RIGHTS AGREEMENT Rights Record Date: September 19, 2001 Amended as of September 30, 2005 and Effective for All Purposes as of the Rights Record Date (September 19, 2001)
U.S.
ENERGY CORP.
Issuer
and Company
and
COMPUTERSHARE
TRUST COMPANY, INC
Rights
Agent
Rights
Record Date: September 19, 2001
Amended
as of September 30, 2005 and
Effective
for All Purposes as of the
Rights
Record Date (September 19, 2001)
1
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TABLE
OF CONTENTS
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Page
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Section
1.
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Definitions
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4
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Section
2.
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Appointment
of Rights Agent
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7
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Section
3.
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Definition
of Distribution Date and Offer Date; When Right Certificates Will
Issue
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7
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Section
4.
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Form
of Right Certificates
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8
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Section
5.
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Countersignature
and Registration
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9
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Section
6.
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Transfer,
Split Up, Combination and Exchange of Right Certificates;
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Mutilated,
Destroyed, Lost or Stolen Right 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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10
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Section
8.
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Cancellation
and Destruction of Right Certificates
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11
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Section
9.
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Reservation
and Availability of Shares; Registration
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11
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Section
10.
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Record
Date
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12
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Section
11.
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Adjustment
of Purchase Price, Number and Kind of Shares or Number of Rights
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(Including
Flip-In Provision)
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12
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Section
12.
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Certification
of Adjusted Purchase Price or Number of Shares
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17
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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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(Including
Flip-Over Provision?)
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18
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Section
14.
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Fractional
Rights and Fractional Shares
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20
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Section
15.
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Rights
of Action..
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21
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Section
16.
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Agreement
of Right Holders
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21
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Section
17.
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Right
Certificate Holder Not Deemed a Stockholder
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21
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Section
18.
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Concerning
the Rights Agent
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21
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Section
19.
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Merger
or Consolidation or Change of Name of Rights Agent
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22
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Section
20.
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Duties
of Rights Agent
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22
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Section
21.
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Change
of Rights Agent
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24
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2
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Section
22.
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Issuance
of New Right Certificates
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24
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Section
23.
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Redemption
Right and Termination of Redemption Right
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24
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Section
24.
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Notice
of Proposed Actions
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25
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Section
25.
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Notices
in General
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25
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Section
26.
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Supplements
and Amendments
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26
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Section
27.
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Exchange
of Rights for Shares of Common Stock Without Cash Payment
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27
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Section
28.
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Successors
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27
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Section
29.
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Determinations
and Actions Taken by the Board of Directors
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27
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Section
30.
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Benefits
of this Agreement
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27
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Section
31.
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Governing
Law; Choice of Venue
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27
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Section
32.
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Counterparts
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28
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Section
33.
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Section
Headings
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28
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Section
34.
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Severability
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28
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Signature
Page
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28
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Exhibit
A
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Form
of Right Certificate
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29
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Exhibit
B
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Summary
of Rights
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34
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Exhibit
C
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Certificate
of Designation for Series P Preferred Stock
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37
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3
This
RIGHTS AGREEMENT, dated as of September 19, 2001, and amended on September
30,
2005, is entered into by U.S. Energy Corp., a Wyoming corporation (the
"Company"),
and
Computershare Trust Company, Inc. as the Rights Agent. As amended pursuant
to
Section 26, (i) the Company has delivered to the Rights Agent a certificate
signed by the president of the company and the Rights Agent has executed
this
Rights Agreement, as amended; and (ii) this Rights Agreement, as amended,
remains effective as of September 19, 2001.
RECITALS
The
board
of directors of the Company has determined that provision should be made
to
supplement Wyoming law, in a manner consistent with that law, to protect
the
shareholders by facilitating obtaining a higher value for the Company through
negotiated transactions, in the event of an attempted unfair takeover of
the
Company without the consent of the board of directors. Subject to the express
provisions of this Rights Agreement, Exhibit C to this Agreement, and
proceedings of the board of directors of the Company, the general purpose
of
this Rights Agreement is to encourage a person or company to discuss a potential
acquisition of the Company through a Qualified Offer, before acquiring more
than
15% of the total voting power of the stock of the Company. Under Section
31, if
there is conflict between this Agreement and the Wyoming Management Stability
Act, that law will control.
Therefore,
the board of directors has authorized and declared the distribution of one
Right
for every share of Common Stock of the Company outstanding at the Close of
Business on September 19, 2001 (the "Rights
Record Date"),
each
Right representing the right to purchase one Unit, being (initially and before
any adjustments as provided for herein) one one-thousandth (1/1,000) of a
share
of Series P Preferred Stock. Further, the board of directors has authorized
and
declared this dividend to cover every additional share of Common Stock which
may
become outstanding between the Rights Record Date and the first to occur
of the
Distribution Date, or the Expiration Date, or the date, if any, when the
Rights
may be redeemed, all upon the terms and subject to the conditions stated
below.
NOW,
THEREFORE, the parties agree as follows:
AGREEMENT
Section
1. DEFINITIONS.
(a) For
purposes of this Agreement, the following terms have the meanings
indicated:
"ACQUIRING
PERSON"
means
any Person who or which, alone or together with all of the Affiliates and
Associates of such Person, is the Beneficial Owner of a Substantial Block
of
Voting Stock, but does not include
(i)
an
Exempt Person or
(ii)
any
Person who or which acquires a Substantial Block of Voting Stock in connection
with a transaction or series of transactions approved prior to such transaction
or transactions by the board of directors of the Company. However, no person
shall become an Acquiring Person solely as a result of a reduction in the
number
of shares of Voting Stock outstanding, unless and until such Person thereafter
becomes the Beneficial Owner of additional shares constituting 1% or more
of the
general voting power of the Company.
4
"AFFILIATE"
and
"ASSOCIATE"
have
the respective meanings ascribed in rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
"BENEFICIAL OWNER."
A
Person is deemed to be the Beneficial Owner of any securities:
(i) which
such Person or any of his or its Affiliates or Associates beneficially owns,
directly or indirectly;
(ii) which
such Person or any of his or its Affiliates or Associates has
(A) the
right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of any conversion, exchange
or
purchase rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of
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 payment or exchange; or
(B)
the
right to vote or to direct the voting of, pursuant to any agreement, arrangement
or understanding (whether or not in writing);
or (C)
the
right to dispose or to direct the disposition of, pursuant to any agreement,
arrangement or understanding (whether or not in writing); or
(iii) which
are
beneficially owned, directly or indirectly, by any other Person with which
such
Person or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the purpose
of
acquiring, holding, voting or disposing of any securities of the Company;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or
to Beneficially Own, any security if the agreement, arrangement or understanding
to vote such security (1)
arises
solely from the grant of a revocable proxy or consent given to such Person
in
connection with a public proxy or consent solicitation made pursuant to,
and in
accordance with, the applicable rules and regulations under the Exchange
Act,
and
(2) is
not
also then reportable on Schedule 13(d) or successor report under the Exchange
Act; provided, further, that a Person engaged in business as an underwriter
of
securities shall not be deemed the "Beneficial Owner" of securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of the 40-day period immediately following
the
date of such acquisition.
"BUSINESS
DAY"
means
any day other than a Saturday, Sunday or day on which banking institutions
in
the State Wyoming are authorized or obligated by law or executive order to
close.
"CLOSE
OF BUSINESS"
means
5:00 p.m., Wyoming time, on a Business Day; provided, however, that if such
is
not a Business Day it shall mean 5:00 p.m., Wyoming time, on the next succeeding
Business Day.
"COMMON
STOCK"
means
the Company?s
Common
Stock; and "common stock" when used with reference to Persons other than
the
Company means: (i)
for
Persons organized in corporate form, the capital stock or equity security
with
the greatest voting power of such Person or, if such Person is a Subsidiary
of
another Person, of the Person or Persons which ultimately control such Person;
and
(ii)
in the
case of Persons not organized in corporate form, the units of beneficial
interest which
(A)
represent the right to participate generally in the profits and losses of
such
Person (including without limitation any flow-through tax benefits resulting
from an ownership interest in such Person)
and (B)
are
entitled to exercise the greatest voting power of such Person or, in the
case of
a limited partnership, shall have the power to remove the general partner
or
partners.
5
"DISTRIBUTION
DATE"
has the
meaning assigned in Section 3(a).
"EQUIVALENT
STOCK"
has the
meaning assigned in Section 7(a).
"EXCHANGE
ACT"
means
the Securities Exchange Act of 1934 and its future amendments.
"EXEMPT
PERSON"
means
the Company, any Subsidiary of the Company and any employee benefit plan
or
employee stock plan of the Company or of any Subsidiary of the Company, or
any
trust or other entity organized, established or holding shares of Common
Stock
by, for or pursuant to, the terms of any such plan.
"EXPIRATION
DATE"
has the
meaning assigned in Section 7(a).
"OFFER
DATE"
has the
meaning assigned in Section 3(a).
"PERSON"
means
any individual, firm, corporation, partnership, trust or other entity and
shall
include any of their successors.
"PRINCIPAL
PARTY"
has the
meaning assigned in Section 13(b).
"PURCHASE
PRICE"
means
the price (initially $200.00) payable for one Unit (1/1,000 share of Series
P
Preferred Stock) upon exercise of a Right.
"QUALIFIED
OFFER"
means a
tender or exchange offer for all outstanding Common Stock at a price and
on
terms determined to be adequate and otherwise in the best interests of the
Company and its stockholders (other than the Person or an Affiliate or Associate
thereof on whose behalf the offer is made) by at least a majority of the
Directors who are not representatives of or affiliated with the Person making
such offer or any Affiliate or Associate of such Person.
"REDEMPTION
PRICE"
has the
meaning assigned in Section 23(a), initially $0.01 per Right.
"RIGHT"
has the
meaning assigned in the Recitals to this Agreement.
"RIGHTS
RECORD DATE"
is
defined in the Recitals to this Agreement.
"SUBJECT
SHARES"
means
the class or series of shares then issuable on exercise of the
Rights.
"STOCK
ACQUISITION DATE"
means
the date of the first public announcement by the Company or an Acquiring
Person
(which for purposes of this definition shall include, without limitation,
a
report filed pursuant to Section 13(d) under the Exchange Act) that an Acquiring
Person has become such.
"SUBSIDIARY"
means,
with respect to any Person, a corporation or other entity the securities
or
other ownership interests of which having ordinary voting power sufficient
to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person and
any
Affiliate of such Person.
6
"SUBSTANTIAL
BLOCK"
means a
number of shares of Voting Stock having in the aggregate 15 percent or more
of
the general voting power.
"TRADING
DAY"
has the
meaning assigned to it in Section 11(d).
"UNIT"
means
the shares or other securities issuable upon exercise of one Right, initially
one one-thousandth of a share of Series P Preferred Stock of the Company
having
the rights and preferences stated in Exhibit C, before any adjustment pursuant
to Section 11(a)(ii) or Section 13.
"VOTING
STOCK"
means
shares of the Company's capital stock the holders of which have general voting
power.
Section
2. APPOINTMENT
OF RIGHTS AGENT.
The
Company hereby appoints the Rights Agent to act as agent for the Company
in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agent or Agents as it may deem necessary or desirable and determine
the respective duties of the Rights Agent and the Co-Rights Agent or
Agents.
Section
3. DEFINITION
OF DISTRIBUTION DATE AND OFFER DATE; WHEN RIGHT CERTIFICATES WILL
ISSUE.
(a) Until
the
Close of Business on the earlier of
(i) the
tenth
Business Day after a Stock Acquisition Date
or (ii) the
tenth
Business Day (or such later date as the Company's board of directors shall
determine) after the date of the commencement by any Person (other than an
Exempt Person) of, or the date of the first public announcement (such
commencement date or announcement is the "Offer
Date")
of the
intent of any Person (other than an Exempt Person) to commence a tender or
exchange offer upon the successful consummation of which such Person, together
with its Affiliates and Associates, would be the Beneficial Owner of 15 percent
or more of the then outstanding Voting Stock (regardless of whether any shares
are actually purchased pursuant to such offer) (the tenth Business Day after
the
first to occur of a Stock Acquisition Date or an Offer Date is the "Distribution
Date"),
(i) the
Rights will automatically attach to, and be evidenced by, the certificates
for
Common Stock registered in the names of the holders of Common Stock (which
certificates for Common Stock shall be deemed also to be Right Certificates)
and
not by separate Right Certificates, and
(ii) each
Right will be transferable only in connection with the transfer of the
underlying shares of Common Stock.
(b) As
soon
as practicable after the Rights Record Date, the Company will send by
first-class mail to each record holder of Common Stock as of the Close of
Business on the Rights Record Date a copy of the Summary of Rights (see Exhibit
B).
For
certificates for Common Stock issued after the Rights Record Date (including
replacement certificates for shares of Common Stock outstanding on or prior
to
the Rights Record Date), but prior to the earliest of the Distribution Date,
the
Expiration Date and the date, if any, on which the Rights may be redeemed,
the
Company will have printed on or otherwise affixed to them the following
legend:
7
This
certificate also entitles the holder hereof to certain Rights as set forth
in
the Rights Agreement between the Company and Corporate Stock Transfer, Inc.
as
Rights Agent as the same shall 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 the Company.
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 Common Stock certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of
a
written request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or becomes
an
Acquiring Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement) or certain transferees of any thereof, whether
currently held by or on behalf of such Person or by any subsequent holder,
may
be limited as provided in Section 7(f) of the Rights Agreement.
For
certificates containing the legend, until the Distribution Date, the Rights
associated with Common Stock represented by such certificates shall be evidenced
only by such certificates; transfer of any such certificates also shall
constitute transfer of the Rights associated with the Common Stock.
(c) After
the
Distribution Date, the Rights will be evidenced solely by the Right
Certificates.
(d) As
soon
as practicable after the Distribution Date, the Rights Agent will mail by
first-class insured mail to each record holder of Common Stock as of the
Close
of Business on the Distribution Date, as shown by the records of the Company
at
the Close of Business on the Distribution Date, at the address of such holder
shown on such records, a Right Certificate, in substantially the form attached
hereto as Exhibit A, evidencing one Right for each share of Common Stock
so
held.
Section
4. FORM
OF RIGHT CERTIFICATES.
(a) The
Right
Certificates (and the forms of assignment and certification and of election
to
purchase shares to be printed on the reverse thereof) shall be in substantially
the form of Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements as are not inconsistent
with this Agreement, or as may be required to comply with any law or to conform
to usage.
(b) Any
Right
Certificate issued pursuant to Section 3(a) or Section 22 that represents
Rights
Beneficially Owned by: (i)
an
Acquiring Person or any Associate or Affiliate of any 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 which the board of directors of the Company has determined is part
of a
plan, arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(f), and any Right Certificate issued pursuant to Section
6 or Section 11 upon transfer, exchange, replacement or adjustment of any
other
Right Certificate referred to in this sentence, shall contain (to the extent
feasible and reasonably identifiable as such) the following legend:
The
Rights represented by this Right 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
8
defined
in the Rights Agreement) or certain transferees thereof. Accordingly, under
certain circumstances as provided in the Rights Agreement, this Right
Certificate and the Rights represented hereby may be limited as provided
in
Section 7(f) of such Agreement.
Section
5. COUNTERSIGNATURE
AND REGISTRATION.
(a) The
Right
Certificates shall be executed on behalf of the Company by its Chairman of
the
Board, its President or any of its Vice Presidents, manually or by facsimile
signature, and have affixed thereto the Company's seal or a facsimile thereof
attested by the Secretary or an Assistant Secretary, either manually or by
facsimile. The Right Certificates shall be manually countersigned by the
Rights
Agent and shall not be valid for any purpose unless so countersigned. In
case
any officer who shall have signed any of the Right Certificates shall cease
to
be such officer before countersignature by the Rights Agent and issuance
and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, issued and delivered with the same force
and
effect as though the person who signed such Right Certificates had not ceased
to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution
of
such Right Certificate, shall be a proper officer (as specified above) of
the
Company to sign such Right Certificate, although at the date of the execution
of
this Rights Agreement any such person was not such an officer.
(b) Following
the Distribution Date, the Rights Agent will keep or cause to be kept books
for
registration and transfer of the Right Certificates issued hereunder. Such
books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each Right
Certificate, the date of each Right Certificate and the number of each Right
Certificate.
Section
6. TRANSFER,
SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED,
LOST OR STOLEN RIGHT CERTI-FICATES.
(a) Subject
to Sections 4(b), 7(f) and 14, at any time after the Close of Business on
the
Distribution Date, and prior to the Close of Business on the Expiration Date
or
the day prior to the day, if any, when the Rights are to be redeemed under
Section 23, any Right Certificate or Certificates may be transferred, split
up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase such number of Units as the Right
Certificate(s) surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate(s) to be transferred, split up, combined
or
exchanged, with the form of assignment on the reverse side(s) thereof duly
completed and executed, at the stock transfer office of the Rights Agent.
The
Rights Agent shall countersign and deliver to the persons entitled thereto
the
Right Certificate(s) requested. The Company may require payment of a sum
sufficient to cover any tax or government charge that may be imposed in
connection therewith. However, neither the Rights Agent nor the Company shall
be
obligated to take any action with respect to the transfer of any such
surrendered Right Certificate unless and until the registered holder shall
have
completed and signed the certificate contained in the form of assignment
on the
reverse side of such Right 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.
(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 Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company
9
and
the
Rights Agent of all reasonable expenses incident thereto, and upon surrender
to
the Rights Agent and cancellation of the Right Certificate, if mutilated,
the
Company will execute and deliver a new Right Certificate of like tenor to
the
Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section
7. EXERCISE
OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject
to Section 7(f), and unless earlier redeemed as provided in Section 23, the
registered holder of any Right Certificate may exercise the Rights evidenced
thereby in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to purchase
on the
reverse side thereof duly completed and executed, to the Rights Agent at
the
stock transfer office of the Rights Agent, together with payment of the Purchase
Price for each Unit as to which the Rights are exercised, at or prior to
the
Close of Business on the tenth anniversary of the Rights Record Date or such
other date to which the Rights may be extended as provided in this Agreement
(the latest of such dates is the "Expiration
Date").
If at
any time after the Distribution Date but prior to the Expiration Date the
Company is unable, under its articles of incorporation, to issue the number
and
class of shares required to be issued upon the exercise of all of the
outstanding Rights, the Company may issue upon exercise of any of the Rights
shares of capital stock or other securities of the Company of value equivalent
to the shares so required to be issued ("Equivalent Stock"), as determined
by
the board of directors.
(b) The
Purchase Price for each Unit pursuant to the exercise of a Right initially
shall
be US$200.00, subject to adjustment from time to time as provided in Sections
11
and 13.
(c) Upon
receipt of a Right Certificate, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the Units to be
purchased and an amount equal to any applicable transfer tax in cash, or
by
certified check, bank draft or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly
(i)
requisition from the Company or any transfer agent of the Company (if different
from the Rights Agent) a certificate for the number of shares to be purchased
and the Company will comply, and hereby irrevocably authorizes its transfer
agent to comply, with all such requests; (ii)
requisition from the Company the amount of cash to be paid in lieu of issuance
of a fractional share, when appropriate, in accordance with Section 14;
and
(iii)
promptly
after receipt of such certificate from any such transfer agent, cause the
same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in the name(s) designated by such holder and cash
for
any fractional share. These same procedures shall be followed if Rights are
exercised for Equivalent Stock.
(d) The
Company shall not be required to pay any transfer tax which may be payable
in
respect of any transfer involved in the transfer or delivery of Right
Certificates, or the issuance or delivery of certificates in a name other
than
the registered holder, or to issue or deliver any certificates upon the exercise
of any Rights, until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender)
or
until it has been established to the Company's satisfaction that no such
tax is
due.
(e) If
the
registered holder exercises less than all the Rights, a new Right Certificate
for the remaining unexercised Rights shall be issued by the Rights Agent
to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to Section 14.
10
(f) Notwithstanding
any provision of this Agreement to the contrary, upon the occurrence of any
of
the events described in any of clauses (A), (B), (C) or (D) of Section
11(a)(ii), or the occurrence of any of the events described in any of Section
13(a)(i), 13(a)(ii) or 13(a)(iii), the adjustment and provision under Section
11(a)(ii), and also the exchange provision under Section 27 and the redemption
provision under Section 23, shall
not apply
with
respect to any Rights that are at the time Beneficially Owned by
(i)
an
Acquiring Person or by any Associate or Affiliate of such Acquiring Person
(which Acquiring Person or Affiliate or Associate engages in, or realizes
the
benefit of, one or more of the transactions described in clause (A) or (B)
of
Section 11(a)(ii), realizes the benefits set forth in clause (C) of Section
11(a)(ii) or, alone or together, become the Beneficial Owner(s) of a number
of
shares of Voting Stock which equals or exceeds the percentage of the general
voting power as provided in clause (D) of Section 11(a)(ii), as the case
may
be), or
(ii) a
transferee of an Acquiring Person or of any Associate or Affiliate of such
Acquiring Person (which engages in, or realizes the benefit of, one or more
of
the transactions described in clause (A) or (B) of Section 11(a)(ii), or
realizes the benefits in clause (C) of Section 11(a)(ii), or, alone or together
with such Acquiring Person or Associate or Affiliate, become the Beneficial
Owner(s) of a number of shares of Voting Stock which equals or exceeds the
percentage of the general voting power as provided in clause (D) of Section
11(a)(ii), as the case may be) (A)
who
becomes a transferee after the Acquiring Person becomes such, or
(B)
who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights either
by (1)
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
(2)
a
transfer which the board of directors of the Company has determined is part
of a
plan, arrangement or understanding which has as a primary purpose or effect
the
avoidance of this Section 7(f). Upon the exercise of such Rights covered
by this
Section 7(f), the holders shall be entitled to receive, upon payment of the
Purchase Price, the number of Units issuable upon exercise of such Rights
without
giving effect
to the
adjustment provided for under Section 11(a)(ii). The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(f) and
Section 4(b) are complied with, but shall have no liability to any holder
of
Right Certificates or other Person as a result of its making or failing to
make
any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(g) 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 Right Certificate surrendered
for
such exercise,
and (ii)
provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section
8. CANCELLATION
AND DESTRUCTION OF RIGHT CERTIFICATES.
All
Right Certificates surrendered for the purpose of exercise, transfer, split
up,
combi-nation or exchange shall, if surrendered to the Company or to any of
its
agents, be delivered to the Rights Agent for cancellation or in canceled
form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right
Certificates shall be issued in lieu 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
Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver
a
certificate of destruction thereof to the Company.
11
Section
9. RESERVATION
AND AVAILABILITY OF SHARES; REGISTRATION.
(a) The
Company covenants and agrees that it shall (i)
on
or
prior to the Rights Record Date, take all such action as shall be necessary
to
cause to be reserved and kept available out of its authorized and unissued
capital stock, enough shares of Preferred Stock to permit the exercise in
full
of all Rights to be outstanding as of the Rights Record Date, (ii)
no later
than promptly following the Distribution Date, take all such action as shall
be
necessary to cause to be reserved and kept available out of its authorized
and
unissued capital stock, or its authorized and issued shares held in its
treasury, the number of shares of Common Stock that will, from time to time,
be
sufficient to permit the exercise in full of all Rights from time to time
outstanding; (iii)
take all
such action as may be necessary to insure that all shares delivered upon
exercise of Rights shall be duly and validly authorized and issued and be
fully
paid and nonassessable; and
(iv)
pay when
due any transfer taxes and charges in respect of the issuance or delivery
of the
Right Certificates or of any shares upon the exercise of Rights (except as
otherwise provided in Section 7(d)).
(b) The
Company agrees to use its best efforts as soon as practicable following the
Distribution Date, to file with the Securities and Exchange Commission a
registration statement to permit the issuance of shares on exercise of the
Rights under the Securities Act of 1933, and to take the steps necessary
to
permit such issuance under the securities "blue sky" laws of the states where
registered holders reside. The Company may temporarily suspend for up to
90 days
the exercise of the Rights to file a registration statement and other documents
as needed to allow exercise of the Rights. At the start and end of a suspension,
the Company shall issue a public announcement and notify the Rights Agent
that
exercise has been suspended and the end of the suspension.
(c) The
Rights shall not be exercisable in any jurisdiction if not there legal.
(d)
The
Company shall use its reasonable efforts to cause all shares reserved for
issuance upon exercise of Rights to be listed on the Company’s exchange or
quotation market.
Section
10. RECORD DATE.
Each
Person in whose name any stock certificate is issued upon exercise of Rights
shall be deemed to have become the holder of record of the shares represented
thereby on, and such certificate shall be dated, the date when the Right
Certificate was surrendered and the Purchase Price paid. Prior to exercise
of
the Rights, the holder of a Right Certificate shall not be entitled to any
rights of a stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including without limitation the right to vote
or
to receive dividends or other distributions, and such holder shall not be
entitled to receive any notice of any proceedings of the Company, except
as
provided herein.
Section
11. ADJUSTMENT
OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS (INCLUDING
FLIP-IN PROVISION).
The
Purchase Price, number and kind of shares or other 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)
If
the
Company shall at any time after the date of this Agreement (A)
declare
and pay a dividend on the shares which are subject to the Rights ("Subject
Shares") payable in shares of stock of the Company,
(B) subdivide
or split the Subject Shares,
(C) combine
or consolidate the Subject Shares into a smaller number of shares or effect
a
reverse stock split of the Subject Shares, or
(D)
issue
any shares of its capital stock in a reclassification of the Subject Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation),
then, and in each
12
such
event,
except
as otherwise provided in this Section 11(a), the Purchase Price in effect
at the
time of the record date for dividend or subdivision, split, reverse split,
combination, consolidation or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled
to
receive the aggregate number and kind of shares of capital stock which, if
such
Right had been exercised immediately prior to such date and at a time when
the
transfer books of the Company were open, he would have received upon such
exercise and been entitled to receive. If an event occurs which would require
an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to,
and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) If
at any
time after the date of this Agreement
(A)
any
Acquiring Person, or any Associate or Affiliate of any Acquiring Person,
directly or indirectly (1)
shall
merge into the Company or any of its Subsidiaries or otherwise combine with
the
Company or any of its Subsidiaries and the Company or such Subsidiary shall
be
the continuing or surviving corporation of such merger or combination and
the
Common Stock shall remain outstanding and the outstanding shares thereof
shall
not be changed into or exchanged for stock or other securities of the Company
or
of any other Person or cash or any other property,
or (2)
shall
sell or otherwise transfer in one or more transactions, assets to the Company
or
any of its Subsidiaries in exchange for 15 percent or more of the shares
of any
class of capital stock of the Company or any of its Subsidiaries, and the
Common
Stock shall remain outstanding and unchanged, or
(B)
directly
or indirectly, any Acquiring Person, or any Associate or Affiliate of any
Acquiring Person, shall
(1)
in one
or more transactions, transfer assets to the Company or any of its Subsidiaries
in exchange (in whole or in part) for shares of any class of capital stock
of
the Company or any of its Subsidiaries or for securities exercisable for
or
convertible into shares of any class of capital stock of the Company or any
of
its Subsidiaries or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of any
class
of capital stock of the Company or any of its Subsidiaries or other securities
exercisable for or convertible into shares of any class of capital stock
of the
Company or any of its Subsidiaries (other than as part of a pro rata
distribution by the Company or such Subsidiary to all holders of Common Stock),
or
(2)
sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise dispose
(in
one or more transactions), to, from or with, as the case may be, the Company
or
any of its Subsidiaries, assets on terms and conditions less favorable to
the
Company or such Subsidiary than the Company or such Subsidiary would be able
to
obtain in arm's-length negotiation with an unaffiliated third party,
or
(3)
receive
any compensation from the Company or any of the Company's Subsidiaries other
than compensation for full-time employment as a regular employee, or fees
for
serving as director, at rates in accordance with the Company's (or its
Subsidiaries') past practices, or
(4)
receive
the benefit, directly or indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other financial assistance
provided by the Company or any of its Subsidiaries, on terms and conditions
less
favorable to the Company or such Subsidiary than the Company or such Subsidiary
would be able to obtain in arm's-length negotiation with an unaffiliated
third
party, or
(C) during
any such time as there is an Acquiring Person, there shall be any
reclassification of securities (including 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 similar transaction or series of
transactions involving the Company or any of its Subsidiaries (whether or
not
with or into or otherwise involving an Acquiring Person or any Affiliate
or
Associate of such Acquiring Person) which has the effect, directly or
indirectly, of increasing by more than one percent the proportionate share
of
the outstanding shares
13
of
any
class of equity securities, or of securities exercisable for or convertible
into
equity securities, of the Company or any of its Subsidiaries which is directly
or indirectly owned by any Acquiring Person or any Associate or Affiliate
of any
Acquiring Person, or
(D) any
Person shall become an Acquiring Person otherwise than pursuant to a Qualified
Offer,
then,
and in each such case,
but
subject to Section 27 (covering exchange of Rights for shares of Common Stock,
without requiring exercise of Rights) and to Section 23 (covering redemption
of
Rights), proper adjustment and provision shall be made so that each holder
of a
Right (except as provided below and in Section 7(f)) shall, on and after
the
later of (I)
the date
of the occurrence of an event described in clause (A), (B), (C) or (D) of
this
Section 11(a)(ii),
or (II) the
expiration of the period within which the Rights may be redeemed under Section
23 (as the same may have been amended under Section 26), have the right to
receive, upon exercise thereof at the then current Purchase Price, the number
of
shares of Common Stock equal to the result obtained by (x)
multiplying the then current Purchase Price by the then number of Units for
which a Right is then exercisable and dividing that product by (y)
50
percent of the current market price per share of Common Stock (determined
in
accordance with Section 11(d)) on the date of the occurrence of the relevant
event listed above in clause (A), (B), (C) or (D) of this subparagraph (ii);
PROVIDED,
HOWEVER,
that if
the transaction that would otherwise give rise to the foregoing adjustment
is
also subject to the provisions of Section 13, then only the provisions of
Section 13 (flip-over provisions) shall apply and no adjustment shall be
made
pursuant to this Section 11(a)(ii). The Company shall not consummate any
such
merger, combination, transfer or transaction referred to in any of such clauses
(A), (B) and (C) unless prior thereto there shall be sufficient authorized
but
unissued Common Stock to permit the exercise in full of the Rights in accordance
with the foregoing sentence, unless the Board of Directors has determined
to
issue Equivalent Stock in accordance with Section 7(a); PROVIDED,
HOWEVER,
that in
no case may the Company consummate any such merger, combination, transfer
or
transaction if at the time of or immediately after such transaction there
are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
If
the
Company issues Equivalent Stock upon the exercise of any Rights pursuant
to the
immediately preceding paragraph, then, upon any such exercise, proper provision
shall be made so that the holder of a Right (except as provided in Section
7(f))
shall have the right to receive, upon such exercise at the then current Purchase
Price, such number of shares or other units of Equivalent Stock of the Company
as shall equal the result obtained by
(x)
multiplying the then current Purchase Price by the number of Units for which
a
Right is then exercisable and dividing that product by (y)
50
percent of the current market price per share or other unit of the Equivalent
Stock of the Company (determined on substantially the same basis as is
prescribed by Section 11(d) with respect to the valuation of Common Stock)
on
the date of occurrence of the relevant event listed above in clause (A),
(B),
(C) or (D) of this subparagraph (ii). If at any time the Company should be
prohibited by law, by any provision of its articles of incorporation, or
by any
instrument or agreement to which the Company is a party or by which it is
bound,
from issuing, or should be unable under its articles of incorporation to
issue,
sufficient Equivalent Stock to permit the exercise of all outstanding Rights
in
accordance with the foregoing sentence, then, in lieu of issuing such Equivalent
Stock upon such exercise, the Company shall pay to each holder of a Right
(except as provided in Section 7(f)) upon surrender of the Right as provided
herein but without payment of the Purchase Price, an amount in cash for each
Right equal to the Purchase Price.
(b) If
after
the Rights Record Date the Company sets a record date for the issuance of
rights
or warrants to all holders of Common Stock or Subject Shares entitling them
(for
a period expiring
14
within
45
calendar days after such record date) to subscribe for or purchase Common
Stock
or Subject Shares or securities convertible into Common Stock or Subject
Shares
at a price per share (or having a conversion price per share, if a security
convertible into Common Stock) less than the current market price per share
(determined with Section 11(d)) on such record date, the Purchase Price to
be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction; the
numerator shall be the total number of shares of Common Stock and Subject
Shares
outstanding on such record date plus the number of shares of Common Stock
which
the aggregate offering price of the total number of shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities
so
to be offered) would purchase at such current market price, and the denominator
shall be the total number of shares of Common Stock and Subject Shares
outstanding on such record date plus the number of additional shares to be
offered for subscription or purchase (or into which the convertible securities
to be offered are initially convertible). In case such subscription or purchase
price may be paid, in whole or in part, 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. Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is
fixed,
and if such rights or warrants are not so issued, the Purchase Price shall
be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been set.
(c) If
the
Company at any time after the Rights Record Date sets a record date for making
a
distribution on shares of Common Stock or the Subject Shares, whether by
way of
a dividend, distribution, reclassification of stock, recapitalization,
reorganization or partial liquidation of the Company or otherwise (and including
any such distribution made in connection with a consolidation or merger in
which
the Company is the continuing corporation), of subscription rights or warrants
(excluding those referred to in Section 11(b)), evidences of indebtedness
or
other assets (other than
(i)
regular
periodic cash dividends, (ii)
a
dividend payable in Common Stock
or (iii)
a
distribution which is part of or is made in connection with a transaction
to
which Section 11(a)(ii) or Section 13 applies), then 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, of which
the numerator shall be the current market price per share of Common Stock
(determined with Section 11(d)) on such record date, less the fair market
value
applicable to one share of Common Stock (as determined in good faith by the
board of directors of the Company, whose determination shall be described
in a
statement filed with the Rights Agent) of such assets or evidences of
indebtedness or of such subscription rights or warrants so to be distributed,
and of which the denominator shall be such current market price per share
of
Common Stock. Such adjustments shall be made successively whenever such a
record
date is fixed; and if such distribution is not so made, the Purchase Price
shall
again be adjusted to be the Purchase Price which would then be in effect
if such
record date had not been fixed.
(d) The
"current
market price"
per
share of Common Stock on any date shall be deemed to be the average of the
daily
closing prices per share of such Common Stock for the 30 consecutive Trading
Days (defined below) immediately prior to such date; provided, however, that
if
the current market price per share of Common Stock is determined during a
period
following the announcement by the issuer of such Common Stock of a dividend
or
distribution on such Common Stock payable in shares of such Common Stock
or
securities convertible into shares of Common Stock (other than the Rights),
and
prior to the expiration of 30 Trading Days after the ex-dividend date for
such
dividend or distribution, then, and in each such case, the current market
price
shall be appropriately adjusted to reflect the current market price per share
of
Common Stock in connection with ex-dividend trading. The closing price for
each
day shall be the last sale price, or, in case no such sale takes place on
such
day, the average of the closing bid and asked prices, in either case as reported
in the principal consolidated transaction reporting system of the principal
market where the shares of
15
Common
Stock are listed or admitted to trading. If the shares of Common Stock
are not
listed or admitted to trading on any national securities exchange, then
closing
price will be determined with reference to the average of the high bid
and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc., Automated Quotation System ("NASDAQ").
If on any such date the shares of Common Stock are not quoted by any such
organization, the fair market value of such shares on such date as determined
in
good faith by the board of directors shall be used. Any such determination
of
current market price shall be described in a statement filed with the Rights
Agent.
For
the
purpose of any computation hereunder, the "current
market price"
of a
Unit shall be deemed to be equal to the current market price per share
of Common
Stock, and the "current market price" of a Subject Share shall be deemed
to be
equal to the current market price per share of Common Stock divided by
the
number of Subject Shares which comprise a Unit.
For
purposes of this Agreement, the term "Trading
Day"
shall
mean a day on which the principal national securities exchange on which
the
shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed
or
admitted to trading on any national securities exchange, a Business
Day.
(e) No
adjustment in the Purchase Price shall be required unless the adjustment
would
require an increase or decrease of at least one percent in Price; provided,
however, that any adjustments which by reason of this Section 11(e) are
not
required to be made shall be carried forward and taken into account in
any
subsequent adjustment. All calculations under this Section 11 shall be
made to
the nearest cent or to the nearest one-thousandth of a share, as the case
may
be. Notwithstanding the proviso to the first sentence of this Section 11(e),
any
adjustment required by this Section 11 shall be made no later than the
earlier
of three years from the date of the transaction which gives rise to such
adjustment or the date of the expiration of the Rights.
(f) If
at any
time, as a result of an adjustment made pursuant to Section 11(a), the
holder of
any Right 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 Right shall
be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions, with respect to such shares,
contained in Sections 11(a) through (c), inclusive. The provisions of Sections
7, 9, 10, 13 and 14 with respect to the shares of 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 hereunder shall represent the right to purchase, at the
adjusted
Purchase Price, the number of shares purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless
the Company shall have exercised its election under Section 11(i), when
there is
an 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 (calculated to the nearest
one-thousandth) obtained by (i)
multiplying
(x)
the
number of shares covered by a Right immediately prior to such adjustment
by
(y)
the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii)
dividing
the result by the Purchase Price in effect immediately after such adjustment.
16
(i) The
Company may elect, on or after the date of adjustment of the Purchase Price,
to
adjust the number of Rights, in substitution for any adjustment in the
number of
shares purchasable upon the exercise of each Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of Units 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-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make
a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount
of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates
have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment
of
the number of Rights the Company shall cause to be distributed to holders
of
record of Right Certificates on such record date, Right Certificates to
show
(subject to Section 14) the additional Rights to which the holders shall
be
entitled as a result of such adjustment. However, at its option, the Company
may
shall cause to be distributed in substitution and replacement for the Right
Certificates held by the holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates to
evidence all the Rights to which the holders are entitled after the adjustment.
(j) Irrespective
of any adjustment or change in the Purchase Price or the number of shares
issuable upon the exercise of the Rights, the Right Certificates theretofore
and
thereafter issued may continue to express the Purchase Price per share
and the
number of shares which were expressed in the initial Right Certificates
issued
hereunder.
(k) If
this
Section 11 requires that an adjustment in the Purchase Price be made effective
as of the record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any Right
exercised after such record date the additional shares or securities of
the
Company, if any, issuable as a consequence of 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 or securities upon the occurrence of such event.
(l) Notwithstanding
the other provisions of this Section 11, the Company shall be entitled
to make
such adjustments in the number of shares which may be acquired upon exercise
of
the Rights, and such adjustments in the Purchase Price, in addition to
those
adjustments expressly required by the other subsections of this Section
11, as
and to the extent that the Company, in its sole discretion, shall determine
to
be advisable, in order that (x)
the
holders of the Rights shall be treated equitably and in accordance with
the
purpose and intent of this Agreement, and
(y)
to the
extent reasonably possible, such event shall not, in the opinion of counsel
for
the Company, result in the stockholders of the Company being subject to
any
United States federal income tax liability by such adjustments. The events
which
would enable the Company to make such further adjustments include (i)
any
reclassification, consolidation or subdivision of the Common Stock;
(ii)
any
reorganization or partial liquidation of the Company or similar transaction;
(iii)
any
issuance wholly for cash of any Common Stock at less than the current market
price; (iv)
any
issuance wholly for cash of Common Stock or securities which by their terms
are
convertible into or exchangeable for Common Stock; (v)
any
stock
dividends;
or (vi)
any
issuance of rights, options or warrants to holders of Common Stock.
Section
12. CERTIFICATION
OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
If an
adjustment is made under Section 11 or 13, the Company shall (i)
promptly
prepare a certificate setting forth such adjustment, and a brief statement
of
the facts accounting for such adjustment; (ii)
17
promptly
file with the Rights Agent and any different transfer agent for the Common
Stock
a copy of such certificate;
and (iii)
mail a
brief summary to each holder of a Right Certificate in accordance with
Section
25. Notwithstanding the foregoing sentence, the failure of the Company
to give
such notice shall not affect the validity of, or the force or effect of,
the
requirement for such adjustment.
Section
13. CONSOLIDATION,
MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER (INCLUDING FLIP-OVER
PROVISION).
(a) If,
at
any time after an Acquiring Person has become such,
(i) the
Company shall consolidate with, or merge with and into, any other Person
and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, or
(ii) any
other
Person(s) shall consolidate or merge with and into the Company, the Company
shall be the continuing or surviving corporation of such merger, and in
connection with such consolidation or merger, all or part of the Common
Stock
shall be changed into or exchanged for stock or other securities of the
Company
or of any other Person or cash or any other property, or
(iii) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets
or
earning power aggregating more than 50 percent of the assets or earning
power of
the Company and its Subsidiaries (taken as a whole) to any other Person,
(other
than a pro rata distribution by the Company of assets (including securities)
of
the Company or any of its Subsidiaries to all holders of the Company's
Common
Stock),
then,
on and
after the later of
(I) the
date
of the occurrence of an event described in clause (i), (ii) or (iii) of
this
Section 13(a), or
(II)
the date
of the expiration of the period within which the Rights may be redeemed
pursuant
to Section 23 (as the same may have been amended as provided in Section
26):
(A) proper
provision shall be made so that each holder of a Right shall thereafter
have the
right to receive, upon the exercise thereof at the then current Purchase
Price,
such number of shares of common stock of the Principal Party as shall be
equal
to the result obtained by (x)
multiplying
the then current Purchase Price by the number of Units for which a Right
is then
exercisable and dividing that product by
(y)
50
percent of the current market price per share of the common stock of the
Principal Party (determined in the same manner as the current market price
of
Common Stock is determined under Section 11(d)) on the date of consummation
of
such consolidation, merger, sale or transfer;
(B) the
Principal Party shall thereafter be liable for, and shall assume, by virtue
of
such consolidation, merger, sale or transfer, all the obligations and duties
of
the Company pursuant to this Agreement, provided that the Principal Party
shall,
prior to the first occurrence of an event described in clause (i), (ii)
or (iii)
of this Section 13(a), have caused to be reserved out of its authorized
and
unissued shares of common stock (or its authorized and issued shares of
common
stock held in its treasury), for issuance pursuant to this Agreement, the
number
of shares of common stock that will be sufficient to permit the exercise
in full
of the Rights after the occurrence of such event;
(C) the
term
"Company" wherever used in this Agreement shall thereafter be deemed to
refer to
such Principal Party; and
(D) the
Principal Party shall, in addition to the reservation of shares of its
common
stock as provided in the proviso to clause (B) above, take such steps (including
without limitation
18
compliance
with the Company's other obligations as set forth in Section 9) in connection
with such consummation as may be necessary to assure that the provisions
hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation
to
the shares of its common stock thereafter deliverable upon the exercise
of the
Rights; provided, however, that, upon the subsequent occurrence of any
merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction
in
respect of such Principal Party, each holder of a Right shall thereupon
be
entitled to receive, upon exercise of a Right and payment of the Purchase
Price,
such cash, shares, rights, warrants and other property which such holder
would
have been entitled to receive had such holder, at the time of such transaction,
owned the shares of common stock of the Principal Party purchasable upon
the
exercise of a Right, and such Principal Party shall take such steps (including,
but not limited to, reservation of shares of stock) as may be necessary
to
permit the subsequent exercise of the Rights in accordance with the terms
hereof
for such cash, shares, rights, warrants and other property.
(b) For
purposes of this Agreement, "Principal Party" shall mean
(i) in
the
case of any transaction described in clause (i) or (ii) of Section 13(a),
(A)
the
Person that is the issuer of the securities into which shares of Common
Stock
are converted in such merger or consolidation, or, if there is more than
one
such issuer, the issuer the common stock of which has the greatest market
value,
or
(B)
if no
securities are so issued,
(x)
the
Person that is the other party to the merger or consolidation and that
survives
said merger or consolidation, or, if there is more than one such Person,
the
Person the common stock of which has the greatest market value or
(y)
if the
Person that is the other party to the merger or consolidation does not
survive
the merger or consolidation, the Person that does so survive (including
the
Company if it survives); and
(ii) in
the
case of any transaction described in clause (iii) of Section 13(a), the
Person
that is the party receiving the greatest portion of the assets or earning
power
transferred pursuant to such transaction or transactions, or, if each Person
that is a party to such transaction or transactions receives the same portion
of
the assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot be determined, whichever
of such Persons is the issuer of common stock having the greatest market
value
of shares outstanding; 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 12-month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another corporation
the common stock of which is and has been so registered, "Principal Party"
shall
refer to such other corporation; (2)
if the
common stock of such Person is not and has not been so registered and such
Person is not a direct or indirect Subsidiary of another corporation the
common
stock of which is and has been so registered, "Principal Party" shall refer
to
the corporation which ultimately controls such Person;
(3)
in case
such Person is a Subsidiary, directly or indirectly, of more than one
corporation, the common stocks of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such corporations is the
issuer of
common stock having the greatest market value of shares held by the public;
and
(4)
if
the
common stock of such Person is not and has not been so registered and such
Person is owned, directly or indirectly, by a joint venture formed by two
or
more Persons that are not owned, directly or indirectly, by the same Person,
the
rules set forth in clauses (1), (2) and (3) above shall apply to each of
the
chains of ownership having an interest in such joint venture as if such
Person
were a "Subsidiary" of both or all of such joint venturers and the Principal
Party in each such chain shall bear the obligations set forth in this Section
13
in the same ratio as its direct or indirect interests in such Person bear
to the
total of such interests.
(c) The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and the Principal Party shall have executed
and
delivered to the Rights Agent
19
a
supplemental agreement making valid provision for the results described
in
clause (A) of Section 13(a) and confirming that the Principal Party will
perform
its obligations under this Section 13(a); provided, however, that in no
case may
the Company consummate any such consolidation, merger, sale or transfer
if
(i)
at the
time of or immediately after such transaction there are any rights, warrants
or
other instruments or securities outstanding or agreements in effect which
would
substantially diminish or otherwise eliminate the benefits intended to
be
afforded by the Rights
or (ii)
prior
to, simultaneously with or immediately after such transaction, the stockholders
of the Person which constitutes, or would constitute, the Principal Party
for
purposes of this Section 13 shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(d) The
provisions of this Section 13 shall similarly apply to successive mergers
or
consolidations or sales or other transfers. This Section 13 shall not be
applicable to a transaction described in Subparagraphs (i), (ii) or (iii)
of
Subsection (a) of this Section if
(i)
such
transaction is consummated with a Person or Persons who acquired Common
Stock
pursuant to a Qualified Offer (or a wholly owned subsidiary of any such
Person
or Persons);
(ii)
the
price per share of Common Stock offered in such transaction or distributable
to
stockholders upon conclusion of such transaction is not less than the price
per
share of Common Stock paid to all holders of Common Stock whose shares
were
purchased pursuant to such Qualified Offer;
and (iii)
the form
of consideration being offered to the remaining holders of Common Stock
pursuant
to such transaction or distributable to stockholders upon conclusion of
such
transaction is the same as the form of consideration paid pursuant to such
Qualified Offer. Upon conclusion of any transaction described in the foregoing
sentence, all Rights shall expire.
Section
14. FRACTIONAL
RIGHTS AND FRACTIONAL SHARES.
(a) The
Company shall not be required to issue fractions of Rights or distribute
Right
Certificates which evidence fractional Rights. If the Company shall elect
not to
issue such fractional Rights, in lieu of such fractional Rights, there
shall be
paid to the registered holders of the Right Certificates with regard to
which
such Fractional Rights would otherwise be issuable, cash equal to the same
fraction of the current market value of a whole Right. For the purposes
of this
Section 14(a), the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the date on
which
such fractional Rights would have been otherwise issuable. The closing
price for
any day shall be the last sale price, regular way, or, in case no such
sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to
trading on the New York Stock Exchange or, if the Rights are not listed
or
admitted to trading on the New York Stock Exchange, as reported in the
principal
consolidated transaction reporting system with respect to securities listed
on
the principal national securities exchange on which the Rights are listed
or
admitted to trading or, if the Rights are not listed or admitted to trading
on
any national securities exchange, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ. If on any
such
date the Rights are not quoted by any such organization, the fair value
of the
Rights on such date as determined in good faith by the board of directors
of the
Company shall be used. Any such determination of current market value shall
be
described in a statement filed with the Rights Agent.
(b) The
Company shall not be required to issue fractions of shares upon exercise
of a
Right or to distribute certificates which evidence fractional shares. In
lieu of
fractional shares, the Company shall pay to the registered holders of Right
Certificates at the time such Right Certificates are exercised, cash equal
to
the same fraction of the current market value of a share of Common Stock.
For
purposes of this Section 14, the current market value of a share of Common
Stock
shall be the closing price of a share of Common Stock for the Trading Day
immediately prior to the date of such exercise.
20
(c) The
holder of a Right by the acceptance thereof expressly waives his right
to
receive any fractional Rights or any fractional shares upon exercise of
a
Right.
Section
15. RIGHTS
OF ACTION.
All
rights of action in respect of this Agreement are vested in the registered
holders of the Right Certificates (and prior to the Distribution Date,
the
registered holders of the Common Stock). Any registered holder of any Right
Certificate (or, prior to the Distribution Date, any registered holder
of the
Common Stock), without the consent of the Rights Agent or the holder of
any
other Right Certificate (or, prior to the Distribution Date, any other
registered holder of the Common Stock), may, on his own behalf and for
his own
benefit, enforce, and may institute and maintain, any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right
to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy
at law
for any breach of this Agreement and will be entitled to specific performance
of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section
16. AGREEMENT
OF RIGHT HOLDERS.
Every
holder of a Right by accepting the same, consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:
(a) prior
to
the Distribution Date, the Rights will be transferable only in connection
with
the transfer of Common Stock;
(b) on
and
after the Distribution Date, the Right Certificates will be transferable
only on
the registry books of the Rights Agent and then if surrendered at the stock
transfer office of the Rights Agent, duly endorsed or accompanied by a
proper
instrument of transfer; and
(c) the
Company and the Rights Agent may deem and treat the person in whose name
the
Right 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
Right Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever.
Neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section
17. RIGHT
CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Stock or any
other
securities of the Company which may at any time be issuable on the exercise
of
the Rights represented thereby. No provision of this Agreement or of any
Right
Certificate shall be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company
or any
right to vote for the election of directors or upon any matter submitted
to
stockholders at any meeting thereof, or to give or withhold consent to
any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), or to receive dividends
or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate have been exercised.
21
Section
18. CONCERNING
THE RIGHTS AGENT.
(a) The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of
the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the
exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and hold it harmless against any loss, liability,
or
expense incurred, without negligence, bad faith or willful misconduct on
the
part of the Rights Agent, for anything done or omitted by the Rights Agent
in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability.
(b) The
Rights Agent shall be protected and shall incur no liability for or in
respect
of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate
or
certificate for 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, acting with reasonable care, to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
person or
persons.
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
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution
or
filing of any paper or any further act on the part of any of the parties
hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement
any
of the Right Certificates shall have been countersigned but not delivered,
any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned. In case
at
that time any of the Right Certificates shall not have been countersigned,
any
successor Rights Agent may countersign such Right Certificates either in
the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent and in all such cases such Right Certificates shall have the full
force
provided in the Right Certificates and in this Agreement.
(b) In
case
at any time the name of the Rights Agent shall be changed and at such time
any
of the Right Certificates shall have been countersigned but not delivered,
the
Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned, and in case at that time any of the
Right
Certificates shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed name,
and in
all such cases such Right Certificates shall have the full force provided
in the
Right Certificates and in this Agreement.
Section
20. DUTIES
OF RIGHTS AGENT.
The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and
the
holders of Right Certificates, by their acceptance thereof, shall be
bound:
22
(a) The
Rights Agent may consult with legal counsel (who may be legal counsel for
the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken
or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever
in the performance of its duties under this Agreement the Rights Agent
shall
deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action hereunder, such
fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by
a
certificate signed by the Chairman of the Board, the President, any Vice
President, or the Secretary of the Company and delivered to the Rights
Agent,
and such certificate shall be full authorization to the Rights Agent for
any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The
Rights Agent shall be liable hereunder only for its own negligence, bad
faith or
willful misconduct.
(d) The
Rights Agent shall not be liable for or by reason of any of the statements
of
fact or recitals contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to verify the same,
but all
such statements and recitals are and shall be deemed to have been made
by the
Company only.
(e) The
Rights Agent shall not be under any responsibility in respect of the validity
of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution
of any
Right Certificate (except its countersignature thereof), nor shall it be
responsible for any breach by the Company of any covenant or condition
contained
in this Agreement or in any Right Certificate, nor shall it be responsible
for
any adjustment required under the provisions of Section 11 or 13 or responsible
for the manner, method or amount of any such adjustment or the ascertaining
of
the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
actual
notice of any such adjustment), nor shall it by any act hereunder be deemed
to
make any representation or warranty as to the authorization or reservation
of
any shares of stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of stock will, when issued, be
validly
authorized and issued, fully paid and nonassessable.
(f) The
Company agrees that it will perform, execute, acknowledge and deliver or
cause
to be performed, executed, acknowledged and delivered all such further
and other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performance by the Rights Agent of the provisions
of this Agreement.
(g) The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of
the
Board, the President or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and
it shall
not be liable for any action taken or suffered to be taken by it in good
faith
in accordance with instructions of any such officer.
(h) Nothing
herein shall preclude the Rights Agent from acting in any other capacity
for the
Company or for any other legal entity.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby
vested
in it or perform any duty hereunder either itself or by or through its
attorneys
or agents, and the Rights Agent
23
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) If,
with
respect to any Right Certificate surrendered to the Rights Agent for exercise
or
transfer, the certificate attached to the form of assignment or form of
election
to purchase, as the case may be, has either not been completed or indicates
an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall
not
take any further action with respect to such requested exercise or transfer
without first obtaining the Company's approval.
Section
21. CHANGE
OF RIGHTS AGENT.
Unless
the Company and the Rights Agent agree to a shorter time period, the Rights
Agent or any successor Rights Agent may resign and be discharged from its
duties
under this Agreement upon 15 days' notice in writing mailed to the Company
(and,
if different, to each transfer agent of Common Stock) by registered or
certified
mail, and to the holders of the Right Certificates by first-class mail.
Unless
the Company and the Rights Agent agree to a shorter time period, the Company
may
remove the Rights Agent or any successor Rights Agent upon 15 days' notice
in
writing, mailed to the Rights Agent or successor Rights Agent, as the case
may
be, and to each transfer agent of Common Stock by registered or certified
mail,
and to the holders of the Right Certificates by first-class mail. If the
Rights
Agent shall resign or be removed or shall otherwise become incapable of
acting,
the Company shall appoint a successor to the Rights Agent. If the Company
shall
fail to make such appointment within a period of 15 days after such removal
or
after it has been notified in writing of such resignation or incapacity
by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection
by the
Company), then the registered holder of any Right Certificate may apply
to any
court of competent jurisdiction for the appointment of a new Rights Agent.
Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the
United
States having a stock transfer office in the State of Colorado which is
subject
to supervision or examination by federal authority. 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 if different, each transfer agent of Common Stock) and mail a notice
thereof in writing to the registered holders of the Right Certificates.
Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or
removal
of the Rights Agent or the appointment of the successor Rights Agent, as
the
case may be.
Section
22. ISSUANCE
OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its board of directors
to
reflect any adjustment or change in the Expiration Date, the Purchase Price
per
share or the number or kind or class of shares of stock or other securities
or
property purchasable under the Right Certificates made in accordance with
the
provisions of this Agreement.
Section
23. Redemption
Right and Termination of Redemption Right.
The
Board of Directors of the Company has the right (the “Redemption Right”), but
not the obligation, at any time prior to the earlier of (i) the Close of
Business on the tenth day following the Stock Acquisition Date, or (ii)
the
final Expiration Date, redeem all but not less than all of the then outstanding
Rights (which shall not include Rights
24
that
have
become subject to Section 7(f))at a redemption price of $0.01 per Right,
as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend
or similar transaction occurring after the date hereof (such redemption
price
being hereinafter referred to as the “Redemption Price”). Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall
not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until
such
time as the Company’s Redemption Right has expired. The Company may, at its
option, pay the Redemption Price in cash, shares of Common Stock (based
on the
“current market price,” as defined in Section 11(d), of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate
by the
Board of Directors. The redemption of the Rights by the Board of Directors
may
be made effective at such time, on such basis and with such conditions
as the
Board of Directors in its sole discretion may establish.
Immediately
upon the action of the Board of Directors of the Company ordering the redemption
of the Rights, evidence of which shall have been filed with the Rights
Agent 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 for each Right so held. Promptly
after
the action of the Board of Directors ordering the redemption of the Rights,
the
Company shall give notice of such redemption to the Rights Agent and the
holders
of the then outstanding Rights by mailing such notice to the Rights Agent
and to
all such holders at each holder’s last address as it appears 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 which is mailed
in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method
by
which the payment of the Redemption Price will be made.
Section
24. NOTICE
OF PROPOSED ACTIONS.
In case
the Company, after the Rights become exercisable, shall propose
(i)
to pay
any dividend payable in stock of any class to the holders of its Common
Stock or
the Subject Shares or to make any other distribution to the holders of
its
Common Stock or Subject Shares (other than a regular periodic cash dividend),
or
(ii)
to offer
to the holders of its Common Stock or Subject Shares 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, or
(iii)
to
effect any reclassification of its Common Stock or Subject Shares (other
than a
reclassification involving only the subdivision of outstanding shares of
Common
Stock) or any recapitalization or reorganization of the Company, or
(iv) to
effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale
or
other transfer), in one or more transactions, of more than 50 percent of
the
assets or earning power of the Company and its Subsidiaries (taken as a
whole)
to, any other Person, or
(v)
to
effect the liquidation, dissolution or winding up of the Company, then,
in each
such case, the Company shall give to each holder of a Right, in accordance
with
Section 25, a notice. The notice of such proposed action shall specify
the
record date or the date on which such reclassification, recapitalization,
reorganization, consolidation, merger, sale, transfer, liquidation, dissolution
or winding up is to take place and the date of participation therein by
the
holders of Common Stock and/or Subject Shares, if any such date is to be
fixed.
The notice shall be given in case of any action covered by clause (i) or
(ii)
above at least 20 days prior to the record date for determining holders
of the
Common Stock and/or Subject Shares for purposes of such action; in the
case of
any other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of
Common
Stock and/or Subject Shares, whichever shall be the earlier. The failure
to give
notice required by this Section 24 or any defect thereon shall not affect
the
legality or validity of the action taken by the Company or the vote upon
any
such action.
25
Section
25. NOTICES
IN GENERAL.
Notices
or demands authorized by this Agreement to be given or made by the Rights
Agent
or by the holder of any Right Certificate to or on the Company shall
be given if
sent by courier, facsimile, or first-class mail, postage prepaid, addressed
to:
U.S.
Energy Corp.
▇▇▇
▇.
▇▇▇
▇.
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax
▇▇▇.▇▇▇.▇▇▇▇
Any
notice or demand authorized by this Agreement to be given or made by
the Company
or by the holder of any Right Certificate to or on the Rights Agent shall
be
sufficiently given or made if sent by courier, facsimile or first-class
mail,
postage prepaid, addressed (until another address is filed in writing
with the
Company) as follows:
Computershare
Trust Company, Inc.
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ [Fax ▇▇▇.▇▇▇.▇▇▇▇]
Notices
or demands authorized by this Agreement to be given or made by the Company
or
the Rights Agent to or on the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder on the
Company.
Section
26. SUPPLEMENTS
AND AMENDMENTS.
Prior
to the Distribution Date and subject to the penultimate sentence of this
Section, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval
of any
holders of certificates representing shares of Common Stock. From and
after the
Distribution Date and subject to the penultimate sentence of this Section,
the
Company and the Rights Agent shall, if the Company so directs, supplement
or
amend this Agreement without the approval of any holders of Right Certificates
in order (i)
to
cure
any ambiguity,
(ii)
to
correct or supplement any provision contained herein which may be defective
or
inconsistent with any other provisions herein, (iii)
to
shorten or lengthen any time period, or
(iv)
to
change or supplement the provisions hereof in any manner which the Company
may
deem necessary or desirable and which shall not adversely affect the
interests
of the holders of Right Certificates; provided,
however,
this
Agreement may not be supplemented or amended to lengthen
(A)
a time
period relating to when the Rights may be redeemed at such time as the
Rights
are not then redeemable, or
(B)
any
other time period, unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders
of
Rights. Upon the delivery of a certificate from an appropriate officer
of the
Company which states that the proposed supplement or amendment is in
compliance
with the terms of this Section, the Rights Agent shall execute such supplement
or amendment. Notwithstanding anything contained in this Agreement to
the
contrary: (1)
no
supplement or amendment shall be made which changes the Redemption Price,
the
Purchase Price or the number of shares or Units for which a Right is
exercisable; and
(2)
the
duration of the Rights may not be shortened without the written consent
of the
registered holders thereof (other than by a redemption of the Rights).
Prior to
the Distribution Date, the interests of the holders of Rights shall be
deemed
coincident with the interests of the holders of Common Stock.
26
Section
27. EXCHANGE OF
RIGHTS FOR SHARES OF COMMON STOCK WITHOUT
CASH PAYMENT.
(a) The
board
of directors of the Company may, at its option, at any time after any
Person
becomes an Acquiring Person, exchange all or part of the then outstanding
and
exercisable Rights (which shall not include Rights that have become subject
to
Section 7(f)) for Common Stock at an exchange ratio of one share of Common
Stock
per Right, appropriately adjusted to reflect any stock split, stock dividend
or
similar transaction occurring after the date hereof (such exchange ratio
being
hereinafter referred to as the "Exchange Ratio").
(b) Immediately
upon the action of the board of directors of the Company ordering the
exchange
of any Rights pursuant to subsection (a) of this Section 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 Exchange Ratio. The Company shall promptly
give
public notice of any such exchange; provided, however, that the failure
to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all
of the
holders of such Rights at their last addresses as they appear upon the
registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice.
Each notice of exchange will state the method by which the exchange of
the
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than
Rights
which have become subject to the provisions of Section 7(f)) held by
each holder
of Rights.
(c) If
there
is not enough authorized Common Stock to permit an exchange of Rights
as
contemplated in accordance with this Section, the Company shall take
all such
action as may be necessary to authorize additional Common Stock or Equivalent
Stock for issuance upon exchange of the Rights.
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. DETERMINATION
AND ACTIONS TAKEN BY THE BOARD OF DIRECTORS.
For all
purposes of this Agreement, any calculation of the number of shares of
Common
Stock (or other applicable securities hereunder) outstanding at any particular
time, including for purposes of determining the particular percentage
of such
outstanding shares of Common Stock (or other securities) of which any
Person is
the Beneficial Owner, shall be made in accordance with the last sentence
of rule
13d-3(d)(1)(i) (as in effect on the date of this Agreement) of the General
Rules
and Regulations under 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 such board or
to the
Company, or as may be necessary or advisable in the administration of
this
Agreement, including without limitation the right and power to
(i)
interpret the provisions of this Agreement,
and (ii)
make all
Determinations deemed necessary or advisable for the administration of
this
Agreement (including a determination to redeem or not redeem the Rights
or to
amend the Agreement). All such actions, calculations, interpretations
and
Determinations (including, for purposes of clause (B) below, all omissions
with
respect to the foregoing) which are done or made by the Board in good
faith,
shall (A)
be
final, conclusive and binding on the Company, the Rights Agent,
27
the
holders of the Rights and all other parties, and
(B)
not
subject the board to any liability to the holders of the
Rights.
Section
30. BENEFITS
OF THIS AGREEMENT.
Nothing
in this Agreement shall be construed to give to any Person other than
the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the holders of Common Stock) any
legal or
equitable right, remedy or claim under this Agreement. This Agreement
shall be
for the sole and exclusive benefit of the Company, the Rights Agent and
the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the holders of Common Stock).
Section
31. GOVERNING
LAW; CHOICE OF VENUE.
This
Agreement and each Right Certificate issued hereunder shall be deemed
to be a
contract made under the laws of the State of Wyoming and for all purposes
shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State. The
rights and obligations of the Rights Agent under this Agreement shall
be
governed by and construed in accordance with the laws in effect in the
State of
Colorado. The parties to this Agreement, and all of the holders of record
of the
Rights, irrevocably agree and acknowledge that all disputes involving
the
subject matter of this Agreement are to be resolved in the District Courts,
Fremont County, Wyoming.
Notwithstanding
any provision of this Agreement, in the event of any conflict between
any
provision of this Agreement, on the one hand, and the express provisions
of the
Wyoming Management Stability Act (the ?WMSA,?
secs.
▇▇-▇▇-▇▇▇ et
seq.,
as now
in effect and hereafter amended), on the other hand, then the express
provisions
of the WMSA shall control, and the necessary provisions of this Agreement
shall
be deemed modified and changed to the extent necessary so that this Agreement
shall not conflict with the WMSA, and all the other provisions of this
Agreement
shall remain intact and unchanged.
Section
32. COUNTERPARTS.
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and
all such
counterparts shall together constitute but one and the same
instrument.
Section
33. SECTION
HEADINGS.
Descriptive headings of the Sections of this Agreement are inserted only
for
convenience and shall not control or affect its meaning or
construction.
Section
34. SEVERABILITY.
If any
term, provision, covenant or restriction of this Agreement is held by
a court of
competent jurisdiction or other authority to be invalid, illegal, or
unenforceable, (i)
such
invalid, illegal or unenforceable term, provision, covenant or restriction
shall
nevertheless be valid, legal and enforceable to the extent, if any, provided
by
such court or authority, and
(ii)
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.
(Remainder
of the page intentionally left blank).
28
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed, with the
amendments contained herein, as of September 30, 2005, but to be effective
for
all purposes as of the day and year first above written.
U.S.
ENERGY CORP.
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:
▇▇▇▇▇
▇. ▇▇▇▇▇▇, Chairman & CEO
COMPUTERSHARE
TRUST COMPANY, INC.
/s/
▇▇▇▇▇▇ ▇▇▇▇▇
By: ▇▇▇▇▇▇
▇▇▇▇▇, Vice President
/s/
▇▇▇ ▇▇▇▇▇
By:
▇▇▇
▇▇▇▇▇, President
29
EXHIBIT
A
[Form
of
Right Certificate]
Certificate
No. R- Rights
THESE
RIGHTS ARE NOT EXERCISABLE AFTER PUBLIC ANNOUNCEMENT OF REDEMPTION IS
MADE. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01
PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IF THE RIGHTS REPRESENTED
BY THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON
OR AN
ASSOCIATE OR AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR CERTAIN TRANSFEREES THEREOF, THIS RIGHT CERTIFICATE AND
THE RIGHTS
REPRESENTED HEREBY MAY BE SUBJECT TO CERTAIN LIMITATIONS IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7 OF THE RIGHTS AGREEMENT.
RIGHT
CERTIFICATE
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
19,
2001 (the "Rights Agreement") between U.S. Energy Corp. a Wyoming corporation
(the "Company"), and Computershare Trust Company, Inc. (the "Rights Agent"),
to
purchase from the Company, unless the Rights have been previously redeemed,
at
any time after the Distribution Date (defined in the Rights Agreement)
and prior
to the Expiration Date (defined in the Rights Agreement), or the date,
if any,
on which the Rights evidenced by this Certificate may be redeemed, at
the stock
transfer office of the Rights Agent, or its successors as Rights Agent,
one
one-thousandth (1/1,000th) of one (1) fully paid and nonassessable share
of
Series P Preferred Stock, at a purchase price of $200.00 (the "Purchase
Price"),
upon
presentation and surrender of this Right Certificate with the Form of
Election
to Purchase duly completed and executed. The number of Rights evidenced
by this
Right Certificate as set forth above (and the number of shares which
may be
purchased upon exercise thereof), and the Purchase Price set forth above,
are
the number and Purchase Price as of the date of the Rights Agreement
based on
the shares of Common Stock of the Company as constituted at such
date.
Upon
the
occurrence of an event described in clause (A), (B), (C) or (D) of Section
11(a)(ii), or in Section 13(a)(i), 13(a)(ii), or 13(a)(iii), of the Rights
Agreement, the holder of any Rights that are, or were, beneficially owned
by an
Acquiring Person or an Associate or Affiliate thereof (as such terms
are defined
in the Rights Agreement) or certain transferees thereof which engaged
in, or
realized the benefit of, an event or transaction or transactions described
in
clause (A), (B), (C) or (D) of such Section 11(a)(ii), shall not be entitled
to
the benefit of the adjustment described in such Section 11(a)(ii), nor
shall
such holder or certain transferees be entitled to participate in the
exchange
provisions under Section 27 or the redemption provisions of Section
23..
As
provided in the Rights Agreement, the Purchase Price and the number and
class of
shares which may be purchased upon the exercise of the Rights evidenced
by this
Right Certificate are subject to modification and adjustment upon the
happening
of certain events.
This
Right Certificate is subject to all of the terms, provisions and conditions
of
the Rights Agreement, and all of those terms, provisions and conditions
are
hereby incorporated herein by reference and made a part
30
hereof.
Reference is made to the Rights Agreement for a full description of the
rights,
limitations of rights, obligations, duties and immunities hereunder of
the
Rights Agent, the Company and the holders of the Right Certificates,
which
limitations of rights include the temporary suspension of the exercisability
of
such Rights under specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights
Agent and
at the principal office of the Company.
This
Right Certificate, with or without other Right Certificates, upon surrender
at
the stock transfer office of the Rights Agent set forth above, may be
exchanged
for another Right Certificate or Right Certificates of like tenor and
date
evidencing Rights entitling the holder to purchase such number of shares
as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate
shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof
another Right Certificate or Right Certificates for the number of whole
Rights
not exercised.
Subject
to the Rights Agreement, the Rights evidenced by this Certificate may
be
redeemed by the Company at its option at a redemption price of $.01 per
Right.
No
fractional shares will be issued upon the exercise of any Rights evidenced
hereby, but in lieu thereof a cash payment may be made, as provided in
the
Rights Agreement.
No
holder
of this Right Certificate shall be entitled to vote or receive dividends
or be
deemed for any purpose the holder of shares or of any other securities
of the
Company which may at any time be issuable on the exercise hereof. Nothing
in
this Right Certificate and nothing contained in the Rights Agreement
shall be
construed to confer upon the holder hereof, as such, any of the rights
of a
stockholder of the Company or any right to vote for the election of directors
or
upon any matter submitted to stockholders at any meeting thereof, or
to give or
withhold consent to any corporate action, or to receive notice of meetings
or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise,
until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This
Right Certificate shall not be valid or obligatory for any purpose until
it
shall have been countersigned by the Rights Agent.
WITNESS
the
facsimile signatures of the proper officers of the Company.
Dated
as
of September 30, 2005, but effective September 2001.
Attest:
By
Secretary ▇▇▇▇▇
▇. ▇▇▇▇▇▇,
Chairman & CEO
Countersigned:
By:
Authorized
Signature
31
[Form
of
Reverse Side of Right Certificate]
FORM
OF
ASSIGNMENT
(To
be
executed by the registered holder if such holder desires to transfer
the Right
Certificate.)
FOR
VALUE
RECEIVED hereby
sells, assigns and transfers unto
(Please
print name
and address of transferee)
this
Right Certificate, together with all right, title and interest therein,
and does
hereby irrevocably constitute and appoint
Attorney
to transfer the within Right Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated:
Signature
Signature
Guaranteed:
CERTIFICATE
The
undersigned hereby certifies (after due inquiry and to the best knowledge
of the
undersigned) by checking the appropriate boxes that:
(1) this
Right Certificate [ ] is [ ] is not being sold, assigned and transferred
by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate
or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this
Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:
Signature
Dated:
Signature
Dated:
Signature
Signature
Guaranteed:
NOTICE:
The signature to the foregoing Assignment and Certificate must correspond
to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
32
FORM
OF
ELECTION TO PURCHASE
(To
be
executed if holder desires to exercise the Right Certificate.)
To
the
Company and the Rights Agent:
The
undersigned hereby irrevocably elects to exercise
Rights
represented by this Right Certificate and to purchase the shares issuable
upon
the exercise of such Rights and requests that certificates for such shares
be
issued in the name of:
Please
insert social security or other identifying number:
(Please
print name
and address)
If
such
number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such
Rights
shall be registered in the name of and delivered to:
Please
insert social security or other identifying number:
(Please
print
name and address)
Dated:
Signature
(Signature
must conform in all respects to name of holder as specified on the face
of this
Right Certificate)
Signature
Guaranteed:
33
CERTIFICATE
The
undersigned hereby certifies (after due inquiry and to the best knowledge
of the
undersigned) by checking the appropriate boxes that:
(1) the
Rights evidenced by this Right Certificate [ ] are [ ] are not being
exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate
or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement);
(2)
the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this
Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:
Signature
Signature
Guaranteed:
NOTICE
The
signature to the foregoing Election to Purchase and Certificate must
correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
34
EXHIBIT
B
SUMMARY
OF RIGHTS
This
summary is qualified by reference to the detailed provisions of the Rights
Agreement, a copy of which is filed herewith. A copy of the Rights Agreement
is
available free of charge from the Company.
As
of
September 19, 2001, the board of directors of U.S. Energy Corp. (the
"Company")
declared a distribution of one Right for each outstanding one share of
common
stock (the "Common
Shares")
of the
Company. The distribution is to be made as of September 19, 2001 (the
"Rights
Record Date")
to the
stockholders of record on that date. All Common Shares issued after the
Rights
Record Date also will carry one Right for each share. The Rights are
designed to
discourage unfair takeovers of the Company, by encouraging a potential
acquiror
of the Company to negotiate with the board of directors a fair price
for the
Company. The Rights defined as part of the Rights Agreement between the
Company
and Computershare Trust Company, Inc. as the Rights Agent. Arrangements
adopted
by United States corporations which are similar to the Rights Agreement
are
often called poison pills. As summarized below, if a Qualified Offer
is made to
acquire all the stock of the Company, the Rights would be redeemed by
the board
of directors, thus causing the poison pill to disappear.
Each
Right entitles the registered holder to purchase from the Company, initially,
one one-thousandth (1/1,000th) of one (1) share of Series P Preferred
Stock
("Preferred
Shares")
at a
price of $200.00 (the "Purchase
Price")
for
each 1/1,000th of 1 share, subject to adjustment. Fractional shares may
not be
issued, at the discretion of the Company, in which event fractions would
be
cashed out. The terms and conditions of the Rights are set forth in the
Rights
Agreement between the Company and the Rights Agent.
A
Preferred Share purchasable upon exercise of the Rights will be entitled
to
dividends equal to 1,000 times the dividends, per share, declared on
the Common
Shares. In the event of liquidation, a Preferred Share will be entitled
to a
minimum preferential liquidating distribution of $1,000 per share and
an
aggregate liquidating distribution, per share, equal to 1,000 times the
distribution made per Common Share. The Preferred Shares will vote together
with
the Common Shares and in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share
will be
entitled to receive 1,000 times the amount received per Common
Share.
Because
of the Preferred Shares' dividend and liquidation rights, the value when
issued
of the 1/1,000th of a Preferred Share purchasable upon exercise of each
Right
should approximate the underlying value (but not necessarily the market
value)
of one Common Share.
Until
the
earlier to occur of (i) 10 business days following a public announcement
that a
person or group of affiliated or associated persons (an "Acquiring
Person")
has
acquired beneficial ownership of 15% or more of the Company's general
voting
power other than pursuant to a Qualified Offer (as defined below), the
date of
such public announcement being called the "Stock
Acquisition Date,"
or
(ii) 10 business days (or such later date as may be determined by action
of the
board of directors) following the commencement of, or announcement of
an
intention to make, a tender offer or exchange offer the consummation
of which
would result in the beneficial ownership by a person or group of 15%
or more of
the Company's general voting power (the date of such earlier occurrence
being
called the "Distribution
Date"),
the
Rights will be evidenced by the certificates representing the Common
Shares and
will be transferred with and only with the Common Shares. New Common
Share
certificates issued after the Rights Record Date upon transfer or new
issuance
of Common Shares will contain a notation incorporating the Rights Agreement
by
reference, and the surrender for
35
transfer
of any certificate for Common Shares, even without such notation or
a copy of
this Summary of Rights being attached thereto, will also constitute
the transfer
of the Rights associated with the Common Shares represented by such
certificate.
If
there
ever is a Distribution Date, then immediately the Company will mail to
holders
of record of the Common Shares (as of the close of business on the Distribution
Date) separate certificates evidencing the Rights ("Right
Certificates"),
and
such separate Right Certificates alone will evidence the Rights.
The
Rights are not exercisable until the Distribution Date. The Rights will
expire
on the tenth anniversary of the Rights Record Date (the "Final
Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are
earlier
redeemed or exchanged by the Company, as described below.
The
Purchase Price payable, the number of shares or other securities or property
issuable upon exercise of the Rights, and the number of outstanding Rights,
are
subject to adjustment from time to time to prevent dilution.
A
Qualified
Offer
is a
tender offer or exchange offer for all outstanding Common Shares which
is
determined by the directors not affiliated with an Acquiring Person to
be fair
to and otherwise in the best interests of the Company and its shareholders.
If
any
person becomes an Acquiring Person other than by a purchase pursuant
to a
Qualified Offer, proper provision shall be made so that each holder of
a Right,
other than Rights beneficially owned by the Acquiring Person (which will
not be
entitled to the benefit of such adjustment) will thereafter have the
right to
receive upon exercise that number of Common Shares or Common Share equivalents
having a market value of two times the exercise price of the Right (i.e.,
Common
Shares will be issued at one-half or 50% of market value at the
time).
If,
at
any time after an Acquiring Person has become such, the Company is acquired
in a
merger or other business combination transaction (other than a merger
which
follows a Qualified Offer at the same or a higher price) or 50% or more
of its
consolidated assets or earning power are sold, proper provision will
be made so
that each holder of a Right will thereafter have the right to receive,
upon the
exercise thereof at the then current exercise price of the Right, that
number of
shares of common stock of the acquiring company which at the time of
such
transaction will have a market value of two times the exercise price
of the
Right.
At
any
time after an Acquiring Person has become such, the board of directors
of the
Company may exchange the Rights (other than Rights owned by such person
or
group), in whole or in part, at an exchange ratio of one Common Share
per one
Right (subject to adjustment), termed an Exchange.
Unlike
exercise of a Right with cash (see the preceding paragraph), such an
Exchange
would not require payment of cash or other consideration by the holder
of the
Right.
At
any
time up to close of business on a Stock Acquisition Date, the board of
directors
of the Company may redeem the Rights in whole, but not in part, at a
price of
$.01 per Right (the "Redemption
Price").
Immediately upon any redemption of the Rights, the right to exercise
them will
terminate and the only right of the holders will be to receive the Redemption
Price. However, such redemption only can be made in conjunction with
the board
of directors’ determination that there is a Qualified Offer.
The
terms
of the Rights may be amended by the board of directors without the consent
of
the holders of the Rights at any time prior to the Distribution Date.
Thereafter
the Rights may be amended to make
36
changes
which do not adversely affect the interests of the holders of the Rights,
or
which shorten or lengthen time periods, subject to certain limitations
set forth
in the Rights Agreement.
Holders
of Rights will have no rights as stockholders of the Company, until Preferred
Shares or Common Shares are acquired on exercise or exchange of the
Rights.
A
copy of
the Rights Agreement has been filed with the Securities and Exchange
Commission
as an Exhibit to a registration statement on Form 8-A.
37
EXHIBIT
C
Articles
of Amendment to the Restated
Articles
of Incorporation of U.S. Energy Corp.
To
Establish Series P Preferred Stock
By
authority of Article IV of the existing Restated Articles of Incorporation
of
U.S. Energy Corp. (the “Corporation
‘),
and
section 17-16-602(a) of the Wyoming Business Corporation Act (the “WBCA”), the
board of directors of the Corporation has established a new series of
shares of
the Preferred Stock.
These
Articles of Amendment are filed with the Wyoming Secretary of State by
the
Corporation under section 17-16-1006 of the WBCA.
A. The
name
of the Corporation is U.S. Energy Corp.
B.
The
text
of the amendment is:
There
is
established the series P Preferred Stock. The number of shares in the
series,
its designation thereof, and the rights, preferences, privileges and
restrictions of the shares of such series, all are fixed and established
as
follow:
I. Designation
and Amount
The
series is designated the "Series P Preferred Stock." The number of shares
constituting the Series P Preferred Stock is fifty thousand (50,000).
Such
number of shares may be increased or decreased by resolution of the board
of
directors, but no decrease shall reduce the number of shares of Series
P
Preferred Stock to a number less than the number of shares then outstanding
plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities
issued by the Corporation convertible into Series P Preferred
Stock.
II. Dividends
and Distributions
(A) Subject
to the rights of the holders of any shares of any series of Preferred
Stock (or
any similar stock) ranking prior and superior to the Series P Preferred
Stock
with respect to dividends, the holders of shares of Series P Preferred
Stock, in
preference to the holders of Common Stock of the Corporation, shall be
entitled
to receive, when, as and if declared by the board of directors out of
funds
legally available for the purpose, quarterly dividends payable in cash
on the
first day of March, June, September and December in each year (a "Quarterly
Dividend Payment Date"), starting on the first Quarterly Dividend Payment
Date
after the first issuance of a share of Series P Preferred Stock, in an
amount
per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b)
subject to the provision for adjustment hereinafter set forth, 1,000
times the
aggregate per share amount of all cash dividends, and 1,000 times the
aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a
subdivision of the outstanding shares of Common Stock (by reclassification
or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend
Payment Date, since the first issuance of any share of Series P Preferred
Stock.
If the Corporation shall at any time declare or pay any dividend on the
Common
Stock
38
payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or
otherwise than by payment of a dividend in shares of Common Stock) into
a
greater or lesser number of shares of Common Stock, then in each such
case the
amount to which holders of shares of Series P Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall
be adjusted by multiplying such amount by a fraction, the numerator of
which is
the number of shares of Common Stock outstanding immediately after such
event
and the denominator of which is the number of shares of Common Stock
that were
outstanding immediately prior to such event.
(B) The
Corporation shall declare a dividend or distribution on the Series P
Preferred
Stock as provided in paragraph (A) of this Section immediately after
it declares
a dividend or distribution on the Common Stock (other than a dividend
payable in
shares of Common Stock); PROVIDED that, if no dividend or distribution
shall
have been declared on the Common Stock during the period between any
Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a
dividend of $1.00 per share on the Series P Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends
shall begin to accrue and be cumulative on outstanding shares of Series
P
Preferred Stock from the Quarterly Dividend Payment Date next preceding
the date
of issue of such shares, unless the date of issue of such shares is prior
to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue
of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a
date after the record date for the determination of holders of shares
of Series
P Preferred Stock entitled to receive a quarterly dividend and before
such
Quarterly Dividend Payment Date, in either of which events such dividends
shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid
on the
shares of Series P Preferred Stock in an amount less than the total amount
of
such dividends at the time accrued and payable on such shares shall be
allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The board of directors may fix a record date for the determination
of holders of shares of Series P Preferred Stock entitled to receive
payment of
a dividend or distribution declared thereon, which record date shall
be not more
than 60 days prior to the date fixed for the payment thereof.
III. Voting
Rights
The
holders of shares of Series P Preferred Stock shall have the following
voting
rights:
(A) Subject
to the provision for adjustment hereinafter set forth, each share of
Series P
Preferred Stock shall entitle the holder thereof to 1,000 votes on all
matters
submitted to a vote of the stockholders of the Corporation.
(B) Except
as
otherwise provided herein, or in any other resolutions of the board of
directors
creating a series of Preferred Stock or any similar stock, or by law,
the
holders of shares of Series P Preferred Stock and the holders of shares
of
Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted
to a
vote of stockholders of the Corporation.
(C) Except
as
set forth herein, in the Corporation's articles of incorporation or as
otherwise
provided by law, holders of Series P Preferred Stock shall have no voting
rights.
39
IV. Certain
Restrictions
(A) Whenever
quarterly dividends or other dividends or distributions payable on the
Series P
Preferred Stock as provided in Section II are in arrears, thereafter
and until
all accrued and unpaid dividends and distributions, whether or not declared,
on
shares of Series P Preferred Stock outstanding shall have been paid in
full, the
Corporation shall not:
(i) declare
or pay dividends, or make any other distributions, on any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution
or
winding up) to the Series P Preferred Stock;
(ii)
declare
or pay dividends, or make any other distributions, on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or
winding up) with the Series P Preferred Stock, except dividends paid
ratably on
the Series P Preferred Stock and all such parity stock on which dividends
are
payable or in arrears in proportion to the total amounts to which the
holders of
all such shares are then entitled;
(iii) redeem
or
purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up)
to the Series P Preferred Stock, provided that the Corporation may at
any time
redeem, purchase or otherwise acquire shares of any such stock in exchange
for
shares of any stock of the Corporation ranking junior (either as to dividends
or
upon dissolution, liquidation or winding up) to the Series P Preferred
Stock;
or
(iv) redeem
or
purchase or otherwise acquire for consideration any shares of Series
P Preferred
Stock, or any shares of stock ranking on a parity with the Series P Preferred
Stock, except in accordance with a purchase offer made in writing or
by
publication (as determined by the board of directors) to all holders
of such
shares upon such terms as the board of directors, after consideration
of the
respective annual dividend rates and other relative rights and preferences
of
the respective series and classes, shall determine in good faith will
result in
fair and equitable treatment among the respective series or
classes.
(B) The
Corporation shall not permit any subsidiary of the Corporation to purchase
or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this Section IV
purchase or
otherwise acquire such shares at such time and in such manner.
V. Reacquired
Shares
Any
shares of Series P Stock purchased or otherwise acquired by the Corporation
in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued
as part of
a new series of Preferred Stock subject to the conditions and restrictions
on
issuance set forth herein, in the articles of incorporation, any other
Certificate of Designations creating a series of Preferred Stock or any
similar
stock or as otherwise required by law.
VI. Liquidation,
Dissolution, or Winding Up
Upon
any
liquidation, dissolution or winding up of the Corporation, no distribution
shall
be made (1) to the holders of shares of stock ranking junior (either
as to
dividends or upon liquidation, dissolution or winding up) to the Series
P
Preferred Stock unless, prior thereto, the holders of shares of Series
P
Preferred
40
Stock
shall have received $1,000 per share, plus an amount equal to accrued
and unpaid
dividends and distributions thereon, whether or not declared, to the
date of
such payment, provided that the holders of shares of Series P Preferred
Stock
shall be entitled to receive an aggregate amount per share, subject to
the
provision for adjustment hereinafter set forth, equal to 1,000 times
the
aggregate amount to be distributed per share to holders of shares of
Common
Stock, or (2) to the holders of shares of stock ranking on a parity (either
as
to dividends or upon liquidation, dissolution or winding up) with the
Series P
Preferred Stock, except distri-butions made ratably on the Series P Preferred
Stock and all such parity stock in proportion to the total amounts to
which the
holders of all such shares are entitled upon such liquidation, dissolution
or
winding up. If the Corporation shall at any time declare or pay any dividend
on
the Common Stock payable in shares of Common Stock, or effect a subdivision
or
combination or consolidation of the outstanding shares of Common Stock
(by
reclassification or otherwise than by payment of a dividend in shares
of Common
Stock) into a greater or lesser number of shares of Common Stock, then
in each
such case the aggregate amount to which holders of shares of Series P
Preferred
Stock were entitled immediately prior to such event under the proviso
in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount
by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the
number of shares of Common Stock that were outstanding immediately prior
to such
event.
VII. Consolidation,
Merger, Etc.
In
case
the Corporation shall enter into any consolidation, merger, combination
or other
transaction in which the shares of Common Stock are exchanged for or
changed
into other stock or securities, cash and/or any other property, then
in any such
case each share of Series P Preferred Stock shall at the same time be
similarly
exchanged or changed into an amount per share, subject to the provision
for
adjustment hereinafter set forth, equal to 1,000 times the aggregate
amount of
stock, securities, cash and/or any other property (payable in kind),
as the case
may be, into which or for which each share of Common Stock is changed
or
exchanged. If the Corporation shall at any time declare or pay any dividend
on
the Common Stock payable in shares of Common Stock, or effect a subdivision
or
combination or consolidation of the outstanding shares of Common Stock
(by
reclassification or otherwise than by payment of a dividend in shares
of Common
Stock) into a greater or lesser number of shares of Common Stock, then
in each
such case the amount set forth in the preceding sentence with respect
to the
exchange or change of shares of Series P Preferred Stock shall be adjusted
by
multiplying such amount by a fraction, the numerator of which is the
number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
VIII. Redemption
The
shares of Series P Preferred Stock shall not be redeemable.
IX. Rank
The
Series P Preferred Stock shall rank, with respect to the payment of dividends
and the distribution of assets, junior to all series of any other class
of the
Corporation's Preferred Stock.
X. Amendment
The
articles of incorporation of the Corporation shall not be amended in
any manner
which would alter or change the powers, preferences or special rights
of the
Series P Preferred Stock so as to affect
41
them
adversely without the affirmative vote of the holders of at least two-thirds
of
the outstanding shares of Series P Preferred Stock, voting together as
a single
class.
C. This
amendment was duly adopted and authorized by the board of directors of
U.S.
Energy Corp. on September 19, 2001 and amended again in September 30,
2005.
U.S.
Energy Corp.
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ September
30, 2005
By:
▇▇▇▇▇
▇. ▇▇▇▇▇▇, Chairman & CEO
Attest:
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ September
30, 2005
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇, Secretary
|
Fremont
|
)
|
State
of
Wyoming
)
On
September 30, 2005 personally appeared before me, a Notary Public, ▇▇▇▇▇
▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who acknowledged that they executed the
above
instrument.
_____________________________
Notary
Public
SEAL
My
Commission
Expires: _________
42