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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-12147
DELTIC TIMBER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 71-0795870
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
200 Peach Street, P. O. Box 7200, El Dorado, Arkansas 71731-7200
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 881-6634
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.01 Par Value New York Stock Exchange, Inc.
Series A Participating Cumulative New York Stock Exchange, Inc.
Preferred Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No ____.
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based on the closing sales price of the Common Stock on the New York
Stock Exchange on February 28, 1997, was $188,982,387. For purposes of this
computation, all officers, directors, and 5% beneficial owners of the registrant
(as indicated in Item 12) are deemed to be affiliates. Such determination
should not be deemed an admission that such directors, officers, or 5% benficial
owners are, in fact, affiliates of the registrant.
Number of shares of Common Stock, $.01 Par Value, outstanding at February 28,
1997, was 12,798,323.
Documents incorporated by reference:
The Registrant's definitive Proxy Statement relating to the Annual Meeting of
Stockholders on May 21, 1997, and Amendment No. 2 to Form 10/A, as filed with
the Securities and Exchange Commission on November 27, 1996. (Part III)
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a. Financial Statement Schedules and Exhibits
1. Consolidated Financial Statements
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Income for the Years Ended December 31,
1996, 1995, and 1994
Consolidated Statements of Cash Flows for the Years Ended December
31, 1996, 1995, and 1994
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements, including Consolidated
Quarterly Income Information (unaudited)
Independent Auditors' Report on Consolidated Financial Statements and
Financial Statement Schedules
2. Financial Statement Schedules
Financial statement schedules are omitted because either they are not
applicable or the required information is included in the
consolidated financial statements or notes thereto.
3. Exhibits
3.1 Amended and Restated Certificate of Incorporation of Deltic
Timber Corporation as of December 17, 1996
3.2 Amended and Restated Bylaws of Deltic Timber Corporation
4 Instruments Defining the Rights of Security Holders. Rights
Agreement dated as of December 11, 1996 between Deltic Timber
Corporation and Harris Trust and Savings Bank, as Rights
Agent.
Deltic Timber Corporation is party to several long-term debt
instruments, none of which authorizes securities that exceed
10 percent of the total assets of Deltic Timber Corporation
and its subsidiaries on a consolidated basis. Pursuant to
Regulation S-K, item 601(b), paragraph 4(iii)(A), Deltic
agrees to furnish a copy of each such instrument to the
Securities and Exchange Commission upon request.
10.1 Deltic Timber Corporation 1996 Stock Incentive Plan
10.2 Distribution Agreement
10.3 Tax Sharing Agreement
21 Subsidiaries of the Registrant
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27 Financial Data Schedule for 1996 (electronic filing only)
99 Form 11-K, Annual Report for the fiscal year ended December
31, 1996, covering Combined Thrift Plans for Employees of
Murphy Oil Corporation, Murphy Oil USA, Inc., and Deltic
Timber Corporation. To be filed as an amendment of this Annual
Report on Form 10-K, not later than 180 days after December
31, 1996.
Exhibits other than those listed above have been omitted since they
either are not required or are not applicable.
b. Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended December 31, 1996.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
DELTIC TIMBER CORPORATION
By: /s/Ron L. Pearce Date: April 3, 1997
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Ron L. Pearce, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on March 27, 1997 by the following persons on behalf of
the registrant and in the capacities indicated.
/s/Robert C. Nolan /s/William L. Rosoff
- --------------------------------------- ----------------------------------
Robert C. Nolan, Chairman and Director William L. Rosoff, Director
/s/Ron L. Pearce /s/O. H. Darling, Jr.
- --------------------------------------- ----------------------------------
Ron L. Pearce, President and Chief O. H. Darling, Jr., Director
Executive Officer and Director
(Principal Executive Officer)
/s/R. Madison Murphy /s/John C. Shealy
- --------------------------------------- -----------------------------------
R. Madison Murphy, Director John C. Shealy, Director
/s/Eric M. Heiner /s/Clefton D. Vaughan
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Eric M. Heiner, Director Clefton D. Vaughan, Vice President,
Finance and Administration
(Principal Financial Officer)
/s/Christoph Keller, III /s/Emily R. Evers
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Christoph Keller, III, Director Emily R. Evers, Controller
(Principal Accounting Officer)
/s/Alex R. Lieblong
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Alex R. Lieblong, Director
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Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DELTIC TIMBER CORPORATION
* * * * *
Deltic Timber Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Delaware on September 4, 1996.
2. This Amended and Restated Certificate of Incorporation has been duly
adopted and proposed to the sole stockholder of the Corporation by the Board of
Directors of the Corporation, and has been approved and adopted by the sole
stockholder of the Corporation, in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware.
3. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Amended and Restated Certificate of Incorporation
restates and integrates and further amends the provisions of the Certificate of
Incorporation of the Corporation.
4. The text of the Certificate of Incorporation is hereby restated and
further amended to read in its entirety as hereinafter set forth:
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FIRST: The name of the Corporation is Deltic Timber Corporation.
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SECOND: The address of its registered office in the State of Delaware is
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Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New
Castle, Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
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activity for which corporations may be organized under the General Corporation
Law of the State of Delaware as the same exists or may hereafter be amended
("Delaware Law").
FOURTH: The total number of shares of stock which the Corporation shall
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have authority to issue is 70,000,000, consisting of 50,000,000 shares of Common
Stock, par value $.01 per share (the "Common Stock"), and 20,000,000 shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock").
The Board of Directors is hereby empowered to authorize by resolution or
resolutions from time to time the issuance of one or more classes or series of
Preferred Stock and to fix the designations, powers, preferences and relative,
participating, optional or other rights, if any, and the qualifications,
limitations or restrictions thereof, if any, with respect to each such class or
series of Preferred Stock and the number of shares constituting each such class
or series, and to increase or decrease the number of shares of any such class or
series to the extent permitted by Delaware Law.
FIFTH: (a) The business and affairs of the Corporation shall be managed by
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or under the direction of a Board of Directors consisting of not less than six
nor more than twelve directors, the exact number of directors to be determined
from time to time solely by resolution adopted by the affirmative vote of a
majority of the entire Board of Directors.
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(b) The directors shall be divided into three classes, designated Class I,
Class II and Class III. Each class shall consist, as nearly as may be possible,
of one-third of the total number of directors constituting the entire Board of
Directors. Each director shall serve for a term ending on the date of the third
annual meeting of stockholders next following the annual meeting at which such
director was elected, provided that directors initially designated as Class I
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directors shall serve for a term ending on the date of the 1997 annual meeting,
directors initially designated as Class II directors shall serve for a term
ending on the date of the 1998 annual meeting, and directors initially
designated as Class III directors shall serve for a term ending on the date of
the 1999 annual meeting. Notwithstanding the foregoing, each director shall
hold office until such director's successor shall have been duly elected and
qualified or until such director's earlier death, resignation or removal. In
the event of any change in the number of directors, the Board of Directors shall
apportion any newly created directorships among, or reduce the number of
directorships in, such class or classes as shall equalize, as nearly as
possible, the number of directors in each class. In no event will a decrease in
the number of directors shorten the term of any incumbent director.
(c) There shall be no cumulative voting in the election of directors.
Election of directors need not be by written ballot unless the bylaws of the
Corporation so provide.
(d) Vacancies on the Board of Directors resulting from death, resignation,
removal or otherwise and newly created directorships resulting from any increase
in the number of directors may be filled solely by a majority of the directors
then in office (although less than a quorum) or by the sole remaining director.
Each director so elected shall hold office for the remainder of the full term of
the class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified.
(e) No director may be removed from office by the stockholders except for
cause with the affirmative vote of the holders of not less than a majority of
the total voting power of all outstanding securities of the Corporation then
entitled to vote generally in the election of directors, voting together as a
single class.
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(f) Notwithstanding the foregoing, whenever the holders of one or more
classes or series of Preferred Stock shall have the right, voting separately as
a class or series, to elect directors, the election, term of office, filling of
vacancies, removal and other features of such directorships shall be governed by
the terms of the resolution or resolutions adopted by the Board of Directors
pursuant to ARTICLE FOURTH applicable thereto, and such directors so elected
shall not be subject to the provisions of this ARTICLE FIFTH unless otherwise
provided therein.
SIXTH: The Board of Directors shall have the power to adopt, amend or
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repeal the bylaws of the Corporation.
The stockholders may adopt, amend or repeal the bylaws only with the
affirmative vote of the holders of not less than 80% of the total voting power
of all outstanding securities of the Corporation then entitled to vote generally
in the election of directors, voting together as a single class.
SEVENTH: Any action required or permitted to be taken at any annual or
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special meeting of stockholders may be taken only upon the vote of stockholders
at an annual or special meeting duly noticed and called in accordance with
Delaware Law and may not be taken by written consent of stockholders without a
meeting.
EIGHTH: Special meetings of the stockholders may be called by the Board of
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Directors or the Chairman of the Board of Directors of the Corporation and may
not be called by any other person. Notwithstanding the foregoing, whenever
holders of one or more classes or series of Preferred Stock shall have the
right, voting separately as a class or series, to elect directors, such holders
may call, pursuant to the terms of the resolution or resolutions adopted by the
Board of Directors pursuant to ARTICLE FOURTH, special meetings of holders of
such Preferred Stock.
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NINTH: (1) A director of the Corporation shall, to the fullest extent
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permitted by Delaware Law, not be liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
(2)(a) Each person (and the heirs, executors or administrators of such
person) who was or is a party or is threatened to be made a party to, or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless by the Corporation to the fullest extent permitted
by Delaware Law. The right to indemnification conferred in this ARTICLE NINTH
shall also include the right to be paid by the Corporation the expenses incurred
in connection with any such proceeding in advance of its final disposition to
the fullest extent authorized by Delaware Law. The right to indemnification
conferred in this ARTICLE NINTH shall be a contract right.
(b) The Corporation may, by action of its Board of Directors, provide
indemnification to such of the employees and agents of the Corporation to such
extent and to such effect as the Board of Directors shall determine to be
appropriate and authorized by Delaware Law.
(3) The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss
incurred by such person in any such capacity or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under Delaware Law.
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(4) The rights and authority conferred in this ARTICLE NINTH shall not be
exclusive of any other right which any person may otherwise have or hereafter
acquire.
(5) Neither the amendment nor repeal of this ARTICLE NINTH, nor the
adoption of any provision of this Certificate of Incorporation or the bylaws of
the Corporation, nor, to the fullest extent permitted by Delaware Law, any
modification of law, shall eliminate or reduce the effect of this ARTICLE NINTH
in respect of any acts or omissions occurring prior to such amendment, repeal,
adoption or modification.
TENTH: The Corporation reserves the right to amend this Certificate of
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Incorporation in any manner permitted by the Delaware Law and all rights and
powers conferred upon stockholders, directors and officers herein are granted
subject to this reservation. Notwithstanding the foregoing, the provisions set
forth in ARTICLE FIFTH through ARTICLE TENTH, inclusive, may not be repealed or
amended in any respect, and no other provision may be adopted, amended or
repealed which would have the effect of modifying or permitting the
circumvention of the provisions set forth in ARTICLE FIFTH through ARTICLE
TENTH, inclusive, unless such action is approved by the affirmative vote of the
holders of not less than 80% of the total voting power of all outstanding
securities of the Corporation then entitled to vote generally in the election of
directors, voting together as a single class.
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IN WITNESS WHEREOF, Deltic Timber Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by its President and attested
to by its Secretary this 17th day of December, 1996.
By: /s/ Ron L. Pearce
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Name: Ron Pearce
Title: President
ATTEST: /s/ W. Bayless Rowe
----------------------
Name: W. Bayless Rowe
Title: Secretary
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CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
DELTIC TIMBER CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, Ron Pearce, President, and W. Bayless Rowe, Secretary, of Deltic
Timber Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware ("Delaware Law"), in accordance with
the provisions thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on December 11, 1996, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such
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series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), and the number of shares constituting
such series shall be 150,000. Such number of shares of the Series A Preferred
Stock may be increased or decreased by
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resolution of the Board of Directors; provided that no decrease shall reduce
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the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares issuable upon
exercise or conversion of outstanding rights, options or other securities
issued by the Corporation.
Section 2. Dividends and Distributions.
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(A) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable on March
1, June 1, September 1 and December 1 of each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 and (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends or other distributions and
100 times the aggregate per share amount of all non-cash dividends or other
distributions (other than (i) a dividend payable in shares of Common Stock,
par value $.01 per share, of the Corporation (the "Common Stock") or (ii) a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise)), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. If the Corporation shall at any time after
December 18, 1996 (the "Rights Declaration Date") pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under 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
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immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) above immediately after
it declares a dividend or distribution on the Common Stock (other than as
described in clauses (i) and (ii) of the first sentence of paragraph (A));
provided that if no dividend or distribution shall have been declared on the
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Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date (or, with respect to the
first Quarterly Dividend Payment Date, the period between the first issuance
of any share or fraction of a share of Series A Preferred Stock and such first
Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series
A 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 A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is on or before the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue is a date after the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and on or before such Quarterly
Dividend Payment Date, in which case 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 shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be more than 60
days prior to the date fixed for the payment thereof.
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Section 3. Voting Rights. In addition to any other voting rights
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required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of stockholders of the Corporation.
If the Corporation shall at any time after the Rights Declaration Date pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as a single class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock
then outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Preferred Stock and any other
series of Preferred Stock then entitled as a class to elect directors, voting
together as a single class, irrespective of series, shall have the right to
elect two Directors.
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(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders of 10% in
number of shares of Preferred Stock outstanding shall be present in person or
by proxy. The absence of a quorum of holders of Common Stock shall not affect
the exercise by holders of Preferred Stock of such voting right. At any
meeting at which holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right, voting
as a class, to elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two Directors or, if such right is exercised
at an annual meeting, to elect two Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make such increase in
the number of Directors as shall be necessary to permit the election by them
of the required number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not be increased or
decreased except by vote of the holders of Preferred Stock as herein provided
or pursuant to the rights of any equity securities ranking senior to or pari
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passu with the Series A Preferred Stock.
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(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of special
meeting of holders of
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Preferred Stock, which meeting shall thereupon be called by the President, a
Vice President or the Secretary of the Corporation. Notice of such meeting and
of any annual meeting at which holders of Preferred Stock are entitled to vote
pursuant to this paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such meeting within 60 days
after such order or request, such meeting may be called on similar notice by
any stockholder or stockholders owning in the aggregate not less than 10% of
the total number of shares of Preferred Stock outstanding, irrespective of
series. Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two Directors voting as a
class, after the exercise of which right (x) the Directors so elected by the
holders of Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may (except as provided
in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of stock
which elected the Director whose office shall have become vacant. References
in this paragraph (C) to Directors elected by the holders of a particular
class of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any
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Directors elected by the holders of Preferred Stock as a class shall
terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or bylaws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section
3 (such number being subject, however, to change thereafter in any manner
provided by law or in the certificate of incorporation or bylaws). Any
vacancies in the Board of Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a majority of the remaining
Directors.
(D) The Certificate of Incorporation of the Corporation shall not
be amended in any manner (whether by merger or otherwise) so as to adversely
affect the powers, preferences or special rights of the Series A Preferred
Stock without the affirmative vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a class.
(E) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent shall
not be required for taking any corporate action.
Section 4. Certain Restrictions.
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(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding shares of Series A
Preferred Stock shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
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(ii) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
other 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, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided that
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the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the
Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such other
parity stock 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 value any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
15
<PAGE>
Section 5. Reacquired Shares. Any shares of Series A Preferred
-----------------
Stock redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors as permitted by the
Certificate of Incorporation or as otherwise permitted under Delaware Law.
Section 6. 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 A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 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 A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of
Common Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other 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 after the
Rights Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding shares
of Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a
16
<PAGE>
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. If 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 or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash or any other property, 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 after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not
-------------
be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior
----
(as to dividends and upon liquidation, dissolution and winding up) to all
other series of the Corporation's preferred stock except any series that
specifically provides that such series shall rank junior to the Series A
Preferred Stock.
17
<PAGE>
Section 10. Fractional Shares. Series A Preferred Stock may be
-----------------
issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
this 17th day of December, 1996.
/s/ Ron L. Pearce
--------------------
President
Attest:
/s/ W. Bayless Rowe
----------------------
Secretary
18
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED
BYLAWS
OF
DELTIC TIMBER CORPORATION
* * * * *
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office shall be in the City
-----------------
of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
-------------
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
Section 3. Books. The books of the Corporation may be kept within or
-----
without of the State of Delaware as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of stockholders shall
--------------------------
be held at such place, either within or without the State of Delaware, on such
date and at
<PAGE>
such time as may be determined from time to time by the Board of
Directors (or the Chairman of the Board in the absence of a designation by the
Board of Directors).
Section 2. Annual Meetings. Annual meetings of stockholders, commencing
---------------
with the year 1997, shall be held to elect directors and transact such other
business as may properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of stockholders may be
----------------
called by the Board of Directors or Chairman of the Board of Directors of the
Corporation and may not be called by any other person. Notwithstanding the
foregoing, whenever holders of one or more classes or series of Preferred Stock
shall have the right, voting separately as a class or series, to elect
directors, such holders may call, pursuant to the terms of the resolution or
resolutions adopted by the Board of Directors pursuant to Article Fourth of the
certificate of incorporation, special meetings of holders of such Preferred
Stock.
Section 4. Notice of Meetings and Adjourned Meetings; Waivers of Notice;
-------------------------------------------------------------
Business at Meetings. (a) Whenever stockholders are required or permitted to
- --------------------
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended ("Delaware Law"), such
notice shall be given not less than 10 nor more than 60 days before the date of
the meeting to each stockholder of record entitled to vote at such meeting.
Unless these bylaws otherwise require, when a meeting is adjourned to another
time or place (whether or not a quorum is present), notice need not be given of
the adjourned meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken. At the adjourned meeting, the Corporation
may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than 30 days, or after the adjournment
a new record date is fixed for the adjourned meeting, a notice of the adjourned
2
<PAGE>
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
(b) A written waiver of any such notice signed by the entitled thereto,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
(c) Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 5. Quorum. Unless otherwise provided under the certificate of
------
incorporation or these bylaws and subject to Delaware Law, the presence, in
person or by proxy, of the holders of a majority of the outstanding capital
stock of the Corporation entitled to vote at a meeting of stockholders shall
constitute a quorum for the transaction of business.
Section 6. Voting. (a) Unless otherwise provided in the certificate of
------
incorporation and subject to Delaware Law, each stockholder shall be entitled to
one vote for each outstanding share of capital stock of the Corporation held by
such stockholder. Unless otherwise provided in Delaware Law, the certificate of
incorporation or these bylaws, the affirmative vote of a majority of the shares
of capital stock of the Corporation present, in person or by proxy, at a meeting
of stockholders and entitled to vote on the subject matter shall be the act of
the stockholders.
(b) Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to a corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period.
Section 7. No Action by Consent. Any action
--------------------
3
<PAGE>
required or permitted to be taken at any annual or special meeting of
stockholders may be taken only upon the vote of stockholders at an annual or
special meeting duly noticed and called in accordance with Delaware Law and may
not be taken by written consent of stockholders without a meeting.
Section 8. Organization. At each meeting of stockholders, the Chairman of
------------
the Board, if one shall have been elected, (or in his absence or if one shall
not have been elected, the President) shall act as chairman of the meeting. The
Secretary (or in his absence or inability to act, the person whom the chairman
of the meeting shall appoint secretary of the meeting) shall act as secretary of
the meeting and keep the minutes thereof.
Section 9. Order of Business. The order of business at all meetings of
-----------------
stockholders shall be as determined by the chairman of the meeting.
Section 10. Nomination of Directors. Only persons who are nominated in
-----------------------
accordance with the procedures set forth in these bylaws shall be eligible to
serve as directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 10, who shall be entitled to vote for the election
of directors at the meeting and who complies with the notice procedures set
forth in this Section 10. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice in
writing to the secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 90 days prior to the first anniversary
of the most recent annual meeting of stockholders. Such stockholder's notice
shall set forth (a) as to each person whom the stockholder proposes to nominate
for election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required,
4
<PAGE>
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934 (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b) as to
the stockholder giving the notice (i) the name and address, as they appear on
the Corporation's books, of such stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. No person shall be eligible to
serve as a director of the Corporation unless nominated in accordance with the
procedures set forth in this bylaw. The chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that a nomination was not
made in accordance with the procedures prescribed by the bylaws, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. Notwithstanding the foregoing provisions of
this Section 10, a stockholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, and the rules and
regulations thereunder with respect to the matters set forth in this Section.
Section 11. Notice of Business. At any meeting of the stockholders, only
------------------
such business shall be conducted as shall have been brought before the meeting
(a) by or at the direction of the Board of Directors or (b) in the case of an
annual meeting of stockholders, by any stockholder of the Corporation who is a
stockholder of record at the time of giving of the notice provided for in this
Section 11, who shall be entitled to vote at such meeting and who complies with
the notice procedures set forth in this Section 11. For business to be properly
brought before an annual meeting of stockholders by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 90 days prior to the first anniversary of the most recent annual
meeting of
5
<PAGE>
stockholders. A stockholder's notice to the secretary shall set forth as to each
matter the stockholder proposes to bring before the meeting (a) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (b) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the bylaws to the
contrary, no business shall be conducted at a stockholder meeting except in
accordance with the procedures set forth in this Section 11, and no business
shall be brought by a stockholder before a special meeting of stockholders. The
chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting and in
accordance with the provisions of the bylaws, and if he should so determine, to
the meeting and any such business not properly brought before the meeting shall
not be transacted. Notwithstanding the foregoing, provisions of this Section 11,
a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, and the rules and regulations thereunder with
respect to the matters set forth in this Section 11.
ARTICLE III
DIRECTORS
Section 1. General Powers. Except as otherwise provided in Delaware Law
--------------
or the certificate of incorporation, the business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
Section 2. Number, Classes, Term of Office, etc. The Board of Directors
-------------------------------------
shall consist of not less than six nor more than twelve directors, with the
exact number of directors to be determined from time to time solely by
resolution adopted by the affirmative vote of a majority of the entire Board of
Directors. The directors shall be divided into three
6
<PAGE>
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. Except as otherwise provided in the
certificate of incorporation, each director shall serve for a term ending on the
date of the third annual meeting of stockholders next following the annual
meeting at which such director was elected. Notwithstanding the foregoing, each
director shall hold office until such director's successor shall have been duly
elected and qualified or until such director's earlier death, resignation or
removal. Directors need not be stockholders.
Section 3. Quorum and Manner of Acting. Unless the certificate of
---------------------------
incorporation or these bylaws require a greater number, a majority of the total
number of directors shall constitute a quorum for the transaction of business,
and the affirmative vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors. When a
meeting is adjourned to another time or place (whether or not a quorum is
present), notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken.
At the adjourned meeting, the Board of Directors may transact any business which
might have been transacted at the original meeting. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present at such
meeting may adjourn the meeting, from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 4. Time and Place of Meetings. The Board of Directors shall hold
--------------------------
its meetings at such place, either within or without the State of Delaware, and
at such time as may be determined from time to time by the Board of Directors
(or the Chairman in the absence of a determination by the Board of Directors).
Section 5. Annual Meeting. The Board of Directors shall meet for the
--------------
purpose of electing officers and transacting other business, as soon as
practicable after each annual meeting of stockholders, on the same day and at
the
7
<PAGE>
same place where such annual meeting shall be held. Notice of such meeting need
not be given. In the event such annual meeting is not so held, the annual
meeting of the Board of Directors may be held at such place either within or
without the State of Delaware, on such date and at such time as shall be
specified in a notice thereof given as hereinafter provided in Section 7 of this
Article III or in a waiver of notice thereof signed by any director who chooses
to waive the requirement of notice.
Section 6. Regular Meetings. After the place and time of regular meetings
----------------
of the Board of Directors shall have been determined and notice thereof shall
have been once given to each member of the Board of Directors, regular meetings
may be held without further notice being given.
Section 7. Special Meetings. Special meetings of the Board of Directors
----------------
may be called by the Chairman of the Board and shall be called by the Chairman
of the Board, President or Secretary on the written request of three directors.
Notice of special meetings of the Board of Directors shall be given to each
director at least three days before the date of the meeting in such manner as is
determined by the Board of Directors.
Section 8. Executive Committee. (a) The Board of Directors shall elect
-------------------
from the directors an executive committee. The Board of Directors shall fill
vacancies in the executive committee by election from the directors. The
executive committee shall fix its own rules of procedure and shall meet where
and as provided by such rules or by resolution of the Board of Directors, but in
every case the presence of at least two members of the committee shall be
necessary to constitute a quorum for the transaction of business. In every case
the affirmative vote of a majority of all of the members of the committee
present at the meeting shall be necessary for the adoption of any resolution.
(b) The executive committee shall consist of two members in addition to
the Chairman of the Board, who by virtue of his office shall be a member of the
executive committee and chairman thereof. Unless otherwise ordered by
8
<PAGE>
the Board of Directors, each elected member of the executive committee shall
continue to be a member thereof until the expiration of his term of office as a
director. The executive committee, subject to any limitations prescribed by the
Board of Directors, shall have special charge of all financial accounting, legal
and general administrative affairs of the Corporation. During the intervals
between the meetings of the Board of Directors, the executive committee shall
have and may exercise all the powers and authority of the Board of Directors in
the management of the business and affairs of the Corporation, including the
power to authorize the seal of the Corporation to be affixed to all papers which
may require it, except that said committee shall not have the power or authority
of the Board to (i) fill vacancies in the Board, (ii) amend the certificate of
incorporation or bylaws of the Corporation, (iii) adopt an agreement of merger
or consolidation, (iv) recommend to the stockholders the sale, lease, exchange,
mortgage, pledge or other disposition of all or substantially all of the
Corporation's property and assets, or (v) recommend to the stockholders a
voluntary dissolution of the Corporation or a revocation of a dissolution.
Section 9. Other Committees. The Board of Directors may, by resolution
----------------
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Chairman of the Board shall be an ex officio member of all committees, except
the audit committee, to which he is not otherwise appointed, and shall be
entitled to vote on all proposals duly presented to such committees. The Board
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
including the power to authorize the seal of the Corporation to be affixed to
all papers which may require it; but no such committee shall have the power or
authority of the Board to (i) fill vacancies in the Board, (ii) amend the
certificate of incorporation or bylaws of the Corporation, (iii) adopt an
agreement of merger or
9
<PAGE>
consolidation, (iv) recommend to the stockholders the sale, lease, exchange,
mortgage, pledge or other disposition of all or substantially all of the
Corporation's property and assets, or (v) recommend to the stockholders a
voluntary dissolution of the Corporation or a revocation of a dissolution; and
unless the resolution of the Board of Directors or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required.
Section 10. Action by Consent. Unless otherwise restricted by the
-----------------
certificate of incorporation or these bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
Section 11. Telephonic Meetings. Unless otherwise restricted by the
-------------------
certificate of incorporation or these bylaws, members of the Board of Directors,
or any committee designated by the Board of Directors, may participate in a
meeting of the Board of Directors, or such committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 12. Resignation. Any director may resign at any time by giving
-----------
written notice to the Board of Directors or to the Secretary of the Corporation.
The resignation of any director shall take effect upon receipt of notice thereof
or at such later time as shall be specified in such notice; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 13. Vacancies. Unless otherwise provided in the certificate of
---------
incorporation, vacancies on the Board of
10
<PAGE>
Directors resulting from death, resignation, removal or otherwise and newly
created directorships resulting from any increase in the number of directors may
be filled solely by a majority of the directors then in office (although less
than a quorum) or by the sole remaining director. Each director so elected shall
hold office for the remainder of the full term of the class of directors in
which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified. If there are no
directors in office, then an election of directors may be held in accordance
with Delaware Law. Unless otherwise provided in the certificate of
incorporation, when one or more directors shall resign from the Board, effective
at a future date, a majority of the directors then in office, including those
who have so resigned, shall have the power to fill such vacancy or vacancies,
the vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as provided in
the filling of other vacancies.
Section 14. Removal. No director may be removed from office by the
-------
stockholders except for cause with the affirmative vote of the holders of not
less than a majority of the total voting power of all outstanding securities of
the corporation then entitled to vote generally in the election of directors,
voting together as a single class.
Section 15. Compensation. Unless otherwise restricted by the certificate
------------
of incorporation or these bylaws, the Board of Directors shall have authority to
fix the compensation of directors, including fees and reimbursement of expenses.
Section 16. Preferred Directors. Notwithstanding anything else contained
-------------------
herein, whenever the holders of one or more classes or series of Preferred Stock
shall have the right, voting separately as a class or series, to elect
directors, the election, term of office, filling of vacancies, removal and other
features of such directorships shall be governed by the terms of the resolutions
adopted by the Board of Directors pursuant to the certificate of incorporation
applicable thereto, and such directors so elected shall not be
11
<PAGE>
subject to the provisions of Sections 2, 13 and 14 of this Article III unless
otherwise provided therein.
ARTICLE IV
OFFICERS
Section 1. Principal Officers. The principal officers of the Corporation
------------------
shall be a Chairman of the Board, a President, one or more Vice Presidents
(which may be designated as Executive or Senior Vice President(s)), a Treasurer
and a Secretary who shall have the duty, among other things, to record the
proceedings of the meetings of stockholders and directors in a book kept for
that purpose. The Corporation may also have such other principal officers,
including one or more Controllers, as the Board may in its discretion appoint.
One person may hold the offices and perform the duties of any two or more of
said offices, except that no one person shall hold the offices and perform the
duties of President and Secretary.
Section 2. Election, Term of Office and Remuneration. The principal
-----------------------------------------
officers of the Corporation shall be elected annually by the Board of Directors
at the annual meeting thereof. Each such officer shall hold office until his
successor is elected and qualified, or until his earlier death, resignation or
removal. The remuneration of all officers of the Corporation shall be fixed by
the Board of Directors. Any vacancy in any office shall be filled in such
manner as the Board of Directors shall determine.
Section 3. Subordinate Officers. In addition to the principal officers
--------------------
enumerated in Section 1 of this Article IV, the Corporation may have one or more
Assistant Treasurers, Assistant Secretaries and Assistant Controllers and such
other subordinate officers, agents and employees as the Board of Directors may
deem necessary, each of whom shall hold office for such period as the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any principal officer the power to appoint and to remove any such subordinate
officers, agents or employees.
12
<PAGE>
Section 4. Removal. Except as otherwise permitted with respect to
-------
subordinate officers, any officer may be removed, with or without cause, at any
time, by resolution adopted by the Board of Directors.
Section 5. Resignations. Any officer may resign at any time by giving
------------
written notice to the Board of Directors (or to a principal officer if the Board
of Directors has delegated to such principal officer the power to appoint and to
remove such officer). The resignation of any officer shall take effect upon
receipt of notice thereof or at such later time as shall be specified in such
notice; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 6. Powers and Duties. The officers of the Corporation shall have
-----------------
such powers and perform such duties incident to each of their respective offices
and such other duties as may from time to time be conferred upon or assigned to
them by the Board of Directors.
ARTICLE V
GENERAL PROVISIONS
Section 1. Fixing the Record Date. (a) In order that the Corporation may
----------------------
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than 60 nor less than 10 days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any
13
<PAGE>
adjournment of the meeting; provided that the Board of Directors may fix a new
--------
record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than 60 days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
Section 2. Dividends. Subject to limitations contained in Delaware Law
---------
and the certificate of incorporation, the Board of Directors may declare and pay
dividends upon the shares of capital stock of the Corporation, which dividends
may be paid in cash, in property or in shares of the capital stock of the
Corporation.
Section 3. Fiscal Year. The fiscal year of the Corporation shall commence
-----------
on January 1 and end on December 31 of each year.
Section 4. Corporate Seal. The corporate seal shall have inscribed
--------------
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed, affixed or otherwise reproduced.
Section 5. Voting of Stock Owned by the Corporation. The Board of
----------------------------------------
Directors may authorize any person, on behalf of the Corporation, to attend,
vote at and grant proxies to be used at any meeting of stockholders of any
corporation (except this Corporation) in which the Corporation may hold stock.
14
<PAGE>
Section 6. Amendments. These bylaws or any of them, may be altered,
----------
amended or repealed, or new bylaws may be made, by the Board of Directors or by
the affirmative vote of the holders of not less than 80% of the total voting
power of all outstanding securities of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
15
<PAGE>
Exhibit 4
RIGHTS AGREEMENT
dated as of
December 11, 1996
between
Deltic Timber Corporation
and
Harris Trust and Savings Bank,
as Rights Agent
<PAGE>
TABLE OF CONTENTS/1/
Page
----
Section 1. Definitions............................ 1
Section 2. Appointment of Rights Agent............ 5
Section 3. Issue of Right Certificates............ 5
Section 4. Form of Right Certificates............. 7
Section 5. Countersignature and Registration...... 7
Section 6. Transfer and Exchange of Right
Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates..... 8
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights............. 9
Section 8. Cancellation and Destruction of Right
Certificates.......................... 11
Section 9. Reservation and Availability of
Capital Stock......................... 11
Section 10. Preferred Stock Record Date............ 13
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number
of Rights............................. 13
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares............. 23
/1/The Table of Contents is not a part of this Agreement.
<PAGE>
Page
----
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. 23
Section 14. Fractional Rights and Fractional
Shares.............................. 26
Section 15. Rights of Action..................... 27
Section 16. Agreement of Right Holders........... 28
Section 17. Right Certificate Holder Not Deemed
a Stockholder....................... 29
Section 18. Concerning the Rights Agent.......... 29
Section 19. Merger or Consolidation or Change of
Name of Rights Agent................ 30
Section 20. Duties of Rights Agent............... 30
Section 21. Change of Rights Agent............... 33
Section 22. Issuance of New Right Certificates... 34
Section 23. Redemption........................... 34
Section 24. Notice of Proposed Actions........... 35
Section 25. Notices.............................. 36
Section 26. Supplements and Amendments........... 37
Section 27. Successors........................... 37
Section 28. Determinations and Actions
by the Board of Directors, etc...... 37
Section 29. Benefits of this Agreement........... 38
ii
<PAGE>
Page
----
Section 30. Severability......................... 38
Section 31. Governing Law........................ 39
Section 32. Counterparts......................... 39
Section 33. Descriptive Headings................. 39
iii
<PAGE>
Exhibit A - Form of Certificate of Designation
of Preferred Stock
Exhibit B - Form of Right Certificate
iv
<PAGE>
RIGHTS AGREEMENT
AGREEMENT dated as of December 11, 1996, between Deltic Timber Corporation,
a Delaware corporation (the "Company"), and Harris Trust and Savings Bank, an
Illinois Banking Corporation, as Rights Agent (the "Rights Agent"),
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, on December 11, 1996 the Board of Directors of the Company
authorized and declared a dividend of one preferred stock purchase right (a
"Right") for each share of Common Stock (as hereinafter defined) outstanding at
the close of business on December 18, 1996 (the "Record Date") and has
authorized the issuance, upon the terms and subject to the conditions
hereinafter set forth, of one Right in respect of each share of Common Stock
issued after the Record Date, each Right representing the right to purchase,
upon the terms and subject to the conditions hereinafter set forth, one one-
hundredth of a share of Preferred Stock (as hereinafter defined);
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. The following terms, as used herein, have the
-----------
following meanings:
"Acquiring Person" means any Person (other than an Exempt Holder) who,
together with all Affiliates and Associates (other than an Exempt Holder) of
such Person, shall be the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding, but shall
<PAGE>
not include the Company, any of its Subsidiaries, any employee benefit plan
of the Company or any of its Subsidiaries, any Person organized, appointed or
established by the Company or any of its Subsidiaries for or pursuant to the
terms of any such plan, or Murphy Oil Corporation prior to the consummation
of the Spinoff. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" solely as a result of an acquisition of shares of Common
Stock by the Company which, by reducing the number of shares of Common Stock
outstanding, increases the proportionate number of shares of Common Stock
beneficially owned by such Person (together with all Affiliates and
Associates of such Person) to 15% or more of the shares of Common Stock then
outstanding.
"Affiliate" and "Associate" have the respective meanings ascribed to such
terms in Rule 12b-2 under the Exchange Act as in effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to
"beneficially own", any securities:
(a) which such Person or any of its Affiliates or Associates (other
than an Exempt Holder), directly or indirectly, beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act as in effect on
the date hereof);
(b) which such Person or any of its Affiliates or Associates (other
than an Exempt Holder), directly or indirectly, has
(i) the right to acquire (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or otherwise (other than
pursuant to the Rights); provided that a Person shall not be deemed
--------
the "Beneficial Owner" of or to "beneficially
2
<PAGE>
own" securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of its Affiliates or Associates
until such tendered securities are accepted for payment or exchange;
or
(ii) the right to vote (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or otherwise; provided that
--------
a Person shall not be deemed the "Beneficial Owner" of or to
"beneficially own" any security under this clause (ii) as a result of
an agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (A) arises solely from a
revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to the applicable rules and
regulations under the Exchange Act and (B) is not also then reportable
by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(c) which are beneficially owned, directly or indirectly, by any
other Person (other than an Exempt Holder), or any Affiliate or Associate
(other than an Exempt Holder) thereof, with which such Person or any of its
Affiliates or Associates (other than an Exempt Holder) has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in subparagraph (b)(ii) immediately above) or disposing of any
such securities.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
3
<PAGE>
"Close of business" on any given date means 5:00 P.M., New York City time,
on such date; provided that if such date is not a Business Day "close of
--------
business" means 5:00 P.M., New York City time, on the next succeeding Business
Day.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company, except that, when used with reference to any Person other than the
Company, "Common Stock" means the capital stock of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
"Continuing Director" means any member of the Board of Directors of the
Company, while such Person is a member of the Board, who is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or a representative
or nominee of an Acquiring Person or of any such Affiliate or Associate and
either (a) was a member of the Board immediately prior to the time any Person
becomes an Acquiring Person or (b) subsequently becomes a member of the Board,
if such Person's nomination for election or election to the Board is recommended
or approved by a majority of the Continuing Directors.
"Distribution Date" means the earlier of (a) the close of business on the
tenth day (or such later day as may be designated by action of a majority of the
Continuing Directors) after the Stock Acquisition Date and (b) the close of
business on the tenth Business Day (or such later day as may be designated by
action of a majority of the Continuing Directors) after the date of the
commencement of a tender or exchange offer by any Person if, upon consummation
thereof, such Person would be an Acquiring Person.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exempt Holder" mean Charles H. Murphy, Jr. and his Affiliates and
Associates.
4
<PAGE>
"Expiration Date" means the earlier of (a) the Final Expiration Date
and (b) the time at which all Rights are redeemed as provided in Section
23.
"Final Expiration Date" means the close of business on December 31,
2006.
"Person" means an individual, corporation, partnership, association,
trust or any other entity or organization.
"Preferred Stock" means the Series A Participating Cumulative
Preferred Stock, par value $.01 per share, of the Company, having the terms
set forth in the form of certificate of designation attached hereto as
Exhibit A.
"Purchase Price" means the price (subject to adjustment as provided
herein) at which a holder of a Right may purchase one one-hundredth of a
share of Preferred Stock (subject to adjustment as provided herein) upon
exercise of a Right, which price shall initially be $75.00.
"Section 11(a)(ii) Event" means any event described in the first
clause of Section 11(a)(ii).
"Section 13 Event" means any event described in clauses (x), (y) or
(z) of Section 13(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Spinoff" means the distribution by Murphy Oil Corporation to its
stockholders of 100% of the Common Stock of the Company.
"Stock Acquisition Date" means the date of the first public
announcement (including the filing of a report on Schedule 13D under the
Exchange Act (or any comparable or successor report)) by the Company or an
5
<PAGE>
Acquiring Person indicating that an Acquiring Person has become such.
"Subsidiary" of any Person means any other Person of which securities
or other ownership interests having ordinary voting power, in the absence
of contingencies, 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 first Person.
"Trading Day" means 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.
"Triggering Event" means any Section 11(a)(ii) Event or any Section 13
Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
--------------------------------------
the Rights Agent to act as agent for the Company and the holders of the Rights
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such Co-
Rights Agents as it may deem necessary or desirable. If the Company appoints one
or more Co-Rights Agents, the respective duties of the Rights Agent and any Co-
Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates. (a) Prior to the Distribution
---------------------------
Date, (i) the Rights will be evidenced by the certificates for the Common Stock
and not by separate Right Certificates (as hereinafter defined) and the
registered holders of the Common Stock shall be deemed to be the registered
holders of the associated Rights, and (ii) the Rights will be transferable only
in connection with the transfer of the underlying shares of Common Stock.
(b) As soon as practicable after the Company has notified the Rights
Agent of the occurrence of the Distribution Date, the Rights Agent will send, by
first-class, insured, postage prepaid mail, to each record
6
<PAGE>
holder of the Common Stock as of the close of business on the Distribution Date,
at the address of such holder shown on the records of the Company, one or more
Right Certificates evidencing one Right (subject to adjustment as provided
herein) for each share of Common Stock so held. If an adjustment in the number
of Rights per share of Common Stock has been made pursuant to Section 11(p), the
Company shall, at the time of distribution of the Right Certificates, make the
necessary and appropriate rounding adjustments (in accordance with Section
14(a)) so that Right Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. From and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(c) Rights shall be issued in respect of all shares of Common Stock
outstanding as of the Record Date or issued (on original issuance or out of
treasury) after the Record Date but prior to the earlier of the Distribution
Date and the Expiration Date. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (i) shall, with respect to shares of Common Stock
so issued or sold (x) pursuant to the exercise of stock options or under any
employee plan or arrangement or (y) upon the exercise, conversion or exchange of
other securities issued by the Company prior to the Distribution Date and (ii)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided that no such
--------
Right Certificate shall be issued if, and to the extent that, (i) the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued or (ii) appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
(d) Certificates for the Common Stock issued after the Record Date
but prior to the earlier of the Distribution Date and the Expiration Date shall
have
7
<PAGE>
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences certain Rights as set forth in a Rights
Agreement between Deltic Timber Corporation and Harris Trust and Savings
Bank dated as of December 11, 1996 (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. The
Company will mail to the holder of this certificate a copy of the Rights
Agreement without charge promptly after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be evidenced by separate certificates and no
longer be evidenced by this certificate, may be redeemed or exchanged or
may expire. As set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, may be null and void.
Section 4. Form of Right Certificates. (a) The certificates
--------------------------
evidencing the Rights (and the forms of assignment, election to purchase and
certificates to be printed on the reverse thereof) (the "Right Certificates")
shall be substantially in the form of Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, rule or regulation or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. The Right Certificates, whenever distributed, shall be dated as of the
Record Date.
(b) Any Right Certificate representing Rights beneficially owned by
any Person referred to in clauses (i),
8
<PAGE>
(ii) or (iii) of the first sentence of Section 7(d) shall (to the extent
feasible) contain 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 defined in the Rights
Agreement). This Right Certificate and the Rights represented hereby may be
or may become null and void in the circumstances specified in Section 7(d)
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 Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. 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 of the Company whose
manual or facsimile signature is affixed to the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates may,
nevertheless, be countersigned by the Rights Agent and 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. Any Right
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the place for
surrender of Right Certificates upon exercise, transfer or exchange, books for
registration and transfer of the Right Certificates. Such books shall show with
respect to each Right Certificate the
9
<PAGE>
name and address of the registered holder thereof, the number of Rights
indicated on the certificate and the certificate number.
Section 6. Transfer and Exchange of Right Certificates; Mutilated,
------------------------------------------------------
Destroyed, Lost or Stolen Right Certificates. (a) At any time after the
- --------------------------------------------
Distribution Date and prior to the Expiration Date, any Right Certificate or
Certificates may, upon the terms and subject to the conditions set forth below
in this Section 6(a), be transferred or exchanged for another Right Certificate
or Certificates evidencing a like number of Rights as the Right Certificate or
Certificates surrendered. Any registered holder desiring to transfer or exchange
any Right Certificate or Certificates shall surrender such Right Certificate or
Certificates (with, in the case of a transfer, the form of assignment and
certificate on the reverse side thereof duly executed) to the Rights Agent at
the principal office or offices of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate or Certificates until the registered holder of the Rights has
complied with the requirements of Section 7(e). Upon satisfaction of the
foregoing requirements, the Rights Agent shall, subject to Sections 4(b), 7(d)
and 14, countersign and deliver to the Person entitled thereto a Right
Certificate or Certificates as so requested. The Company may require payment by
the registered holder of a Right of a sum sufficient to cover any transfer tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of any Right Certificate or Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the
10
<PAGE>
Company will issue and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and 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) The registered holder of any Right Certificate may exercise the
- ------
Rights evidenced thereby (except as otherwise provided herein, including
Sections 7(d) and (e), 9(c), 11(a) and 23) in whole or in part at any time after
the Distribution Date and prior to the Expiration Date upon surrender of the
Right Certificate, with the form of election to purchase and the certificate on
the reverse side thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment (in lawful money of the United States of America by certified check or
bank draft payable to the order of the Company) of the aggregate Purchase Price
with respect to the Rights then to be exercised and an amount equal to any
applicable transfer tax or other governmental charge.
(b) Upon satisfaction of the requirements of Section 7(a) and subject
to Section 20(k), the Rights Agent shall thereupon promptly (i)(A) requisition
from any transfer agent of the Preferred Stock (or make available, if the Rights
Agent is the transfer agent therefor) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests) or (B) if the Company shall have elected to deposit the shares of
Preferred Stock issuable upon exercise of the Rights with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of issuance of fractional shares in accordance with Section
14 and (iii) after receipt of such
11
<PAGE>
certificates or depositary receipts and cash, if any, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate (with such certificates or receipts registered in such name or names
as may be designated by such holder). If the Company is obligated to deliver
Common Stock, other securities or assets pursuant to this Agreement, the Company
will make all arrangements necessary so that such other securities and assets
are available for delivery by the Rights Agent, if and when appropriate.
(c) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing the number of Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such 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 (or
any such Associate or Affiliate) to holders of equity interests in such
Acquiring Person (or in any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or any such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Continuing Directors have determined is part
of a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(d) shall become null and void without any
further action, and no holder of such Rights shall have any rights whatsoever
with respect to
12
<PAGE>
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to insure that the provisions of this
Section 7(d) 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 failure to
make any determinations with respect to an Acquiring Person or its Affiliates
and Associates or any transferee of any of them hereunder.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the occurrence of any
purported transfer pursuant to Section 6 or exercise pursuant to this Section 7
unless such registered holder (i) shall have completed and signed the
certificate contained in the form of assignment or election to purchase, as the
case may be, set forth on the reverse side of the Right Certificate surrendered
for such transfer or exercise, as the case may be, (ii) shall not have indicated
an affirmative response to clause 1 or 2 thereof and (iii) 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.
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for exercise, transfer or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or, if surrendered to the Rights
Agent, shall be canceled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by this Agreement. The Company shall
deliver to the Rights Agent for cancellation, and the Rights Agent shall cancel,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
13
<PAGE>
Section 9. Reservation and Availability of Capital Stock. (a) The
---------------------------------------------
Company covenants and agrees that it will cause to be reserved and kept
available a number of shares of Preferred Stock which are authorized but not
outstanding or otherwise reserved for issuance sufficient to permit the exercise
in full of all outstanding Rights as provided in this Agreement.
(b) So long as the Preferred Stock issuable upon the exercise of
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all securities reserved for such issuance to be listed on any such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event as of which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance with Section
11(a)(iii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act with respect
to the securities issuable upon exercise of the Rights, (ii) to cause such
registration statement to become effective as soon as practicable after such
filing and (iii) to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or blue sky laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed 90 days after the date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended,
14
<PAGE>
as well as a public announcement at such time as the suspension is no longer in
effect. Notwithstanding any such provision of this Agreement to the contrary,
the Rights shall not be exercisable for securities in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, such
exercise therefor shall not be permitted under applicable law or a registration
statement in respect of such securities shall not have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all one one-hundredths of a share of
Preferred Stock issuable upon exercise of Rights shall, at the time of delivery
of the certificates for such securities (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and other governmental
charges which may be payable in respect of the issuance or delivery of the Right
Certificates and of any certificates for Preferred Stock upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax or
other governmental charge which may be payable in respect of any transfer
involved in the issuance or delivery of any Right Certificates or of any
certificates for Preferred Stock to a Person other than the registered holder of
the applicable Right Certificate, and prior to any such transfer, issuance or
delivery any such tax or other governmental charge shall have been paid by the
holder of such Right Certificate or it shall have been established to the
Company's satisfaction that no such tax or other governmental charge is due.
Section 10. Preferred Stock Record Date. Each Person (other than the
---------------------------
Company) in whose name any certificate for Preferred Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any
15
<PAGE>
transfer taxes or other governmental charges) was made; provided that if the
--------
date of such surrender and payment is a date upon which the transfer books of
the Company relating to the Preferred Stock are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the applicable
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, 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 the right to vote, to receive dividends
or other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
-------------------------------------------------------
or Number of Rights. (a)(i) If the Company shall at any time after the date of
- -------------------
this Agreement (A) pay a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock into a greater
number of shares, (C) combine the outstanding Preferred Stock into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger involving the Company), the Purchase
Price in effect immediately prior to the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or other capital stock issuable on
such date shall be proportionately adjusted so that each holder of a Right shall
(except as otherwise provided herein, including Section 7(d)) thereafter be
entitled to receive, upon exercise thereof at the Purchase Price in effect
immediately prior to such date, the aggregate number and kind of shares of
Preferred Stock or other capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time when the
applicable transfer books of the Company were open, such holder would have been
entitled to receive upon such exercise and by virtue of such dividend,
subdivision, combination or
16
<PAGE>
reclassification. If an event occurs which requires 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 any Person, alone or together with its Affiliates and
Associates, shall, at any time after the date of this Agreement, become an
Acquiring Person, then proper provision shall promptly be made so that each
holder of a Right shall (except as otherwise provided herein, including Section
7(d)) thereafter be entitled to receive, upon exercise thereof on or after the
Distribution Date at the Purchase Price in effect immediately prior to the first
occurrence of a Section 11(a)(ii) Event, in lieu of Preferred Stock, such number
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock of the Company (such shares being referred to herein as the
"Adjustment Shares") as shall be equal to the result obtained by dividing
(x) the product obtained by multiplying the Purchase Price in effect
immediately prior to the first occurrence of a Section 11(a)(ii) Event by
the number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such first occurrence (such
product being thereafter referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by
(y) 50% of the current market price (determined pursuant to Section
11(d)(i)) per share of Common Stock on the date of such first occurrence.
(iii) If the number of shares of Common Stock which are authorized by
the Company's certificate of incorporation but not outstanding or reserved for
issuance other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii), the Company
shall, with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the Purchase Price then in effect, (A) (to
the extent available) Common Stock and
17
<PAGE>
then, (B) (to the extent available) other equity securities of the Company which
a majority of the Continuing Directors has determined to be essentially
equivalent to shares of Common Stock in respect to dividend, liquidation and
voting rights (such securities being referred to herein as "common stock
equivalents") and then, if necessary, (C) other equity or debt securities of the
Company, cash or other assets, a reduction in the Purchase Price or any
combination of the foregoing, having an aggregate value (as determined by the
Continuing Directors based upon the advice of a nationally recognized investment
banking firm selected by the Continuing Directors) equal to the value of the
Adjustment Shares; provided that (x) the Company may, and (y) if the Company
--------
shall not have made adequate provision as required above to deliver value within
30 days following the later of the first occurrence of a Section 11(a)(ii) Event
and the first date that the right to redeem the Rights pursuant to Section 23
shall expire, then the Company shall be obligated to, deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, (1) (to the extent available) Common Stock and then (2) (to the extent
available) common stock equivalents and then, if necessary, (3) other equity or
debt securities of the Company, cash or other assets or any combination of the
foregoing, having an aggregate value (as determined by the Continuing Directors
based upon the advice of a nationally recognized investment banking firm
selected by the Continuing Directors) equal to the excess of the value of the
Adjustment Shares over the Purchase Price. If the Continuing Directors of the
Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the 30 day period set forth above (such period, as it may
be extended, being referred to herein as the "Substitution Period") may be
extended to the extent necessary, but not more than 90 days following the first
occurrence of a Section 11(a)(ii) Event, in order that the Company may seek
stockholder approval for the authorization of such additional shares. To the
extent that the Company determines that some action is to be taken pursuant to
the first and/or second sentence of this Section 11(a)(iii), the Company (X)
shall provide, subject to Section 7(d), that such action shall apply uniformly
to all outstanding Rights
18
<PAGE>
and (Y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form and value of any consideration to be
delivered as referred to in such first and/or second sentence. If any such
suspension occurs, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock shall be the
current market price per share of Common Stock (as determined pursuant to
Section 11(d)) on the later of the date of the first occurrence of a Section
11(a)(ii) Event and the first date that the right to redeem the Rights pursuant
to Section 23 shall expire; any common stock equivalent shall be deemed to have
the same value as the Common Stock on such date; and the value of other
securities or assets shall be determined pursuant to Section 11(d)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Preferred Stock (or securities having the
same rights, privileges and preferences as the shares of Preferred Stock
("equivalent preferred stock")) or securities convertible into or exercisable
for Preferred Stock (or equivalent preferred stock) at a price per share of
Preferred Stock (or equivalent preferred stock) (in each case, taking account of
any conversion or exercise price) less than the current market price (as
determined pursuant to Section 11(d)) per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate price (taking account of any conversion or
exercise price) of the total number of shares of Preferred Stock (and/or
equivalent preferred stock) so to be offered would purchase at such current
market price and the
19
<PAGE>
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of additional shares of
Preferred Stock (and/or equivalent preferred stock) so to be offered. In case
such subscription price may be paid by delivery of consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computationnt shall be made successively whenever such a record date
is fixed, and if such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger involving the Company) of
evidences of indebtedness, equity securities other than Preferred Stock, assets
(other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company) or rights, options or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)) per
share of Preferred Stock on such record date, less the value (as determined
pursuant to Section 11(d)(iii)) of such evidences of indebtedness, equity
securities, assets, rights, options or warrants so to be distributed with
respect to one share of Preferred Stock and the denominator of which shall be
such current market price per share of Preferred Stock. Such adjustment shall
be made successively whenever such a record date is fixed, and if such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
20
<PAGE>
(d)(i) For the purpose of any computation hereunder other than
computations made pursuant to Section 11(a)(iii) or 14, 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 immediately prior to such date; for purposes of
computations made pursuant to Section 11(a)(iii), 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 10 consecutive Trading
Days immediately following such date; and for purposes of computations made
pursuant to Section 14, the "current market price" per share of Common Stock for
any Trading Day shall be deemed to be the closing price per share of Common
Stock for such Trading Day; provided that if the current market price per share
--------
of the Common Stock is determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities exercisable for or
convertible into shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and prior to
the expiration of the requisite 30 Trading Day or 10 Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the "current market price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchan of
Common Stock are not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter
21
<PAGE>
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use or, if on
any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board of Directors of the Company, or, if at the time of such selection there is
an Acquiring Person, by a majority of the Continuing Directors. If on any such
date no market maker is making a market in the Common Stock, the fair value of
such shares on such date as determined in good faith by the Board of Directors
of the Company (or, if at the time of such determination there is an Acquiring
Person, by a majority of the Continuing Directors) shall be used. If the Common
Stock is not publicly held or not so listed or traded, the "current market
price" per share means the fair value per share as determined in good faith by
the Board of Directors of the Company, or, if at the time of such determination
there is an Acquiring Person, by a majority of the Continuing Directors, or if
there are no Continuing Directors, by a nationally recognized investment banking
firm selected by the Board of Directors, which determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in Section 11(d)(i) (other than
the last sentence thereof). If the current market price per share of Preferred
Stock cannot be determined in such manner, the "current market price" per share
of Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the current market price per share of
Common Stock (as determined pursuant to Section 11(d)(i) (other than the last
sentence thereof)). If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, the "current market price" per share of
the Preferred Stock shall be
22
<PAGE>
determined in the same manner as set forth in the last sentence of Section
11(d)(i). For all purposes of this Agreement, the "current market price" of one
one-hundredth of a share of Preferred Stock shall be equal to the "current
market price" of one share of Preferred Stock divided by 100.
(iii) For the purpose of any computation hereunder, the value of any
securities or assets other than Common Stock or Preferred Stock shall be the
fair value as determined in good faith by the Board of Directors of the Company,
or, if at the time of such determination there is an Acquiring Person, by a
majority of the Continuing Directors then in office, or, if there are no
Continuing Directors, by a nationally recognized investment banking firm
selected by the Board of Directors, which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided 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 ten-thousandth of a share of Common Stock or other share or one-
millionth of a share of Preferred Stock, as the case may be.
(f) If at any time, as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a), the holder of any Right shall be entitled to
receive upon exercise of such Right any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Section 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of
23
<PAGE>
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made hereunder shall evidence the right to purchase, at the Purchase
Price then in effect, the then applicable number of one one-hundredths of a
share of Preferred Stock and other capital stock of the Company issuable 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 as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share for which a
Right was exercisable immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-hundredths of a
share of Preferred Stock for which such 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
ten-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
24
<PAGE>
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 pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14, the additional Rights to which such holders shall be entitled as
a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustmentcates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names of the holders
of record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of shares which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par value, if any, of the number of one one-
hundredths of a share of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the
25
<PAGE>
Company may validly and legally issue fully paid and nonassessable such number
of one one-hundredths of a share of Preferred Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-hundredths of a share of Preferred Stock or other capital
stock of the Company, if any, issuable upon such exercise over and above the
number of one one-hundredths of a share of Preferred Stock or other capital
stock of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided that the Company
--------
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the current market price,
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exercisable for Preferred Stock, stock dividends or
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to the holders of its Preferred Stock, shall not
be taxable to such stockholders.
(n) The Company covenants and agrees that it will not at any time
after the Distribution Date (i) consolidate, merge or otherwise combine with or
(ii) sell or otherwise transfer (and/or permit any of its Subsidiaries to sell
or otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company
26
<PAGE>
and its Subsidiaries, taken as a whole, to any other Person or Persons if (x) at
the time of or immediately after such consolidation, merger, combination or sale
there are any rights, warrants or other instruments or securities outstanding or
any agreements or arrangements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger,
combination or sale, the stockholders of a Person who constitutes, or would
constitute, the "Principal Party" for the purposes of Section 13 shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that after the Distribution
Date, it will not, except as permitted by Sections 23 and 26, take (or permit
any Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, if
at any time after the date hereof and prior to the Distribution Date the Company
shall (i) pay a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock into a
larger number of shares or (iii) combine the outstanding Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter as contemplated
by Section 3(c), shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such event by a fraction
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
27
<PAGE>
Section 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Sections 11 and 13, the
- ------
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and the Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
the manner set forth in Section 25. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power. (a) If, following the Stock Acquisition Date, directly or
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indirectly,
(x) the Company shall consolidate with, merge into, or otherwise
combine with, any other Person, and the Company shall not be the continuing
or surviving corporation of such consolidation, merger or combination,
(y) any Person shall merge into, or otherwise combine with, the
Company, and the Company shall be the continuing or surviving corporation
of such merger or combination and, in connection with such merger or
combination, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for other stock or securities of the Company or
any other Person, cash or any other property, or
(z) the Company and/or one or more of its Subsidiaries shall sell or
otherwise transfer, in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries, taken as a whole, to any other
Person or Persons,
28
<PAGE>
then, and in each such case, proper provision shall promptly be made so that
(1) each holder of a Right shall thereafter be entitled to receive,
upon exercise thereof at the Purchase Price in effect immediately prior to the
first occurrence of any Triggering Event, such number of duly authorized,
validly issued, fully paid and nonassessable shares of freely tradeable Common
Stock of the Principal Party (as hereinafter defined), not subject to any rights
of call or first refusal, liens, encumbrances or other claims, as shall be equal
to the result obtained by dividing
(A) the product obtained by multiplying the Purchase Price in effect
immediately prior to the first occurrence of any Triggering Event by the
number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such first occurrence (such
product being thereafter referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by
(B) 50% of the current market price (determined pursuant to Section
11(d)(i)) per share of the Common Stock of such Principal Party on the date
of consummation of such consolidation, merger, combination, sale or
transfer;
(2) the Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, combination, sale or transfer,
all the obligations and duties of the Company pursuant to this Agreement;
(3) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; and
(4) such Principal Party shall take such steps (including the
authorization and reservation of a sufficient number of shares of its Common
Stock to permit exercise of
29
<PAGE>
all outstanding Rights in accordance with this Section 13(a)) in connection with
the consummation of any such transaction 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.
(b) "Principal Party" means
(i) in the case of any transaction described in Section 13(a)(x) or
(y), the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger, consolidation or
combination, and if no securities are so issued, the Person that survives
or results from such merger, consolidation or combination; and
(ii) in the case of any transaction described in Section 13(a)(z), the
Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions;
provided that in any such case, (A) 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 Person the Common Stock of which is and has been
so registered, "Principal Party" shall refer to such other Person; and (B) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
combination, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which are not outstanding or
otherwise reserved for issuance to permit the exercise in full of the Rights in
accordance with this
30
<PAGE>
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in Section 13(a) and (b) and providing that,
as soon as practicable after the date of any consolidation, merger, combination,
sale or transfer mentioned in Section 13(a), the Principal Party will
(i) prepare and file a registration statement under the Securities
Act with respect to the securities issuable upon exercise of the Rights,
and will use its best efforts to cause such registration statement (A) to
become effective as soon as practicable after such filing and (B) to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, combinations, sales or other transfers. If any Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
---------------------------------------
shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p), or to distribute Right
Certificates which evidence fractional Rights. In lieu of any such fractional
Rights, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
price of a whole Right. For purposes of this Section 14(a), the current market
price of a whole Right shall be the closing price of a Right for the Trading Day
immediately
31
<PAGE>
prior to the date on which such fractional Rights would otherwise have been
issuable. The closing price of a Right 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, on the
principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price, or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company, or, if at the
time of such selection there is an Acquiring Person, by a majority of the
Continuing Directors. If on any such date no such market maker is making a
marketcurrent market price of the Rights on such date shall be as determined in
good faith by the Board of Directors of the Company, or, if at the time of such
determination there is an Acquiring Person, by a majority of the Continuing
Directors.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market price of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market price
of one one-hundredth of a share of
32
<PAGE>
Preferred Stock shall be one one-hundredth of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of any Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised or exchanged as herein provided an amount in cash equal to the same
fraction of the current market price of a share of Common Stock. For purposes of
this Section 14(c), the current market price of a share of Common Stock shall be
the closing price of a share of Common Stock (as determined pursuant to Section
11(d)(i)) for the Trading Day immediately prior to the date of such exercise or
exchange.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of any certificate representing
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of any certificate
representing Common Stock), may, in 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
33
<PAGE>
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) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Sections 6 and 7, the Company and the Rights Agent may
deem and treat the Person in whose name a Right Certificate (or, prior to the
Distribution Date, a certificate representing shares of Common Stock) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the certificate representing shares of Common Stock made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of Section 7(d),
shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by
34
<PAGE>
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining performance of such
obligation; provided that the Company must use its best efforts to have any such
--------
order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
-------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as provided
in Section 24), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
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 disbursements and other disbursements incurred in
the execution or administration of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without 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 administration of this Agreement or the exercise or
performance of its duties hereunder, including the costs and expenses of
defending against any claim of liability.
35
<PAGE>
(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 the administration of this Agreement or the exercise or performance of its
duties hereunder 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,
instruction, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
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 corporate
trust or 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 a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(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
36
<PAGE>
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:
(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
(including, without limitation, the identity of any "Acquiring Person" and the
determination of "current market price") be proved or established by the Company
prior to taking, suffering or omitting to take 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 or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant 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, suffered or omitted 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.
37
<PAGE>
(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 change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(d)) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in
Sections 3, 11, 13 or 23, 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 Common Stock or
Preferred Stock to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of Common Stock or Preferred Stock will, when
issued, be duly authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary
38
<PAGE>
or the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken, suffered or omitted to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or to any holders of Rights resulting from
any such act, default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) 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 cases may be, has either not
been completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any
39
<PAGE>
further action with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of any state of the United States, in good standing, having a principal
office in the State of New York (or such other State acceptable to the Company),
which is authorized under such laws to exercise stock transfer or corporate
trust powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been
40
<PAGE>
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and, subsequent to the Distribution
Date, 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, 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 Purchase Price and the number or kind or class of shares of stock
issuable upon exercise of the Rights made in accordance with the provisions of
this Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company
----------
may, at its option, at any time prior to the earlier of (i) the close of
business on the tenth day after the Stock Acquisition Date (or such later date
as a majority of the Continuing Directors may designate prior to such time as
the Rights are no longer redeemable) and (ii) the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.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"); provided that after any Person has become an Acquiring Person, any
--------
redemption of the Rights shall be effective only if there are Continuing
Directors then in office, and such redemption shall have been approved
41
<PAGE>
by a majority of such Continuing Directors. Notwithstanding anything 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 right
of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights and without any further action and without
any notice, the right to exercise the Rights will terminate and thereafter the
only right of the holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly thereafter give notice of such
redemption to the Rights Agent and the holders of the Rights in the manner set
forth in Section 25; provided that the failure to give, or any defect in, such
--------
notice shall not affect the validity of such redemption. 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. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in Section 23, and other than in connection with the purchase, acquisition
or redemption of shares of Common Stock prior to the Distribution Date.
Section 24. Notice of Proposed Actions. (a) In case the Company shall
--------------------------
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or combination of outstanding
shares of Preferred Stock) or (iv) to effect any consolidation or merger with
any other Person, or to effect and/or to permit one or more of its
42
<PAGE>
Subsidiaries to effect any sale or other transfer, in one transaction or a
series of related transactions, of assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries, taken as
a whole, to any other Person or Persons, 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, to the extent feasible and in accordance
with Section 25, a notice of such proposed action, which shall specify the
record date for the purposes of any such dividend, distribution or offering of
rights or warrants, or the date on which any such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up is
to take place and the date of participation therein by the holders of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the Preferred Stock entitled to
participate in such dividend, distribution or offering, and in the case of any
such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of Preferred
Stock, whichever shall be the earlier. The failure to give notice required by
this Section or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date a public filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such case, (1)
the Company shall as soon as practicable thereafter give to each holder of a
Right, in accordance with Section 25, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) or 13, as the case may be, and (2) all references
in Section 24(a) to
43
<PAGE>
Preferred Stock shall be deemed thereafter to refer to Common Stock or other
capital stock, as the case may be.
Section 25. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Right to or on
the Company shall be sufficiently given or made if sent by first-class mail
(postage prepaid) to the address of the Company indicated on the signature page
hereof or such other address as the Company shall specify in writing to the
Rights Agent. Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail (postage prepaid) to the address of the Rights Agent
indicated on the signature page hereof or such other address as the Rights Agent
shall specify in writing to the Company. Notices or demands authorized by this
Agreement to be given or made by the Company or the Rights Agent to the holder
of any Right Certificate (or, prior to the Distribution Date, to the holder of
any certificate representing shares of Common Stock) shall be sufficiently given
or made if sent by first-class mail (postage prepaid) to the address of such
holder shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution
--------------------------
Date, 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, 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 (a) to cure any ambiguity, (b) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein or (c) 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 Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Notwithstanding the foregoing, after any
44
<PAGE>
Person has become an Acquiring Person, any supplement or amendment shall be
effective only if there are Continuing Directors then in office, and such
supplement or amendment shall have been approved by a majority of such
Continuing Directors. 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. 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.
Section 27. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors,
------------------------------------------------------
etc. For all purposes of this Agreement, any calculation of the number of shares
- ----
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act as in effect on
the date of this Agreement. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including 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
exchange or not to redeem or exchange the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board (or,
45
<PAGE>
where specifically provided for herein, by the Continuing Directors) in good
faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the
Board of Directors of the Company or the Continuing Directors to any liability
to the holders of the Rights.
Section 29. 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 certificates representing the shares of Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the certificates representing the shares of Common Stock).
Section 30. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided that, notwithstanding anything in this Agreement to the contrary, if
any such term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and the Board of Directors of the
Company (or, after any Person has become an Acquiring Person, a majority of the
Continuing Directors) determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors or
Continuing Directors, as the case may be.
Section 31. Governing Law. This Agreement, each Right and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of
46
<PAGE>
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State, except that the rights and obligations of the Rights
Agent shall be governed by the law of the State of New York.
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
one and the same instrument.
Section 33. Descriptive Headings. The captions herein are included
--------------------
for convenience of reference only, do not constitute a part of this Agreement
and shall be ignored in the construction and interpretation hereof.
47
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
DELTIC TIMBER CORPORATION
By: /s/ Clefton D. Vaughan
-------------------------------------
Name: Clefton D. Vaughan
Title: Vice President
200 Peach Street
P.O. Box 7000
El Dorado, Arkansas 71731-7000
Attention: Secretary
HARRIS TRUST AND SAVINGS BANK
By: /s/ Susan M. Shadel
-------------------------------------
Name: Susan M. Shadel
Title: Assistant Vice
President
311 West Monroe, 11th Floor
P.O. Box A3504
Chicago, Illinois 60690-3504
Attention: Sue Shadel
48
<PAGE>
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
DELTIC TIMBER CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, Ron Pearce, President, and W. Bayless Rowe, Secretary, of Deltic
Timber Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware ("Delaware Law"), in accordance with
the provisions thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on December 11, 1996, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such
--------------------------------
series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), and the number of shares constituting
such series shall be 150,000. Such number of shares of the
<PAGE>
Series A Preferred Stock may be increased or decreased by resolution of the
Board of Directors; provided that no decrease shall reduce the number of shares
--------
of Series A Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares issuable upon exercise or conversion of
outstanding rights, options or other securities issued by the Corporation.
Section 2. Dividends and Distributions.
---------------------------
(A) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable on March 1,
June 1, September 1 and December 1 of each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 and (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends or other distributions and 100 times the
aggregate per share amount of all non-cash dividends or other distributions
(other than (i) a dividend payable in shares of Common Stock, par value $.01 per
share, of the Corporation (the "Common Stock") or (ii) a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise)), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
If the Corporation shall at any time after December 18, 1996 (the "Rights
Declaration Date") pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which
A-2
<PAGE>
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than as described
in clauses (i) and (ii) of the first sentence of paragraph (A)); 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 (or, with respect to the first
Quarterly Dividend Payment Date, the period between the first issuance of any
share or fraction of a share of Series A Preferred Stock and such first
Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series A
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 A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is on or before the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue and be cumulative from the date of issue of such shares, or
unless the date of issue is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on or before such Quarterly Dividend Payment Date, in which case
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 shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or
A-3
<PAGE>
distribution declared thereon, which record date shall not be more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights
-------------
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of stockholders of the Corporation. If
the Corporation shall at any time after the Rights Declaration Date pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as a single class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, all holders
A-4
<PAGE>
of Preferred Stock and any other series of Preferred Stock then entitled as a
class to elect directors, voting together as a single class, irrespective of
series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that
neither such voting right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the authorized number of
Directors shall be exercised unless the holders of 10% in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The absence
of a quorum of holders of Common Stock shall not affect the exercise by holders
of Preferred Stock of such voting right. At any meeting at which holders of
Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect Directors
to fill such vacancies, if any, in the Board of Directors as may then exist up
to two Directors or, if such right is exercised at an annual meeting, to elect
two Directors. If the number which may be so elected at any special meeting does
not amount to the required number, the holders of the Preferred Stock shall have
the right to make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Preferred Stock.
---- -----
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of Preferred Stock
outstanding, irrespective of series, may
A-5
<PAGE>
request, the calling of special meeting of holders of Preferred Stock, which
meeting shall thereupon be called by the President, a Vice President or the
Secretary of the Corporation. Notice of such meeting and of any annual meeting
at which holders of Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Preferred Stock by
mailing a copy of such notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such order or request or
in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 10% of the total number of
shares of Preferred Stock outstanding, irrespective of series. Notwithstanding
the provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be entitled
to elect the whole number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two Directors voting as a class, after
the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class of stock
shall include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a
A-6
<PAGE>
class to elect Directors shall cease, (y) the term of any Directors elected by
the holders of Preferred Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the certificate of
incorporation or bylaws irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
certificate of incorporation or bylaws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding sentence may
be filled by a majority of the remaining Directors.
(D) The Certificate of Incorporation of the Corporation shall not be
amended in any manner (whether by merger or otherwise) so as to adversely affect
the powers, preferences or special rights of the Series A Preferred Stock
without the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred Stock, voting separately as a class.
(E) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent shall not
be required for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on outstanding shares of Series A Preferred Stock shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
A-7
<PAGE>
(ii) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
other 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, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided that
--------
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the
Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such other
parity stock 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 value any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
A-8
<PAGE>
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock without designation as to series and may be reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors as permitted by the Certificate of
Incorporation or as otherwise permitted under Delaware Law.
Section 6. 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 A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 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 A
--------
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other 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 after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a
A-9
<PAGE>
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
Section 7. Consolidation, Merger, etc. If 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 or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash or any other property, 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 after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not be
-------------
redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior (as
----
to dividends and upon liquidation, dissolution and winding up) to all other
series of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
Section 10. Fractional Shares. Series A Preferred Stock may be issued
-----------------
in fractions of a share which
A-10
<PAGE>
shall entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
this __ day of December, 1996.
--------------------------------
President
Attest:
- ---------------------------------
Secretary
A-11
<PAGE>
Exhibit B
---------
[Form of Right Certificate]
No. R- ____________Rights
NOT EXERCISABLE AFTER THE EARLIER OF DECEMBER 31, 2006 AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN
THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO,
OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, MAY BE NULL AND VOID. [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 AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(d) OF THE RIGHTS AGREEMENT.]/2/
RIGHT CERTIFICATE
DELTIC TIMBER CORPORATION
This Right Certificate certifies that __________________________, or
registered assigns, is the registered holder of the number of Rights set forth
above,
/2/ If applicable, insert this portion of the legend and delete the preceding
sentence.
B-1
<PAGE>
each of which entitles the holder (upon the terms and subject to the conditions
set forth in the Rights Agreement dated as of December 11, 1996 (the "Rights
Agreement") between Deltic Timber Corporation, a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, as Rights Agent (the "Rights
Agent")) to purchase from the Company, at any time after the Distribution Date
and prior to the Expiration Date, ___ one-hundredth[s] of a fully paid,
nonassessable share of Series A Participating Cumulative Preferred Stock (the
"Preferred Stock") of the Company at a purchase price of $75.00 per one one-
hundredth of a share (the "Purchase Price"), payable in lawful money of the
United States of America, upon surrender of this Right Certificate, with the
form of election to purchase and related certificate duly executed, and payment
of the Purchase Price at an office of the Rights Agent designated for such
purpose.
Terms used herein and not otherwise defined herein have the meanings
assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and the
number and kind of shares issuable upon exercise of each Right) and the Purchase
Price set forth above are as of December 18, 1996, and may have been or in the
future be adjusted as a result of the occurrence of certain events, as more
fully provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Right Certificate are beneficially owned by (a) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (b) a transferee of
an Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of an Acquiring
Person (or any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such, such Rights shall become
null and void, and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
B-2
<PAGE>
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of the Rights Agent
designated for such purpose and subject to the terms and conditions set forth in
the Rights Agreement, any Rights Certificate or Certificates may be transferred
or exchanged for another Rights Certificate or Certificates evidencing a like
number of Rights as the Rights Certificate or Certificates surrendered.
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the close of business on
the tenth day after the Stock Acquisition Date (or such later date as a
majority of the Continuing Directors may designate prior to such time as
the Rights are no longer redeemable) and (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right; or
(b) at any time after any Person becomes an Acquiring Person (but
before such Person becomes the Beneficial Owner of 50% or more of the
shares of Common Stock then outstanding), exchange all or part of the then
outstanding Rights (other than Rights held by the Acquiring Person and
certain related Persons) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right. If the Rights shall be exchanged in
part, the holder of this Right Certificate shall be entitled to receive
upon surrender
B-3
<PAGE>
hereof another Right Certificate or Certificates for the number of whole
Rights not exchanged.
No fractional shares of Preferred Stock are required to be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are multiples of one one-hundredth of a share of Preferred Stock, which may, at
the election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Certificates for
the number of whole Rights not exercised.
No holder of this Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officers.
Dated as of ________________, 19__
B-4
<PAGE>
DELTIC TIMBER CORPORATION
By
------------------------------
Title:
[SEAL]
Attest:
- --------------------------
Secretary
Countersigned:
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By
------------------------
Authorized Signature
B-5
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
--------------------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _____________________, 19__
--------------------------------
Signature
Signature Guaranteed:
B-6
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate ___are ___are not being
assigned by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
___did ___did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, 19 __ ------------------------
Signature
__________
The signatures 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.
__________
B-7
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if the registered holder desires to exercise
Rights represented by the Right Certificate.)
To: Deltic Timber Corporation
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be issued in the name
of and delivered to:
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 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: ________________, 19__
----------------------------
Signature
B-8
<PAGE>
Signature Guaranteed:
B-9
<PAGE>
Certificate
-----------
The undersigned hereby certifies 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 any such Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
___did ___did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, 19 __ ------------------------
Signature
__________
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.
__________
B-10
<PAGE>
EXHIBIT 10.1
DELTIC TIMBER CORPORATION
1996 Stock Incentive Plan
SECTION 1. Purpose
The purpose of the Deltic Timber Corporation Stock Incentive Plan is to
foster and promote the long-term financial success of the Company and materially
increase shareholder value by (a) motivating superior performance by means of
performance-related incentives, (b) encouraging and providing for the
acquisition of an ownership interest in the Company by Employees, and (c)
enabling the Company to attract and retain the services of an outstanding
management team upon whose judgment, interest, and special effort the successful
conduct of its operations is largely dependent.
SECTION 2. Definitions
Unless the context otherwise indicates, the following definitions shall be
applicable for the purpose of the 1996 Stock Incentive Plan:
"Agreement" shall mean a written agreement setting forth the terms of an
Award.
"Award" shall mean any Option (which may be designated as a Nonqualified or
Incentive Stock Option), a Stock Appreciation Right or a Restricted Stock Award,
in each case granted under this Plan.
"Beneficiary" shall mean the person, persons, trust or trusts designated by
an Employee or if no designation has been made, the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive the
benefits specified under this Plan in the event of an Employee's death.
"Board" shall mean the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Committee" shall mean the Executive Compensation Committee of the Board,
as from time to time constituted, or any successor committee of the Board with
similar functions. The Committee shall be constituted to comply with the
requirements of Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, or such rule or any successor rule
thereto which is in effect from time to time.
"Common Stock" shall mean the Common Stock of the Company, $0.01 par value,
subject to adjustment pursuant to Section 11.
"Company" shall mean Deltic Timber Corporation, a Delaware corporation.
"Employee" shall mean any person employed by the Company on a full-time
salaried basis or by a subsidiary that does not have in effect for its personnel
any plan similar to the Plan, including officers and employee directors thereof.
"Incentive Stock Option" or "ISO" shall mean an Option that is intended by
the Committee to meet the requirements of Section 422 of the Code or any
successor provision.
"Nonqualified Stock Option" or "NQSO" shall mean an Option granted pursuant
to this Plan which does not qualify as an Incentive Stock Option.
"Normal Termination" shall mean a termination of employment (i) at normal
retirement time, (ii) for permanent and total disability, or (iii) with Company
approval, and without being terminated for cause.
"Option" shall mean the right to purchase Common Stock at a price to be
specified and upon terms to be designated by the Committee pursuant to this
Plan. An Option shall be designated by the Committee as a Nonqualified Stock
Option or an Incentive Stock Option at the time of grant.
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"Opportunity Shares" shall mean additional shares of Common Stock which may
be earned by an Employee pursuant to Section 8 hereof.
"Option Holder" or "Holder" shall mean an Employee to whom an option has
been granted.
"Personal Representative" shall mean the person or persons who, upon the
disability or incompetence of an Employee, shall have acquired on behalf of the
Employee by legal proceeding or otherwise the right to receive the benefits
specified in this Plan.
"Plan" shall mean this 1996 Stock Incentive Plan.
"Replacement Shares" shall mean shares which may be awarded to Employees as
Option(s) or as Restrictive Stock in such amount and at such value as may be
determined by the Committee to be sufficient to replace similar awards from
Murphy Oil Corporation which were forfeited by Employees by virtue of their
employment by the Company.
"Restricted Period" shall mean the period designated by the Committee
during which Restricted Stock may not be sold, assigned, transferred, pledged,
or otherwise encumbered and during which such stock is subject to forfeiture.
"Restricted Stock" shall mean those shares of Common Stock issued pursuant
to a Restricted Stock Award which are subject to the restrictions, terms, and
conditions specified by the Committee pursuant to Section 8 hereof.
"Restricted Stock Award" shall mean an award of Restricted Stock pursuant
to Section 8 hereof.
"Stock Appreciation Right" or "SAR" shall mean the right of the holder to
receive, upon exercise thereof, payment of an amount determined by
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multiplying: (a) any increase in the Fair Market Value of a share of Common
Stock at the date of exercise over the price fixed by the Committee at the date
of grant, by (b) the number of shares with respect to which the SAR is
exercised; provided, however, that at the time of grant, the Committee may
establish, in its sole discretion, a maximum amount per share which will be
payable upon exercise of a SAR. The amount payable upon exercise may be paid in
cash or other property, including without limitation shares of Common Stock, or
any combination thereof as determined by the Committee.
SECTION 3. Administration
The Plan shall be administered by the Committee. In addition to any implied
powers and duties that may be needed to carry out the provisions of the Plan,
the Committee shall have all of the powers vested in it by the terms of the
Plan, including exclusive authority to select the Employees to be granted Awards
under the Plan, to determine the type, size and terms of the Awards to be made
to each Employee selected, to determine the time when Awards will be granted,
and to prescribe the form of the Agreements embodying Awards made under the
Plan. No member of the Committee, while he serves on the Committee, may be
granted Awards under the Plan. The Committee shall be authorized to interpret
the Plan and the Awards granted under the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, to make any other determinations
which it believes necessary or advisable for the administration of the Plan, and
to correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award in the manner and to the extent the Committee deems
desirable to carry it into effect. Any decision of
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the Committee in the administration of the Plan, as described herein, shall be
final and conclusive.
The Board may from time to time remove members from the Committee or add
members thereto, and vacancies in the Committee, however caused, shall be filled
by action of the Board. The Committee shall select one of its members as
chairman and shall hold its meetings at such time and places as it may
determine. The Committee may act only by a majority of its members. The members
of the Committee may receive such compensation for their services as the Board
may determine. Any determination of the Committee may be made, without notice,
by the written consent of the majority of the members of the Committee. In
addition, the Committee may authorize any one or more of their number or any
officer of the Company to execute and deliver documents on behalf of the
Committee.
SECTION 4. Stock Subject to the Plan
The aggregate maximum number of shares which may be issued under the Plan
shall be 1.2 million. Subject to the aggregate maximum limit, the maximum number
of shares available for Awards under the Plan in each calendar year during any
part of which the Plan shall be in effect shall be one-half of one percent
(0.5%) of the total issued and outstanding shares as of the date of issuance of
the shares, excluding any Replacement Shares issued due to the spin-off from
Murphy Oil Corporation. In subsequent years, the Committee may award up to one-
half of one percent of the total issued and outstanding shares as of December 31
of the immediately preceding year for long-term Awards. Any and all such shares
may be issued in respect of any of the types of Awards; provided, however no
more than fifty percent (50%) of the shares available shall be available for
Awards under the Plan
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shall be issued in respect of Restricted Stock. Unless otherwise determined by
the Committee, all shares available in any year that are not granted under the
Plan will not be available for grant for subsequent years.
If any shares of Common Stock subject to an Award hereunder are forfeited
or any such Award otherwise terminates without the issuance of shares of Common
Stock or other consideration to an Employee, such shares, shall not increase the
number of shares available for grant in such year.
SECTION 5. Eligibility
Any Employee who is a director or an officer or who serves in any other key
administration, professional or technical capacity shall be eligible to
participate in the Plan. In addition the Committee may in any year include any
other Employee who the Committee has determined has made some unusual
contribution which would not be expected of such Employee in the ordinary course
of his work.
SECTION 6. Stock Options
A. Grant of Options and Price.
(a) Any Option granted under the Plan may be granted as an Incentive Stock
Option or as a Nonqualified Stock Option, as shall be designated by the
Committee at the time of the grant of such Option. Each Option shall be
evidenced by an Agreement between the recipient and the Company, which Agreement
shall specify the designation of the Option as an ISO or a NQSO, as the case may
be, and shall contain such terms and conditions not inconsistent with the Plan
as the Committee, in its sole discretion, may determine in accordance with the
Plan. The maximum Option that an Employee may receive in a calendar year is
50,000 shares; and in addition, as
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to Incentive Stock Options, the aggregate fair market value (determined on the
date the option is granted) any Employee may receive in any calendar year shall
not exceed $100,000.
(b) The exercise price for the purchase of Common Stock to be issued pursuant to
each Option shall be fixed by the Committee at the time of the granting of the
Option provided, however, that except with respect to the exercise price for
Replacement Shares, such exercise price shall in no event be less than the fair
market value of the Common Stock on the date such Option is granted. With
respect to the exercise price for Replacement Shares, the Committee may fix an
exercise price at any value as it may determine.
B. Exercise.
The period during which an Option may be exercised shall be determined by
the Committee; provided, that such period will not be longer than ten years from
the date on which the Option is granted. The date or dates on which portions of
an Option may be exercised during the term of an Option shall be determined by
the Committee. In no case may an Option be exercised at any time for fewer than
50 shares (or the total remaining shares covered by the Option if fewer than 50
shares) during the term of the Option. An Option which is granted in tandem with
a SAR may only be exercised upon the surrender of the right to exercise such SAR
for an equivalent number of shares.
C. Payment for Shares.
The exercise price for the Common Stock shall be paid in full when the
Option is exercised. Subject to such rules as the Committee may impose, the
exercise price
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may be paid in whole or in part in (i) cash, (ii) whole shares of Common Stock
evidenced by negotiable certificates, valued at their fair market value on the
date of exercise, (iii) by a combination of such methods of payment, or (iv)
such other consideration as shall be approved by the Committee.
SECTION 7. Stock Appreciation Rights
Stock Appreciation Rights may be granted to participants at such time or
times as shall be determined by the Committee and shall be subject to such terms
and conditions as the Committee may impose. A grant of a SAR shall be made
pursuant to a written agreement containing such provisions not inconsistent with
the Plan as the Committee shall approve.
SARs may be exercised at such times or subject to such conditions as the
Committee shall impose, either at or after the time of grant. SARs which are
granted in tandem with an Option may only be exercised upon the surrender of the
right to exercise such Option for an equivalent number of shares and may be
exercised only with respect to the shares of Stock for which the related Option
is then exercisable. Option shares with respect to which a tandem SAR shall have
been exercised for cash shall not again be available for an Award under this
Plan. Notwithstanding any other provision of the Plan, the Committee may impose
such conditions on the exercise of a SAR (including, without limitation, the
right of the Committee to limit the time of exercise to specified periods) as
may be required to satisfy the applicable provisions of Rule 16b-3 as
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
SECTION 8. Restricted Stock Awards
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The Committee may make an award of Restricted Stock to selected Employees,
evidenced by an Agreement which shall contain such terms and conditions,
including without limitation, forfeiture provisions, as the Committee, in its
sole discretion, may determine. The amount of each Restricted Stock Award and
the respective terms and conditions of each Award (which terms and conditions
need not be the same in each case) shall be determined by the Committee in its
sole discretion. The maximum Award that an Employee may receive in a calendar
year is 50,000 shares.
The Committee shall establish performance measures for each Restricted
Period on the basis of such criteria and to accomplish such objectives as the
Committee may from time to time, in its sole discretion, determine. Such
measures may include, but shall not be limited to, total shareholder return,
growth in cash flow per share, growth in earnings per share, return on assets,
or return on stockholder equity. The Committee may from time to time establish
different performance objectives for certain operating subsidiaries or sectors
of the business.
Shares of Restricted Stock will be subject to forfeiture and may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
until such time or until the satisfaction of such conditions or the occurrence
of such events as shall be determined by the Committee either at or after the
time of grant. Unless otherwise determined by the Committee at the time of
grant, participants holding shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those shares during the Restricted
Period.
Unless otherwise determined by the Committee at the time of grant,
participants holding shares of Restricted Stock shall be entitled to receive all
dividends and other
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distributions paid with respect to those shares, provided that if any such
dividends or distributions are paid in shares of Stock or other securities, such
shares or securities shall be subject to the same forfeiture restrictions and
restrictions on transferability as apply to the Restricted Stock with respect to
which they were paid.
Each Employee, who has received shares of Common Stock pursuant to a
Restricted Stock Award with respect to which all of the restrictions set forth
in Section 8 shall have lapsed or pursuant to an award of Opportunity Shares
related to such Restricted Stock Award, shall also receive from the Company a
cash payment in the year following the close of the Restricted Period in an
amount determined by the Committee, which amount is intended to allow such
Employee to pay such Employee's tax liability (assuming the highest rates of tax
applicable to any individual taxpayer in the year in which such payment is made)
with respect to (i) such shares and (ii) such cash payment. Provided, however,
unless otherwise determined by the Committee, the cash payment shall in no event
exceed 50% of the fair market value of such shares as of the date that all of
the restrictions set forth in Section 8 shall have lapsed or as to an award of
Opportunity Shares as of the date of grant thereof.
SECTION 9. Termination of Employment
Unless otherwise determined by the Committee, in the event a participant's
employment terminates by reason of Normal Termination, any Options granted to
such participant which are then outstanding may be exercised at the earlier of
any time prior to the expiration of the term of the Options or within two (2)
years after termination and any shares of Restricted Stock then outstanding
shall be prorated for all
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restricted periods then in effect based on the number of months of actual
participation.
Unless otherwise determined by the Committee, in the event a participant's
employment is terminated by reason of death, any Options granted to such
participant which are then outstanding may be exercised by the participant's
beneficiary or the participant's legal representative at any time prior to the
expiration date of the term of the Options or within two (2) years following the
participant's termination of employment, whichever period is shorter, and any
shares of Restricted Stock then outstanding shall be prorated for all restricted
periods then in effect based on the number of months of actual participation.
Unless otherwise determined by the Committee, in the event the employment
of the participant shall terminate for any reason other than the ones described
in this Section, any Options granted to such participant which are then
outstanding shall be cancelled and any shares of Restricted Stock then
outstanding as to which the Restricted Period has not lapsed shall be forfeited.
A change in employment from the Company or one Subsidiary to another
Subsidiary of the Company shall not be considered a termination.
SECTION 10. Change in Control
Notwithstanding any other provision of this Plan or an Agreement to the
contrary, upon a Change in Control, as defined below, all outstanding Awards
shall vest, become immediately exercisable or payable or have all restrictions
lifted as may apply to the type of Award.
A "Change in Control" shall be deemed to have occurred if (i) any "person",
including a "group" (as such terms are used in Sections 13(d) and 14(d)(2) of
the
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Exchange Act, but excluding the Company, any of its subsidiaries or any employee
benefit plan of the Company or any of its subsidiaries or Charles H. Murphy, Jr.
and affiliates of Charles H. Murphy, Jr.) is or becomes the "beneficial owner"
(as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities; or (ii) the stockholders or the
Board of the Company shall approve a definitive agreement (1) for the merger or
other business combination of the Company with or into another corporation a
majority of the directors of which were not directors of the Company immediately
prior to the merger or in which the stockholders of the Company immediately
prior to the effective date of such merger own less than 50% of the voting power
in such corporation or (2) for the sale or other disposition of all or
substantially all of the assets of the Company.
SECTION 11. Adjustments Upon Changes in Capitalization
In the event of any change in the Common Stock by reason of any stock
split, stock dividend, recapitalization, merger, consolidation, reorganization,
combination, or exchange of shares, split-up, spin-off, share purchase,
liquidation or other similar change in capitalization affecting or involving the
Common Stock, or any distribution to common stockholders other than regular cash
dividends, the Committee shall make such substitution or adjustment, if any, as
it deems equitable, as to the number or kind of shares that may be issued under
the Plan pursuant to Section 4 and the number or kind of shares subject to, or
the price per share under or terms of any outstanding Award. The amount and form
of the substitution or adjustment shall be determined by
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the Committee and any such substitution or adjustment shall be conclusive and
binding on all parties for all purposes of the Plan.
SECTION 12. Miscellaneous Provisions
(a) No Employee or other person shall have any claim or right to be granted an
Award under the Plan and no Award shall confer any right to continued
employment.
(b) An Employee's rights and interest under the Plan or any Award may not be
assigned or transferred in whole or in part, either directly or by operation of
law or otherwise (except in the event of an Employee's death, to the Employee's
Beneficiaries or by will or the laws of descent and distribution), including,
but not by way of limitation, execution, levy, garnishment, attachment, pledge,
bankruptcy or in any other manner, and no such right or interest of any Employee
in the Plan or in any Award shall be subject to any obligation or liability of
such individual. An Award shall be exercisable, during an Employee's lifetime,
only by him or her or his or her Personal Representative. Except as specified in
the applicable Award agreement, the holder of an Award shall have none of the
rights of a shareholder until the shares subject thereto shall have been
registered on the transfer books of the Company.
(c) Any provision of the Plan or any Agreement to the contrary notwithstanding,
no Common Stock shall be issued hereunder unless counsel for the Company shall
be satisfied that such issuance will be in compliance with applicable Federal,
state, or other securities laws.
(d) The Company shall have the power to withhold, or require a participant to
remit to the Company, an amount sufficient to satisfy Federal, state, and local
withholding tax requirements in respect of any Award, or any exercise or vesting
thereof under the Plan, and the Company may defer payment of cash or issuance of
Stock until such
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requirements are satisfied. The Committee may, in its discretion, permit an
Employee to elect, subject to such conditions as the Committee shall impose, (i)
to have shares of Stock otherwise issuable under the Plan withheld by the
Company or (ii) to deliver to the Company previously acquired shares of Stock,
in either case having a fair market value sufficient to satisfy all or part of
the participant's estimated total Federal state, and local tax obligation
associated with the transaction.
(e) The expenses of the Plan shall be borne by the Company, except as set forth
above in subsection (d) of this Section.
(f) Awards granted under the Plan shall be binding upon the Company, its
successors and assigns.
(g) Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval of any such additional arrangement is required.
SECTION 13. Amendment, Modification, and Termination of Plan
The Board may from time to time amend the Plan or any provision thereof
without the consent of the stockholders except in the case of any amendments
that require stockholder approval in order to comply with applicable law or
provisions of stock exchange listing agreements.
The Board may terminate the Plan in whole or in part at any time provided
that no such termination shall impair the terms of Awards then outstanding under
which the obligations of the Company have not been fully discharged.
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SECTION 14. Governing Law
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the State of Delaware.
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Exhibit 10.2
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT dated as of December 11, 1996 (the "Agreement")
between Murphy Oil Corporation, a Delaware corporation ("Murphy") and Deltic
Timber Corporation, a Delaware corporation ("Deltic").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Deltic is a wholly owned Subsidiary of Murphy;
WHEREAS, the Board of Directors of Murphy has determined that it is in the
best interest of Murphy, its stockholders and Deltic that all shares of Deltic
Common Stock owned by Murphy be distributed pro rata to Murphy's stockholders;
WHEREAS, Murphy and Deltic are concurrently herewith entering into the Tax
Sharing Agreement;
WHEREAS, the parties hereto desire to set forth herein the principal
corporate transactions to be effected in connection with the Distribution and
certain other matters relating to the relationship and the respective rights and
obligations of the parties following the Distribution;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms, as used herein, have the
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following meanings:
"Action" means any claim, suit, action, arbitration, inquiry, investigation
or other proceeding by or before any court, governmental or other regulatory or
administrative agency or commission or any other tribunal.
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"Administrative Services" has the meaning set forth in Schedule 6.01.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such other
Person. For the purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
"Costs" has the meaning set forth in Section 6.04.
"Deltic Business" means the businesses and operations of the Deltic Group
whether conducted prior to, on or after the Distribution Date.
"Deltic Common Stock" means the common stock, par value $.01 per share, of
Deltic, including any associated preferred stock purchase rights.
"Deltic Group" means Deltic and its Subsidiaries as of (and, except where
the context clearly indicates otherwise, after) the Distribution Date (including
all predecessors to such Persons).
"Deltic Indemnitees" has the meaning set forth in Section 4.02.
"Deltic Liabilities" means all (i) Liabilities of the Deltic Group under
this Agreement, (ii) except as otherwise specifically provided herein or in the
Tax Sharing Agreement, other Liabilities, whether arising before, on or after
the Distribution Date, of or relating to thing under or relating to the Deltic
Group or arising from or in connection with the conduct of the Deltic Business
or the ownership or use of assets in connection therewith, including without
limitation any Liabilities arising under or relating to
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Environmental Laws, and (iii) Liabilities of the Deltic Group set forth in
Schedule 5.01 hereto. Notwithstanding the foregoing, "Deltic Liabilities" shall
exclude: (x) any Liabilities for Taxes (since such Liabilities shall be governed
by the Tax Sharing Agreement) and (y) any Liabilities specifically retained or
assumed by Murphy pursuant to this Agreement.
"Distribution" means a distribution by Murphy on the Distribution Date of
all Deltic Common Stock owned by it to the holders of Murphy Common Stock as of
the Record Date.
"Distribution Agent" means Harris Trust and Savings Bank.
"Distribution Date" means the business day as of which the Distribution
shall be effected.
"Distribution Documents" means all of the agreements and other documents
entered into in connection with the Distribution as contemplated hereby,
including, without limitation, this Agreement and the Tax Sharing Agreement.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, permits, licenses and governmental restrictions,
whether now or hereafter in effect, relating to the environment, the effect of
the environment on human health or to emissions, discharges, releases,
manufacturing, storage, processing, distribution, use, treatment, disposal,
transportation or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic, radioactive or hazardous substances or
wastes or the clean-up or other remediation thereof.
"Finally Determined" or "Final Determination" means, with respect to any
Action or other matter, that the outcome or resolution of such Action or matter
has been judicially determined by judgment or order not subject to further
appeal or discretionary review.
"Force Majeure" has the meaning set forth in
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Section 6.05(b).
"Form 10" means the registration statement on Form 10 filed by Deltic with
the Commission on September 9, 1996 to effect the registration of Deltic Common
Stock pursuant to the 1934 Act in connection with the Distribution, as such
registration statement may be amended from time to time.
"Group" means, as the context requires, the Deltic Group or the Murphy
Group.
"Indemnified Party" has the meaning set forth in Section 4.04.
"Indemnifying Party" has the meaning set forth in Section 4.04.
"Information Statement" means the information statement to be sent to each
holder of Murphy Common Stock in connection with the Distribution.
"Liabilities" means any and all claims, debts, liabilities and obligations,
absolute or contingent, matured or not matured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including all costs
and expenses relating thereto, and including, without limitation, those debts,
liabilities and obligations arising under this Agreement, any law, rule,
regulation, any action, order, injunction or consent decree of any governmental
agency or entity, or any award of any arbitrator of any kind, and those arising
under any agreement, commitment or undertaking.
"Losses" means, with respect to any Person, any and all damage, loss,
liability and expense incurred or suffered by such Person (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any and all Actions or threatened Actions).
"Murphy Common Stock" means the common stock, par value $1 per share, of
Murphy.
"Murphy Group" means Murphy and its Subsidiaries (other
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than any Subsidiary or member of, or other entity in, the Deltic Group).
"Murphy Indemnitees" has the meaning set forth in Section 4.01.
"Murphy Liabilities" means all (i) Liabilities of the Murphy Group under
this Agreement and (ii) except as otherwise specifically provided herein or in
the Tax Sharing Agreement, other Liabilities, whether arising before, on or
after the Distribution Date, of or relating to the Murphy Group or arising from
or in connection with the conduct of the businesses of the Murphy Group (other
than the Deltic Business) or the ownership or use of assets in connection
therewith, including without limitation any Liabilities arising under or
relating to Environmental Laws. Notwithstanding the foregoing, "Murphy
Liabilities" shall exclude: (x) any Liabilities for Taxes (since such
Liabilities shall be governed by the Tax Sharing Agreement) and (y) any
Liabilities specifically retained or assumed by Deltic pursuant to this
Agreement.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Office Facilities" has the meaning set forth in Schedule 6.01.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
governmental or political subdivision or an agency or instrumentality thereof.
"Record Date" means the date determined by Murphy's Board of Directors (or
determined by a committee of such Board of Directors or by any person pursuant
to authority delegated to such committee or such person) as the record date for
determining the holders of Murphy Common Stock entitled to receive Deltic Common
Stock pursuant to the Distribution.
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"Representatives" has the meaning set forth in Section 7.06.
"Restated Deltic Charter" has the meaning set forth in Section 3.02.
"Services" has the meaning set forth in Schedule 6.01.
"Subsidiary" means, with respect to any Person, any other entity of which
securities or other ownership interests having ordinary voting power 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.
"Tax" means Tax as such term is defined in the Tax Sharing Agreement.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated as of the
date hereof between Murphy and Deltic.
"Termination Notice" has the meaning set forth in Section 6.02(b).
"Third-Party Claim" has the meaning set forth in Section 4.05.
"Transition Period" has the meaning set forth in Section 6.02(a).
ARTICLE II
ASSET TRANSFERS
Section 2.01. Transfers of Certain Other Assets. Effective prior to or as
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of the Distribution Date or as soon as practicable after the Distribution Date,
subject to receipt of any necessary consents or approvals of third parties or of
governmental or regulatory agencies or authorities and subject to Section 8.02,
(a) Murphy shall, or shall cause the relevant member of the Murphy Group to,
assign, contribute, convey, transfer and deliver to Deltic or to one or more
members of the
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Deltic Group all of the right, title and interest of Murphy or such member of
the Murphy Group in and to all assets, if any, held by any member of the Murphy
Group that relate solely to the Deltic Business (and not to the businesses of
the Murphy Group) and Deltic shall assume and take transfer of all liabilities
associated with such assets, and (b) Deltic shall, or shall cause the relevant
member of the Deltic Group to, assign, convey, transfer and deliver to Murphy or
to one or more members of the Murphy Group all of the right, title and interest
of Deltic or such member of the Deltic Group in and to all assets, if any, held
by any member of the Deltic Group that relate solely to the businesses of the
Murphy Group (and not to the Deltic Business) and Murphy shall assume and take
transfer of all liabilities associated with such assets.
Section 2.02. Agreement Relating To Consents Necessary To Transfer Assets.
-----------------------------------------------------------
Notwithstanding anything in this Agreement to the contrary, this Agreement shall
not constitute an agreement to transfer or assign any asset or any claim or
right or any benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the necessary consent of a third party, would
constitute a breach or other contravention thereof or in any way adversely
affect the rights of Deltic or Murphy thereunder. Deltic and Murphy will,
subject to Section 8.02, use their reasonable efforts to obtain the consent of
any third party or any governmenin connection with the transfer or assignment
pursuant to Section 2.01 of any such asset or any claim or right or any benefit
arising thereunder. If such required consent is not obtained, or if an
attempted assignment thereof would be ineffective or would adversely affect the
rights of the transferor thereunder so that the intended transferee would not in
fact receive all such rights, Deltic and Murphy will cooperate in a mutually
agreeable arrangement under which the intended transferee would obtain the
benefits and assume the obligations thereunder in accordance with this
Agreement, including sub-contracting, sub-licensing or sub-leasing to such
transferee, or under which the transferor would enforce for the benefit of the
transferee, with the transferee assuming the transferor's obligations, any and
all rights of the transferor against a third party thereto.
7
<PAGE>
ARTICLE III
THE DISTRIBUTION
Section 3.01. Cooperation Prior to the Distribution.
-------------------------------------
(a) Murphy and Deltic have prepared, and Deltic has filed with the
Commission, the Form 10, which includes or incorporates by reference the
Information Statement setting forth appropriate disclosure concerning Deltic and
the Distribution. The Form 10 has become effective under the 1934 Act. After the
Form 10 became effective, Murphy mailed the Information Statement to the holders
of Murphy Common Stock as of the Record Date.
(b) Murphy and Deltic shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereto that are appropriate to reflect the establishment of or
amendments to any employee benefit and other plans contemplated by this
Agreement.
(c) Murphy and Deltic shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or other political
subdivisions of the United States in connection with the transactions
contemplated by this Agreement.
(d) Deltic shall prepare, file and pursue an application to permit listing
of the Deltic Common Stock on the New York Stock Exchange.
Section 3.02. Murphy Board Action; Conditions Precedent to the
------------------------------------------------
Distribution. Murphy's Board of Directors shall, in its discretion, establish
- ------------
(or delegate authority to establish) the Record Date and the Distribution Date
and any appropriate procedures in connection with the Distribution. In no event
shall the Distribution occur unless the following conditions shall have been
satisfied:
(i) the Form 10 shall have become effective under the 1934 Act;
8
<PAGE>
(ii) the Deltic Common Stock to be delivered in the Distribution
shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance;
(iii) the Board of Directors of Murphy shall be satisfied that (a)
both before and after giving effect to the Distribution, Murphy is not and
would not be insolvent, (b) after giving effect to the Distribution, Murphy
would be able to pay its liabilities as they mature and become absolute,
and Murphy would not have unreasonably small capital with which to engage
in its business and (c) the Distribution will be made out of surplus within
the meaning of Section 170 of the Delaware General Corporation Law.
(iv) Murphy's Board of Directors shall have approved the
Distribution and shall not have abandoned, deferred or modified the
Distribution at any time prior to the Distribution Date;
(v) Deltic's Board of Directors, as named in the Information
Statement, shall have been elected by Murphy, as sole stockholder of
Deltic, and Deltic's certificate of incorporation (the "Restated Deltic
Charter") and bylaws, in substantially the forms filed as exhibits to the
Form 10, shall be in effect;
(vi) the Tax Sharing Agreement shall have been duly executed and
delivered by the parties thereto;
(vii) Murphy shall have received an appropriate private letter ruling
issued by the Internal Revenue Service, or an opinion of counsel
satisfactory to Murphy, as to the tax-free nature of the Distribution; and
(viii) a credit facility shall have been made available to Deltic by
its lenders on terms and in an amount satisfactory to Murphy and Deltic.
Section 3.03. The Distribution. Subject to the terms and conditions set
----------------
forth in this Agreement, (i) prior to the Distribution Date, Murphy shall
deliver to the Distribution Agent for the benefit of holders of record of Murphy
Common Stock on the
9
<PAGE>
Record Date, a stock certificate or certificates, endorsed by Murphy in blank,
representing all of the then outstanding shares of Deltic Common Stock owned by
Murphy, (ii) the Distribution shall be effective as of the close of business,
New York time, on the Distribution Date and (iii) Murphy shall instruct the
Distribution Agent to distribute, on or as soon as practicable after the
Distribution Date, to each holder of record of Murphy Common Stock as of the
Record Date one share of Deltic Common Stock for each 3.5 shares of Murphy
Common Stock so held. Deltic agrees to provide all certificates for shares of
Deltic Common Stock that Murphy shall require (after giving effect to Section
3.04) in order to effect the Distribution.
Section 3.04. Subdivision of Deltic Common Stock to Accomplish the
----------------------------------------------------
Distribution. Effective upon the filing of the Restated Deltic Charter with the
- ------------
Secretary of State of the State of Delaware, each share of Deltic Common Stock
then issued and outstanding shall, without any action on the part of the holder
thereof, be subdivided and converted into that number of fully paid and non-
assessable shares of Deltic Common Stock issued and outstanding equal to the
number of shares of Murphy Common Stock outstanding on the Record Date
(excluding shares of restricted stock) times 1/3.5 divided by the number of
shares of Deltic Common Stock outstanding immediately prior to such filing.
Section 3.05. Fractional Shares. No certificates representing fractional
-----------------
shares of Deltic Common Stock will be distributed in the Distribution. The
Distribution Agent will be directed to determine the number of whole shares and
fractional shares of Deltic Common Stock allocable to each holder of Murphy
Common Stock as of the Record Date. Upon the determination by the Distribution
Agent of such number of fractional shares, as soon as practicable after the
Distribution Date, the Distribution Agent, acting on behalf of the holders
thereof, shall sell such fractional shares for cash on the open market and shall
disburse the appropriate portion of the resulting cash proceeds to each holder
entitled thereto.
10
<PAGE>
ARTICLE IV
INDEMNIFICATION
Section 4.01. Deltic Indemnification of the Murphy Group.
------------------------------------------
(a) Subject to Section 4.03, on and after the Distribution Date, Deltic
shall indemnify, defend and hold harmless the Murphy Group and the respective
directors, officers, employees and Affiliates of each Person in the Murphy Group
(the "Murphy Indemnitees") from and against any and all Losses incurred or
suffered by any of the Murphy Indemnitees (i) arising out of, or due to the
failure of any Person in the Deltic Group to pay, perform or otherwise
discharge, any of the Deltic Liabilities, or (ii) arising out of or in
connection with the provision by the Murphy Group of the Services to the Deltic
Group under Article VI.
(b) Subject to Section 4.03, Deltic shall indemnify, defend and hold
harmless each of the Murphy Indemnitees and each Person, if any, who controls
any Murphy Indemnitee within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act from and against any and all Losses caused by any
untrue statement or alleged untrue statement of a material fact contained in the
Form 10 or any amendment thereof or the Information Statement (as amended or
supplemented), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
Losses are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information furnished to Deltic in writing by
Murphy expressly for use therein.
Section 4.02. Murphy Indemnification of Deltic Group.
--------------------------------------
(a) Subject to Section 4.03, on and after the Distribution Date, Murphy
shall indemnify, defend and hold harmless the Deltic Group and the respective
directors, officers, employees and Affiliates of each Person in the Deltic Group
(the "Deltic Indemnitees") from and against any and all Losses incurred or
suffered by any of the Deltic Indemnitees and arising out of, or due to the
failure of any Person in the Murphy Group to pay,
11
<PAGE>
perform or otherwise discharge, any of the Murphy Liabilities.
(b) Subject to Section 4.03, Murphy shall indemnify, defend and hold
harmless each of the Deltic Indemnitees and each Person, if any, who controls
any Deltic Indemnitee within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act from and against any and all Losses caused by any
untrue statement or alleged untrue statement of a material fact contained in the
Form 10 or any amendment thereof or the Information Statement (as amended or
supplemented), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such Losses are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished to Deltic in writing by Murphy expressly for use therein.
Section 4.03. Insurance; Third Party Obligations. Any indemnification
----------------------------------
pursuant to Sections 4.01 or 4.02 shall be paid net of the amount of any
insurance or other amounts that would be payable by any third party to the
Indemnified Party (as defined below) in the absence of this Agreement
(irrespective of time of receipt of such insurance or other amounts). It is
expressly agreed that no insurer or any other third party shall be (i) entitled
to a benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, (ii) relieved of the responsibility to pay any
claims to which it is obligated or (iii) entitled to any subrogation rights with
respect to any obligation hereunder.
Section 4.04. Notice and Payment of Claims. If any Murphy Indemnitee or
----------------------------
Deltic Indemnitee (the "Indemnified Party") determines that it is or may be
entitled to indemnification by any party (the "Indemnifying Party") under
Article IV (other than in connection with any Action subject to Section 4.05),
the Indemnified Party shall deliver to the Indemnifying Party a written notice
specifying, to the extent reasonably practicable, the basis for its claim for
indemnification and the amount for which the Indemnified Party reasonably
believes it is entitled to be indemnified. Within 30 days after receipt of such
notice, the Indemnifying Party shall pay the Indemnified Party such amount in
12
<PAGE>
cash or other immediately available funds unless the Indemnifying Party objects
to the claim for indemnification or the amount thereof. If the Indemnifying
Party does not give the Indemnified Party written notice objecting to such
indemnity claim and setting forth the grounds therefor within such 30-day
period, the Indemnifying Party shall be deemed to have acknowledged its
liability for such claim and the Indemnified Party may exercise any and all of
its rights under applicable law to collect such amount. In the event of such a
timely objection by the Indemnifying Party, the amount, if any, that is Finally
Determined to be required to be paid by the Indemnifying Party in respect of
such indemnity claim shall be paid by the Indemnifying Party to the Indemnified
Party in cash within 15 days after such indemnity claim has been so Finally
Determined.
Section 4.05. Notice and Defense of Third-Party Claims. Promptly
----------------------------------------
following the earlier of (i) receipt of notice of the commencement by a third
party of any Action against or otherwise involving any Indemnified Party or (ii)
receipt of information from a third party alleging the existence of a claim
against an Indemnified Party, in either case, with respect to which
indemnification may be sought pursuant to this Agreement (a "Third-Party
Claim"), the Indemnified Party shall give the Indemnifying Party written notice
thereof. The failure of the Indemnified Party to give notice as provided in
this Section 4.05 shall not relieve the Indemnifying Party of its obligations
under this Agreement, except to the extent that the Indemnifying Party is
prejudiced by such failure to give notice. Within 30 days after receipt of such
notice, the Indemnifying Party may (i) by giving written notice thereof to the
Indemnified Party, acknowledge liability for such indemnification claim and at
its option elect to assume the defense of such Third-Party Claim at its sole
cost and expense or (ii) object to the claim for indemnification set forth in
the notice delivered by the Indemnified Party pursuant to the first sentence of
this Section 4.05; provided that if the Indemnifying Party does not within such
--------
30-day period give the Indemnified Party written notice objecting to such
indemnification claim and setting forth the grounds therefor, the Indemnifying
Party shall be deemed to have acknowledged its liability for such
indemnification claim. If the Indemnifying Party has elected to assume the
defense of a Third-Party Claim, (x) the defense shall be conducted by counsel
retained by the Indemnifying Party and
13
<PAGE>
reasonably satisfactory to the Indemnified Party, provided that the Indemnified
--------
Party shall have the right to participate in such proceedings and to be
represented by counsel of its own choosing at the Indemnified Party's sole cost
and expense; and (y) the Indemnifying Party may settle or compromise the Third
Party Claim without the prior written consent of the Indemnified Party so long
as such settlement includes an unconditional release of the Indemnified Party
from all claims that are the subject of such Third Party Claim, provided that
--------
the Indemnifying Party may not agree to any such settlement pursuant to which
any remedy or relief, other than monetary damages for which the Indemnifying
Party shall be responsible hereunder, shall be applied to or against the
Indemnified Party, without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld. If the Indemnifying Party does
not assume the defense of a Third-Party Claim for which it has acknowledged
liability for indemnification hereunder, the Indemnified Party may require the
Indemnifying Party to reimburse it on a current basis for its reasonable
expenses of investigation, reasonable attorney's fees and reasonable out-of-
pocket expenses incurred in defending against such Third-Party Claim and the
Indemnifying Party shall be bound by the result obtained with respect thereto by
the Indemnified Party; provided that the Indemnifying Party shall not be liable
--------
for any settlement effected without its consent, which consent shall not be
unreasonably withheld. The Indemnifying Party shally in cash the amount, if any,
for which the Indemnified Party is entitled to be indemnified hereunder within
15 days after such Third Party Claim has been Finally Determined, in the case of
a Third-Party Claim as to which the Indemnifying Party has acknowledged
liability or, in the case of any Third-Party Claim as to which the Indemnifying
Party has not acknowledged liability, within 15 days after such Indemnifying
Party's objection to liability hereunder has been Finally Determined.
Section 4.06. Contribution. If for any reason the indemnification
------------
provided for in Section 4.01 or 4.02 is unavailable to any Indemnified Party, or
insufficient to hold it harmless, then the Indemnifying Party shall contribute
to the amount paid or payable by such Indemnified Party as a result of such
Losses in such proportion as is appropriate to reflect all relevant equitable
considerations.
14
<PAGE>
Section 4.07. Non-Exclusivity of Remedies. The remedies provided for in
---------------------------
this Article IV are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Party at law or in equity.
ARTICLE V
EMPLOYEE MATTERS
Section 5.01. Employee Matters Generally. With respect to employee
--------------------------
matters and employee benefits arrangements, the parties hereto agree as set
forth in Schedule 5.01.
ARTICLE VI
CERTAIN TRANSITIONAL SERVICES
Section 6.01. Provision of Services. On the terms and conditions set
---------------------
forth in this Agreement, in order to assist in effecting an orderly transition
following the Distribution, the Murphy Group will provide to or perform for the
Deltic Group and the Deltic Group will purchase from the Murphy Group, for the
Transition Period, the Services set forth in Schedule 6.01.
Section 6.02. Duration of Provision and Purchase of Services.
----------------------------------------------
(a) The Services shall be provided by the Murphy Group and purchased by
Deltic for a period (the "Transition Period") commencing on the Distribution
Date and ending on the earlier of (i) six (6) months after the Distribution Date
and (ii) with respect to any Service, thirty (30) days after delivery of a
Termination Notice pursuant to Section 6.02(b).
(b) At any time during the Transition Period, Deltic may, at its election,
terminate the provision of any Service by delivery of a notice to Murphy (a
"Termination Notice"), which termination shall become effective with respect to
such Service thirty (30) days after the date of delivery of a Termination
Notice.
15
<PAGE>
Section 6.03. Nature and Scope of Provision of Services. The nature,
-----------------------------------------
scope and timing of provision of the Services to be provided by the Murphy Group
to the Deltic Group hereunder shall be substantially consistent with the nature,
scope and timing of the Murphy Group's comparable services provided to the
Deltic Group prior to the Distribution; provided that Murphy shall not be
--------
obligated to hire additional or replacement employees, or increase the
compensation of its existing employees, in order to provide the Services to the
Deltic Group.
Section 6.04. Charges and Payment for Services. Deltic shall pay or
--------------------------------
reimburse Murphy for all costs attributable to the provision or performance by
the Murphy Group of the Services hereunder as set forth in Schedule 6.01 (the
"Costs"). All Costs required to be paid or reimbursed to Murphy hereunder shall
be invoiced monthly by Murphy and (ii) invoiced amounts shall be due and payable
by Deltic in cash within thirty (30) days from date of receipt of such invoice
therefor.
Section 6.05. Exculpation; Force Majeure.
--------------------------
(a) No Murphy Indemnitee shall be liable to any other Person for any
Losses directly or indirectly arising out of, relating to or in connection with
the performance or non-performance of the Services hereunder, except to the
extent such Losses are attributable to the Murphy Group's gross negligence or
willful misconduct.
(b) Without limiting the provisions of Section 6.05(a), the Murphy Group
shall not be liable to the Deltic Group for any delay or default in performance
of the Services where occasioned by any cause of any kind or extent beyond the
Murphy Group's control including, by way of example, but not limitation, any act
of God, any act, regulation or law of any government, war, civil commotion,
destruction of production facilities or materials by fire,
earthquake or storm, labor disturbance, epidemic, equipment breakdown or
failure, failure to obtain any consent or approval of a third party necessary to
provide the Services, or failure of suppliers, public utilities or common
carriers ("Force Majeure"). In claiming relief hereunder Murphy shall promptly
notify Deltic in writing of the Force Majeure causing delay or default in
performance, the probable extent to which it will be unable to
16
<PAGE>
perform, and the actions it intends to take to remove such Force Majeure, to the
extent reasonably possible to do so. The Murphy Group shall take reasonable
action within its control to alleviate the Force Majeure causing delay or
default in performance.
ARTICLE VII
ACCESS TO INFORMATION
Section 7.01. Provision of Corporate Records. Immediately prior to or
------------------------------
as soon as practicable following the Distribution Date, each Group shall provide
to the other Group all documents, contracts, books, records and data (including
but not limited to minute books, stock registers, stock certificates and
documents of title) in its possession relating to such other Group or such other
Group's business and affairs; provided that if any such documents, contracts,
--------
books, records or data relate to both Groups or the business and operations of
both Groups, each such Group shall provide to the other Group true and complete
copies of such documents, contracts, books, records or data.
Section 7.02. Access to Information. From and after the Distribution
---------------------
Date, each Group shall afford promptly to the other Group and its accountants,
counsel and other designated representatives reasonable access during normal
business hours to all documents, contracts, books, records, computer data and
other data in such Group's possession relating to such other Group or the
business and affairs of such other Group (other than data and information
subject to an attorney/client or other privilege), insofar as such access is
reasonably required by such other Group, including, without limitation, for
audit, accounting, litigation and disclosure and reporting purposes.
Section 7.03. Litigation Cooperation. Each Group shall use reasonable
----------------------
efforts to make available, upon written request, its directors, officers,
employees and representatives as witnesses to the other Group and its
accountants, counsel, and other designated representatives, and shall otherwise
cooperate with the other Group, to the extent reasonably required in connection
with any legal, administrative or other proceedings arising out of either
Group's business and operations prior to the Distribution Date in
17
<PAGE>
which the requesting party may from time to time be involved.
Section 7.04. Reimbursement. Each Group providing information or
-------------
witnesses to the other Group, or otherwise incurring any expense in connection
with cooperating, under Sections 7.01, 7.02 or 7.03 shall be entitled to receive
from the recipient thereof, upon the presentation of invoices therefor, payment
for all costs and expenses as may be reasonably incurred in providing such
information, witnesses or cooperation.
Section 7.05. Retention of Records. Except as otherwise required by law
--------------------
or agreed to in writing, each party shall, and shall cause the members of its
respective Group to, retain all information relating to the other Group's
business and operations in accordance with the past practice of such party.
Notwithstanding the foregoing, any party may destroy or otherwise dispose of any
such information at any time, provided that, prior to such destruction or
disposal, (i) such party shall provide not less than 90 days' prior written
notice to the other party, specifying the information proposed to be destroyed
or disposed of, and (ii) if the recipient of such notice shall request in
writing prior to the scheduled date for such destruction or disposal that any of
the information proposed to be destroyed or disposed of be delivered to such
requesting party, the party proposing the destruction or disposal shall promptly
arrange for the delivery of such of the information as was requested at the
expense of the requesting party.
Section 7.06. Confidentiality. Each party shall hold and shall cause its
---------------
directors, officers, employees, agents, consultants and advisors
("Representatives") to hold in strict confidence all information (other than any
such information relating solely to the business or affairs of such party)
concerning the other party unless (i) such party is compelled to disclose such
information by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law or (ii) such information can be shown to
have been (A) in the public domain through no fault of such party or (B)
lawfully acquired after the Distribution Date on a non-confidential basis from
other sources. Notwithstanding the foregoing, such party may disclose such
information to its Representatives so long as such Persons are informed by such
party of the confidential nature of such
18
<PAGE>
information and are directed by such party to treat such information
confidentially. If such party or any of its Representatives becomes legally
compelled to disclose any documents or information subject to this Section, such
party will promptly notify the other party so that the other party may seek a
protective order or other remedy or waive such party's compliance with this
Section. If no such protective order or other remedy is obtained or waiver
granted, such party will furnish only that portion of the information which it
is advised by counsel is legally required and will exercise its reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded such information. Such party agrees to be responsible for any breach of
this Section by it and its Representatives.
Section 7.07. Inapplicability of Article VII to Tax Matters.
---------------------------------------------
Notwithstanding anything to the contrary in Article VII, Article VII shall not
apply with respect to information, records and other matters relating to Taxes,
all of which shall be governed by the Tax Sharing Agreement.
ARTICLE VIII
CERTAIN OTHER AGREEMENTS
Section 8.01. Intercompany Accounts. Except as otherwise provided in the
---------------------
Tax Sharing Agreement, all intercompany receivable, payable and loan balances in
existence as of the Distribution Date between the Murphy Group and Deltic Group
will be eliminated by payment in full by the party owing any such obligation.
Section 8.02. Further Assurances and Consents. In addition to the actions
-------------------------------
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things, reasonably necessary,
proper or advisable under applicable laws, regulations and agreements or
otherwise to consummate and make effective the transactions contemplated by this
Agreement, including but not limited to using its reasonable efforts to obtain
any consents and approvals and to make any filings and applications necessary or
desirable in order
19
<PAGE>
to consummate the transactions contemplated by this Agreement; provided that no
--------
party hereto shall be obligated to pay any consideration therefor (except for
filing fees and other similar charges) to any third party from whom such
consents or approvals are requested or to take any action or omit to take any
action if the taking of or the omission to take such action would be
unreasonably burdensome to the party, its Group or its Group's business.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices. All notices and other communications to any party
-------
hereunder shall be in writing (including telex, telecopy or similar writing) and
shall be deemed given when received addressed as follows:
If to Murphy, to:
Murphy Oil Corporation
200 Peach Street
El Dorado, Arkansas 71731-7000
Telecopy: (501) 864-6220
Attention: General Counsel
If to Deltic, to:
Deltic Timber Corporation
200 Peach Street
El Dorado, Arkansas 71731-7000
Telecopy: (501) 864-6565
Attention: General Counsel
Any party may, by written notice so delivered to the other parties, change the
address to which delivery of any notice shall thereafter be made.
Section 9.02. Amendments; No Waivers.
----------------------
20
<PAGE>
(a) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by Murphy and Deltic, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 9.03. Expenses. Except as specifically provided otherwise in this
--------
Agreement or the Tax Sharing Agreement (including, without limitation, in
Articles IV and VI, Sections 7.04, 7.05, 8.01 and 9.07(c) and Schedules 5.01 and
6.01 of this Agreement), all costs and expenses incurred in connection with the
preparation, execution and delivery of the Distribution Documents and the
consummation of the Distribution and the other transactions contemplated hereby
(including the fees and expenses of all counsel, accountants and financial and
other advisors of both Groups in connection therewith, and all expenses in
connection with preparation, filing and printing of the Form 10 and the
Information Statement) shall be paid by the party incurring such costs or
expenses.
Section 9.04. Successor and Assigns. The provisions of this Agreement
---------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may assign,
--------
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
Section 9.05. Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the law of the State of Arkansas, without regard
to the conflicts of laws rules of such State.
Section 9.06. Entire Agreement. This Agreement and the other Distribution
----------------
Documents constitute the entire understanding of
21
<PAGE>
the parties with respect to the subject matter hereof and thereof and supersedes
all prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter hereof and thereof. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein or in the other Distribution Documents has been made or relied
upon by any party hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder. To the extent that the provisions of this Agreement are
inconsistent with the provisions of any other Distribution Document, the
provisions of such other Distribution Document shall prevail.
Section 9.07. Tax Sharing Agreement; Set-Off; Certain Transfer Taxes.
------------------------------------------------------
(a) Except as otherwise provided herein, this Agreement shall not govern
any Tax, and any and all claims, losses, damages, demands, costs, expenses or
liabilities relating to Taxes shall be exclusively governed by the Tax Sharing
Agreement.
(b) If, at the time Deltic is required to make any payment to Murphy under
this Agreement, Murphy owes Deltic any amount under this Agreement or the Tax
Sharing Agreement, then such amounts shall be offset and the excess shall be
paid by the party liable for such excess. Similarly, if at the time Murphy is
required to make any payment to Deltic under this Agreement, Deltic owes Murphy
any amount under this Agreement or the Tax Sharing Agreement, then such amounts
shall be offset and the excess shall be paid by the party liable for such
excess.
(c) All transfer, documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with Section 2.01 of this Agreement shall be borne and paid by the
Person who is receiving the property being transferred. The party that is
required by applicable law to file any Return (as defined in the Tax Sharing
Agreement) or make any payment with respect to any such Tax shall do so, and the
other party shall cooperate with respect thereto as necessary. The non-paying
party shall reimburse the paying party in accordance with this Section 9.08
within 5 business days after
22
<PAGE>
it receives notice of the payment of such Tax.
Section 9.09. Existing Arrangements. Except as otherwise contemplated
---------------------
hereby, all prior agreements and arrangements, including those relating to
goods, rights or services provided or licensed, between the Deltic Group and the
Murphy Group shall be terminated effective as of the Distribution Date, if not
theretofore terminated. No such agreements or arrangements shall be in effect
after the Distribution Date unless embodied in the Distribution Documents.
Section 9.10. Termination Prior to the Distribution. The Murphy Board of
-------------------------------------
Directors may at any time prior to the Distribution abandon the Distribution
and, by notice to Deltic, terminate this Agreement (whether or not the Murphy
Board of Directors has theretofore approved this Agreement and/or the
Distribution).
Section 9.11. Captions. The captions herein are included for convenience
--------
of reference only and shall be ignored in the construction or interpretation
hereof.
23
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Distribution
Agreement to be duly executed by these respective authorized officers as of the
date first above written.
MURPHY OIL CORPORATION
By /s/ S. Cosse
----------------------------
Name: Steven A. Cosse
Title: Senior Vice President
DELTIC TIMBER CORPORATION
By /s/ Clefton D. Vaughan
-----------------------------
Name: Clefton D. Vaughan
Title: Vice President
24
<PAGE>
SCHEDULE 5.01
EMPLOYEE MATTERS
Section 1. General. Except as otherwise set forth in this Schedule 5.01,
-------
(a) Murphy shall retain any and all liabilities relating to or arising out of
any employee benefit or compensation arrangement (a "Plan") in respect of any
employee or former employee of Murphy and any Affiliate of Murphy who is not a
Transferred Employee (as hereinafter defined), and (b) Murphy shall have no
liability relating to or arising out of any Plan in respect of Transferred
Employees to the extent that any such liability is incurred or otherwise relates
to any period after the Distribution Date.
Section 2. Employees. Except as provided in the following two sentences,
---------
with respect to each individual who is listed on Exhibit A hereto (collectively,
the "Transferred Employees"), Deltic shall cause the employment of such
Transferred Employee to be continued on the Distribution Date, provided that
nothing stated herein shall limit the right of Deltic or any Subsidiary to
terminate the employment of any Transferred Employee following the Distribution
Date or to reduce or otherwise modify the position, responsibilities,
compensation or benefits of any Transferred Employee at any time. Any
individual who is listed on Exhibit A hereto who is not actively employed, as of
the Distribution Date, by reason of disability, shall not be considered a
Transferred Employee as of the Distribution Date. Upon the return of any such
individual to active employment, (i) Deltic shall cause the employment of such
individual to be continued, consistent with the terms of the first sentence of
this Section 2, (ii) such individual shall thereafter be considered a
Transferred Employee, and (iii) any references in this Schedule 5.01 to the
Distribution Date shall, with respect to such individual, be deemed where
appropriate to refer instead to the date such individual becomes a Transferred
Employee. The employee benefit plans and arrangements maintained by Deltic
shall give full service creection with any such severance or vacation plan or
policy, for purposes of
<PAGE>
determining the level of benefit) for any service on or prior to the
Distribution Date of a Transferred Employee with Murphy and its Subsidiaries.
Section 3. Defined Benefit Retirement Plan.
-------------------------------
(a) Effective as of the Distribution Date, Murphy shall take all necessary
actions to cause the Retirement Plan of Murphy Oil Corporation (the "Murphy DB
Plan") to be amended (i) to freeze, effective immediately prior to the
Distribution Date, future benefit accruals with respect to Transferred
Employees, and (ii) to provide for the direct trust-to-trust transfer of assets
and the assumption of liabilities as contemplated herein.
(b) Prior to the Distribution Date, Deltic shall establish a defined
benefit pension plan which shall be qualified under Section 401(a) of the Code
(the "Deltic DB Plan") effective as of the Distribution Date covering
Transferred Employees. The Deltic DB Plan shall contain provisions comparable
in all material respects to those of the Murphy DB Plan immediately prior to the
time of adoption of the Deltic DB Plan. As soon as practicable following the
establishment of the Deltic DB Plan, Murphy and Deltic shall file with the IRS
proper notice on IRS Forms 5310 regarding the transfer of assets and liabilities
from the Murphy DB Plan to the Deltic DB Plan.
(c) As soon as practical after the Distribution Date and in no event later
than the termination of the Transition Period, following receipt by Deltic and
Murphy of favorable determination letters or Deltic's certification to Murphy,
and Murphy's certification to Deltic, in a manner reasonably acceptable to both
Murphy and Deltic, that the Murphy DB Plan and Deltic DB Plan are qualified
under the applicable provisions of the Code, the assets and liabilities
associated with all Transferred Employees shall be transferred from the Murphy
DB Plan to the Deltic DB Plan. The amount of assets to be transferred shall be
equal to that amount which bears the same ratio to the assets of the Murphy DB
Plan, as of the Distribution Date, as the accrued liability of the Transferred
Employees bears to the accrued liability of all participants in the Murphy DB
Plan, as of the Distribution Date. For purposes of the preceding sentence, the
"accrued liability" of any participant in the Murphy DB Plan shall be calculated
under the
2
<PAGE>
entry age normal actuarial method using the same actuarial assumptions
employed for purposes of the most recent annual valuation of the Murphy DB Plan.
The assets to be transferred shall be credited (or charged) expenses, on the
balance outstanding from time to time from the Distribution Date to the actual
date of transfer, at the rate of earnings (or losses) on assets of the Murphy DB
Plan during the period from the Distribution Date to the last day of the month
ending prior to the actual date of transfer. Notwithstanding the above, the
transfer of assets and liabilities from the Murphy DB Plan to the Deltic DB Plan
shall satisfy the requirements of Code Section 414(l). Deltic and Murphy shall
each use best efforts to effect the asset and liability transfers contemplated
in this Section 3 as soon as practicable.
(d) Following the transfers of assets and liabilities as provided in
paragraph (c) above, Deltic shall have no further liability whatsoever (either
under this Agreement or otherwise) with respect to the participants under the
Murphy DB Plan, and Murphy shall have no further liability whatsoever (either
under this Agreement or otherwise) with respect to the participants under the
Deltic DB Plan.
Section 4. Defined Contribution Retirement Plans.
-------------------------------------
(a) Effective as of the Distribution Date, Murphy shall amend the Thrift
Plan for Employees of Murphy Oil Corporation (the "Murphy DC Plan") (i) to cause
the active participation of the Transferred Employees therein to cease as of the
Distribution Date, and (ii) to provide for the direct trust-to-trust transfer of
plan accounts as contemplated herein.
(b) Prior to the Distribution Date, Murphy or Deltic shall establish a
defined contribution retirement plan which shall be qualified under Section
401(a) of the Code (the "Deltic DC Plan") effective as of the Distribution Date
covering Transferred Employees. The Deltic DC Plan shall contain provisions
comparable in all material respects to those of the Murphy DC Plan immediately
prior to the time of adoption of the Deltic DC Plan.
3
<PAGE>
(c) No later than the date of the transfer described herein, Murphy shall
make all applicable 401(k), profit sharing, matching contributions and qualified
non-elective contributions payable under the Murphy DC Plan with respect to
Transferred Employees for periods on or prior to the Distribution Date and shall
be entitled to retain any applicable reserves or accruals relating thereto. As
soon as practicable following the Distribution Date, Murphy shall cause the
trustee of the Murphy DC Plan to transfer the full account balances of
Transferred Employees (and beneficiaries thereof) under the Murphy DC Plan
(which account balances will have been credited with appropriate earnings
attributable to the period from the Distribution Date to the date of transfer
described herein), reduced by any necessary benefit or withdrawal payments to or
in respect of Transferred Employees occurring during the period from the
Distribution Date to the date of transfer described herein, to the appropriate
trustee as designated by Deltic under the trust agreement forming a part of the
Deltic DC Plan. Murphy and Deltic agree to take such actions and enter into
such agreements, if any, that may be necessary to effect the transfer described
herein. In consideration for the transfer of assets described herein, Deltic
shall, effective as of the date of transfer described herein, assume all of the
obligations of Murphy in respect of the account balances accumulated by
Transferred Employees under the Murphy DC Plan (exclusive of any portion of such
account balances which are paid or otherwise withdrawn prior to the date of
transfer described herein) with respect to the account balances transferred to
the Deltic DC Plan. Murphy hereby indemnifies Deltic against and agrees to hold
it harmless from any liabilities or claims (including claims for benefits or for
breach of fiduciary duties, but excluding claims for benefits to the extent of
the assets transferred hereunder) relating to the Murphy DC Plan (or the
qualified status of that Plan) which arose prior to the transfer of assets
described herein or which relate to the operation or administration of that Plan
prior to the transfeltic hereby indemnifies Murphy against and agrees to hold it
harmless from any liabilities or claims relating to the qualified status of the
Deltic DC Plan or the operation or administration of that Plan following the
transfer of assets described herein.
(d) As of the Distribution Date, Deltic shall assume sponsorship of the
Thrift Plan for Employees of Deltic Farm &
4
<PAGE>
Timber, Inc. (the "Deltic Hourly Plan") and, except as provided in the
succeeding sentence, Murphy shall have no further liability with respect to such
Plan. Murphy hereby indemnifies Deltic against and agrees to hold it harmless
from any liabilities or claims (excluding claims for benefits but including
claims for breach of fiduciary duties relating to the Deltic Hourly Plan or the
qualified status of that Plan) which arose prior to the assumption of
sponsorship described herein or which relate to the operation or administration
of that Plan prior to such assumption of sponsorship. Deltic hereby indemnifies
Murphy against and agrees to hold it harmless from any liabilities or claims
relating to the qualified status of the Deltic Hourly Plan or the operation or
administration of that Plan following the assumption of sponsorship described
herein.
Section 5. Welfare Plans and Worker Compensation.
-------------------------------------
(a) As soon as practicable after the Distribution Date, Deltic shall
establish or designate welfare benefit plans, within the meaning of Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended, for the
benefit of the Transferred Employees. Murphy shall retain liability for all
incurred but unpaid claims of Transferred Employees and their beneficiaries as
of the Distribution Date under the health and life insurance benefit plans
maintained by Murphy. Deltic shall assume as of the Distribution Date all the
obligations of Murphy and any of its Affiliates for any obligation to provide
coverage and benefits for Transferred Employees and their qualified beneftion
Act of 1985 and Section 4980B of the Code.
(b) Deltic shall be responsible for all workers compensation claims,
whether arising before or after the Distribution Date, with respect to any
Transferred Employee. In addition, Deltic shall be entitled to retain any
applicable reserves or accruals relating thereto.
(c) As of the Distribution Date, Deltic shall assume or retain all
liabilities with respect to postretirement health and life insurance benefits of
Transferred Employees. Murphy shall retain or assume all other liabilities with
respect to
5
<PAGE>
postretirement health and life insurance benefits
Section 6. Bonus and Profit Incentive Plans. Murphy shall bear the full
--------------------------------
cost of any bonus or short-term incentive award for calendar 1996 for any
Transferred Employee (the amount of which shall be determined in the ordinary
course, consistent with past practice), and Deltic shall have no liability
therefor. Murphy shall have no liability for, and Deltic shall bear the cost
of, any bonus or short-term incentive awards relating to periods beginning on or
after January 1, 1997.
Section 7. Severance. The continued employment by Deltic and its
---------
Affiliates of Transferred Employees after the Distribution Date shall not be
deemed a severance of employment of such Transferred Employees from Murphy for
purposes of any policy, plan, program or agreement of Murphy or any of its
Subsidiaries that provides for the payment of severance, salary continuation or
similar benefits.
Section 8. Nonqualified Deferred Compensation. Deltic and its Affiliates
----------------------------------
shall assume as of the Distribution Date all of the obligations and liabilities
of Murphy and any of its Affiliates for any Transferred Employee under any
nonqualified deferred compensation plan or arrangement maintained by Murphy.
Section 9. No Third Party Beneficiaries. Neither Transferred
----------------------------
Employees nor any current, former or retired employee of Murphy or its
affiliates shall be entitled to enforce the provisions of this Schedule against
the respective parties as third party beneficiaries thereof.
6
<PAGE>
Exhibit A to Schedule 5.01
Transferred Employees
7
<PAGE>
SCHEDULE 6.01
SERVICES DURING TRANSITION PERIOD
Set forth below are the services (each numbered item, a "Service" and
collectively, the "Services") that the Murphy Group will provide to the Deltic
Group during the Transition Period and the Costs related thereto.
<TABLE>
<CAPTION>
===============================================================================
Costs
Services (per month)
-------- -----------
- -------------------------------------------------------------------------------
<S> <C>
Office Facilities - Rental.
1. Murphy shall provide the Deltic Group with use of the office $ 4,200
facilities at 200 Peach Street, El Dorado, Arkansas that are
occupied and in use by the Deltic Group as of the Distribution
Date (the "Office Facilities").
- --------------------------------------------------------------------------------
Office Facilities - Usage.
2. The Murphy Group shall provide the Deltic Group with services $15,750
substantially similar to those provided to the Deltic Group prior
to the Distribution Date in connection with the Deltic Group's
usage of the Office Facilities in the ordinary course of business.
Such services shall include, without limitation: (i) janitorial
service; (ii) telephone service; (iii) provision of utilities,
including electricity, gas and water; (iv) provision of office
equipment for use by the Deltic Group, including photocopying
equipment, fax machines and personal computers; (v) contract
mechanical maintenance service; (vi) contract fire system
maintenance; (vii) contract elevator maintenance; (viii) payment
of property taxes related to the Office Facilities; (ix) provision
of insurance for the Office Facilities; and (x) provision of
building engineers and maintenance supplies related to the Office
Facilities.
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
================================================================================
Costs
Services (per month)
-------- -----------
Administrative Functions.
The Murphy Group shall provide the Deltic Group
with such administrative services as are reasonably
required by the Deltic Group and are substantially
similar to those provided to the Deltic Group by the
Murphy Group prior to the Distribution Date in the
following areas (the "Administrative Services"):
3. Controllers $ 6,900
4. Environmental Affairs 6,700
5. Human Resources 14,250
6. Information Systems 5,725
7. Insurance 8,000
8. Law 14,400
9. Purchasing 1,500
10. Treasury and Tax/1/ 15,200
-------
$72,675
=======
In the event that there
is a significant increase
or decrease in the level
of activity required by
Murphy personnel in provid-
ing any of the Administra-
tive Services, Murphy and
Deltic hereby agree to
renegotiate in good faith
the Costs associated
therewith.
- --------------------------------------------------------------------------------
</TABLE>
/1/ Includes preparation and filing of consolidated Federal Tax Returns for all
Pre-Distribution Periods (in each case, as defined in the Tax Sharing Agreement)
pursuant to Section 2(c) of the Tax Sharing Agreement.
2
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
Costs
Services (per month)
-------- -----------
<S> <C>
11. Insurance
The insurance policies listed below (with applicable expiration In the event that Murphy
dates) have been purchased by Murphy and provide coverage for various incurs any retroactive
activities and assets of the Deltic Group. Murphy has previously premium adjustments or
collected from Deltic its pro rata portion of the initial premiums under refunds attributable to
such policies. For each policy, prior to expiration Murphy shall assist claims or coverage
Deltic in processing claims and such other matters as may be requested applicable to the Deltic
by Deltic. Following expiration of each policy, Murphy shall not be Group, Murphy shall
obligated to renew or replace such policy for the benefit of Deltic and invoice or credit Deltic
Deltic may procure any replacement or other policy as it may desire. for such charges, as
applicable.
Policy Insurance Carrier Expiration Date
- -----------------------------------------------------------------------------
Workers' Reliance National 06/01/97
Compensation Indemnity Company
Automobile Reliance National 06/01/97
Liability Indemnity Company
General Reliance National 06/01/97
Liability Indemnity Company
Excess Lloyds/XL/OCIL/AC 04/30/97
Liability
Business Life Insurance 07/02/97
Travel/ Company of North
Accident America
Directors & National Union Fire 09/30/97
Officers Insurance Company
Liability
=============================================================================================================
</TABLE>
3
<PAGE>
Exhibit 10.3
TAX SHARING AGREEMENT
---------------------
This Agreement is entered into as of the 11th day of December, 1996 between
Murphy Oil Corporation, ("Murphy Oil"), a Delaware corporation, and Deltic
Timber Corporation ("Deltic"), a Delaware corporation, successor corporation to
Deltic Farm & Timber Co., Inc.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Murphy Oil and Deltic intend to enter into a Distribution
Agreement dated as of December 11, 1996 (the "Distribution Agreement"),
providing for the distribution by Murphy Oil to its stockholders of all of the
common stock of Deltic (the "Distribution");
WHEREAS, Murphy Oil and Deltic desire to set forth their agreement on the
rights and obligations of Murphy Oil, Deltic and their respective Affiliates
with respect to various Tax matters and the handling and allocation of federal,
state, and local Taxes incurred in Taxable periods beginning prior to the
Distribution Date;
NOW, THEREFORE, in consideration of the mutual
<PAGE>
covenants and agreements hereinafter set forth, the parties agree as follows:
1. Definitions.
-----------
(a) As used in this Agreement:
"Affiliate" (and the correlative meaning, "Affiliation") of any person
shall mean any individual, corporation, partnership or other entity directly or
indirectly controlling, controlled by or under common control with such person.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"Consolidated Murphy Group Tax" shall mean the consolidated Federal Tax
liability of the Murphy Oil Consolidated Group for any period with respect to
which a consolidated Federal Tax Return is filed by Murphy Oil for such group.
"Deltic Federal Tax Liability" shall mean, with respect to any Tax Sharing
Period, the sum of (i) the Deltic Group's share of Consolidated Murphy Group Tax
and (ii) any interest, penalties or other additions to such Taxes for such
period computed in each case as if the Deltic Group were not and never were part
of the Murphy Oil Consolidated
2
<PAGE>
Group, but rather were a separate affiliated group of corporations filing a
consolidated Federal Tax Return.
"Deltic Group" shall mean the corporations that are members of the
affiliated group of corporations of which Deltic will be the common parent
(within the meaning of Section 1504 of the Code) immediately after the
Distribution Date and any predecessors or successors thereto.
"Deltic Tax Asset Statement" shall be, with respect to any Tax Asset
attributable to the Deltic Group ("Deltic Tax Asset"), a computation of the
Deltic Tax Asset Value prepared by a nationally recognized public accounting
firm selected by Deltic and acceptable to Murphy Oil.
"Deltic Tax Asset Value" shall be the hypothetical benefit to the Deltic
Group produced by any Deltic Tax Asset had such Tax Asset been utilized by the
Deltic Group as a separate affiliated group of corporations filing a
consolidated Federal Tax Return for all periods. Such hypothetical tax savings
shall be calculated in good faith and in accordance with past practices.
"Distribution Date" shall mean the date on which Murphy Oil distributes to
its stockholders all of the common stock of Deltic.
3
<PAGE>
"Federal Tax" shall mean any Tax imposed under Subtitle A of the Code.
"Final Determination" shall mean (i) a "determination" as defined in
Section 1313(a) of the Code, (ii) the date of acceptance by or on behalf of the
Internal Revenue Service of Form 870-AD (or any successor form thereto), as a
final resolution of tax liability for any taxable period, except that a Form
870-AD (or successor form thereto) that reserves the right of the taxpayer to
file a claim for refund and/or the right of the Internal Revenue Service to
assert a further deficiency shall not constitute a Final Determination with
respect to the item or items so reserved; or (iii) the payment (or receipt of a
refund) of Tax by Murphy Oil with respect to any item disallowed or adjusted by
the Internal Revenue Service.
"Murphy Oil Consolidated Group" shall mean, with respect to any Taxable
period, the corporations that are members of the affiliated group of
corporations of which Murphy Oil is the common parent within the meaning of
Section 1504 of the Code.
"Murphy Oil Group" shall mean the corporations that are members of the
Murphy Oil Consolidated Group during
4
<PAGE>
any Taxable period, excluding the corporations that are the members of the
Deltic Group.
"Other Taxes" are defined in Section 4.
"Post-Distribution Period" shall mean any taxable period (or portion
thereof) beginning after the close of business on the Distribution Date.
"Pre-Distribution Period" shall mean any Taxable period (or portion
thereof) ending on or before the close of business on the Distribution Date.
"Pre-Distribution Tax Liability" shall mean the Consolidated Murphy Group
Tax for any Pre-Distribution Period and for the portion of any Taxable period
including but not ending on the Distribution Date.
"Prime" shall mean the rate announced from time to time as "prime" by
Morgan Guaranty Trust Company to Murphy Oil as the prime rate.
"Referee" is defined in Section 16.
"Return" shall mean any Tax return, statement, report or form (including
estimated Tax returns and reports and information returns and reports) required
to be filed with any Taxing Authority.
"Tax" (and the correlative meaning, "Taxes,"
5
<PAGE>
"Taxing" and "Taxable") shall mean (A) any net income, gross income, gross
receipts, alternative or add-on minimum, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, transfer, recording,
severance, stamp, occupation, premium, property, environmental, custom duty, or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax or
additional amount imposed by a Taxing Authority; (B) any liability of Murphy
Oil, Deltic or any Affiliate of Murphy Oil or Deltic (or, in each case, any
successor in interest thereto by merger or otherwise), as the case may be, for
the payment of any amounts of the type described in clause (A) for any taxable
period resulting from the application of Treasury Regulation Section 1.1502-6
or, in the case of any similar provision applicable under state law; and (C) any
liability of Murphy Oil, Deltic or any Affiliate of Murphy Oil or Deltic (or, in
each case, any successor in interest thereto by merger or otherwise) for the
payment of any amounts described in clause (A) as a result of any express or
implied obligation to indemnify any other party.
"Tax Asset" shall mean any net operating loss, net
6
<PAGE>
capital loss, excess tax credit, or other similar tax attribute which could
reduce Federal Taxes.
"Tax Sharing Period" shall mean any taxable period (or any portion thereof)
beginning after December 31, 1986 and ending on or before the Distribution Date.
"Tax Package" shall mean one or more packages of information reasonably
necessary for the purpose of preparing Federal Tax Returns of the Murphy Oil
Consolidated Group with respect to a Pre-Distribution Period completed in all
material respects in accordance with the standards that Murphy Oil has
heretofore established for its subsidiaries.
"Taxing Authority" shall mean any governmental authority responsible for
the imposition of any Tax.
(b) Any term used in this Agreement which is not defined in this Agreement
shall, to the extent the context requires, have the meaning assigned to it in
the Code or the applicable Treasury regulations thereunder.
2. Federal Taxes--Administrative and Compliance Matters.
----------------------------------------------------
(a) Sole Tax Sharing Agreement. The parties acknowledge that the members
--------------------------
of the Deltic Group are includible in the Murphy Oil Consolidated Group for the
Pre-
7
<PAGE>
Distribution Period. Any and all existing tax sharing agreements or
arrangements, written or unwritten, between the Murphy Oil Group and the Deltic
Group shall be terminated as of December 31, 1986, and after such date this
Agreement shall constitute the sole tax sharing agreement between the Murphy Oil
Group and each member of the Deltic Group.
(b) Designation of Agent. Each member of the Deltic Group hereby
--------------------
irrevocably designates Murphy Oil as its agent for the purpose of taking any and
all actions (including the execution of waivers of applicable statutes of
limitation) necessary or incidental to the filing of any Federal Tax Return, any
amended Federal Tax Return, or any claim for refund (including those resulting
from an item or Tax Asset that may arise in a Post-Distribution Period), credit
or offset of Tax or any other proceedings in each case relating to any Pre-
Distribution Period.
(c) Pre-Distribution Period Returns. Murphy Oil will prepare and file the
-------------------------------
consolidated Federal Tax Returns for all Pre-Distribution Periods. Deltic shall
prepare and deliver to Murphy Oil a Tax Package with respect to the 1996 taxable
year on or before April 1, 1997.
8
<PAGE>
3. Allocation of Federal Taxes.
---------------------------
(a) General. For any Tax Sharing Period, Deltic shall pay to Murphy Oil
-------
an amount equal to the Deltic Federal Tax Liability.
(b) Estimated Payments. Murphy Oil shall determine the amounts of
------------------
estimated tax installments payable with respect to the Deltic Federal Tax
Liability for 1996. Deltic shall, within 5 days of receipt of such
determination, pay to Murphy Oil the amount so determined.
(c) Payment of Taxes for Tax Sharing Periods.
----------------------------------------
(i) On or before 5 days prior to the due date (including all
applicable and valid extensions) for the Murphy Oil Consolidated Group's
1996 Federal Tax Return, Murphy Oil shall deliver a statement to Deltic
reflecting the Deltic Federal Tax Liability for 1996.
(ii) On or before the date Murphy Oil files the Murphy Oil
Consolidated Group's 1996 Federal Tax Return, Deltic shall pay to Murphy
Oil, or Murphy Oil shall pay to Deltic, as appropriate, an amount equal to
the difference, if any, between (x) the Deltic Federal Tax Liability for
1996 and
9
<PAGE>
(y) the aggregate amount of estimated tax installments paid with respect to
the Deltic Federal Tax Liability for 1996 pursuant to Section 3(b).
(iii) If the Murphy Oil Consolidated Group's 1996 Federal Tax Return
reflects a Deltic Tax Asset that may under applicable law be used to reduce
Consolidated Murphy Group Tax for any taxable period, then within 30 days
of receipt by Murphy Oil of a Deltic Tax Asset Statement, Murphy Oil shall
pay to Deltic the amount owing pursuant to such Deltic Tax Asset Statement.
(d) Treatment of Adjustments for Tax Sharing Periods. If any adjustment
------------------------------------------------
is made in a Federal Tax Return filed for any taxable period that includes a Tax
Sharing Period, after the filing thereof, then at the time of a Final
Determination of the adjustment, Murphy Oil shall pay Deltic or Deltic shall pay
to Murphy Oil, as the case may be, the difference between all payments actually
made under Section 3 with respect to the taxable year or period covered by such
Tax Return and all payments that would have been made under Section 3 taking
such adjustment into account,
10
<PAGE>
together with any penalties and interest actually paid for each day until the
date of Final Determination.
(e) Carrybacks and Certain Other Matters.
------------------------------------
(i) Deltic agrees to carry to Pre-Distribution Periods any Tax Asset
as to which such carryback is optional, if requested to do so by Murphy
Oil.
(ii) Murphy Oil agrees to pay Deltic the Deltic Tax Asset Value for
any Deltic Tax Asset arising in a Post-Distribution period that is carried
back to reduce Consolidated Murphy Group Tax. Within 30 days of receipt by
Murphy Oil of a Deltic Tax Asset Statement, Murphy Oil shall satisfy its
obligations under this paragraph 3(e)(ii) by paying to Deltic the amount
owing pursuant to such Deltic Tax Asset Statement.
(iii) If, subsequent to the payment by Murphy Oil to Deltic of any
amount referred to in Section 3(e)(ii) above, there shall be a Final
Determination that results in a disallowance or a reduction of the Deltic
Tax Asset so carried back, Deltic shall repay to Murphy Oil within 30 days
of
11
<PAGE>
such event the amount that would not have been payable to Deltic pursuant
to Section 3(e)(ii) had the Deltic Tax Asset Value been determined in light
of such event, plus interest at a rate equal to Prime computed from the
date of payment made pursuant to Section 3(c)(ii) and penalties, if any,
imposed solely in connection with a disallowance or reduction of the Deltic
Tax Asset.
(f) Deductions for Certain Payments Made by Murphy Oil. Notwithstanding
--------------------------------------------------
anything in this Agreement to the contrary, the amount of any Deltic Federal Tax
Liability or Deltic Tax Asset shall be computed without regard to any deduction
arising from the payment or satisfaction by Murphy Oil of any compensation
expense or compensatory award (including, without limitation, bonuses, stock
options, and restricted stock awards) that have not been and will not be
reimbursed by any member of the Deltic Group.
4. Other Taxes.
-----------
(a) Liability for all Taxes other than Federal Taxes ("Other Taxes"),
attributable to any member of the Deltic Group, shall be the sole responsibility
of the Deltic Group. The responsibility for filing all Returns relating
12
<PAGE>
to Other Taxes attributable to any member of the Deltic Group for all Tax
periods ending on or before the Distribution Date shall be the sole
responsibility of Murphy Oil. Except as otherwise provided in the Distribution
Agreement, the responsibility for filing all Returns relating to Other Taxes
attributable to any member of the Deltic Group for all Tax periods ending after
the Distribution Date shall be the sole responsibility of Deltic. Liability for
Other Taxes attributable to any member of the Murphy Oil Group and the
responsibility for filing all Returns relating to such Other Taxes shall be the
sole responsibility of the Murphy Oil Group. Each party agrees to indemnify and
hold the other harmless in accordance with the undertakings contained in this
Section 4(a).
(b) The Deltic Group shall be entitled to all refunds and credits of Other
Taxes attributable to any member of the Deltic Group, and the Murphy Oil Group
shall be entitled to all refunds and credits of Other Taxes attributable to any
member of the Murphy Oil Group.
5. Certain Representations and Covenants.
-------------------------------------
(a) Representations. Deltic and Murphy Oil, as
---------------
13
<PAGE>
the case may be, represent that, as of the date hereof and on the Distribution
Date, (i) there is no plan or intention (A) to liquidate Deltic or Murphy Oil or
to merge Deltic or Murphy Oil with any unaffiliated corporation subsequent to
the Distribution or (B) to sell or otherwise dispose of any asset of Deltic or
Murphy Oil subsequent to the Distribution, except, in each case, in the ordinary
course of business; (ii) neither Deltic nor Murphy Oil is aware of any plan or
intention by the current stockholders of Murphy Oil to sell, exchange, transfer
by gift, or otherwise dispose of any of their stock in Murphy Oil or Deltic
subsequent to the Distribution; and (iii) Murphy Oil has received a
representation to that effect from C.H. Murphy, Jr., First United Bancshares,
First National Bank of El Dorado and First National Bank of Magnolia.
(b) Deltic Covenants. Deltic covenants to Murphy Oil that (i) during the
----------------
two-year period following the Distribution Date it will not liquidate, merge,
consolidate, combine or affiliate with any other person, discontinue or
materially change the conduct of a material portion of its businesses
independently and with its own employees, redeem or otherwise reacquire its
stock, or sell, exchange, dis-
14
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tribute or otherwise dispose of its assets other than (A) in the ordinary course
of business or (B) in the case of any disposition by Deltic of its farmland, in
the event an attractive unsolicited offer is received; (ii) following the
Distribution, Deltic will, for a minimum of two years, continue the active
conduct of the historic business conducted by Deltic throughout the five year
period prior to the Distribution; (iii) within one year of the Distribution,
Deltic will use its best efforts to consummate an offering of $30-40 million of
common, convertible preferred or "straight" preferred stock, provided that in no
event will the offering, when added to any other issuances of stock by Deltic
that are contemplated at the time of the Distribution Date, exceed an amount
that, if all such issuances were treated as made immediately prior to the
Distribution, would cause Murphy Oil to own less than 80% of the total combined
voting power of all classes of stock of Deltic entitled to vote or less than 80%
of the total number of shares of all other classes of stock of Deltic; (iv) that
it will diligently undertake to effectuate its growth strategies, including the
acquisition of timber properties, in accordance with the plan presented to the
Board of Directors
15
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of Murphy on August 7, 1996, and (v) on or after the Distribution, Deltic will
not, nor will it permit any member of the Deltic Group to, make or change any
accounting method, amend or take any Tax position on any Tax Return, take any
other action, omit to take any action or enter into any transaction that
reasonably could be expected to result in any increased Tax liability or
reduction of any Tax Asset of the Murphy Oil Consolidated Group or any member
thereof (immediately after the Distribution) in respect of any Pre-Distribution
Period, without first obtaining the written consent of an authorized
representative of Murphy Oil.
(c) Murphy Oil Covenants. On or after the Distribution, Murphy Oil will
--------------------
not, nor will it permit any member of the Murphy Oil Group to make or change any
accounting method, amend any Tax Return or take any Tax position on any Tax
Return, take any other action, omit to take any action or enter into any
transaction that reasonably could be expected to result in any increased Tax
liability or reduction of any Tax Asset of the Deltic Group or any member
thereof (immediately after the Distribution) in respect of any Pre-Distribution
Period, without first obtaining the written consent of an authorized
16
<PAGE>
representative of Deltic.
(d) Exceptions. Notwithstanding the foregoing, Deltic may take actions
----------
inconsistent with the covenants contained in Section 5(b)(i) and 5(b)(ii) above,
or may, within one year of the Distribution, issue shares in excess of the
amount described in Section 5(b)(iii) above if:
(i) Deltic obtains a ruling from the Internal Revenue Service to the
effect that such actions will not result in the Distribution being taxable to
Murphy Oil or its stockholders; or
(ii) Deltic obtains an unqualified opinion acceptable to Murphy Oil to the
same effect as in Section 5(d)(i) from a nationally recognized independent
tax counsel.
(e) Best Efforts. For purposes of the covenant contained in Section
------------
5(b)(iii), if Deltic does not make the offering described therein within one
year of the Distribution, Deltic will be considered to have used its best
efforts to do so if Deltic obtains a ruling from the Internal Revenue Service to
the effect that failure to make such offering will not result in the
Distribution being taxable to Murphy Oil or its stockholders.
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<PAGE>
6. Indemnities.
-----------
(a) Deltic Indemnity. Deltic and each member of the Deltic Group will
----------------
jointly and severally indemnify Murphy Oil and each member of the Murphy Oil
Group, against and hold them harmless, on an after tax basis, from
(i) any Pre-Distribution Tax Liability assessed after the Distribution
Date pursuant to a Final Determination, to the extent attributable to an
adjustment of any item of income, gain, gross receipts, loss, credit,
deduction or other tax attribute of any member of the Deltic Group;
(ii) any liability resulting from a breach by Deltic or any member of the
Deltic Group after the Distribution Date of any representation or covenant
made by Deltic herein; and
(iii) all direct and indirect costs and expenses (including, without
limitation, legal fees and expenses and any personnel costs and expenses)
incurred by Murphy Oil with respect to any item or liability described in
Section 6(a)(i) or (ii).
(b) Murphy Oil Indemnity. Murphy Oil and each member of the Murphy Oil
--------------------
Group will jointly and severally
18
<PAGE>
indemnify Deltic and each member of the Deltic Group against and hold them
harmless, on an after tax basis from
(i) any Pre-Distribution Tax Liability, other than any such liabilities
described in Sections 6(a)(i) or (ii) hereof,
(ii) any liability resulting from a breach by Murphy Oil or any member of
the Murphy Oil Group after the Distribution Date of any representation or
covenant made by Murphy Oil herein.
(c) Discharge of Indemnity. Deltic and Murphy Oil shall discharge their
----------------------
obligations under Sections 6(a) and 6(b) hereof, respectively, by paying the
relevant amount within 15 days of demand therefor. After a Final Determination
of an obligation of Deltic under Section 6(a), Murphy Oil shall send a statement
to Deltic showing the amount due thereunder. Notwithstanding the foregoing, if
either Deltic or Murphy Oil disputes in good faith the fact or amount of its
obligation under Section 6(a) or Section 6(b), then no payment of the amount in
dispute shall be required until any such good faith dispute is resolved in
accordance with Section 16 hereof; provided, however, that any amount not paid
-------- -------
within 30 days of demand therefor shall
19
<PAGE>
bear interest at a rate equal to Prime computed from the date of demand.
(d) Refunds. Any refunds of Tax, net of any tax payable by reason of the
-------
receipt of such refund, received by Murphy Oil relating to a Pre-Distribution
Period, to the extent attributable to any item or adjustment of any item of
income, loss, credit, deduction or other tax attribute of any member of the
Deltic Group shall be paid by Murphy Oil to Deltic within 30 days of receipt of
such refund.
(e) Method of Calculation. Except as otherwise provided, the amount of
---------------------
Deltic's liability under Section 6(a)(i) and Murphy Oil's liability under
Section 6(b)(i) and 6(d) shall be calculated as if the Deltic Group were not and
never were part of the Murphy Oil Group, but rather were a separate affiliated
group of corporations filing a consolidated Federal Tax Return for all periods.
7. Communication and Cooperation.
-----------------------------
(a) Consult and Cooperate. Deltic and Murphy Oil shall consult and
---------------------
cooperate (and shall cause each of their Affiliates to cooperate) fully at such
time and to the extent reasonably requested by the other party in connection
with all matters subject to this Agreement. Such
20
<PAGE>
cooperation shall include, without limitation,
(i) the retention and provision on reasonable request of any and all
information including all books, records, documentation or other information,
any necessary explanations of information, and access to personnel, until the
expiration of all applicable statutes of limitations (giving effect to any
extension, waiver, or mitigation thereof);
(ii) the execution of any document that may be necessary or helpful in
connection with any required Return or in connection with any audit,
proceeding, suit or action; and
(iii) the use of the parties' best efforts to obtain any documentation from
a governmental authority or a third party that may be necessary or helpful in
connection with the foregoing.
(b) Provide Information. Murphy Oil and Deltic shall keep each other
-------------------
fully informed with respect to any material development relating to all matters
subject to this Agreement.
8. Audits and Contest.
------------------
(a) Murphy Oil shall have full control over all
21
<PAGE>
matters relating to any Federal Tax Return filed by the Murphy Oil Consolidated
Group or any Federal Tax audit, dispute or proceeding (whether administrative or
judicial) relating to any Tax matters of the Murphy Oil Consolidated Group.
Murphy Oil shall have absolute discretion with respect to any decisions to be
made, or the nature of any action to be taken, with respect to any matter
described in the preceding sentence.
(b) With respect to Returns relating to Other Taxes attributable to any
member of the Deltic Group, except as otherwise provided in the Distribution
Agreement, Deltic shall have full control over all matters relating to any state
audit, dispute or proceeding (whether administrative or judicial) in connection
therewith. Deltic shall have absolute discretion with respect to any decisions
to be made, or the nature of any action to be taken, with respect to any matter
described in the preceding sentence.
9. Payments.
--------
All payments to be made hereunder shall be made in immediately available
funds. Payments shall be deemed made when received.
10. Notices.
-------
22
<PAGE>
Any notice, demand, claim, or other communication under this Agreement
shall be in writing and shall be deemed to have been given upon the delivery or
mailing thereof, as the case may be, if delivered personally or sent by
certified mail, return receipt requested, postage prepaid, to the parties at the
following addresses (or at such other address as a party may specify by notice
to the other):
If to Murphy Oil, to:
Murphy Oil Corporation
200 Peach Street
P.O. Box 7000
El Dorado, AR 71731-7000
Attn: Income Tax Manager
If to Deltic, to:
Deltic Timber Corporation
200 Peach Street
P.O. Box 7000
El Dorado, AR 71731-7000
Attn: Vice President, Finance and Administration
11. Costs and Expenses.
------------------
Except as expressly set forth in this Agreement, each party shall bear its
own costs and expenses incurred pursuant to this Agreement. For purposes of
this Agreement, "out-of-pocket" expenses shall include reasonable attorney
23
<PAGE>
fees, accountant fees and other related professional fees and disbursements.
12. Effectiveness; Termination and Survival.
---------------------------------------
This Agreement shall become effective upon the consummation of the
Distribution. Notwithstanding anything in this Agreement to the contrary, this
Agreement shall remain in effect and its provisions shall survive for the full
period of all applicable statutes of limitations (giving effect to any
extension, waiver or mitigation thereof).
13. Section Headings.
----------------
The headings contained in this Agreement are inserted for convenience only
and shall not constitute a part hereof or in any way affect the meaning or
interpretation of this Agreement.
14. Entire Agreement; Amendments and Waivers.
----------------------------------------
(a) Entire Agreement. This Agreement contains the entire understanding of
----------------
the parties hereto with respect to the subject matter contained herein. No
alteration, amendment, modification, or waiver of any of the terms of this
Agreement shall be valid unless made by an instrument signed by an authorized
officer of Murphy Oil and Deltic, or
24
<PAGE>
in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) Waiver. No failure or delay by any party in exercising any right, power
------
or privilege hereunder shall operate as a waiver hereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege.
15. Governing Law and Interpretation. This Agreement has been made in and
--------------------------------
shall be construed and enforced in accordance with the laws of the State of
Arkansas without regard to principles of conflicts of law.
16. Dispute Resolution. If the parties hereto are unable to agree to
------------------
resolve any disagreement or dispute relating to this Agreement other than with
respect to Section 5 within 20 days, such disagreement or dispute shall be
resolved by a nationally recognized law firm or accounting firm expert in tax
matters that is mutually acceptable to the parties hereto ("Referee"). A Referee
so chosen shall resolve any such disagreement pursuant to such procedures as it
may deem advisable. Any such resolution shall be binding on the parties hereto
without further recourse. The costs of any such Referee shall be
25
<PAGE>
apportioned between Murphy Oil and Deltic as determined by such Referee in such
manner as the Referee deems reasonable, taking into account the circumstances of
the dispute, the conduct of the parties and the resolution of the dispute.
17. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
18. Assignments; Third Party Beneficiaries.
--------------------------------------
This Agreement shall be binding upon and shall inure only to the benefit of the
parties hereto and their respective successors and assigns. This Agreement is
not intended to benefit any person other than the parties hereto and such
successors and assigns, and no such other person shall be a third party
beneficiary hereof.
26
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the day and year first written above.
Murphy Oil on its own behalf and on
behalf of the companies
listed on Schedule 1 hereto.
By: /s/ S. Cosse
--------------------------
Title: Senior Vice President
-----------------------
Deltic on its own behalf and on
behalf of the companies
listed on Schedule 2 hereto.
By: /s/ Clefton D. Vaughan
--------------------------
Title: Vice President
-----------------------
27
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Schedule 1
Arkansas Oil Company
El Dorado Exploration, S.A.
Murphy Denmark Oil Company
Murphy Eastern Oil Company
Murphy Equatorial Guinea Oil company
Murphy France Oil Company
Murphy Ireland Oil Company
Murphy Italy Oil Company
Murphy Loop, Inc.
Murphy Latin America Refining & Marketing, Inc.
Murphy New Zealand Oil Company
Murphy Oil Trading Company (Eastern)
Murphy Pakistan Oil Company
Norske Murphy Oil Company
Spur Oil Corporation
Murphy Gas Gathering, Inc.
New Murphy Oil (U.K.) Corporation
Murphy Exploration & Production Company
Murphy Building Corporation
El Dorado Engineering, Inc.
El Dorado Contractors, Inc.
Ocean International Finance Corporation
Norske Ocean Exploration Company
Ocean Spain Oil Company
Ocean Exploration Company
ODECO Gabon Oil Company
Ocean Gabon Oil Company
Murphy Overseas Ventures, Inc.
ODECO Italy Oil Company
Ocean France Oil Company
Mentor Holding Corporation
Murphy Western Oil Company
Mentor Excess & Surplus Lines Insurance Co.
Mentor Insurance and Reinsurance Corporation
Murphy Spain Oil Company
Murphy Somalia Oil Company
Murphy Yemen Oil Company
Murphy Oil USA, Inc.
Murphy Ventures Corporation
Murphy South Atlantic Oil Company
28
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Schedule 2
Deltic Timber Purchasers, Inc.
Chenal Properties, Inc.
29
<PAGE>
EXHIBIT 21
Deltic Timber Corporation
Subsidiaries of the Registrant
As of December 31, 1996
State of
Subsidiaries Incorporation
- --------------------------------------------------------------------------------
Deltic Timber Purchasers, Inc. Arkansas
Chenal Properties, Inc. Arkansas
