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AMENDMENT NO. 1
FORM 8-A/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
BELLWETHER EXPLORATION COMPANY
(Exact name of registrant as
specified in its charter)
DELAWARE
(State of incorporation or organization)
76-0437769
(I.R.S. Employer Identification No.)
1331 LAMAR, SUITE 1455
HOUSTON, TEXAS 77010
(Address of principal executive
offices, including zip code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
N/A N/A
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. [ ]
If this Form relates to the registration of a class of debt securities and is
to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [ ]
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
SERIES A PREFERRED STOCK PURCHASE RIGHTS
(Title of class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On September 12, 1997, the Board of Directors of Bellwether
Exploration Company (the "Company") authorized and declared a dividend of one
preferred stock purchase right (a "Right") for each share of common stock, par
value $.01 per share, of the Company (the "Common Shares"). The dividend is
payable on September 26, 1997 (the "Record Date") to the holders of record of
Common Shares as of the close of business on such date.
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of September
12, 1997 by and between the Company and American Stock Transfer & Trust Company,
as Rights Agent (the "Rights Agent").
1. COMMON SHARE CERTIFICATES REPRESENTING RIGHTS
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights shall not be exercisable, (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) the stock certificates representing
Common Shares shall also represent the Rights attached to such Common Shares.
Common Share certificates issued after the Record Date and prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.
2. DISTRIBUTION DATE
The "Distribution Date" is the earliest of (a) the tenth day following
the date of the first public announcement that any person (other than the
Company or certain related entities, and with certain additional exceptions) has
become the beneficial owner of 15% or more of the then outstanding Common Shares
(such person is an "Acquiring Person" and the date of such public announcement
is the "Stock Acquisition Date") or (b) the close of business on the tenth
business day (or such later day as shall be designated by the Board of
Directors) following the date of the commencement of, or the announcement of an
intention to make, a tender offer or exchange offer, the consummation of which
would cause any person (other than the Company and certain related entities and
with certain additional exceptions) to become an Acquiring Person. In
calculating the percentage of outstanding Common Shares that are beneficially
owned by any person, such person shall be deemed to beneficially own any Common
Shares issuable upon the exercise, exchange or conversion of any options,
warrants or other securities beneficially owned by such person and any Common
Shares beneficially owned by certain affiliates and associates of such person.
Notwithstanding the foregoing, if any person shall become the beneficial owner
of at least 15% of the outstanding Common Shares by reason of purchases of
Common Shares by the Company, then such person shall not be deemed an "Acquiring
Person" until such person thereafter acquires beneficial ownership of, in the
aggregate, a number of additional Common Shares equal
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to 1% or more of the then outstanding Common Shares.
After the Distribution Date, the Rights shall separate from the Common
Shares, Rights certificates shall be issued, and the Rights shall become
exercisable to purchase Preferred Shares as described in Section 5 below.
3. ISSUANCE OF RIGHTS CERTIFICATES
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Rights certificates alone shall represent such Rights from and after
the Distribution Date.
4. EXPIRATION OF RIGHTS
The Rights shall expire on September 26, 2007, unless earlier redeemed
or exchanged.
5. EXERCISE OF RIGHTS
Unless the Rights have expired or been redeemed or exchanged, they may
be exercised, at the option of the holders, pursuant to paragraphs (a), (b) or
(c) below. No Right may be exercised more than once or pursuant to more than
one of such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by an
Acquiring Person or an affiliate or associate thereof shall be void.
(a) RIGHT TO PURCHASE PREFERRED SHARES. From and after the close of
business on the Distribution Date, each Right (other than a Right that has
become void) shall be exercisable to purchase one one-hundredth of a share of
Series A Preferred Stock, par value $1.00 per share, of the Company (the
"Preferred Shares"), at an exercise price of $50.00) (the "Purchase Price").
The Preferred Shares are nonredeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock, are
subordinate to any other series of the company's preferred stock whether issued
before or after the issuance of the Preferred Shares. The Preferred Shares may
not be issued except upon exercise of Rights. The holder of a Preferred Share
is entitled to receive when, as and if declared, the greater of (i) cash and
non-cash dividends in an amount equal to 100 times the dividends declared on
each Common Share or (ii) a preferential annual dividend of $1.00 per Preferred
Share. In the event of liquidation, the holders of Preferred Shares shall be
entitled to receive a liquidation payment in an amount equal to the greater of
(1) $.25 (twenty-five cents) per Preferred Share, plus all accrued and unpaid
dividends and distributions on the Preferred Shares, or (2) an amount equal to
100 times the aggregate amount to be distributed per Common Share. Each
Preferred Share has 100 votes, voting together with the Common Shares. In the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged,
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the holder of a Preferred Share shall be entitled to receive 100 times the
amount received per Common Share. The rights of the Preferred Shares as to
dividends, voting and liquidation preferences are protected by antidilution
provisions. It is anticipated that the value of one one-hundredth of a Preferred
Share should approximate the value of one Common Share.
(b) RIGHT TO PURCHASE COMMON SHARES OF THE COMPANY. In the event
that any person, alone or together with its affiliates or associates, shall
become an Acquiring Person (subject to certain exceptions), each Right (other
than a Right that has become void) shall be exercisable to purchase, at the
Purchase Price (initially $50.00), Common Shares with a market value equal to
two times the Purchase Price. If the Company does not have sufficient Common
Shares available for all Rights to be exercised the Company shall, or otherwise
if the Company so elects the Company may, substitute for all or any portion of
the Common Shares that would otherwise be issuable upon the exercise of the
Rights, cash, assets or other securities having the same aggregate value as such
Common Shares.
(c) RIGHT TO PURCHASE COMMON STOCK OF A SUCCESSOR CORPORATION. If,
after a person has become an Acquiring Person, (i) the Company is acquired in a
merger or other business combination in which the Company is not the surviving
corporation, (ii) the Company is the surviving corporation in a merger or other
business combination in which all or part of the outstanding Common Shares are
changed into or exchanged for stock or assets of another person or (iii) 50% or
more of the company's consolidated assets or earning power are sold, then each
Right (other than a Right that has become void) shall thereafter be exercisable
to purchase, at the Purchase Price (initially $50.00), shares of common stock or
cash of the surviving corporation or purchaser, respectively, with an aggregate
market value equal to two times the Purchase Price.
6. ADJUSTMENTS TO PREVENT DILUTION
The Purchase Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Agreement in
order to prevent dilution. With certain exceptions, no adjustment in the
Purchase Price shall be required until cumulative adjustments require an
adjustment of at least 1%.
7. CASH PAID INSTEAD OF ISSUING FRACTIONAL SECURITIES
No fractional securities shall be issued upon exercise of a Right
(other than fractions of Preferred Shares that are integral multiples of one
one-hundredth of a Preferred Share, which fractions may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash shall be made based on the market price of such securities on the last
trading date prior to the date of exercise.
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8. REDEMPTION
Prior to the earlier of the close of business on the tenth business
day following a Stock Acquisition Date or the close of business on the earlier
of expiration, redemption or exchange of the Rights, the Company may, by
resolution of its Board of Directors (or of certain "Continuing Directors", as
hereinafter defined, if such resolution is adopted after a Stock Acquisition
Date), redeem all of the then outstanding Rights at a redemption price of $.01
per Right, subject to adjustment, payable in cash, Common Shares or other
appropriate consideration.
9. EXCHANGE
At any time after any Person becomes an Acquiring Person and prior to
the first date thereafter upon which an Acquiring Person (with certain
exceptions) shall be the beneficial owner of 50% or more of the outstanding
Common Shares, the Board of Directors may, at its option, direct the Company to
exchange all, but not less than all, of the then outstanding Rights for Common
Shares at an exchange ratio of one Common Share per Right, subject to
adjustment. Immediately upon such action by the Board of Directors, the right
to exercise Rights shall terminate and the only right of the holders of Rights
thereafter shall be to receive a number of Common Shares to which such holder
is entitled pursuant to such exchange ratio.
10. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, shall have no
rights as a stockholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. AMENDMENT OF RIGHTS AGREEMENT
The Board of Directors may, from time to time, without the approval of
any holder of Rights, direct the Company and the Rights Agent to supplement or
amend any provision of the rights Agreement in any manner, whether or not such
supplement or amendment is adverse to any holder of Rights, and the Company and
Rights Agent shall so supplement or amend such provision; provided, however,
that from and after the time that any person becomes an Acquiring Person, the
Rights Agreement shall not be supplemented or amended in any manner that would
adversely affect any holder of outstanding Rights other than an Acquiring
Person; provided, further that from and after the time that any person becomes
an Acquiring Person, the Rights Agreement shall not be supplemented or amended
in any manner without the approval of certain Directors who were elected at a
regularly scheduled, annual meeting of the Company or Directors appointed by
such Directors so elected ("Continuing Directors").
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ITEM 2. EXHIBITS
Attached hereto as an exhibit and incorporated herein by reference is the
Rights Agreement dated as of September 12, 1997 by and between the Company and
American Stock Transfer & Trust Company, as Rights Agent, and which includes as
Exhibit A thereto, the form of Certificate of Designations, Preferences and
Rights of Series A Preferred Stock, as Exhibit B thereto the form of Rights
Certificate and as Exhibit C thereto the Summary of Rights.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Date: September 25, 1997 BELLWETHER EXPLORATION COMPANY,
a Delaware corporation
By: /s/ J. Darby Sere
------------------------------
Name: J. Darby Sere
Title: Chairman and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit
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1. Rights Agreement by and between Bellwether Exploration Company and American
Stock Transfer & Trust Company, as Rights Agent, dated as of September 12,
1997, and which includes as Exhibit A thereto the form of Certificate of
Designation, Preferences and Rights of Series A Preferred Stock, as
Exhibit B thereto the form of Rights Certificate and as Exhibit C thereto
the Summary of Rights.
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================================================================================
RIGHTS AGREEMENT
by and between
BELLWETHER EXPLORATION COMPANY
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
Dated as of September 12, 1997
================================================================================
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 1. Certain Definitions..................................................... 1
Section 2. Appointment of Rights Agent............................................. 4
Section 3. Issue of Rights Certificates............................................ 4
Section 4. Form of Rights Certificates............................................. 6
Section 5. Countersignature and Registration....................................... 6
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Certificates...................... 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights........... 8
Section 8. Cancellation and Destruction of Rights Certificates..................... 9
Section 9. Reservation and Availability of Preferred Stock......................... 10
Section 10. Preferred Stock Record Date............................................. 11
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights....................................................... 11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.............. 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.... 20
Section 14. Fractional Rights and Fractional Shares................................. 22
Section 15. Rights of Action........................................................ 24
Section 16. Agreement of Rights Holders............................................. 24
Section 17. Rights Certificate Holder Not Deemed a Stockholder...................... 24
Section 18. Concerning the Rights Agent............................................. 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent............... 25
Section 20. Duties of Rights Agent.................................................. 26
Section 21. Change of Rights Agent.................................................. 28
Section 22. Issuance of New Rights Certificates..................................... 29
Section 23. Exchange................................................................ 29
Section 24. Redemption.............................................................. 30
Section 25. Notice of Certain Events................................................ 31
Section 26. Notices................................................................. 32
Section 27. Supplements and Amendments.............................................. 33
Section 28. Determination and Actions by the Board of Directors, etc................ 33
Section 29. Successors.............................................................. 34
Section 30. Benefits of this Agreement.............................................. 34
Section 31. Severability............................................................ 34
Section 32. Governing Law........................................................... 34
Section 34. Descriptive Headings.................................................... 34
Exhibit A Form of Certificate of Designation, Preferences
and Rights of Series A Preferred Stock................................. A-1
Exhibit B Form of Rights Certificate.............................................. B-1
Exhibit C Summary of Rights....................................................... C-1
</TABLE>
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RIGHTS AGREEMENT
This Agreement, dated as of September 12, 1997, between Bellwether
Exploration Company, a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company, a New York corporation (the "Rights Agent").
W I T N E S S E T H:
--------------------
WHEREAS, on September 12, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each share of common stock, $0.01 par value, of the Company (the
"Common Stock") outstanding as of the close of business on September 26, 1997
(the "Record Date"), and contemplates the issuance of one Right (subject to
adjustment as provided herein) for each share of Common Stock of the Company
issued between the Record Date and the earliest of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined), each Right representing
the right to purchase, initially, one one-hundredth of one share of Preferred
Stock of the Company (as defined in Section 1 hereof), upon the terms and
subject to the conditions hereinafter set forth (the "Rights").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter
defined) who or which, together with all Affiliates (as hereinafter
defined) and Associates (as hereinafter defined) of such Person, shall
be the Beneficial Owner (as hereinafter defined) of securities
representing 15% or more of the shares of Common Stock then
outstanding, but shall not include the Company, any Subsidiary (as
hereinafter defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity organized,
appointed or established by the Company or any Subsidiary of the
Company for or pursuant to the terms of any such plan. Notwithstanding
the foregoing, (i) no Person shall become an "Acquiring Person" as a
result of an acquisition of Common Stock by the Company which, by
reducing the aggregate number of shares of Common Stock outstanding,
increases the percentage of the total number of shares of Common Stock
outstanding which are beneficially owned by such Person to 15% or
more; provided however, that if a Person shall become the Beneficial
Owner of 15% or more of the Common Stock then outstanding by reason of
purchases of Common Stock by the Company and such Person shall, after
such share purchases by the Company, become the Beneficial Owner of
additional shares of Common Stock totaling 1% or more of the shares of
Common Stock then outstanding, then such Person shall constitute an
"Acquiring Person" and (ii) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
Acquiring Person, as defined pursuant to the foregoing provisions of
this paragraph (a), has become such inadvertently and in good faith,
and, if requested by the Board of Directors, such Person agrees to
divest himself of a sufficient number of shares
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of Common Stock so that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and
as in effect on the date of this Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering
of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement
or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a
bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by
the proviso to Section l(c)(ii)(B)) or disposing of any
securities of the Company.
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Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Texas are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Houston, Texas time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Houston, Texas time, on the
next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall
mean the shares of common stock, par value $.01 per share, of the Company.
"Common Stock" when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary
of another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(g) "Company" shall mean Bellwether Exploration Company, a
Delaware corporation.
(h) "Continuing Director" shall mean, as of the time a
determination is made, a member of the Board of Directors of the Company
who was elected by the stockholders of the Company at a regularly scheduled
annual meeting of stockholders or who was appointed by the Board of
Directors of the Company at a time when at least a majority of the members
of the Board of Directors of the Company were elected by the stockholders
of the Company at a regularly scheduled annual meeting of stockholders.
(i) "Distribution Date" shall have the meaning assigned to such
term in Section 3 hereof.
(j) "Expiration Date" shall have the meaning assigned to such term in
Section 7 hereof.
(k) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust or other entity and shall
include any successor (by merger or otherwise) of such entity.
(l) "Preferred Stock" shall mean the Series A Preferred Stock,
$1.00 par value, of the Company having the rights and preferences set forth
in the Form of Certificate of Designation, Preferences and Rights attached
to this Agreement as Exhibit A.
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(m) "Purchase Price" shall mean the price per share of Common
Stock described in Section 7 hereof.
(n) "Record Date" shall have the meaning as set forth in the Preamble
of this Agreement.
(o) "Rights" shall have the meaning as set forth in the Preamble
of this Agreement.
(p) "Rights Agent" shall have the meaning as set forth in the
Preamble of this Agreement.
(q) "Rights Certificate" shall have the meaning assigned to such
term in Section 3 hereof.
(r) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(s) A "Section 13 Event" shall mean any event described in
Section 13(a)(x), (y) or (z) hereof.
(t) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such.
(u) A "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or interest is owned, directly, or indirectly, by such Person.
(v) A "Triggering Event" shall mean a 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 (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) 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. In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agent and any co-Rights Agent shall be as the
Company shall determine.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES. (a) Until the earlier of
(i) the tenth day after the Stock Acquisition Date or (ii) the Close of Business
on the tenth Business Day (or such later date as may be determined by action of
the Board of Directors prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity holding Common Stock for or
pursuant to the terms of any such plan) of, or of the first public
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announcement of the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Stock for or pursuant to
the terms of any such plan) to commence, a tender or exchange offer that, if
consummated, would result in such Person, alone or together with its Affiliates
and Associates, becoming an Acquiring Person (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock shall be deemed also to be
Rights Certificates) and not by separate Rights Certificates, and (y) the right
to receive Rights Certificates will be transferable only in connection with the
transfer of the underlying shares of Common Stock. As soon as practicable after
the Company has notified the Rights Agent of the occurrence of the Distribution
Date, the Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class, insured, postage prepaid mail, to each record
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
rights certificates in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights, in substantially the form of
Exhibit C hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Stock as of the close of business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the Rights will be evidenced by such certificates
for the Common Stock registered in the name of the holders thereof together with
a copy of the Summary of Rights attached thereto. Until the Distribution Date
(or earlier redemption, expiration or termination of the Rights), the surrender
for transfer of any certificate for Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Certificates for Common Stock which become outstanding (including,
without limitation, shares issued out of treasury and certificates issued upon
transfer or exchange of Common Stock) after the Record Date, but prior to the
earliest of the Distribution Date or the redemption, expiration or termination
of the Rights shall be deemed also to be certificates for Rights, and shall have
impressed, printed, stamped, written or otherwise affixed onto them the
following legend:
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This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Bellwether
Exploration Company (the "Company") and American Stock Transfer & Trust
Company (the "Rights Agent"), dated as of September 12, 1997 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices of the
Company and the Rights Agent. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed, may expire, or may be
evidenced by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a
copy of the Rights Agreement without charge within five days after receipt
of a written request therefor. Under certain circumstances, Rights issued
to, or held by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement) whether currently held by or on behalf of such Person or by any
subsequent holder, may be null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the transfer of
any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates. If the
Company purchases or acquires any Common Stock after the Record Date but prior
to the Distribution Date, any Rights associated with such Common Stock shall be
deemed canceled and retired so that the Company shall not be entitled to
exercise any rights associated with the shares of Common Stock that are no
longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATES. The Rights Certificates
(and the forms of election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set forth in 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 or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of authentication thereof, and on their
face shall entitle the holders thereof to purchase such number of one-hundredths
of a share of Preferred Stock at the exercise price as shall be set forth
therein, but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, a Vice Chairman, 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 Rights
Certificates shall be manually countersigned by the Rights Agent
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and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificate shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company. Any
Rights Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not 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
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a) Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date (as such term is defined in Section 7(a) hereof), any Rights
Certificate or Rights Certificates (other than Rights Certificates representing
Rights that have become void pursuant to Section 7(e) hereof or that may have
been exchanged pursuant to Section 23 hereof) may be transferred, split up,
combined or exchanged for another Rights Certificate or other Rights
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock (or Common Stock, other securities or other property,
as the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged, with the form
of assignment duly executed, at the principal office or offices of the Rights
Agent designated for such purpose. Thereupon the Rights Agent shall countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, 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 Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature
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and delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Rights
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 the
aggregate Purchase Price with respect to the total number of one-hundredths of a
share of Preferred Stock (or other securities or property, as the case may be)
as to which the Rights are exercised, at or prior to the earlier of (i) the
Close of Business on the tenth anniversary of the Record Date, (ii) the time at
which the Rights are redeemed as provided in Section 24 hereof or (iii) the time
at which the Board of Directors of the Company orders the exchange of Rights
pursuant to paragraph (a) of Section 23 (the earlier of (i), (ii) and (iii) is
herein referred to as the "Expiration Date"). Subject to adjustment as provided
herein, each Right shall initially be exercisable for one one-hundredth of a
share of Preferred Stock.
(b) The Purchase Price for each one one-hundredth share of Preferred
Stock pursuant to the exercise of a Right shall initially be $50.00, shall be
subject to adjustment from time to time as provided in Sections 11 and 13 hereof
(the "Purchase Price") and shall be payable in lawful money of the United States
of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per one
one-hundredth of a share of Preferred Stock (or for such Common Stock, other
securities or other property, as the case may be) to be purchased, and an amount
equal to any applicable transfer tax payable in accordance with Section 9(e) (as
determined by the Rights Agent), in cash, or by certified check, cashier's check
or money order payable to the order of the Company (or other proper party in the
case of payments to be made in accordance with Section 9(e)), the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent therefor) certificates for the total number
of shares 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, in its sole discretion, shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights hereunder with
a depositary agent, requisition from the depositary agent depositary receipts
representing such number of 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, (iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may
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be designated by such holder, and (iv) after receipt promptly deliver such cash,
if any, to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities are available for distribution by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) From and after the occurrence of a Section 11(a)(ii) Event, any
Rights that are or were acquired or Beneficially Owned by any Acquiring Person
(or any Associate or Affiliate of such Acquiring Person) shall be void and any
holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Rights Certificate shall be issued
pursuant to Section 3 that represents Rights Beneficially Owned by an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Rights Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate; and any
Rights Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the preceding sentence shall be
canceled.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
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SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK. (a)
Subject to the terms of its certificate of incorporation, the Company covenants
and agrees that it shall use its best efforts to cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock, or any
authorized and issued shares of Preferred Stock held in its treasury, the number
of shares of Preferred Stock that will be sufficient to permit the exercise in
full of all outstanding Rights and, after the occurrence of a Triggering Event,
shall so reserve and keep available a sufficient number of shares of Preferred
Stock (and/or other securities) which may be required to permit the exercise in
full of all outstanding Rights in accordance with Section 7.
(b) So long as the shares of Preferred Stock (and, after the
occurrence of a Triggering Event, any other securities) issuable upon the
exercise of the 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 shares or units of such other securities reserved
for such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts to (i) 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) hereof, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities Act of
1933, as amended (the "Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing and (iii)
cause such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the 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 of the Rights. 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, 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 in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law, or a registration statement shall not have
been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock and/or other
securities delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares or securities.
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(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates or
of any certificates for shares of Preferred Stock and/or Common Stock upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a person other than, or in respect of the issuance or
delivery of the shares of Preferred Stock and/or Common Stock in a name other
than that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for shares of
Preferred Stock, and/or Common Stock in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing such Rights was
duly presented and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such presentation and
payment is a date upon which the Preferred Stock transfer books of the Company
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 Preferred Stock transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate, as such, shall not be entitled to any rights of a stockholder of
the Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, 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. The Purchase Price, the number of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11:
(a) (i) In the event the Company shall at any time after the
Record Date (A) declare a dividend on its then outstanding Preferred Stock
that is payable in shares of Preferred Stock, (B) subdivide the outstanding
shares of Preferred Stock, (C) combine the outstanding shares of Preferred
Stock into a smaller number of shares of Preferred Stock 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 in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive
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the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when
the Preferred Stock transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both 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) Subject to Section 23 of this Agreement, in the event (a
"Section 11(a)(ii) Event") that any Person (other than any employee benefit
plan of the Company or any Subsidiary of the Company or any Person
organized, appointed or established by the Company or such Subsidiary for
or pursuant to the terms of any such employee benefit plan), alone or
together with its Affiliates and Associates (other than the Company, any
Subsidiary of or other Person controlled by the Company, any employee
benefit plan of the Company or any Subsidiary of the Company or any Person
organized, appointed or established by the Company or such Subsidiary for
or pursuant to the terms of any such employee benefit plan), shall become
an Acquiring Person, then proper provision shall be made so that each
holder of a Right, except as provided in Sections 7(e) and 11(a)(iii)
hereof, shall have a right to receive upon exercise of each Right at a
price equal to the then current Purchase Price multiplied by the number of
one-hundredths of a Preferred Share for which a Right is then exercisable,
in accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one-hundredths of a share of Preferred
Stock for which a Right was exercisable (or, if the Distribution Date shall
not have occurred prior to the date of such Section 11(a)(ii) Event, the
number of one-hundredths of a Preferred Share for which a Right would have
been exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 11(a)(ii) Event) immediately
prior to such Section 11(a)(ii) Event and (y) dividing that product by 50%
of the current market price per one share of Common Stock of the Company
(determined pursuant to Section 11(d)) on the date of the occurrence of the
event set forth in this subparagraph (ii) (such number of shares being
referred to as the number of "adjustment shares"). Successive adjustments
shall be made pursuant to this paragraph each time a Section 11(a)(ii)
Event occurs. In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company shall not take
any action which would eliminate or diminish the benefits intended to be
afforded by the Rights.
(iii) In lieu of issuing shares of Common Stock of the Company
in accordance with Section 11(a)(ii) hereof, the Company, acting by
resolution of its Board of Directors (which resolution shall be effective
only with the concurrence of a majority of the Continuing Directors), may,
and, in the event that the number of shares of Common Stock which are
authorized by the Company's Certificate of
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Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof,
shall (A) determine the excess of (1) the value of the adjustment shares
issuable upon the exercise of a Right (the "current value"), over (2) the
Purchase Price attributable to each Right (such excess, the "spread") and
(B) with respect to each Right (subject Section 7(e) hereof), make adequate
provision to substitute for the adjustment shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares of preferred stock which the
Board of Directors of the Company (with the concurrence of a majority of
the Continuing Directors) has deemed to have the same value as shares of
Common Stock of the Company (such shares or units of preferred stock
hereinafter called "common stock equivalents")), (4) debt securities of the
Company, (5) other assets or (6) any combination of the foregoing having an
aggregate value equal to the current value, where such aggregate value has
been determined by action of the Board of Directors of the Company (with
the concurrence of a majority of the Continuing Directors) based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company which has theretofore performed no
services for the Company or any Subsidiary of the Company in the past five
years; provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty days
following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the first date that the right to redeem the Rights pursuant
to Section 24 hereof, as such date may be amended pursuant to Section 26
hereof, shall expire (the later of (x) and (y) being referred to herein as
the "Section 11(a)(ii) trigger date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock of the
Company (to the extent available) and then, if necessary, cash, which
shares or cash have an aggregate value equal to the spread. If, after the
occurrence of a Section 11(a)(ii) Event, the number of shares of Common
Stock that are authorized by the Company's certificate of incorporation but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit exercise in full of the
Rights in accordance with Section 11(a)(ii) hereof and the Company, acting
by resolution of its Board of Directors (which resolution shall be
effective only with the concurrence of a majority of the Continuing
Directors), shall determine in good faith that it is likely that sufficient
additional shares of its Common Stock could be authorized for issuance upon
exercise in full of the Rights, then the thirty-day period set forth above
may be extended to the extent necessary, but not more than ninety days
after the Section 11(a)(ii) trigger date, in order that the Company may
seek stockholder approval for the authorization of such additional shares
(such period as it may be extended, the "substitution period"). To the
extent that the Company determines that some action is to be taken pursuant
to the terms of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the substitution period in order to seek such
stockholder approval for the authorization of additional shares or to
decide the appropriate form of distribution to be made pursuant to the
first sentence of this Section 11(a)(iii) and to determine the value
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thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, 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 of the Company shall be the current market
price per share (determined in accordance with Section 11(d) hereof) of the
Common Stock of the Company on the date of the occurrence of the Section
11(a)(ii) Event, and the per share or per unit value of any Common Stock
Equivalents shall be deemed to equal the current market price (determined
in accordance with Section 11(d) hereof) per share of the Common Stock of
the Company on such date.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Stock (or shares having the same or
more favorable rights, privileges and preferences as the Preferred Stock
("equivalent preferred stock")) or securities convertible into Preferred
Stock or equivalent preferred stock at a price per share of Preferred Stock
or per share of equivalent preferred stock (or having a conversion price
per share, if a security convertible into Preferred Stock or equivalent
preferred stock) less than the current market price (as defined in 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 record 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 offering price of the total number of
shares of Preferred Stock and/or equivalent preferred stock to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price
and the denominator 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 to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of a Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If such subscription price may be
paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be determined reasonably and
with good faith to the holders of Rights by the Board of Directors of the
Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent. 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 computation. Such
adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) If 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 in which the
Company is the
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continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights 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 defined in Section 11(d))
per share of Preferred Stock on such record date, less the fair market
value (as determined reasonably and with good faith to the holders of
Rights by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such convertible
securities, subscription rights or warrants distributable in respect of one
share of Preferred Stock and the denominator of which shall be the current
market price (determined pursuant to Section 11(d)) per share of the
Preferred Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
in 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 30 consecutive "trading days"
(as such term is hereinafter defined) immediately prior to such date and
for purposes of computations made pursuant to Section 11(a)(iii) hereof,
the "current market price" per share of the 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; provided, however, that in the event that the current per share
market price 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 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 30 trading days after the ex-
dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the "current market price" 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 Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities
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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 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. 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
reasonably and with good faith by the Board of Directors of the Company
shall be used and shall be binding on the Rights Agent. The term, "trading
day" shall mean a day on which the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading is
open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so listed or
traded, "current market price" per share shall mean the fair value per
share determined reasonably and with good faith to the holders of Rights by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current
market price" per share (or one one-hundredths of a share) of Preferred
Stock shall be determined in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the current market price per share (or one one-
hundredth of a share) of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d), 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 the
Common Stock and the "current market price" per one one-hundredth of a
share of Preferred Stock shall be equal to the current market price per
share of the Common Stock (as 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). If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or
traded, "current market price" per share shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive 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, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All
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calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandths of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of this transaction which mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a), the holder
of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect
to the shares contained in Section 11(a), (b), (c), (e), (g), (h), (i),
(j), (k), (m) and the provisions of Sections 7, 9, 10, 13, and 14 hereof
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 to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election 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-hundredths of a share of Preferred Stock (calculated to
the nearest one-millionth) obtained by (i) multiplying (x) the number of
one-hundredths of a share of Preferred Stock covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price 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 substitution for
any adjustment in the number of shares of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter but, if the Rights
Certificates have been issued, shall be at least 10 days later than the
date of
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the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates 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 Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Preferred Stock issuable upon the exercise
of the Rights, the Rights Certificates theretofore and thereafter issued
may continue to express the Purchase Price per share and the number of
shares which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares
of Preferred Stock, Common Stock or other securities issuable upon exercise
of the rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Preferred
Stock, Common Stock or other securities at such adjusted Purchase Price.
If upon any exercise of the Rights, a holder is to receive a combination of
Common stock and common stock equivalents, a portion of the consideration
paid upon such exercise, equal to at least the then par value of a share of
Common Stock of the Company, shall be allocated as the payment for each
share of Common Stock of the Company so received.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date the shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due 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 to the contrary in this Section 11 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
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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 shares of Preferred Stock at less than the
current market price, issuance wholly for cash of shares of Preferred Stock
or securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock, stock dividends or issuance of rights, options
or warrants referred to hereinabove in this Section 11, hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not at any
time after the Distribution Date (i) consolidate with, (ii) merge with or
into, or (iii) sell or transfer to, 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, any other Person or Persons if (x) at the time of or immediately
after such consolidation, merger or sale there are any rights, warrants or
other instruments outstanding or 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 or sale, the shareholders of a
Person who constitutes, or would constitute, the "Principal Party" for the
purposes of Section 13(a) hereof 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 Section 23 or 24 hereof, 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) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare or pay any
dividend on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine
the outstanding Common Stock into a smaller number of shares, or (iv) issue
any shares of its capital stock in a reclassification of the outstanding
Common Stock, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, 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.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company
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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 Rights Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) In the event that, at any time after a Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof) and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person shall consolidate with the Company or merge with and into the Company
and the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell, mortgage or
otherwise transfer (or one or more of its Subsidiaries shall sell, mortgage or
otherwise transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
one or more of its wholly-owned Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof) (each, a "Section 13 Event"), then,
and in each such case, proper provision shall be made so that (i) each holder of
a Right, subject to Section 7(e) hereof, shall have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of shares of validly authorized and issued,
fully paid, non-assessable, and freely tradable shares of Common Stock of the
principal party (as hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by the
number of one-hundredths of a share of Preferred Stock for which a Right is then
exercisable (without taking into account any adjustment previously made pursuant
to Section 11(a)(ii) hereof) and (2) dividing that product by 50% of the current
market price per share of the Common Stock of such principal party (determined
pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such principal party, it being specifically intended that the provisions of
Section 11 hereof shall apply to such principal party; and (iv) such principal
party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with Section 9
hereof) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights.
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(b) "Principal party" shall mean
(i) in the case of any transaction described in (x) or (y) of the
first sentence of this Section 13, the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to the merger or consolidation (including,
if applicable, the Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in (z) of the first
sentence in this Section 13, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions; provided, however, that in any such case,
(1) if the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect Subsidiary or
Affiliate of another Person, "principal party" shall refer to such other
Person; (2) in case such Person is a Subsidiary, directly or indirectly, or
Affiliate 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; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons,
the rules set forth in (1) and (2) above shall apply to each of the Persons
having an interest in such joint venture as if such joint venture were a
"Subsidiary" of both or all of such Persons and, in connection therewith,
"principal party" shall refer to each of such Persons and each such
principal party shall bear the obligations set forth in this Section 13 in
the same ratio as their direct or indirect interests in such joint venture
bear to the total of such interests.
If, for any reason, the Rights cannot be exercised for Common Stock of the
Company or such principal party, then a holder of Rights will have the right to
exchange his Rights for cash from the Company or such principal party in an
amount equal to the number of shares of such Common Stock of the Company or of
such principal party he would otherwise be entitled to purchase times 50% of the
then current market price, as determined pursuant to Section 11(d)(i) hereof, of
the Common Stock of the Company or of such principal party, as the case may be.
If, for any reason, including, without limitation, if such principal party is an
individual, private partnership or private company, the foregoing formulation
cannot be applied to determine the cash amount into which the Rights are
exchangeable, then the Board of Directors, based upon the advice from one or
more investment banking firms, shall determine such amount reasonably and with
utmost good faith to the holders of Rights. Any such determination shall be
binding and final.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and each principal party and
each other Person who may become a principal party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or
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transfer of assets mentioned in paragraph (a) of this Section 13, the principal
party at its own expense will
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, will use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the principal party and each of its Affiliates which comply
in all material respects with the requirements for registration on Form 10
under the Exchange Act.
(d) The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a 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 be 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 or to distribute
Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
trading day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day shall
be the last sale price, 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. If on any such date
no such market maker is making a market in the Rights, then the fair value of
the Rights on such date as determined reasonably and with good faith to the
holders of Rights by the Board of Directors of the Company shall be used and
shall be binding on the Rights Agent.
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(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
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 integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the trading day immediately prior to the date of
such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 giving rise to the right to receive common stock
equivalents (other than Preferred Stock) or other securities upon the exercise
of a Right, the Company shall not be required to issue fractions of shares or
units of such common stock equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence fractional shares of such
common stock equivalents or other securities. In lieu of fractional shares or
units of such common stock equivalents or other securities, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share or unit of such common stock equivalent or other
securities. For purposes of this Section 14(c), the current market value of
such share or unit shall be determined in the manner set forth in Section
11(d)(i) with respect to shares of Common Stock except that the current market
price shall be determined by reference only to the trading day immediately prior
to the date of such exercise.
(d) Except as otherwise expressly provided herein, the holder of a
Right by the acceptance of the Rights expressly waives his right to receive any
fractional Rights or any fractional shares upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION. From and after the Record Date, all
rights of action in respect of this Agreement, except rights of action given to
the Rights Agent pursuant to Sections 20 and 21 hereof, are vested in the
respective registered holders of the Rights Certificates (and during the period
that commences on the Record Date and ends on the Distribution Date, the
registered holders of the Common Stock); and from and after the Record Date any
registered holder of any Rights Certificate
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(or, during the period that commences on the Record Date and ends on the
Distribution Date, of the Common Stock), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or, prior to the Distribution
Date, of the 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 Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights, would not have an adequate remedy at law or any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees incurred by them in any action to enforce
the provisions of this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right
by accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) during the period that commences on the Record Date and ends
on the Distribution Date, the Rights will be transferable only in
connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, during the period that
commences on the Record Date and ends on the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock, Common Stock or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions thereof.
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SECTION 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other reasonable disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly. The indemnification provided for hereunder
shall survive the expiration of the Rights and the termination of this
Agreement.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it, after property inquiry or
examination, to be genuine and to be signed, executed and, where necessary
verified or acknowledged, by the proper Person or Persons or otherwise upon the
advice of counsel set forth in Section 20 hereof.
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 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at the time any of the Rights
Certificates shall not have been countersigned any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates in
this Agreement.
(b) If at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver the Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates
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either in its prior name or in its changed name; and in all such cases such
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound;
(a) The Rights Agent may consult with legal counsel selected by
it (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 an Acquiring
Person and the determination of the current market price per share of
Common Stock) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of
the Chairman of the Board, a Vice Chairman, the Chief Executive Officer,
the President, any Vice President, the Secretary or the Treasurer of the
Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Sections 3, 11, 13, 23 or 24 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice that such change or adjustment is
required); nor shall it be responsible for any determination by the Board
of Directors of the Company of the current
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market value of the Rights or Preferred Stock or Common Stock pursuant to
the provisions of Section 14 hereof; nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock or other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, a Vice Chairman, the Chief Executive
Officer, the President, any Vice President, the Secretary or the Treasurer
of the Company, and is authorized to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer or for any delay in acting while
waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(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, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, omission, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if 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 Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent
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shall not take any further action with respect to such requested exercise
of transfer without first consulting with the Company.
(l) The Rights Agent shall not be required to take notice of or
be deemed to have notice of any fact, event or determination under this
Agreement unless and until the Rights Agent shall be specifically notified
in writing by the Company of such fact, event or determination.
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 to holders of the Rights Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Stock and Preferred
Stock by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. 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 Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or the State of Texas or the State of New York (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York, in good standing,
having an office in the State of Texas or the State of New York, which is
authorized under such laws to exercise corporate trust or stock transfer 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 million 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 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 Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES"". Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its
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option, issue new Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement.
SECTION 23. EXCHANGE. (a) The Board of Directors of the Company
may, at its option, at any time after any Person becomes an Acquiring Person,
authorize and direct the Company to exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at
an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date of this Agreement (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any entity holding shares of
Common Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 23 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the shares of Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 23, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b) hereof) for Common Shares exchangeable for
Rights, at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant to the
terms thereof, so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 23, the
Company shall take all such action
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as may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence shares of Common Stock
in connection with any exchange made pursuant to this Section 23. In lieu of
such fractional shares of Common Stock, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole share of Common Stock. For the
purposes of this paragraph (e), the current market value of a whole share of
Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
trading day immediately prior to the date of exchange pursuant to this Section
23.
SECTION 24. REDEMPTION. (a) The Company may, by resolution of its
Board of Directors (which resolution shall, if adopted following the Stock
Acquisition Date, be effective only with the concurrence of a majority of the
Continuing Directors and only if the Continuing Directors constitute a majority
of the number of directors then in office), at its option, at any time prior to
the earlier of (x) the Close of Business on the tenth Business Day following the
Stock Acquisition Date or (y) the Close of Business on the Expiration Date
redeem all but not less than all of the then outstanding Rights at a redemption
price of $.01 per Right (payable in cash, shares of Common Stock (based on the
current market price, determined pursuant to Section 11(d), of the Common Stock
at the time of redemption) or any other form of consideration deemed appropriate
by the Board of Directors of the Company), 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, however, that the Board of Directors of the Company may act
only with the concurrence of a majority of the Continuing Directors in
authorizing redemption of the Rights on or after the date of a change (resulting
from a proxy or consent solicitation effected in compliance with applicable law
and the requirements of any national securities exchange on which the Common
Stock of the company is listed) in a majority of the directors in office at the
commencement of such solicitation if any Person who is a participant in such
solicitation has stated (or, if upon the commencement of such solicitation, a
majority of the Board of Directors of the Company has determined in good faith)
that such Person (or any of its Affiliates or Associates) intends to take, or
may consider taking, any action which would result in such Person becoming an
Acquiring Person or which would cause the occurrence of a Triggering Event.
(b) In the event that, following the occurrence of the Stock
Acquisition Date and following the expiration of the right of redemption under
subparagraph (a) of this Section 24, but prior to any Triggering Event, (i) a
Person who is an Acquiring Person shall have transferred or otherwise disposed
of a number of shares of Common Stock of the Company in one transaction, or a
series of transactions (not directly or indirectly involving the Company or any
of its Subsidiaries), which did not result in the occurrence of a Triggering
Event, such that such Person is thereafter a Beneficial Owner of 5% or less of
the outstanding Common Stock of the Company, (ii) there are no other Persons,
immediately following the occurrence of the event described in clause (i), who
are
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Acquiring Persons and (iii) the Board of Directors of the Company (with the
concurrence of a majority of the Continuing Directors) shall so approve, then
the Company's right of redemption provided in subparagraph (a) of this Section
24 shall be reinstated and thereafter all outstanding Rights shall again be
subject to the provisions of this Section 24.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event during such time as the Company has the right to redeem
the Rights under this Section 24.
(d) Immediately upon the action of the Board of Directors of the
Company (with, if required, the concurrence of a majority of the continuing
Directors) ordering the redemption of the Rights (or at such time subsequent to
such action as the Board of Directors, with the concurrence of a majority of the
Continuing Directors, may determine, including, without limitation, the time of
the occurrence of one or more events or the satisfaction of one or more
conditions), and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. Within 10 days after the
action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock of the Company. 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 any Rights at any time in any manner
other than that specifically set forth in this Section 24, other than in
connection with the repurchase of Common Stock of the Company prior to the
Distribution Date.
SECTION 25. NOTICE OF CERTAIN EVENTS. (a) If after the Record
Date the Company shall propose (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), (ii) to offer to the holders of
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, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), (iv) to effect any consolidation or
merger into or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Rights Certificate, in
accordance with Section 27 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given
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in the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.
(b) If any of the events set forth in Section 11(a)(ii) of this
Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, 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) hereof.
SECTION 26. NOTICES. (a) Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Bellwether Exploration Company
1331 Lamar, Suite 1455
Houston, Texas 77010
Attn: Secretary
(b) Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attn: Corporate Trust Department
(c) Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Rights Certificate
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. The Company may from time
to time supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with respect to the
Rights which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person) and only if
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approved by the Continuing Directors. Without limiting the foregoing, the
Company may at any time prior to such time as any Person becomes an Acquiring
Person amend this Agreement to lower the threshold set forth in Section 1(a) to
not less than the greater of (i) any percentage greater than the largest
percentage of the then outstanding Common Stock then known by the Company to be
beneficially owned by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company, any entity holding Common Stock for or pursuant to the terms of any
such plan) and (ii) 10%. Prior to the Record Date, the Board of Directors of the
Company may amend, modify or terminate this Agreement in any manner determined,
in their sole discretion, to be necessary or appropriate.
SECTION 28. DETERMINATION 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 or any other securities of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board, or the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights 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
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights Certificates and all other parties, (y)
not subject the Board to any liability to the holders of the Rights
Certificates.
SECTION 29. 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 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Rights Certificates (and,
prior to the Distribution Date, the 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 Rights Certificates (and, prior to the Distribution Date, the
Common Stock).
SECTION 31. 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.
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SECTION 32. GOVERNING LAW. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and to be performed entirely within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereto affixed and
attested, all as of the day and year first above written.
BELLWETHER EXPLORATION COMPANY
Attest: By:
--------------------- ---------------------------
Name: J. Darby Sere
Title: Chairman and
Chief Executive Officer
AMERICAN STOCK TRANSFER &
TRUST COMPANY
Attest: By:
--------------------- ---------------------------
Name:
Title:
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Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A PREFERRED STOCK
OF
BELLWETHER EXPLORATION COMPANY
PURSUANT TO SECTION 151 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
I, J. Darby Sere, President and Chief Executive Officer of Bellwether
Exploration Company, a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), in accordance with
the provisions of Section 103 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
September 12, 1997, adopted the following resolution creating a series of
300,000 shares of Preferred Stock designated as Series A Preferred Stock.
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation is hereby created,
and that the designation and amount thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as
follows:
SECTION 1. DESIGNATION AND AMOUNT. There shall be a series of Preferred
Stock of the Corporation which shall be designated as "Series A Preferred
Stock", par value $1.00 per share, and the number of shares constituting such
series shall be 300,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than that of
the shares then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS. (A) Subject to the prior and
superior rights of the holders of any shares of any series of Preferred Stock
ranking prior and superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of
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Series A Preferred Stock in preference to the holders of shares of Common Stock,
par value $.01 per share (the "Common Stock"), of the Corporation and any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of January, April, July, and October
in each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred Stock
in an amount per share (rounded to the nearest cent) equal to the greater of (a)
$.25 (twenty-five cents), or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash and
non-cash (payable in kind) dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time after September 26, 1997 (the "Record Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then 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 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 a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $.25 (twenty-five cents) 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 prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series 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
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<PAGE>
thereon, which record date shall be no more than 60 days prior to the date fixed
for the payment thereof.
SECTION 3. VOTING RIGHTS. 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 the stockholders of the Corporation. In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then 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 one 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 (6) 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 (including holders of the
Series A Preferred Stock) with dividends in arrears in an amount equal to six
quarterly dividends thereon, voting as a 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 ten percent in number of
shares of Preferred Stock outstanding shall be present in person or by proxy.
The absence of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Preferred Stock of such voting right. At any meeting
at which the 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
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<PAGE>
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 ten percent of the total number of shares of Preferred
Stock outstanding, irrespective of series, may request, the calling of a special
meeting of the 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 no 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 ten percent of the total number of shares of Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, 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 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 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 By-Laws 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 By-Laws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are
A-4
<PAGE>
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
SECTION 4. CERTAIN RESTRICTIONS. (A) Whenever quarterly dividends or
other dividends or distributions payable on the 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 shares of Series
A Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:
(i) Declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) Declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) Redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) Purchase or otherwise acquire for consideration any shares of Series
A Preferred Stock or any shares of stock ranking on a parity 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 such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or
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<PAGE>
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to the 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 per share, the greater
of $.25 (twenty-five cents) or 100 times the payment made per share of Common
Stock, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series A Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Preferred Stock and Common Stock, respectively,
holders of Series A Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Series A Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Record Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
A-6
<PAGE>
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then 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 are outstanding immediately prior to such
event.
SECTION 8. REDEMPTION. The shares of Series A Preferred Stock shall not
be redeemable.
SECTION 9. RANKING. The Series A Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
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.
A-7
<PAGE>
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this ____ day of
_________, 1997.
By:___________________________
Name: J. Darby Sere
Title: Chairman and Chief Executive
Officer
Attest:
______________________________
Roland E. Sledge, Secretary
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<PAGE>
Exhibit B
[Form of Rights Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 26, 2007 OR EARLIER IF NOTICE OF EXCHANGE
OR REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO EXPIRATION, REDEMPTION
AND EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED
BE CERTAIN PERSONS MAY BECOME NULL AND VOID.
Rights Certificate
Bellwether Exploration Company
(a Delaware corporation)
This certifies that ___________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of September 12, 1997 (the "Rights Agreement") between
Bellwether Exploration Company, a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date and prior to 5:00 P.M.
(Houston, Texas time) on September 26, 2007, unless prior thereto such Rights
are redeemed or exchanged in accordance with the terms of the Rights Agreement,
at the office of the Rights Agent designated for such purpose, one one-hundredth
of a fully paid, non-assessable share of Series A Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of $[_____] per one one-
hundredth of a share (the "Purchase Price"), upon presentation and surrender of
this Rights Certificate with the appropriate Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of ___________, ____, based on the Preferred
Stock as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities or consideration which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated
B-1
<PAGE>
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Company, and the Company
will mail to the holder a copy of the Rights Agreement within five days of a
written request therefor.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent may be exercised for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Preferred Stock as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.01 per Right, payable in cash, common stock or other
consideration.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be exchanged by the Company at its option at
an exchange price of one share of Common Stock (or certain other securities) per
Right, subject to adjustment.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral 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.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company 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 Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
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<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ____________, ____.
ATTEST: BELLWETHER EXPLORATION COMPANY
____________________________ By:_________________________
Name: Name:
Title: Title:
Countersigned:
____________________________
as Rights Agent
____________________________
Authorized Signature
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<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer the Rights represented by this Certificate.)
FOR VALUE RECEIVED __________________ sell, assigns and
transfers unto _________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________________ ,
to transfer the within Rights Certificate on the books of the within-named
Company, will full power of substitution.
Dated:_____________, ____
______________________________________
Signature
Signature Guaranteed:
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<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to 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 Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ______________, ____ ______________________________________
Signature
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Rights)
To Bellwether Exploration Company:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock (or Common Stock or such other securities of the Company or any
other Person) issuable upon the exercise of the Rights and requests that
certificates for such shares be issued in the name of:
________________________________________________________________________________
(Please insert social security or other identifying number)
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
The Rights Certificate indicating the balance, if any, of such Rights
which may still be exercised shall be returned to the undersigned unless such
person requests that the Rights Certificate be registered in the name of and
delivered to:
________________________________________________________________________________
(Please insert social security or other identifying number)
[complete only if Rights Certificate is to be
registered in a name other than the undersigned]
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated:______________, ____
______________________________________
Signature
Signature Guaranteed:
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<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to 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 Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _____________, ____ ______________________________________
Signature
Notice
------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
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<PAGE>
Exhibit C
SUMMARY OF THE RIGHTS
On September 12, 1997, the Board of Directors of Bellwether Exploration
Company (the "Company") authorized and declared a dividend of one preferred
stock purchase right (a "Right") for each share of common stock, par value $.01
per share, of the Company (the "Common Shares"). The dividend is payable on
September 26, 1997 (the "Record Date") to the holders of record of Common Shares
as of the close of business on such date.
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of September
12, 1997 by and between the Company and American Stock Transfer & Trust Company,
as Rights Agent (the "Rights Agent").
1. COMMON SHARE CERTIFICATES REPRESENTING RIGHTS
Until the Distribution Date (as defined in Section 2 below), (a) the Rights
shall not be exercisable, (b) the Rights shall be attached to and trade only
together with the Common Shares and (c) the stock certificates representing
Common Shares shall also represent the Rights attached to such Common Shares.
Common Share certificates issued after the Record Date and prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.
2. DISTRIBUTION DATE
The "Distribution Date" is the earliest of (a) the tenth day following the
date of the first public announcement that any person (other than the Company or
certain related entities, and with certain additional exceptions) has become the
beneficial owner of 15% or more of the then outstanding Common Shares (such
person is an "Acquiring Person" and the date of such public announcement is the
"Stock Acquisition Date") or (b) the close of business on the tenth business day
(or such later day as shall be designated by the Board of Directors) following
the date of the commencement of, or the announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would cause any person
(other than the Company and certain related entities and with certain additional
exceptions) to become an Acquiring Person. In calculating the percentage of
outstanding Common Shares that are beneficially owned by any person, such
person shall be deemed to beneficially own any Common Shares issuable upon the
exercise, exchange or conversion of any options, warrants or other securities
beneficially owned by such person and any Common Shares beneficially owned by
certain affiliates and associates of such person. Notwithstanding the
foregoing, if any person shall become the beneficial owner of at least 15% of
the outstanding Common Shares by reason of purchases of Common Shares by the
Company, then such person shall not be deemed an "Acquiring Person" until such
person thereafter acquires beneficial ownership of, in the aggregate, a
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<PAGE>
number of additional Common Shares equal to 1% or more of the then outstanding
Common Shares.
After the Distribution Date, the Rights shall separate from the Common
Shares, Rights certificates shall be issued, and the Rights shall become
exercisable to purchase Preferred Shares as described in Section 5 below.
3. ISSUANCE OF RIGHTS CERTIFICATES
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Rights certificates alone shall represent such Rights from and after
the Distribution Date.
4. EXPIRATION OF RIGHTS
The Rights shall expire on September 26, 2007, unless earlier redeemed or
exchanged.
5. EXERCISE OF RIGHTS
Unless the Rights have expired or been redeemed or exchanged, they may be
exercised, at the option of the holders, pursuant to paragraphs (a), (b) or (c)
below. No Right may be exercised more than once or pursuant to more than one of
such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by an
Acquiring Person or an affiliate or associate thereof shall be void.
(a) RIGHT TO PURCHASE PREFERRED SHARES. From and after the close of
business on the Distribution Date, each Right (other than a Right that has
become void) shall be exercisable to purchase one one-hundredth of a share of
Series A Preferred Stock, par value $1.00 per share, of the Company (the
"Preferred Shares"), at an exercise price of $50.00) (the "Purchase Price").
The Preferred Shares are nonredeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock, are
subordinate to any other series of the company's preferred stock whether issued
before or after the issuance of the Preferred Shares. The Preferred Shares may
not be issued except upon exercise of Rights. The holder of a Preferred Share
is entitled to receive when, as and if declared, the greater of (i) cash and
non-cash dividends in an amount equal to 100 times the dividends declared on
each Common Share or (ii) a preferential annual dividend of $1.00 per Preferred
Share. In the event of liquidation, the holders of Preferred Shares shall be
entitled to receive a liquidation payment in an amount equal to the greater of
(1) $.25 (twenty-five cents) per Preferred Share, plus all accrued and unpaid
dividends and distributions on the Preferred Shares, or (2) an amount equal to
100 times the aggregate amount to be distributed per Common Share. Each
Preferred Share has 100 votes, voting together with the Common Shares. In the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, the holder of a Preferred Share shall be entitled to receive 100
times the amount received per Common Share. The rights of the Preferred Shares
as to dividends, voting and liquidation
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preferences are protected by antidilution provisions. It is anticipated that the
value of one one-hundredth of a Preferred Share should approximate the value of
one Common Share.
(b) RIGHT TO PURCHASE COMMON SHARES OF THE COMPANY. In the event that any
person, alone or together with its affiliates or associates, shall become an
Acquiring Person (subject to certain exceptions), each Right (other than a Right
that has become void) shall be exercisable to purchase, at the Purchase Price
(initially $50.00), Common Shares with a market value equal to two times the
Purchase Price. If the Company does not have sufficient Common Shares available
for all Rights to be exercised the Company shall, or otherwise if the Company so
elects the Company may, substitute for all or any portion of the Common Shares
that would otherwise be issuable upon the exercise of the Rights, cash, assets
or other securities having the same aggregate value as such Common Shares.
(c) RIGHT TO PURCHASE COMMON STOCK OF A SUCCESSOR CORPORATION. If, after a
person has become an Acquiring Person, (i) the Company is acquired in a merger
or other business combination in which the Company is not the surviving
corporation, (ii) the Company is the surviving corporation in a merger or other
business combination in which all or part of the outstanding Common Shares are
changed into or exchanged for stock or assets of another person or (iii) 50% or
more of the company's consolidated assets or earning power are sold, then each
Right (other than a Right that has become void) shall thereafter be exercisable
to purchase, at the Purchase Price (initially $50.00), shares of common stock or
cash of the surviving corporation or purchaser, respectively, with an aggregate
market value equal to two times the Purchase Price.
6. ADJUSTMENTS TO PREVENT DILUTION
The Purchase Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Agreement in
order to prevent dilution. With certain exceptions, no adjustment in the
Purchase Price shall be required until cumulative adjustments require an
adjustment of at least 1%.
7. CASH PAID INSTEAD OF ISSUING FRACTIONAL SECURITIES
No fractional securities shall be issued upon exercise of a Right (other
than fractions of Preferred Shares that are integral multiples of one one-
hundredth of a Preferred Share, which fractions may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash shall be made based on the market price of such securities on the last
trading date prior to the date of exercise.
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8. REDEMPTION
Prior to the earlier of the close of business on the tenth business day
following a Stock Acquisition Date or the close of business on the earlier of
expiration, redemption or exchange of the Rights, the Company may, by resolution
of its Board of Directors (or of certain "Continuing Directors", as hereinafter
defined, if such resolution is adopted after a Stock Acquisition Date), redeem
all of the then outstanding Rights at a redemption price of $.01 per Right,
subject to adjustment, payable in cash, Common Shares or other appropriate
consideration.
9. EXCHANGE
At any time after any Person becomes an Acquiring Person and prior to the
first date thereafter upon which an Acquiring Person (with certain exceptions)
shall be the beneficial owner of 50% or more of the outstanding Common Shares,
the Board of Directors may, at its option, direct the Company to exchange all,
but not less than all, of the then outstanding Rights for Common Shares at an
exchange ratio of one Common Share per Right, subject to adjustment.
Immediately upon such action by the Board of Directors, the right to exercise
Rights shall terminate and the only right of the holders of Rights thereafter
shall be to receive a number of Common Shares to which such holder is entitled
pursuant to such exchange ratio.
10. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, shall have no
rights as a stockholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. AMENDMENT OF RIGHTS AGREEMENT
The Board of Directors may, from time to time, without the approval of any
holder of Rights, direct the Company and the Rights Agent to supplement or amend
any provision of the rights Agreement in any manner, whether or not such
supplement or amendment is adverse to any holder of Rights, and the Company and
Rights Agent shall so supplement or amend such provision; provided, however,
that from and after the time that any person becomes an Acquiring Person, the
Rights Agreement shall not be supplemented or amended in any manner that would
adversely affect any holder of outstanding Rights other than an Acquiring
Person; provided, further that from and after the time that any person becomes
an Acquiring Person, the Rights Agreement shall not be supplemented or amended
in any manner without the approval of certain Directors who were elected at a
regularly scheduled, annual meeting of the Company or Directors appointed by
such Directors so elected ("Continuing Directors").
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