (x) at the time of or immediately
after such consolidation, merger or sale there are any rights, warrants or
other
instruments or securities outstanding or agreements in effect that would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the Person that constitutes, or would
constitute, the Principal Party (as defined in Section 13(b)) shall have
distributed or otherwise transferred to its stockholders or other persons
holding an equity interest in such Person, Rights previously owned by such
Person or any of its Affiliates and Associates; provided,
however, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell
or
transfer assets or earning power to, any other Subsidiary of the Company, or
(z)
the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.
(o) After
the Distribution Date, the Company shall not, except as permitted by
Section 23 or Section 26, take (or permit any of its Subsidiaries to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) If,
at any time after the date of this Agreement and prior to the Distribution
Date,
the Company shall (i) declare or pay any dividend on outstanding shares of
Common Stock of the Company payable in shares of Common Stock of the Company
or
(ii) effect a subdivision, combination or consolidation of the Common Stock
of
the Company (by reclassification or otherwise than by payment of dividends
in
shares of Common Stock of the Company) into a greater or lesser number of shares
of Common Stock of the Company, then in any such case the number of shares
of
Common Stock purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of shares of Common Stock so
purchasable immediately prior to such event by a fraction, the numerator of
which shall be the number of shares of Common Stock of the Company outstanding
immediately before such event and the denominator of which shall be the number
of shares of Common Stock of the Company outstanding immediately after such
event. The adjustments provided for in this Section 11(p) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
20
Section
12. Certificate of Adjusted Purchase Price or Number of
Shares.
Whenever
an adjustment is made as provided in Sections 11 and 13, the Company shall
promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) file with
the
Rights Agent and with each transfer agent for the shares of Common Stock of
the
Company or shares of Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate in accordance
with
Section 25 hereof (if so required under Section 25
hereof). Notwithstanding the foregoing sentence, the failure by the
Company to make such certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment contained therein and shall not
be
deemed to have knowledge of such adjustment unless and until it shall have
received such certificate.
Section
13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) Except
as provided in Section 13(b), in the event that, following a Stock Acquisition
Date, directly or indirectly, (x) the Company shall 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(o)), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger,
(y) any Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o)) shall consolidate with the Company, or
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the shares of Common Stock of
the
Company shall be changed into or exchanged for stock or other securities of
any
other Person or cash or any other property, or (z) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer) to any Person or Persons (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o)), in one or more
transactions, directly or indirectly, assets or earning power aggregating 50%
or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole), (any such event being a “Flip-Over Event”), then, and in
each such case, proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e), shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price, such number of validly authorized and issued, fully paid and
nonassessable shares of Common Stock of the Principal Party, which shares shall
not be subject to any liens, encumbrances, rights of first refusal, transfer
restrictions or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the number of shares
of Common Stock for which a Right is exercisable immediately prior to the first
occurrence of a Flip-Over Event (or, if a Flip-In Event has occurred prior
to
the first occurrence of a Flip-Over Event, multiplying the number of such shares
of Common Stock for which a Right would be exercisable hereunder but for the
occurrence of such Flip-In Event by the Purchase Price that would be in effect
hereunder but for such first occurrence) and (2) dividing that product
(which, following the occurrence of a Flip-Over Event, shall be the “Purchase
Price” for all purposes of this Agreement) by 50% of the Current Per Share
Market Price of the shares of Common Stock of such Principal Party on the date
of consummation of such Flip-Over Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Flip-Over Event,
all the obligations and duties of the Company pursuant to this Agreement;
(iii) the term “Company” shall, for all purposes of this Agreement,
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 shall apply only to such
Principal Party following the first occurrence of a Flip-Over Event;
(iv) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as may be necessary
to
ensure that the provisions of this Agreement shall thereafter be applicable
to
its shares of Common Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) shall be of no
further effect following the first occurrence of any Flip-Over
Event.
21
(b) “Principal
Party” shall mean:
(i) in
the case of any transaction described in clause (x) or (y) 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
in
such merger or consolidation, or, if there is more than one such issuer, the
issuer whose outstanding shares of Common Stock have the greatest aggregate
Current Per Share Market Price and (B) if no securities are so issued, the
Person that is the other party to such merger or consolidation, or, if there
is
more than one such Person, the Person whose outstanding shares of Common Stock
have the greatest aggregate Current Per Share Market Price; and
(ii) in
the case of any transaction described in clause (z) of the first sentence
of Section 13(a), the Person that is the party receiving the largest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person whose outstanding shares of Common Stock have
the
greatest aggregate Current Per Share Market Price; provided,
however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act
(“Registered Common Stock”), or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, “Principal Party” shall refer to such other
Person; (2) if the Common Stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary of another Person but is not a direct or indirect Subsidiary
of another Person that has Registered Common Stock outstanding, “Principal
Party” shall refer to the ultimate parent entity of such first-mentioned Person;
(3) if the Common Stock of such Person is not Registered Common Stock or such
Person is not a corporation, and such Person is directly or indirectly
controlled by more than one Person, and one or more of such other Persons has
Registered Common Stock outstanding, “Principal Party” shall refer to whichever
of such other Persons is the issuer of the Registered Common Stock having the
highest aggregate Current Per Share Market Price; and (4) if the Common
Stock of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and none of such other Persons has Registered Common Stock
outstanding, “Principal Party” shall refer to whichever ultimate parent entity
is the corporation having the greatest stockholders’ equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets.
22
(c) The
Company shall not consummate any such consolidation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13, and
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that the Principal Party will:
(i) (A) file
on an appropriate form, as soon as practicable following the execution of such
agreement, a registration statement under the Securities Act with respect to
the
shares of Common Stock of such Principal Party that may be acquired upon
exercise of the Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the Expiration Date, and (C) as soon as practicable
following the execution of such agreement take such action as may be required
to
ensure that any acquisition of such shares of Common Stock of such Principal
Party upon the exercise of the Rights complies with any applicable state
securities or “blue sky” laws;
(ii) deliver
to holders of the Rights historical financial statements for the Principal
Party
and each of its Affiliates that comply in all respects with the requirements
for
registration on Form 10 (or any successor form) under the Exchange
Act;
(iii) use
its best efforts, if the Common Stock of the Principal Party shall be listed
or
admitted to trading on the New York Stock Exchange or on another national
securities exchange, to list or admit to trading (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on the
New
York Stock Exchange or such securities exchange, or, if the Common Stock of
the
Principal Party shall not be listed or admitted to trading on the New York
Stock
Exchange or a national securities exchange, to cause the Rights and the
securities receivable upon exercise of the Rights to be authorized for quotation
on NASDAQ or on such other system then in use; and
(iv) 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.
23
(d) In
case the Principal Party that is to be a party to a transaction referred to
in
this Section 13 has a provision in any of its authorized securities or in
its certificate of incorporation, bylaws or other instrument governing its
corporate affairs, which provision would have the effect of (i) causing such
Principal Party to issue, in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the Current Per Share Market
Price or securities exercisable for, or convertible into, shares of Common
Stock
of such Principal Party at less than the Current Per Share Market Price (other
than to holders of Rights pursuant to this Section 13) or (ii) providing
for any special payment, tax or similar provisions in connection with the
issuance of the shares of Common Stock of such Principal Party pursuant to
the
provisions of this Section 13, then, in such event, the Company 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.
(e) The
provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Flip-Over
Event shall occur at any time after the occurrence of a Flip-In Event, the
Rights that have not theretofore been exercised shall thereafter be exercisable
in the manner provided in Section 13(a).
Section
14. Fractional Rights and Fractional Shares.
(a) The
Company shall not be required to issue fractions of Rights or to distribute
Rights Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Current Per Share
Market Price of a whole Right. For purposes of this Section 14(a),
the Current Per Share Market Price of a whole Right shall be the closing price
per whole Right on the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The
Company shall not be required to issue fractions of shares of Common Stock
upon
exercise of the Rights or to distribute certificates that evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company shall pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to
the
same fraction of the Current Per Share Market Price of one share of Common
Stock.
(c) The
holder of a Right by the acceptance of the Right expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise
of
a Right (except as provided above).
24
Section
15. Rights of Action.
All
rights of action in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18, are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of certificates representing shares of Common
Stock
of the Company); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, a certificate representing shares of Common Stock
of
the Company), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, of a certificate
representing shares of Common Stock of the Company), may, in such holder’s own
behalf and for such holder’s own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder’s right to exercise the Rights
evidenced by such Rights Certificate or, prior to the Distribution Date, in
the
manner provided in any such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders
of
Rights would not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations hereunder,
and
injunctive relief against actual or threatened violations of the obligations
of
any Person subject to this Agreement.
Section
16. Agreement of Rights Holders.
Every
holder of a Right, by accepting the same, consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:
(a) prior
to the occurrence of a Distribution Date, the Rights will be transferable only
in connection with the transfer of shares of Common Stock of the
Company;
(b) after
the occurrence of a Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office
of
the Rights Agent designated for such purpose, duly endorsed or accompanied
by a
proper instrument of transfer;
(c) subject
to Sections 6(a) and 7(f), the Company and the Rights Agent may deem and treat
the person in whose name the 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 Certificates or the associated Common
Stock certificate made by anyone other than the Company or the Rights Agent)
for
all purposes whatsoever, and neither the Company nor the Rights Agent shall
be
affected by any notice to the contrary;
(d) such
holder expressly waives any right to receive any fractional Rights and any
fractional securities upon exercise or exchange of a Right, except as otherwise
provided in Section 14; and
(e) 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 shall use commercially
reasonably efforts to seek to have any such order, decree or ruling lifted
or
otherwise overturned as soon as practicable.
25
Section
17. Rights Certificate Holder Not Deemed a
Stockholder.
No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Common Stock
or any other securities of the Company that may at any time be issuable upon
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 or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with this Agreement.
Section
18. Concerning the Rights Agent.
The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it under this Agreement 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 or willful
misconduct on the part of the Rights Agent, for any action taken, suffered
or
omitted by the Rights Agent in connection with the execution, acceptance and
administration of this Agreement and the exercise and performance of its duties,
including the costs and expenses of defending against and appealing any claim
of
liability in the premises. This indemnity shall survive the
termination of this Agreement and the expiration of the Rights. The
costs and expenses incurred in enforcing this right of indemnification shall
be
paid by the Company.
The
Rights Agent may conclusively rely upon and shall be protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted by
it
in connection with, its administration of this Agreement and the exercise and
performance of its duties hereunder in reliance upon any Rights Certificate
or
certificate for shares of 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 believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20.
26
Section
19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer
or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, that such corporation must be eligible for
appointment as a successor Rights Agent under the provisions of 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
Certificates 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 Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In
case at any time the name of the Rights Agent shall be changed and at such
time
any of the Rights Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and
in
all such cases such Rights Certificates shall have the full force provided
in
the Rights Certificates and in this Agreement.
Section
20. Duties of Rights Agent.
The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound,
and
no implied duties or obligations shall be read into this Agreement against
the
Rights Agent:
(a) Before
the Rights Agent acts or refrains from acting, it may consult with legal counsel
of its choice (who may be legal counsel for the Company), and the advice or
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken, suffered or omitted by it in good
faith and in accordance with such advice or opinion.
(b) Whenever
in the administration, exercise and performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or
matter be proved or established by the Company prior to taking, suffering or
omitting any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any officer
of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken, suffered or omitted
in good faith by it under the provisions of this Agreement in reliance upon
such
certificate.
27
(c) The
Rights Agent shall be liable hereunder to the Company and any other Person
only
for its own gross negligence or willful misconduct.
(d) The
Rights Agent shall not be liable for or by reason of any of the statements
of
fact or recitals contained in this Agreement or in the 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 liability or responsibility in respect
of
the legality, validity or enforceability of this Agreement or the execution
and
delivery hereof (except the due execution by the Rights Agent) or in respect
of
the legality, validity or enforceability or the execution of any Rights
Certificate (except its countersignature); nor shall it be liable or 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 exercisability of the Rights (including, without limitation,
the
Rights becoming void pursuant to Section 11(a)(ii)) or any adjustment in the
terms of the Rights (including, without limitation, the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, 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 receipt
of the certificate described in Section 12); 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 Common Stock or other securities to be issued
upon
the exercise of any Rights or as to whether any such security will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
(g) The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the administration, exercise and performance of its duties hereunder
from any one officer of the Company, and to apply to such officer for advice
or
instructions in connection with its duties, and it shall not be responsible
or
liable for any action taken, suffered or omitted by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. Any application by the Rights
Agent for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent
in
accordance with a proposal included in any such application on or after the
date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Company actually received such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date
in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The
Rights Agent and any stockholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the
Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal
entity.
28
(i) The
Rights Agent may execute and exercise any of the rights or powers vested in
it
or perform any duty under this Agreement either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents
or
for any loss to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
(j) No
provision of this Agreement shall require the Rights Agent to expend or risk
its
own funds or otherwise incur any financial liability in the performance of
any
of its duties hereunder or in the exercise of its rights if the Rights Agent
in
good faith believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If,
with respect to any Rights Certificate surrendered to the Rights Agent for
exercise, transfer, split up, combination or exchange, the certification on
the
form of assignment or form of election to purchase, as the case may be, that
the
Rights evidenced by the Rights Certificate are not owned by an Acquiring Person,
or an Affiliate or Associate thereof, has either not been completed or in any
manner indicates any other response thereto, the Rights Agent shall not take
any
further action with respect to such requested exercise, transfer, split up,
combination or exchange, 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 thirty days’ notice in writing mailed to the
Company and to each transfer agent of the Common Stock of the Company (as to
which the Rights Agent has received prior written notice) by registered or
certified mail, and the Company shall mail notice thereof to the holders of
the
Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty 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 (as to which the Rights Agent has
received prior written notice) 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. If the
Company shall fail to make such appointment within a period of thirty days
after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or
by
the holder of a Rights Certificate (who shall, with such notice, submit such
holder’s Rights Certificate for inspection by the Company), then 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
of any state of the United States, in good standing, authorized under such
laws
to exercise corporate trust or stock transfer powers, and subject to supervision
or examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any
further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment
the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock, and mail a notice thereof
in
writing to the registered holders of the Rights Certificates. Failure to
give any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of
the
Rights Agent or the appointment of the successor Rights Agent, as the case
may
be.
29
Section
22. Issuance of New Rights Certificates.
Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in
such form as may be approved by its board of directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made
in
accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock of the Company
following the Distribution Date and prior to the Expiration Date, the Company
(a) shall, with respect to shares of Common Stock of the Company so issued
or sold pursuant to the exercise of stock options or under any employee benefit
plan or arrangement or upon the exercise, conversion or exchange of securities
of the Company currently outstanding or issued at any time in the future by
the
Company and (b) may, in any other case, if deemed necessary or appropriate
by the board of directors of the Company issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate
shall be issued and this sentence shall be null and void abinitio
if, and to the extent that, such issuance or this sentence would create a
significant risk of or result in material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued or would
create a significant risk of or result in such options’ or employee plans’ or
arrangements’ failing to qualify for otherwise available special tax treatment
and (ii) no such Rights Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
Section
23. Redemption and Termination.
(a) The
Company may, at its option, upon action by the board of directors, at any time
on or prior to the earlier of (i) the time a Person becomes an Acquiring Person
and (ii) the Final Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement (such redemption price being
hereinafter referred to as the “Redemption Price”), and the Company may,
at its option, pay the Redemption Price either in cash, shares of Common Stock
of the Company (based on the Current Per Share Market Price thereof at the
time
of redemption), or any other form of consideration deemed appropriate by its
board of directors. The redemption of the Rights upon action by the
board of directors of the Company may be made effective at such time, on such
basis and with such conditions as the board of directors of the Company in
its
sole discretion may establish. Any such redemption will be effective
immediately upon the action of the board of directors of the Company ordering
the same, unless such action of the board of directors of the Company expressly
provides that such redemption will be effective at a subsequent time or upon
the
occurrence or nonoccurrence of one or more specified events (in which case
such
redemption will be effective in accordance with the provisions of such action
of
the board of directors of the Company).
30
(b) Immediately
upon the effectiveness of the redemption of the Rights pursuant to Section
23(a), and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such
notice
shall not affect the validity of such redemption. Within 10 days
after the effectiveness of the redemption of the Rights, the Company shall
give
notice of such redemption to the Rights Agent and shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice that is mailed in such manner shall be
deemed given, whether or not the holder receives the notice. Each
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights
at
any time in any manner other than that specifically set forth in this Section
23
or in Section 24, and other than in connection with the purchase of shares
of
Common Stock prior to the Distribution Date.
(c) Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not
be
exercisable pursuant to Section 7(a) at any time when the Rights may be redeemed
by action of the board of directors pursuant to Section 23(a).
Section
24. Exchange.
(a) The
Company, at its option, upon approval by its board of directors, at any time
after any Person becomes an Acquiring Person, may exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for shares
of Common Stock at an exchange ratio equal to, subject to adjustment to reflect
stock splits, stock dividends and similar transactions occurring after the
date
hereof, that number obtained by dividing the Purchase Price by the then Current
Per Share Market Price of Common Stock on the earlier of (i) the date on which
any Person becomes an Acquiring Person and (ii) the date on which a tender
or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity) is commenced within the meaning of Rule 14d-2(a) of the Exchange
Act Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock
of
the Company then outstanding (such exchange ratio being hereinafter referred
to
as the “Section 24(a) Exchange Ratio”). Notwithstanding the
foregoing, the Company may not effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan maintained by the Company or any of its Subsidiaries, or any trustee or
fiduciary with respect to such plan acting in such capacity), together with
all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or
more of the shares of Common Stock of the Company then outstanding.
31
(b) Immediately
upon the action of the board of directors of the Company ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be
to
receive that number of shares of Common Stock equal to the number of such Rights
held by such holder multiplied by the Section 24(a) Exchange Ratio.
The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books
of
the Rights Agent. Any notice that 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 exchange will state the method by which
the exchange of shares of Common Stock for Rights will be effected and, in
the
event of any partial exchange, the number of Rights that will be
exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights that have
become void pursuant to the provisions of Section 7(e)) held by each holder
of Rights.
(c) In
the
event that the number of shares of Common Stock authorized by the Company’s
certificate of incorporation but not outstanding or reserved for issuance
for
purposes other than upon exercise of the Rights is not sufficient to permit
any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights or make adequate
provision to substitute (1) cash, (2) Common Stock of the Company or other
equity securities of the Company, (3) debt securities of the Company, (4)
other
assets, or (5) any combination of the foregoing, having an aggregate value
equal
to the aggregate Current Per Share Market Price of the shares of Common Stock
that would otherwise be issuable in such exchange, all as determined by the
board of directors of the Company (which determination shall be described
in a
statement filed with the Rights Agent and shall be conclusive and binding
on the
Rights Agent, the holders of the Rights and all other Persons). To
the extent that the Company determines that some action need be taken pursuant
to Section 24(a), the board of directors of the Company may temporarily suspend
the exercisability of the Rights for a period of up to sixty days following
the
date on which the event described in Section 24(a) shall have occurred, in
order
to seek any authorization of additional shares of Common Stock and/or to
decide
the appropriate form of distribution to be made pursuant to the above provision
and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
32
Section
25. Notice of Certain Events.
(a) In
case the Company shall, at any time after the earlier to occur of a Distribution
Date or a Stock Acquisition Date, propose (i) to pay any dividend payable
in stock of any class to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock (other than a regular quarterly
cash dividend), (ii) to offer to the holders of its Common Stock rights or
warrants to subscribe for or to purchase any additional shares of Common Stock
or shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding Common Stock),
(iv) to effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction that complies with
Section 11(o)), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect
the liquidation, dissolution or winding up of the Company or (vi) to declare
or
pay any dividend on the Common Stock of the Company payable in shares of Common
Stock of the Company or to effect a subdivision, combination or consolidation
of
the shares of Common Stock of the Company (by reclassification or otherwise
than
by payment of dividends in shares of Common Stock), then, in each such case,
the
Company shall give to each holder of a Rights Certificate, in accordance with
Section 26, a notice of such proposed action that shall specify the record
date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date
of participation therein by the holders of the shares of Common Stock of the
Company, if any such date is to be fixed, and such notice shall be so given
in
the case of any action covered by clause (i) or (ii) above at least ten days
prior to the record date for determining holders of the shares of Common Stock
for purposes of such action, and in the case of any such other action, at least
ten days prior to the date of the taking of such proposed action or the date
of
participation therein by the holders of the shares of Common Stock of the
Company, whichever shall be the earlier.
(b) In
case a Flip-In Event shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance with
Section 26, a notice of the occurrence of such event, which notice shall
describe such event and the consequences of such event to holders of Rights
under Section 11(a)(ii). In the event any Person becomes an Acquiring
Person, the Company will promptly notify the Rights Agent upon obtaining
knowledge thereof.
Section
26. Notices.
Notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any 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 is filed in writing by the Company with the
Rights Agent) as follows:
33
Petroleum
Development
Corporation
▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General
Counsel
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 sent by registered or certified
mail and shall be deemed given upon receipt and addressed (until another address
is filed in writing by the Rights Agent with the Company) as
follows:
Transfer
Online,
Inc.
▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇
Attention: Legal
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.
Section
27. Supplements and Amendments.
As
long
as the Rights are redeemable pursuant to Section 23, the Company may, in its
sole and absolute discretion, and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement (including, without
limitation, Section 15) in any respect, without the approval of any holders
of
Rights, by action of its board of directors. At any time when the Rights are
no
longer redeemable pursuant to Section 23, the Company may, and the Rights Agent
shall, if the Company so directs, from time to time supplement or amend any
provision of this Agreement without the approval of any holders of Rights,
by
action of its board of directors in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained herein that may be
defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that 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), including, without limitation, to change
the Purchase Price, the Redemption Price, any time periods herein specified,
and
any other term hereof, any such supplement or amendment to be evidenced by
a
writing signed by the Company and the Rights Agent; provided,
however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner that would
adversely affect the interests of the holders of Rights. The
foregoing notwithstanding, this Agreement may not be so supplemented or amended
in any manner that would adversely affect the Rights Agent without the written
consent of the Rights Agent. Upon receipt of a certificate from an
appropriate officer of the Company that the proposed supplement or amendment
is
consistent with this Section 27 and, after such time as any Person has become
an
Acquiring Person, that the proposed supplement or amendment does not adversely
affect the interests of the holders of Rights, the Rights Agent shall execute
such supplement or amendment.
34
Section
28. Successors.
All
the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section
29. Determinations and Actions by the Board of
Directors.
For
all
purposes of this Agreement, any calculation of the number of shares of Common
Stock of the Company outstanding at any particular time, including, without
limitation, for purposes of determining the particular percentage of such
outstanding shares of Common Stock of the Company of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the Exchange Act. The board of directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
board of directors, 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, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, without limitation,
for purposes of clause (y) below, all omissions with respect to the foregoing)
that are done or made by the board of directors of the Company in good faith
(x) shall be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights Certificates and all other Persons and
(y) shall not subject the board of directors of the Company to any
liability to the holders of the Rights or any other Persons.
Section
30. Benefits of this Agreement.
Nothing
in this Agreement shall be construed to give to any person or corporation other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, shares of Common Stock of
the
Company) any legal or equitable right, remedy or claim under this Agreement;
but
this Agreement shall be for the sole and exclusive benefit of the Company,
the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, shares of Common Stock of the Company).
Section
31. Severability.
If
any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, void or unenforceable, the remainder
of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section
32. 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 the State
of Delaware applicable to contracts to be made and performed entirely within
such state, without regard to the choice-of-law or conflict-of-laws principles
of any jurisdiction.
35
Section
33. Counterparts.
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.
Section
34. Descriptive Headings.
Descriptive
headings of the several sections of this Agreement are inserted or convenience
only and shall not affect the meaning or construction of any of the provisions
of this Agreement.
[Signature
page follows]
36
IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be
duly
executed and attested, all as of the day and year first above
written.
| PETROLEUM DEVELOPMENT CORPORATION: | |
| By: _________________________________ | |
| Name: _______________________________ |
|
Title:________________________________
|
|
|
|
|
| TRANSFER ONLINE, INC. | |
| By:_________________________________ | |
| Name:_______________________________ | |
| Title:________________________________ |
Exhibit
A
Form
of
Rights Certificate
Certificate
No.
R-___ ________
Rights
NOT
EXERCISABLE AFTER SEPTEMBER 11, 2017 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE
COMPANY AT $0.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [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 SUCH AGREEMENT]
Rights
Certificate
PETROLEUM
DEVELOPMENT CORPORATION
This
certifies that _____________, or registered assigns, is the registered owner
of
the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement, dated
as of September 11, 2007 (the “Rights Agreement”), between Petroleum
Development Corporation., a Nevada corporation (the “Company”), and
Transfer Online, Inc., as Right Agent (the “Rights Agent”), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 p.m., New York City
time, on September 11, 2017 at the office of the Rights Agent designated for
such purpose, or at the office of its successor as Rights Agent, one fully
paid
non-assessable share of Common Stock, par value $0.01 per share (the “Common
Stock”) of the Company, at a purchase price of $240 per share of Common
Stock (the “Purchase Price”), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Rights Certificate
(and the number of shares of Common Stock that may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of September 11, 2007 based on the Common Stock as
constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of shares of Common Stock that may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain
events.
A-1
This
Rights Certificate is subject to all of the terms, provisions and conditions
of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights
Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of the Company.
This
Rights Certificate, with or without other Rights Certificates, upon surrender
at
the office of the Rights Agent designated for such purpose, may be exchanged
for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number
of
shares of Common Stock as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to
purchase. If this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at a redemption price of $0.01 per
Right.
No
fractional shares of Common Stock will be issued upon the exercise of any Rights
or Rights evidenced hereby, but in lieu thereof a cash payment will be made,
as
provided in the Rights Agreement.
No
holder
of this Rights Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock
or
of any other securities of the Company that may at any time be issuable on
the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of
a
stockholder of the Company or any right to vote for the election of directors
or
upon any matter submitted to stockholders at any meeting thereof, or to give
or
withhold consent to any corporate action, or to receive notice of meetings
or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Rights or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
A-2
This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS
the signature of the proper officers of the Company and its corporate
seal. Dated as of _______________, _____.
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PETROLEUM
DEVELOPMENT CORPORATION
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By:____________________________
Name:__________________________
Title:___________________________
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Countersigned:
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TRANSFER
ONLINE, INC.,
as Rights
Agent
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By:_____________________
Authorized
Signatory
Name:_______________________
Title:________________________
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A-3
Form
of
Reverse Side of Rights Certificate
FORM
OF ASSIGNMENT
(To
be
executed by the registered holder if such holder desires to transfer the Rights
Certificate.)
FOR
VALUE
RECEIVED
hereby sells, assigns and transfers unto
_________________________________________________________________________________________________________
(Please
print name and address of transferee)
this
Rights Certificate, together with all right, title and interest therein, and
does hereby
irrevocably
constitute and appoint
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
DATED: _______________________ , ___
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Signature
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Signature
Guaranteed:
Signatures
must be guaranteed by a participant in a Securities Transfer Association Inc.
recognized signature guarantee medallion program.
A-4
CERTIFICATE
The
undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or
Associate thereof (each as defined in the Rights Agreement).
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Signature
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NOTICE
The
signature in the foregoing Form of Assignment must conform to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In
the
event the certification set forth above in the Form of Assignment is not
completed, the Company and the Rights Agent will deem the beneficial owner
of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or
an
Affiliate or Associate thereof (each as defined in the Rights Agreement) and
such Assignment will not be honored.
A-5
FORM
OF ELECTION TO PURCHASE
(To
be
executed if holder desires to exercise the Rights Certificate.)
To
PETROLEUM DEVELOPMENT CORPORATION
The
undersigned hereby irrevocably elects to exercise
Rights represented by this Rights Certificate to purchase the shares of Common
Stock issuable upon the exercise of such Rights and requests that certificates
for such Common Stock be issued in the name
of:______________________________________________________
Please
insert social security
or
other
identifying
number __________________________________________________
(Please
print name and address)
If
such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be
registered in
the name of and delivered to:
___________________________________________________________________
Please
insert social security
or
other
identifying __________________________________________________________________
(Please
print name and
address)
DATED: ______________ , ____________
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Signature
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Signature
Guaranteed:
Signatures
must be guaranteed by a participant in a Securities Transfer Association Inc.
recognized signature guarantee medallion program.
A-6
CERTIFICATE
The
undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or
Associate thereof (each as defined in the Rights Agreement).
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Signature
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NOTICE
The
signature in the foregoing Form of Election to Purchase must conform to the
name
as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In
the
event the certification set forth above in the Form of Election to Purchase,
as
the case may be, is not completed, the Company and the Rights Agent will deem
the beneficial owner of the Rights evidenced by this Rights Certificate to
be an
Acquiring Person or an Affiliate or Associate thereof (each as defined in the
Rights Agreement) and such Election to Purchase will not be
honored.
A-7
Exhibit
B
PETROLEUM
DEVELOPMENT CORPORATION
SUMMARY
OF STOCKHOLDER RIGHTS PLAN
On
August
28, 2007, the board of directors of Petroleum Development Corporation (the
“Company”) declared a dividend distribution of one right for each
outstanding share of our common stock to stockholders of record at the close
of
business on September 14, 2007. Each Right entitles the registered
holder to purchase from the Company one share of Common Stock, par value $0.01
per share (the “Common Stock”), at a purchase price of $240 per share,
subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement (“Rights Agreement”) between the Company
and Transfer Online, Inc., as Rights Agent.
Initially,
the Rights will be attached to all common stock certificates representing shares
then outstanding, and no separate Rights certificates will be
distributed. The Rights will separate from the common stock and a
distribution date (the “Distribution Date”) will occur upon the date that
is the earlier of
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·
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ten
days following a public announcement that a person or group of affiliated
or associated persons (an “Acquiring Person”) has (subject to
certain exceptions) acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of our common
stock
(the “Stock Acquisition Date”), other than as a result of
repurchases of stock by the Company
and
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·
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ten
days (or such later date as our board of directors shall determine)
following the commencement of a tender offer or exchange offer that
would
result in a person or group beneficially owning 15% or more of such
outstanding shares of our common
stock.
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Until
the
Distribution Date,
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the
Rights will be evidenced by the common stock certificates and will
be
transferred with and only with such common stock
certificates,
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new
common stock certificates issued after the record date will contain
a
notation incorporating the Rights Agreement by reference
and
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·
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the
surrender for transfer of any certificates for common stock outstanding
will also constitute the surrender for transfer of the Rights associated
with the common stock represented by the
certificates.
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The
Rights are not exercisable until the Distribution Date and will expire at the
close of business on September 11, 2017, unless earlier exercised, exchanged
or
redeemed by the Company as described below.
B-1
As
soon
as practicable after the occurrence of the Distribution Date, Rights
certificates will be mailed to holders of record of our common stock as of
the
close of business on the Distribution Date and, thereafter, the separate Rights
certificates alone will represent the Rights. Except as otherwise
determined by our board of directors, only shares of our common stock issued
prior to the occurrence of the Distribution Date will be issued with
Rights.
Generally,
in the event that:
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any
person becomes an Acquiring Person;
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an
Acquiring Person (i) consummates with the Company or any of its
subsidiaries (a) certain mergers, or (b) securities transactions
or asset transactions that are valued at more than $10 million or
are not
on arm’s length terms and conditions, or (ii) receives any
(a) compensation not related to full time employment by the Company
or any of its subsidiaries or (b) loan, guarantee or tax benefit;
or
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·
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the
securities of the Company are reclassified, the Company is recapitalized
or undergoes a merger with one of its subsidiaries while an Acquiring
Person exists;
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each
holder of a Right would thereafter have the right to receive, upon exercise,
shares of Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in the bullets in this paragraph,
all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void.
For
example, at an exercise price of $240 per share, each Right not owned by an
Acquiring Person (or by certain related parties) following an event set forth
in
the preceding paragraph would entitle its holder to purchase $480 worth of
shares of Common Stock (or other consideration, as noted above) for
$240. Assuming that one share of our Common Stock had a per share
value of $25 at such time and the exercise price were $100, the holder of each
valid Right would be entitled to purchase 8 shares of Common Stock for
$100.
In
the
event that, at any time following the occurrence of a Stock Acquisition Date,
(i) we are acquired in a merger or other business combination transaction in
which we are not the surviving corporation (other than a merger that follows
an
offer for all outstanding shares of common stock that our board of directors
determines to be fair and otherwise in the best interests of the Company and
its
stockholders), or (ii) 50% or more of our assets, cash flow or earning power
is
sold or transferred, each holder of a Right (except Rights that previously
have
been exercised or voided) would have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the exercise
price of the Right.
At
any
time after a person or group becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding common
stock, our board of directors may exchange the Rights (other than Rights that
are owned by the Acquiring Person and have become void), in whole or in part,
at
an exchange ratio of one share of common stock (or of a share of a class or
series of our Common Stock having equivalent rights, preferences and privileges)
per Right (subject to adjustment).
B-2
At
any
time until the occurrence of a Distribution Date, our board of directors may
order the Company to redeem the Rights in whole, but not in part, at a price
of
$0.01 per Right (payable in cash, common stock or other consideration deemed
appropriate by the board). Immediately upon the action of the board
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $0.01 redemption
price.
Until
a
Right is exercised, the holder of a Right will have, by virtue of ownership
of
the Right, no rights as a stockholder of the Company, including, without
limitation, any right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize taxable
income in the event that the Rights become exercisable for Common Stock (or
other consideration) of the Company or for common stock of the acquiring
company.
Any
of
the provisions of the Rights Agreement may be amended by action of our board
of
directors prior to the time a person or group becomes an Acquiring
Person. Thereafter, the provisions of the Rights Agreement may be
amended by our board of directors in order to cure any ambiguity, to make
changes that do not adversely affect the interests of holders of Rights, or
to
shorten or lengthen any time period under the Rights Agreement.
A
copy of
the Rights Agreement has been filed with the Securities and Exchange Commission
as an exhibit to a Current Report on Form 8-K. A copy of the Rights
Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified
in
its entirety by reference to the actual terms and provisions of the Rights
Agreement, which is incorporated herein by reference.
B-3