SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
BERRY PETROLEUM COMPANY
(Exact name of registrant as specified in charter)
Delaware 77-0079387
(State of Incorporation of organization) (I.R.S. Employer Identification No.)
28700 Hovey Hills Road, P.O. Bin X, Taft, CA 93268
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to
Section l2(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Rights to Purchase Series B New York Stock Exchange
Junior Participating
Preferred Stock
Securities to be registered pursuant to
Section 12(f) of the Act:
None
(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
On November 18, 1999 (the "Rights Dividend Declaration Date"),
the Board of Directors of Berry Petroleum Company (the "Company")
declared a dividend of one Right (a "Right") for each outstanding
share of capital stock (Class A Common Stock "Common Stock" and Class
B Stock) to be distributed to stockholders of record at the close of
business on December 8, 1999 (the "Record Date"). Each Right entitles
the registered holder to purchase from the Company one one-hundredth
of a share (a "Unit") of Series B Junior Participating Preferred
Stock, par value $0.01 per share (the "Preferred Stock"), at a
Purchase Price of $38.00, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and ChaseMellon Shareholder Services,
LLC, as Rights Agent.
The following is a brief description of the Rights. It is
intended to provide a general description only and is qualified in its
entirety by reference to the Rights Agreement, which is attached
hereto as Exhibit 1. Capitalized terms not otherwise defined herein
shall have the meanings given to them in the Rights Agreement.
Issuance of Rights.
Each share of Common Stock and Class B Stock outstanding at the
close of business on the Record Date will receive one Right. In
addition, prior to the Distribution Date (as hereinafter defined), one
additional Right (as such number may be adjusted pursuant to the
provisions of the Rights Agreement) shall be deemed to be delivered
for each share of Common Stock and Class B Stock issued or transferred
by the Company after the Record Date. Following the Distribution Date
(as hereinafter defined) and prior to the expiration or redemption of
the Rights, the Company will issue one Right (as such number may be
adjusted pursuant to the provisions of the Rights Agreement) for each
share of Common Stock issued pursuant to the exercise of stock options
or under employee plans or upon the exercise, conversion or exchange
of securities issued by the Company after the effective date of the
Rights Agreement. In any other case after the Distribution Date, the
Company may issue Rights when it issues capital stock if the Board of
Directors deems it to be necessary or appropriate but shall be under
no obligation to do so.
Capital Stock Certificates Representing Rights Prior to Distribution
Date.
Prior to the Distribution Date, the Rights will be attached to
all capital stock certificates representing shares then outstanding
and will be transferred with and
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only with such capital stock certificates. No separate Rights certificates
will be distributed. The surrender for transfer of any certificates for
capital stock outstanding will also constitute the transfer of the Rights
associated with the capital stock represented by such certificate. New capital
stock certificates issued after the Record Date will contain a legend
incorporating the Rights Agreement by reference.
Distribution Date.
The Rights will separate from the capital stock and a
Distribution Date will occur (the "Distribution Date") upon the
earlier of (i) 10 days following a public announcement that a person
or group of affiliated or associated persons, other than the Company,
any subsidiary of the Company, any employee benefit plan or employee
stock plan of the Company or any subsidiary of the Company, any person
or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan, or a person who or which,
together with its Affiliates and Associates, shall become the
Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding solely as a result of a reduction in the number of shares
of Common Stock outstanding due to a repurchase of Common Stock by the
Company, unless such person shall thereafter purchase or otherwise
become the Beneficial Owner of additional shares of Common Stock
representing 1% of the shares of Common Stock then outstanding (an
"Exempt Person"), who or which, without the consent of the Company,
has acquired or obtained the right to acquire, beneficial ownership of
20% or more of the outstanding shares of capital stock (such person or
group being referred to as an "Acquiring Person" and such date being
referred to as the "Stock Acquisition Date"), or (ii) 10 business days
following the commencement of a tender offer or exchange offer that
would result in a person or group (other than an Exempt Person or
person approved by the Company) beneficially owning 20% or more of the
outstanding shares of Common Stock. As soon as practicable after the
Distribution Date, Rights certificates will be mailed to holders of
record of the capital stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights certificates
alone will represent the Rights.
Exercise of Rights.
Rights Initially Not Exercisable. Prior to the Distribution
Date, the Rights are not exercisable.
Rights Entitling Holders to Purchase Preferred Stock. At any
time after the Distribution Date, but prior to the earlier of the
expiration or redemption of the Rights, each Right may be exercised at
the stated purchase price of $38.00 (subject
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to adjustment) for one one-hundredth of a share of the Preferred Stock;
provided, however, that upon the occurrence of any of the events described
below the Rights may no longer be exercised for the Preferred Stock and may
only be exercised for certain other securities described below.
Rights Entitling Holders (Except Any Acquiring Person) to
Purchase Common Stock of the Company. In the event that at any time
following the Rights Dividend Declaration Date, a person becomes an
Acquiring Person (except pursuant to an offer for all outstanding
shares of Common Stock which a majority of the independent directors
determines to be fair to and otherwise in the best interests of the
Company and its stockholders), then each holder of a Right will
thereafter have the right to receive, upon exercise, Common Stock (or,
in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the
Right. The Rights are exercisable following the occurrence of the
foregoing only at such time as the Rights are not redeemable by the
Company. Notwithstanding any of the foregoing, following the
occurrence of the event set forth in this Paragraph, all Rights that
are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person will be
null and void.
Rights Entitling Holders (Except Any Acquiring Person) to
Purchase Common Stock of an Acquiring Company. In the event that, at
any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or in which the
Company's outstanding Common Stock is exchanged for cash, stock or
other property (other than a merger which follows an offer described
in the preceding Paragraph), or (ii) 50% or more of the Company's
assets or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the
exercise price of the Right.
Adjustment of Number of Rights, Purchase Price and Number of Units of
Preferred Stock.
The Purchase Price payable and/or the number of Units of
Preferred Stock or other securities or property issuable upon exercise
of the Rights are subject to adjustment from time to time to prevent
dilution, as set forth in the Rights Agreement. With certain
exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments amount to at least 1% of the Purchase Price.
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Fractional Rights and Fractional Shares.
No fractional Rights, fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one
one-hundredth of a share), or fractional shares of Common Stock will
be issued and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Rights, Preferred Stock, or Common
Stock, respectively, on the last trading date prior to the date of
exercise.
Redemption of Rights.
In general, the Company may redeem the Rights in whole, but not
in part, at a price of $0.01 per Right, at any time until the
Distribution Date. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the
$0.01 redemption price. After the Distribution Date, the Company's
ability to redeem the Rights can be reinstated in certain
circumstances, subject to certain conditions, in connection with a
permitted transaction not involving an Acquiring Person or where an
Acquiring Person has decreased its beneficial ownership in the Company
to less than 10% of the then outstanding shares of Common Stock and
there is no other Acquiring Person.
Amendments.
Other than those provisions relating to the redemption price or
the final expiration date of the Rights, any of the provisions of the
Rights Agreement may be supplemented or amended by the Company prior
to the Distribution Date, without approval of the Rights holders,
whether or not a supplement or amendment is adverse to the Rights
holders. After the Distribution Date, the provisions of the Rights
Agreement (other than those provisions relating to the redemption
price or the final expiration date of the Rights) may be amended by
the Company in order to make changes which do not materially and
adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person).
Final Expiration Date.
The Rights will expire at the close of business on December 8, 2009,
unless earlier redeemed or exchanged by the Company or terminated, as
described in the Rights Agreement.
No Voting or Dividend Rights.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a
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stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
Terms of the Preferred Stock.
The Company has initially reserved 250,000 shares of Preferred
Stock for issuance upon exercise of the Rights, such number to be
subject to adjustment from time to time in accordance with the Rights
Agreement. The Preferred Stock will be nonredeemable and will rank
junior to all other series of the Company's preferred stock. The
dividend, liquidation and voting rights, and the rights upon
consolidation or merger of the Preferred Stock are designed so that
the value of the one one-hundredth interest in a share of Preferred
Stock purchasable with each Right will approximate the value of one
share of Common Stock. Each whole share of Preferred Stock will be
entitled to receive a quarterly preferential dividend of the greater
of $.25 per share or 100 times the dividend declared on the Common
Stock. In the event of liquidation, the holders of the Preferred
Stock will be entitled to receive a preferential liquidation payment
of $100 per share but will be entitled to receive, in the aggregate, a
liquidation payment equal to 100 times the payment made per share of
Common Stock. Each share of Preferred Stock will have 100 votes,
voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common
Stock are exchanged for or changed into other stock or securities,
cash and/or other property, each share of Preferred Stock will be
entitled to receive 100 times the amount received per share of Common
Stock.
Item 2. Exhibits.
1. Rights Agreement, dated as of December 8, 1999, by and
between the Company and ChaseMellon Shareholder Services, LLC, as
Rights Agent, which includes as Exhibit B thereto the Form of Rights
Certificate. Pursuant to the terms of the Rights Agreement, Rights
Certificates will not be mailed until after the Distribution Date ( as
that term is defined in the Rights Agreement).
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SIGNATURE
Pursuant to the requirements 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: December 7, 1999 Berry Petroleum Company
By: /s/ Jerry V. Hoffman
Jerry V. Hoffman,
Chairman of the Board, President and
Chief Executive Officer
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________________________________________________________
BERRY PETROLEUM COMPANY
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
__________________________
RIGHTS AGREEMENT
Dated as of December 8, 1999
________________________________________________________
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TABLE OF CONTENTS
Section Page
1. Certain Definitions 1
2. Appointment of Rights Agent 6
3. Issue of Rights Certificates. 6
4. Form of Rights Certificates. 8
5. Countersignature and Registration. 9
6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates. 10
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. 10
8. Cancellation and Destruction of Rights Certificates. 13
9. Reservation and Availability of Capital Stock. 13
10. Preferred Stock Record Date 15
11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights 15
12. Certificate of Adjusted Purchase Price or Number of Shares. 24
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. 24
14. Fractional Rights and Fractional Shares. 28
15. Rights of Action 29
16. Agreement of Rights Holders 30
17. Rights Certificate Holder Not Deemed a Stockholder. 30
18. Concerning the Rights Agent. 31
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19. Merger or Consolidation or Change of Name of Rights Agent. 31
20. Duties of Rights Agent. 32
21. Change of Rights Agent 34
22. Issuance of New Rights Certificates 35
23. Redemption and Termination. 36
24. Exchange. 37
25. Notice of Certain Events. 38
26. Notices 39
27. Supplements and Amendments 40
28. Successors 41
29. Determination and Actions by the Board of Directors. Etc. 41
30. Benefits of this Agreement 41
31. Severability 41
32. Governing Law 42
33. Counterparts 42
34. Descriptive Headings 42
Exhibit A - Form of Certificate of Designation, Preferences and
Rights of Series B Junior Participating Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Berry Petroleum Company Summary of Rights to Purchase
Preferred Stock
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 8, 1999 (the "Agreement"),
between Berry Petroleum Company, a Delaware corporation (the "Company"),
and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company, as Rights Agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on November 18, 1999 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of capital stock (including the
Class A Common Stock and Class B Stock) of the Company outstanding at the
close of business on December 8, 1999 (the "Record Date"), and has authorized
the issuance of one Right (as such number may hereinafter be adjusted pursuant
to the provisions of Section 11(p) hereof) for each share of Common Stock of
the Company issued between the Record Date (whether originally issued or
delivered from the Company's treasury) and the Distribution Date (as
hereinafter defined), each Right initially representing the right to purchase
one one-hundredth of a share of Series B Junior Participating Preferred Stock
of the Company having the rights, powers and preferences set forth in the form
of Certificate of Designation, Preferences and Rights attached hereto as
Exhibit A, 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 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 who or which, together
with all Affiliates and Associates of such Person, without the prior
approval of the Company, shall become the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any subsidiary of the Company, any
Person or entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan, or a Person who or
which, together with its Affiliates and Associates, shall become the
Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding solely as a result of a reduction in the number of shares
of Common Stock outstanding due to a repurchase of Common Stock by the
Company, unless such Person shall thereafter purchase or otherwise
become the Beneficial Owner of additional shares of Common Stock
representing 1% of the shares of Common Stock then outstanding.
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(b) "Act" shall mean the Securities Act of 1933.
(c) "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
in effect on the date of this Agreement (the "Exchange Act").
(d) 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, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange, or (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement
arrangement or understanding: (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not
also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding
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(whether or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company; provided, however, that nothing in this
paragraph (d) shall cause a Person engaged in business as an underwriter
of securities to be the "Beneficial Owner" of, or to "beneficially own,"
any securities acquired through such Person's participation in good faith
in a firm commitment underwriting until the expiration of forty days after
the date of such acquisition; and further provided that a bank or trust
association shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any securities held by it as of the Rights
Dividend Declaration Date as trustee, executor or other fiduciary of
any trust or estate, and the beneficiary or other equitable owner of
such securities shall be deemed the "Beneficial Owner" of, and to
"beneficially own," such securities.
(e) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of California or
the city in which the office of the Rights Agent is located are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
California time on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., California time on the
next succeeding Business Day.
(g) "Common Stock" shall mean the Class A Common Stock, $0.01 par
value, of the Company, and, to the extent a holder of Class B Stock of
the Company is a holder of Rights granted pursuant to this Agreement,
all references to holders of Common Stock shall be deemed to likewise
refer to such holder of Class B Stock and all privileges, benefits
and/or obligations provided hereunder to holders of Common Stock shall
likewise apply to such holder of Class B Stock. "Common Stock" when
used with reference to any Person other than the Company shall mean
the capital stock (or units of beneficial interest which represent the
right to participate in profits, losses, deductions and credits) of
such Person with the greatest voting power, or the equity securities
or other equity interest having power to control or direct the
management, of such Person.
(h) "Common stock equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Current market price" shall have the meaning set forth in
Section 11(d)(i) hereof.
(j) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
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(k) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(l) "Exchange Act" shall have the meaning set forth in Section 1(c)
hereof.
(m) "Equivalent Common Stock" shall have the meaning set forth in
Section 11(b) hereof.
(n) "Exempt Person" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan or employee stock plan of the
Company or of any Subsidiary of the Company, any Person or entity
organized, appointed, or established by the Company for or pursuant to
the terms of any such plan, or a Person who or which, together with
its Affiliates and Associates, shall become the Beneficial Owner of
20% or more of the shares of Common Stock when outstanding solely as a
result of a reduction in the number of shares of Common Stock
outstanding due to a repurchase of Common Stock by the Company, unless
such Person shall thereafter purchase or otherwise become the
Beneficial Owner of additional shares of Common Stock representing 1%
of the shares of Common Stock then outstanding.
(o) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(p) "Final Expiration Date" shall mean the close of business on
December 8, 2009.
(q) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(r) "Preferred Stock" shall mean shares of Series B Junior
Participating Preferred Stock, $0.01 par value, of the Company and,
To the extent that there is not a sufficient number of shares of
Series B Junior Participating Preferred Stock authorized to permit the
full exercise of the Rights, any other series of Preferred Stock, $0.01
par value, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series B Junior
Participating Preferred Stock.
(s) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(t) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(u) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(v) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
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(w) "Rights" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(x) "Rights Certificates" shall have the meaning set forth in Section
3(a) hereof.
(y) "Rights Dividend Declaration Date" shall have the meaning set
forth in the WHEREAS clause at the beginning of this Agreement.
(z) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(aa) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(bb) "Section 13 Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(cc) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(dd) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such or such earlier date as a majority of the
directors shall become aware of the existence of an Acquiring Person.
(ee) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient to elect at least a
majority of the directors of such corporation (or other persons
performing similar functions) is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such Person.
(ff) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(gg) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
(hh) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Any determination required by the definitions contained in this
Section 1 shall be made by the Board of Directors of the Company in
its good faith judgment, which determination shall be binding on the
Rights Agent and the holders of the Rights.
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Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint such Co-
Rights Agents as it may deem necessary or desirable. The Rights Agent
shall have no duty to supervise, and in no event shall be liable for,
the acts or omissions of any such co-Rights Agent.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business
on the Record Date), or (ii) the Close of Business on the tenth
Business Day after the date of the commencement by any Person (other
than an Exempt Person) or the date that a tender or exchange offer by
any Person (other than an Exempt Person) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such
Person together with its Affiliates and Associates, would be the
Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding (irrespective of whether any shares are actually purchased
pursuant to any such offer) (the earliest of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section
3) by the certificates for the Common Stock registered in the names of
the holders of the Common stock (which certificates for Common Stock
shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) each Right will be transferable only in
connection with the transfer of the underlying share of Common Stock
(including a transfer to the Company). As soon as practicable after
the Distribution Date, the Company will send by first-class, 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) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to purchase Preferred Stock,
in substantially the form attached hereto as Exhibit C, by first-class,
postage prepaid mail, to each record holder of the Common Stock as of
the Close of Business on the Record Date, at the
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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, the Rights will be evidenced by such certificates for
the Common Stock and the registered holders of the Common Stock shall also be
the registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been
issued shall also constitute the transfer of the Rights associated with such
shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing
such shares of Common Stock (including, without limitation,
certificates issued upon transfer or exchange of Common Stock) shall
also be deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also represents Rights that entitle the holder hereof
to certain rights as set forth in a Rights Agreement between Berry
Petroleum Company (the "Company") and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, dated as of December 8, 1999 (the
"Rights Agreement"), the terms, conditions and limitations of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt
of a written request therefor. Under certain circumstances set forth
in the Rights Agreement, Rights issued to, or beneficially owned 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 become null and void and no longer
transferable.
With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock represented by such
certificates shall, until the Distribution Date, be evidenced by such
certificates alone and registered holders of Common Stock shall also
be the registered holders of the associated Rights, and the transfer
of any of
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such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of an election to purchase
and of assignment and of certificates to be printed on the reverse
thereof) when, as and if issued, 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 which
do not affect the duties or responsibilities of the Rights Agent 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 11 and
Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face shall entitle
the holders thereof to purchase such number of one one-hundredth of a
share of Preferred Stock as shall be set forth therein at the price
set forth therein (such exercise price per one one-hundredth of a
share, the "Purchase Price"), 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.
(b) Notwithstanding any other provision of this Agreement, any Rights
Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by any Person known to be: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which
the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary purpose or
effect avoidance of Section 7(e) hereof, and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible)
the following legend, modified as applicable to apply to such Person:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring
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<PAGE> 9
Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented
hereby may become null and void in the circumstances specified in
Section 7(e) of such Agreement.
The provisions of Section 7(e) of this Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights
Certificate. The Company shall give notice to the Rights Agent
promptly after it becomes aware of the existence of any Acquiring
Person or any Associate or Affiliate thereof.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be
valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Rights Certificates shall
cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect
as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificates
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 such an officer.
(b) Following the Distribution Date, and receipt by the Rights Agent
of all necessary information, the Rights Agent will keep or cause to
be kept, at its office 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 certificate number
and the date of each of the Rights Certificates.
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<PAGE> 10
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e), Section
14 and Section 24 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, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to
purchase a like number of one one-hundredth of a share of Preferred
Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights
Certificate or 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 or Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or
exchanged at the office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer
of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon
the Rights Agent shall, 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 charge that may be imposed in
connection with any transfer, split up, combination or exchange of
Rights Certificates. The Rights Agent shall have no duty or
obligation under this Section unless and until it is satisfied that
all such taxes and/or charges have been paid.
(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 satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company
will execute and deliver a new Rights Certificate of like tenor to the
Rights Agent for countersignature 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) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except
as otherwise provided
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herein including, without limitation, the restrictions on exercisability
set forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof), 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 and properly executed, to the
Rights Agent at the office of the Rights Agent designated as the appropriate
place for such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of one one-hundredth of a share
of Preferred Stock (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable,
at or prior to the earliest of (i) the Final Expiration Date, (ii) the
time at which the Rights are redeemed as provided in Section 23
hereof, (iii) the time at which the Rights are exchanged as provided
in Section 24 hereof, or (iv) the time at which the Rights expire as
provided in Section 13(d) hereof (the earliest of (i) through (iv)
being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
$38.00, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph(c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
and properly 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 other shares, securities, cash or other
assets, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall,
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 for such shares) certificates for the total number
of one one-hundredth of a share of Preferred Stock to be purchased and
the Company hereby authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredth 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 an amount
of cash, if any, to be paid in lieu of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the
order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv)
after receipt thereof, deliver such cash, if any, to or upon the order
of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) may be made by
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<PAGE> 12
bank draft, certified bank check or money order payable to the order of
the Company. In the event that the Company is obligated to issue other
securities (including Common Stock) 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, cash
and/or other property are available for distribution by the Rights Agent, if
and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) by or for the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of
the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance
of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts
to insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or any of their
respective Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or
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<PAGE> 13
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercises,
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 Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired
by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled
Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares
of Preferred Stock (and, following the occurrence of a Triggering
Event, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares
held in its treasury), the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or
other securities) that, as provided in this Agreement including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights, provided, however, that the Company
shall not be required to reserve and keep available shares of
Preferred Stock, Common Stock or other securities sufficient to permit
the exercise in full of all outstanding Rights pursuant to the
adjustments set forth in Section 11(a)(ii), Section 11(a)(iii) or
Section 13 hereof unless, and only to the extent that, the Rights
become exercisable pursuant to such adjustments.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of Rights may
be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed
on such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the offer and issuance of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock
and/or other securities)issuable and deliverable upon the exercise of
Rights, the Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the occurrence
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<PAGE> 14
of a Section 11(a)(ii) Event on 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 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
date of the expiration 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 ninety (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 with prompt notice thereof to the
Rights Agent. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction,
unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement (if required) has
been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-hundredth of a
share of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all taxes and charges which may be payable in
respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of one one-hundredth of a share of
Preferred Stock (or Common Stock and/or other securities, as the case
may be) upon the exercise of Rights. The Company shall not, however,
be required to pay any tax or charge which may be payable in respect
of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of one one-hundredth of
a share of Preferred Stock (or Common Stock and/or other securities,
as the case may be) in respect of 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 a
number of one one-hundredth of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until
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<PAGE> 15
such tax or charge shall have been paid (any such tax or charge
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 or charge is due.
Section 10. Preferred Stock Record Date. Each person in whose name
any certificate for a number of one one-hundredth of a share of
Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such fractional
shares of Preferred Stock (or Common Stock and/or other securities, as
the case may be) represented thereby and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable taxes or charges) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred
Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the
Company are open. 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 and kind 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 date of
this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, 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 Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Preferred Stock or
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<PAGE> 16
capital stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the 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. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof,
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) hereof.
(ii) Subject to Section 24 of this Agreement, in the event any
Acquiring Person, alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration
Date, become the Beneficial Owner of 20% or more of the shares of
Common Stock then outstanding, unless the event causing the 20%
threshold to be crossed is a transaction set forth in Section 13(a)
hereof, or is an acquisition of shares of Common Stock pursuant to a
tender offer or an exchange offer for all outstanding shares of Common
Stock at a price and on terms determined by at least a majority of the
members of the Board of Directors who are not officers of the Company
and who are not representatives, nominees, Affiliates or Associates of
an Acquiring Person, after receiving advice from one or more
investment banking firms to be (a) at a price which is fair to
stockholders of the Company (taking into account all factors which
such members of the Board deem relevant including, without limitation,
prices which could reasonably be achieved if the Company or its assets
were sold on an orderly basis designed to realize maximum value) and
(b) otherwise in the best interests of the Company and its stockholders,
then, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of one one-hundredth of a share 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 one-hundredth of a share of Preferred Stock for which a Right
was exercisable immediately prior to the occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (which, following such occurrence,
shall thereafter be referred to as the "Purchase Price" for each Right and
for all purposes of this Agreement) by 50% of the current market price
(determined pursuant to Section 11(d) hereof) per share of Common Stock on
the date of such occurrence (such number of shares is herein called the
"Adjustment Shares"); provided that the Purchase Price and the number of
Adjustment Shares shall be further adjusted as provided in this Agreement to
reflect any events occurring after the date of such occurrence; and provided,
further, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
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<PAGE> 17
(iii) In the event that the number of shares of Common Stock which 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
is not sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section 11(a) and the Rights
shall become so exercisable, to the extent permitted by applicable law and
any agreements in effect on the date hereof to which the Company is a party,
the Company 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 (such excess, the "Spread"), and (B) with respect to each
Right, 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 has deemed to have the same value
as shares of Common Stock (such shares of preferred stock, "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 the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by
the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
later of (x) the occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as
the ASection 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 (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If
the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of Common Stock
could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) 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 need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect in each case
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<PAGE> 18
with prompt notice thereof to the Rights Agent. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the current
market price (as determined pursuant to Section 11(d) hereof) per
share of the Common Stock on the Section 11(a)(ii) Trigger Date and
the value of any "common stock equivalent" shall be deemed to have the
same value as the Common Stock on such date. The Board of Directors
may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock upon the exercise of Rights pursuant
to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record
date) Preferred Stock (or shares having the same rights, privileges
and preferences as the shares of 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
determined pursuant to Section 11(d) hereof) 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 so to
be offered and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current market price, and the denominator 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). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights.
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) In case the Company shall fix a record date for 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 continuing corporation) of
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<PAGE> 19
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 subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the current market price
(as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator
of which shall be such current market price (as determined pursuant to
Section 11(d) hereof per share of Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, 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 thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to but not including such date,
and for purposes of computations made pursuant to Section 11(a)(iii)
hereof, 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 ten (10) consecutive Trading Days
immediately following such date; provided, however, that in the event
that the current market price per share of the Common Stock is
determined during a period following the announcement by the issuer of
such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible
into shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of the requisite thirty (30) Trading Day or
ten (10) Trading Day period, as set forth above, after but not
including the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification,
then, and in each such case, the "current 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
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<PAGE> 20
respect to securities listed on the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading or,
if the shares of Common Stock are not listed or admitted to trading on
any national securities exchange the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-
the-counter 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 in good faith by the Board of Directors of the
Company shall be used. 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 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.
(ii) For the purpose of any computation hereunder, the "current market
price" per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the current
market price per 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. If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
"current market price" per share of the Preferred Stock 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. For all purposes of this Agreement, the "current market
price" to one one-hundredth of a share of Preferred Stock shall be
equal to the "current market price" of one share of Preferred Stock
divided by 100.
(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 one percent (1%) in the
Purchase Price; provided, however, that any
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<PAGE> 21
adjustments which by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred Stock, as the
case may be. Notwithstanding the first sentence of this Section
11(e), an adjustment required by this Section 11 shall be made no
later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustments, or (ii) the Expiration
date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
other than Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price
thereof shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k), and (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 one
one-hundredth of a share 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 Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-hundredth of a share of Preferred Stock
(calculated to the nearest one-ten-thousandth) obtained by (i)
multiplying (x) the number of one one-hundredth of a share 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 lieu of any
adjustment in the number of one one-hundredth of a share 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 one-hundredth 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
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<PAGE> 22
number of Rights (calculated to the nearest one-ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date
for the adjustment to be made with prompt notice thereof to the Rights
Agent. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least ten (10) days later than the date
of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section 14 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 one one-hundredth of a share 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
one one-hundredth of a share and the number of one one-hundredth of a
share which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause adjustment reducing the
Purchase Price below the then stated value, if any, of the number of
one one-hundredth of a share of Preferred Stock issuable upon exercise
of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable such number
of one one-hundredth of a share of Preferred Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer with prompt
notice thereof to the Rights Agent until the occurrence of such event
the issuance to the holder of any Right exercised after such record
date the number of one one-hundredth of a share of Preferred Stock and other
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<PAGE> 23
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-hundredth of a share 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 (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the
Board of Directors of the Company shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash or any shares of Preferred Stock
at less than the current market price, (iii) issuance wholly for cash
or shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv)
stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a
series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger, sale
or transfer there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to
be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger, sale or transfer, the
shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for 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 Section 27
hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably
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<PAGE> 24
foreseeable that such action will diminish substantially 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 Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding shares of Common
Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered
thereafter 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 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 Section 11 and
Section 13 hereof, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the
facts and computations 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 (or, if prior to the Distribution Date, to each holder of
a certificate representing shares of Common Stock) in accordance with
Section 26 hereof. Notwithstanding the foregoing sentence, the
failure of the Company to give such notice shall not affect the
validity of or the force or effect of or the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained. Any
adjustment to be made pursuant to Sections 11 and 13 of this Agreement
shall be effective as of the date of the event giving rise to such
adjustment; provided, however, that the Rights Agent shall have no
duty with respect to and shall not be deemed to have any 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, following the 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 which complies with
24
<PAGE> 25
Section 11(o) hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger, and, in connection with such consolidation or
merger, all or part of the outstanding 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 or
otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case,
proper provisions shall be made so that: (i) each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter 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 validly authorized and issued, fully paid, non-assessable
and freely tradeable shares of Common Stock of the Principal Party (as
such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal 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 one-hundredth of a share
of Preferred Stock for which a Right was exercisable immediately prior
to the occurrence of a Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such Section 11(a)(ii) Event, and (2)
dividing that product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the "Purchase Price" for
each Right and for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d)(i) hereof)
per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event (or the fair market value on
such date of other securities or property of the Principal Party, as
provided for herein); provided that the Purchase Price and the number
of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in this
Agreement to reflect any events occurring after the date of the first
occurrence of a Section 13 event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section
13 Event, 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 only to such Principal
Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock)
in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares
of Common Stock thereafter
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<PAGE> 26
deliverable upon the exercise of the Rights; provided, however, that upon
the subsequent occurrence of any merger, consolidation, sale of all or
substantially all assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Purchase Price, such cash,
shares, rights, warrants and other property which such holder would
have been entitled to receive had he, at the time of such transaction,
owned the shares of Common Stock of the Principal Party purchasable
upon the exercise of a Right, and such Principal Party shall take such
steps (including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights,
warrants and other property; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) the case of any transaction described in clause (x) or (y) of the
first sentence of Section 13(a): (A) the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer whose Common Stock has the greatest market
value or (B) if no securities are so issued, (x) the Person that is
the other party to such merger or consolidation and survives said
merger or consolidation, or, if there is more than one such Person,
the Person whose Common Stock has the greatest market value or (y) if
the Person that is the other party to the merger or consolidation does
not survive the merger or consolidation, the Person that does survive
the merger or consolidation (including the Company if it survives);
and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or earning
power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest market value of shares
outstanding; provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such other
Person; and (2) if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of two or more
of which are and have been so registered, "Principal Party" shall
refer to whichever of such persons is the issuer of the Common Stock
having the greatest aggregate market value.
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<PAGE> 27
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set
forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in
paragraph (a) of this Section 13, the Principal Party 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, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date and similarly comply with applicable state securities
laws;
(ii) will deliver to holders of the Rights historical financial
statements of the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 (or any successor form) under the Exchange Act;
(iii) use its best efforts, if the Common Stock of the Principal Party
shall become listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on such securities exchange and, if the
Common Stock of the Principal Party shall not be listed on a national
securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by NASDAQ or
such other system then in use; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or 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 thereafter become exercisable in the manner described
in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of Common
Stock pursuant to a tender offer or exchange offer for all
27
<PAGE> 28
outstanding shares of Common Stock which complies with the provisions of
Section 11(a)(ii) hereof (or a wholly owned subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid
to all holders of shares of Common Stock whose shares were purchased
pursuant to such tender offer or exchange offer, and (iii) the form of
consideration being offered to the remaining holders of shares of
Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this Section
13(d), all Rights under this Agreement shall expire, and this
Agreement shall terminate.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p)
hereof, 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 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, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed
or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the 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
the fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Company shall be used.
(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 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
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fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock). 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 a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company 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 (1) share of Common Stock. For purposes of this Section
14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant
to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) 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, except as permitted by this Section
14.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, other than rights of action vested in the Rights Agent
pursuant to this Agreement, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock); and any registered
holder of any Rights Certificate (or, prior to 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
for 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.
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Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) Prior to the 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 office or offices of the Rights Agent designated
for such purposes, duly endorsed or accompanied by a proper instrument
of transfer and with the appropriate forms and certificates fully
executed;
(c) The Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agents) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be required to be affected by
any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must
use its best efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as possible.
Section 17. Rights 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 purposes the holder of the
number of one one-hundredth of a share of Preferred 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 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or
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<PAGE> 31
Rights evidenced by such Rights Certificate shall have been exercised
in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration, preparation, delivery, amendment 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, damage, judgment, fine,
penalty, claim, demand, settlement cost or expense, incurred without
negligence, bad faith or willful misconduct, as determined by a court
of competent jurisdiction, on the part of the Rights Agent, for any
action taken, suffered or omitted by the Rights Agent in connection
with the acceptance, amendment and administration of this Agreement,
including, without limitation, the costs and expenses of defending
against any claim of liability arising therefrom, directly or
indirectly. The indemnity provided herein shall survive the
termination of this Agreement and the termination and the expiration
of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company. Anything to
the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, punitive, indirect, consequential or incidental
loss or damage of any kind whatsoever (including, but not limited to,
lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage.
(b The Rights Agent shall be authorized and 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 Common
Stock or for other securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or
Persons or otherwise upon the advice of counsel as set forth in
Section 20.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
Person resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any Person
succeeding to the shareholder services 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
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part of any of the parties hereto; provided, however, that such Person 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 a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates
either in the name of the predecessor or in the name of the successor
Rights agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only
the duties and obligations expressly imposed by this Agreement upon
the following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall
be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken, suffered or omitted by it in good faith
and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current market price") be
proved or established by the Company prior to taking, omitting or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or
any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization and protection
to the Rights Agent and the Rights Agent shall incur no liability for
or in respect of any action taken, suffered or omitted
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<PAGE> 33
in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall not be liable for or by reason of the
statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to
its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by
the Company only.
(d) The Rights Agent shall not be under any liability or
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 or liable for any adjustment required under this Agreement
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 receipt of the certificate
described in Section 12 hereof setting forth any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of
Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificates or as to whether any shares of
Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(e) 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.
(f) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken, suffered or omitted to be taken by it in good
faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Company may, at
the option of the Rights Agent, set forth in writing any action
proposed to be taken, suffered or omitted by the Rights Agent under
this Agreement and the date on and/or after which such action shall be
taken or suffered or such omission shall be effective. The Rights
Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included
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<PAGE> 34
in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days
after the date any officer of the Company actually receives such
application unless any such officer shall have consented in writing to
an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall
have received written instructions in response to such application
specifying the action to be taken, suffered or omitted.
(g) The Rights Agent and any stockholder, director, Affiliate,
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 Person.
(h) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or
misconduct or any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct
absent negligence, bad faith or willful misconduct, as determined by
a court of competent jurisdiction; provided, however, reasonable care
was exercised in the selection and continued employment thereof.
(i) 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.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase as the case may be,
has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer without
first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign (with or without cause) and be
discharged from its duties under this Agreement upon thirty (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 the holders of the Rights Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause)
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<PAGE> 35
upon thirty (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 thirty
(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 incumbent Rights Agent or any
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) organized and doing business under the laws of the
United States or of any other state of the United States in good
standing, which is authorized under such laws and is subject to
supervision or examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate of such a Person
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 the
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 option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock
so issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may,
in any other case, if deemed
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<PAGE> 36
necessary or appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the Person to
whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) (i) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (x) the Close of Business on the
tenth day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the
Close of Business on the tenth day following the Record Date), subject
to extension by the Board of Directors by amendment as in Section 27
hereof or (y) the Close of Business on the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a
redemption price of $0.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable after the occurrence of an event
described in Section 11(a)(ii) until such time as the Company's right
of redemption hereunder has expired. The Company may, at its option,
pay the Redemption Price in cash, shares of Common Stock (based on the
"current market price", as defined in Section 11(d)(i) hereof, of the
Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(ii) In addition, the Company's right of redemption shall be
reinstated and the Company may, at its option, after the Distribution
Date, but prior to any event described in Section 13(a) either (x) in
connection with any event described in Section 13(a) in which all
holders are treated alike and not involving (other than as a holder of
Common Stock being treated like all other such holders) an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or any
other Person acting directly or indirectly on behalf of or in
association with any such Acquiring Person, Affiliate or Associate, or
(y) following the occurrence of an event set forth in Section
11(a)(ii), if and for as long as the Acquiring Person is not
thereafter the Beneficial Owner of securities representing 10% or more
of the then outstanding shares of Common Stock, and at the time of
redemption there are no other persons who are Acquiring Persons.
(b) In the case of a redemption permitted by Section 23(a)(i),
immediately upon the action of the Board of Directors of the Company
ordering the redemption of
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<PAGE> 37
the Rights, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held, without any interest thereon. In the case of a redemption permitted
only under Section 23(a)(ii), the right to exercise the Rights will terminate
and represent only the right to receive the Redemption Price only after
ten Business Days following the giving of notice of such redemption to
the Rights Agent and to the holders of such Rights if no event set
forth in Section 11(a)(ii) shall have occurred, and if such event
shall have occurred, only at such date as may be determined by the
Board of Directors. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of
the then outstanding Rights by mailing such notice to all such holders
at each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price
will be made. The failure to give notice required by this Section
23(b) or any defect therein shall not affect the legality or validity
of the action taken by the Company.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time and from time to time after the first occurrence of a Section
11(a)(ii) Event, 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 or Common Stock Equivalents or any combination thereof,
at an exchange ratio of one share of Common Stock, or such number of
Common Stock Equivalents or units representing fractions thereof as
would be deemed to have the same value as one share of Common Stock,
per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the Rights Dividend
Declaration Date (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Any decision to exchange all or part of the
then outstanding and exercisable Rights in the fourteen (14) day
period after the occurrence of a Section 11(a)(ii) Event shall be
superior to and preempt any attempted exercise by a holder under
Section 11(a)(ii).
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a)
of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only
right thereafter of the holders of such Rights shall be to receive
that number of shares of Common Stock and/or Common Stock Equivalents
equal to the number of such Rights held by such holder multiplied by
the Exchange
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Ratio. The Company shall promptly give public notice of any such exchange
with prompt notice thereof to the Rights Agent; 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 and/or
Common Stock Equivalents for Rights will be effected and, in the event
of any partial exchange, the number of Rights that will be exchanged.
Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become null and void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Common Stock that are
authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit an exchange of
Rights as contemplated in accordance with this Section 24, the Company
may, at its option, take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange
of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates or scrip evidencing
fractional shares of Common Stock. In lieu of such fractional shares
of Common Stock, the Company shall pay to the registered holders of
Rights 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 value of a whole share of Common Stock. For purposes
of this Section 24, the value of a whole share of Common Stock shall
be the closing price (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 24, and the value of any
Common Stock Equivalent shall be deemed to have the same value as the
Common Stock on such date.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any
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<PAGE> 39
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or
(iv) to effect any consolidation or merger into or with any other Person
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), 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 transaction or a series of related
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
Persons (other than the Company and/or any of its Subsidiaries in one
or more transactions each of which complies with Section 11(o)
hereof), 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 and the Rights Agent, to the
extent feasible and in accordance with Section 26 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 in the case of any action covered by clause
(i) or (ii) above at least ten (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 ten
(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. The failure to give
notice required by this Section 25 or any defect therein shall not
affect the legality or validity of the action taken by the Company or
the vote upon any such action.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate and
the Rights Agent, to the extent feasible and 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, and (ii) all references in
the preceding paragraph to Preferred Stock shall be deemed thereafter
to refer to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
39
<PAGE> 40
Berry Petroleum Company
28700 Hovey Hills Road
P.O. Bin X
Taft, California 93268
Attention: Chief Financial Officer
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:
ChaseMellon Shareholders Services, L.L.C.
400 South Hope Street, 4th Floor
Los Angeles, California 90071
Attention: James Kirkland
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 (or, if prior to the Distribution Date, to the holder of
certificates representing shares of Common Stock) 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 Transfer Agent.
Section 27. Supplements and Amendments. Prior to the Distribution
Date (which date is subject to extension by the Board of Directors by
amendment), and subject to the penultimate sentence of this Section
27, the Company may, in its sole and absolute discretion and the
Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock, whether or not such
supplement or amendment is adverse to any holders of Rights. From and
after the Distribution Date, and subject to the penultimate sentence
of this Section 27, the Company may and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions hereunder or (iii) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or
desirable and which shall not materially and adversely affect the
interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of any such Person).
Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, and such supplement or
amendment does not change or increase the Rights Agent's
40
<PAGE> 41
duties, liabilities or obligations, the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price or the Final Expiration Date.
Prior to the Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of Common
Stock.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Determination and Actions by the Board of Directors. Etc.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence
of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company (or, as set forth
herein, certain specified members thereof) shall have the exclusive
power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors of
the Company or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this Agreement,
and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, but not limited to, a
determination to redeem or not redeem the Rights, or to amend this
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the
Board of Directors of the Company, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights
and all other parties, and (y) not subject any member of the Board of
Directors to any liability to the holders of the Rights or to any
other Person.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of 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,
registered holders of 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
41
<PAGE> 42
be affected, impaired or invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board of Directors of the Company determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated
and shall not expire until the close of business on the tenth day following
the date of such determination by the Board of Directors of the Company.
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 made and to be performed entirely within
such State; provided, however, all provisions regarding the rights,
duties and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely with 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 hereunto
affixed and attested, all as of the day and year first above written.
Attest: BERRY PETROLEUM COMPANY
[Seal]
By: /s/ Kenneth A. Olson By: /s/ Jerry V. Hoffman
Name: Kenneth A. Olson Name: Jerry V. Hoffman
Title: Corporate Secretary/Treasurer Title: Chairman of the Board,
President and Chief
Executive Officer
[Signatures continued on Page 43]
42
<PAGE> 43
[Signatures continued from Page 42]
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Rights Agent
[Seal]
By: /s/ Joseph Cannata By: /s/ James Kirkland
Name: Joseph Cannata Name: James Kirkland
Title: Assistant Vice President Title: Assistant Vice President
43
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
BERRY PETROLEUM COMPANY
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Jerry V. Hoffman, President and Chief Executive Officer, and
Kenneth A. Olson, Secretary, of Berry Petroleum Company, a corporation
organized and existing under the General Corporation Law of the State
of Delaware, in accordance with provisions of Section 103 thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of said Corporation, said
Board of Directors on November 18, 1999, adopted the following
resolution creating a series of 250,000 shares of Preferred Stock
designated as "Series B Junior Participating Preferred Stock:"
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Restated Certificate of
Incorporation, the Board of Directors does hereby provide for the
issue of a series of Junior Preferred Stock, $0.01 par value, of the
Corporation, to be designated "Series B Junior Participating Preferred
Stock" (hereinafter referred to as the "Series B Preferred Stock"),
initially consisting of 250,000 shares, and to the extent that the
designations, powers, preferences and relative and other special
rights and the qualifications, limitations and restrictions of the
Series B Preferred Stock are not stated and expressed in the Restated
Certificate of Incorporation, does hereby fix and herein state and
express such designations, powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions
thereof as follows (all terms used herein which are defined in the
Restated Certificate of Incorporation shall be deemed to have the
meanings provided therein):
A. Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 250,000. Such
number of shares may be increased or decreased by resolution of the
Board of Directors; provided, however, that no decrease
EX A-1
<PAGE> A-2
shall reduce the number of shares of Series B Junior Participating Preferred
Stock to a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into
Series B Junior Participating Preferred Stock.
B. Dividends and Distributions.
(1) 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 shares of Series B Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series B Junior
Participating Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
15th 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 B Junior
Participating Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $0.25 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common
Stock, par value $0.01 per share, of the Corporation (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
B Junior Participating Preferred Stock. In the event the Corporation
shall at any time after December 8, 1999 (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 to which holders of shares of Series
B Junior Participating 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.
(2) The Corporation shall declare a dividend or distribution on the
Series B Junior Participating Preferred Stock as provided in Paragraph
B(1) above immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided, however, that, in the event no dividend or
distribution shall have been declared on the Common Stock
A-2
<PAGE> A-3
during the period between any Quarterly Dividend Payment Date, a dividend of
$0.25 per share on the Series B Junior Participating Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(3) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series B Junior Participating 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 B Junior Participating 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 B Junior Participating 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 B Junior Participating Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed for
the payment thereof.
C. Voting Rights. The holders of shares of Series B Junior
Participating Preferred Stock shall have the following voting rights:
(1) Subject to the provision for adjustment hereinafter set forth,
each share of Series B Junior Participating Preferred Stock shall
entitle the holders 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 (a)
declare any dividend on Common Stock payable in shares of Common
Stock, (b) subdivide the outstanding Common Stock, or (c) combine the
outstanding Common Stock into a smaller number of shares, then in each
case the number of votes per share to which holders of shares of
Series B Junior Participating 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.
(2) Except as otherwise provided herein or by law, the holders of
shares of Series B Junior Participating Preferred Stock and the
holders of shares of Common
A-3
<PAGE> A-4
Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(3) (a) If at any time dividends on any Series B Junior
Participating Preferred Stock shall be in arrears in an amount equal
to six quarterly dividends thereon, the occurrence of such contingency
shall mark the beginning of a period (herein called a "Default
Period") that 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 B Junior
Participating 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 B Junior Participating Preferred Stock) upon which these or
like voting rights have been conferred and are exercisable (the
"Voting 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.
(b) During any Default Period, such voting right of the holders of
Series B Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to Paragraph C(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 Voting 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 Voting 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 Voting
Preferred Stock of such voting right. At any meeting at which the
holders of Voting 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 that may be so elected at any
special meeting does not amount to the required number, the holders of
the Voting Preferred Stock shall have the right to make such increase
in the number of Directors as shall be necessary to permit the
election by them of the required number. After the holders of the
Voting 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 Voting Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series B Junior Participating
Preferred Stock.
(c) Unless the holders of Voting 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
A-4
<PAGE> A-5
aggregate not less than ten percent of the total number of shares of Voting
Preferred Stock outstanding, irrespective of series, may request, the calling
of a special meeting of the holders of Voting Preferred Stock, which meeting
shall thereupon be called by the Chairman of the Board, the President, a
Vice President or the Secretary of the Corporation. Notice of such
special meeting and of any annual meeting at which holders of Voting
Preferred Stock are entitled to vote pursuant to this Paragraph shall
be given to each holder of record of Voting Preferred Stock by mailing
a copy of such notice to each holder at their last address as the same
appears on the books of the Corporation. Such special meeting shall
be called for a time not earlier than 10 days and not later than 60
days after such order or request or, in default of the calling of such
special meeting within 60 days after such order or request, such
special 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 Voting Preferred Stock outstanding.
Notwithstanding the provisions of this Paragraph, 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.
(d) 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 Voting 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 Voting 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(3)(b)) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock
which elected the Director whose office shall have become vacant.
References in this Paragraph 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.
(e) Immediately upon the expiration of a Default Period, (x) the
right of the holders of Voting Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Voting Preferred Stock as a class shall terminate, and (z)
the number of Directors shall be such number as may be provided for in
the Restated Certificate of Incorporation or By-Laws irrespective of
any increase made pursuant to the provisions of Paragraph C(3)(b)
(such number being subject, however, to change thereafter in any
manner provided by law or in the Restated 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.
A-5
<PAGE> A-6
(4) Except as set forth herein, holders of Series B Junior
Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
D. Certain Restrictions.
(1) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Junior Participating Preferred Stock as
provided in Paragraph B are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series B Junior Participating Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(a) Declare or pay dividends on, make any other distribution 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 B Junior Participating
Preferred Stock;
(b) 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 B Junior
Participating Preferred Stock, except dividends paid ratably on the
Series B Junior Participating 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;
(c) 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 B Junior
Participating 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 for winding up) to the Series B Junior Participating
Preferred Stock; or
(d) Purchase or otherwise acquire for consideration any shares of
Series B Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series B Junior Participating 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.
A-6
<PAGE> A-7
(2) 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 D(1), purchase or otherwise acquire such shares at such time
and in such manner.
E. Reacquired Shares. Any shares of Series B Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
F. Liquidation, Dissolution or Winding Up.
(1) 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 dividends or
upon liquidation, dissolution or winding up) to the Series B Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series B Junior Participating Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the
date of such payment (the "Series B Liquidation Preference").
Following the payment of the full amount of the Series B Liquidation
Preference, no additional distributions shall be made to the holders
of shares of Series B Junior Participating 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 (a) the Series B Liquidation Preference
by (b) 100 (as appropriately adjusted as set forth in Paragraph F(3)
below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in
Clause (b), the "Adjustment Number"). Following the payment of the
full amount of the Series B Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series B Junior
Participating Preferred Stock and Common Stock, respectively, holders
of Series B Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of 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.
(2) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series B Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series B
Junior Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in
proportion to their respective
A-7
<PAGE> A-8
liquidation preferences. In the event, however, that 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.
(3) In the event the Corporation shall at any time after the Rights
Declaration Date (a) declare any dividend on Common Stock payable in
shares of Common Stock, (b) subdivide the outstanding Common Stock, or
(c) 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.
G. Consolidation, Merger, Etc. In the event 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 B Junior Participating 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, 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 B Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
H. No Redemption. The shares of Series B Junior Participating
Preferred Stock shall not be redeemable.
I. Ranking. The Series B Junior Participating Preferred Stock shall
rank junior to all other series of the Corporation's preferred stock,
if any, as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
J. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would
materially alter or change
A-8
<PAGE> A-9
the powers, preferences or special rights of the Series B Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote
of the holders of a majority or more of the outstanding shares of Series B
Junior Participating Preferred Stock, voting separately as a class.
K. Fractional Shares. Series B Junior Participating 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 B Junior
Participating Preferred Stock.
RESOLVED FURTHER, that the proper officers of the Corporation be, and
each of them hereby is, authorized to execute a Certificate of
Designation with respect to the Series B Junior Participating
Preferred Stock pursuant to Section 151 of the General Corporation Law
of the State of Delaware and to take all appropriate action to cause
such Certificate of Designation to become effective, including, but
not limited to, the filing and recording of such Certificate with
and/or by the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
of Designation and do affirm the foregoing as true under the penalties
of perjury this 18 day of November, 1999
/s/ Jerry V. Hoffman
Name: Jerry V. Hoffman
Title: Chairman, President and Chief
Executive Officer
Attest:
/s/ Kenneth A. Olson
Name: Kenneth A. Olson
Title: Corporate Secretary/Treasurer
A-9
<PAGE> B-1
Exhibit B
[Form of Rights Certificate]
Certificate No. R- _________ ___________ Rights
NOT EXERCISABLE AFTER DECEMBER 8, 2009 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
BERRY PETROLEUM COMPANY
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 December 8, 1999 (the "Rights Agreement"), between Berry Petroleum
Company, a Delaware corporation (the "Company"), and ChaseMellon
Shareholders Services, L.L.C., as Rights Agent (the "Rights Agent"),
to purchase from the Company at any time prior to 5:00 P.M.
(California time) on December 8, 2009, at the office of the Rights
Agent designated for such purpose, or its successors as Rights Agent,
one one-hundredth of a fully paid, non-assessable share of Series B
Junior Participating Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $38.00 per one one-hundredth of a
share (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related
Certificate duly and properly executed. The Purchase Price may be
paid by bank draft, certified bank check or money order payable to the
order of the Company. The number of Rights evidenced by this Rights
Certificate (and the number __________________
* The portion of the legend in brackets shall be inserted only if
applicable, shall be modified to apply to an Acquiring Person, and
shall replace the preceding sentence.
B-1
<PAGE> B-2
of shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the
number and Purchase Price, as of December 8, 1999, based on the
Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person
or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a
Person who, after such transfer, became an Acquiring Person or an
Affiliate or Associate of any such Person, such Rights shall become
null and void and no holder hereof shall have any right with respect
to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, 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, including Triggering Events (as such term
is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and
the holders of the Rights Certificates, which limitations of rights
include the temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights
Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one one-hundredths of a
share 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.
Under certain circumstances, and subject to the provisions of the
Rights Agreement, the Rights evidenced by this Certificate may be (i)
redeemed by the
B-2
<PAGE> B-3
Company at its option at a redemption price of $0.01 per Right, or
(ii) exchanged in whole or in part for shares of the Company's Common
Stock, $0.01 par value, and/or other equity securities of the Company
deemed to have the same value as shares of Common Stock.
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 meeting 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.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ________________________
[Seal]
ATTEST: BERRY PETROLEUM COMPANY
_________________________ By: ___________________________
Secretary Name:
Title:
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<PAGE> B-4
Countersigned:
ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent
By: _________________________________
[Authorized Signature]
B-4
<PAGE> B-5
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED ______________________________________ hereby sells,
assigns and transfers unto ______________________________________________
(Please print name and address of transferee)
_____________________________________________________________________
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
______________________________ Attorney, to transfer the within Rights
Certificate on the books of the within named Company with full power
of substitution.
Dated: ___________________
_________________________________
Signature
Signature Guaranteed:
__________________________
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such 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 any such Person.
Dated: ____________________ _______________________________
Signature
B-5
<PAGE> B-6
Signature Guaranteed:
___________________________
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> B-8
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate)
To: BERRY PETROLEUM COMPANY
The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Rights Certificate to purchase the shares
of Preferred Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other Person which may be
issuable upon the exercise of the Rights) and requests that
certificates for such shares be issued in the name of and delivered
to:
Please insert social security
or other identifying number _______________________
_________________________________________________
(Please print name and address)
_________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number ______________________
________________________________________________
(Please print name and address)
________________________________________________
Dated _____________, _____
____________________________
Signature
Signature Guaranteed:
_________________________________
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<PAGE> B-9
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such 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 became an Acquiring Person
or an Affiliate or Associate of any such Person.
Dated: ______________________
_______________________________
Signature
Signature Guaranteed:
_______________________________
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
B-9
<PAGE> C-1
Exhibit C
BERRY PETROLEUM COMPANY
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On November 18, 1999 (the "Rights Dividend Declaration Date"), the
Board of Directors of Berry Petroleum Company (the "Company") declared
a dividend of one Right (a "Right") for each outstanding share of
capital stock (Class A Common Stock "Common Stock" and Class B Stock)
to be distributed to stockholders of record at the close of business
on December 8, 1999. Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share (a "Unit") of
Series B Junior Participating Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), at a Purchase Price of $38.00, subject
to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
Initially, the Rights will be attached to all capital stock
certificates representing shares then outstanding, and no separate
Rights Certificates will be distributed. The Rights will separate
from such stock and a Distribution Date will occur (the "Distribution
Date") upon the earlier of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons other than
the Company, any subsidiary of the Company, any employee benefit plan
or employee stock plan of the Company or any subsidiary of the
Company, any person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan, or any
person who or which, together with its Affiliates and Associates,
shall become the Beneficial Owner of 20% or more of the shares of
Common Stock then outstanding solely as a result of a reduction in the
number of shares of Common Stock outstanding due to a repurchase of
Common Stock by the Company, unless such person shall thereafter
purchase or otherwise become the Beneficial Owner of additional shares
of Common Stock representing 1% of the shares of Common Stock then
outstanding (an "Exempt Person") who or which, without the consent of
the Company, has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of
Common Stock (such person or group being referred to as an "Acquiring
Person" and such date being referred to as the "Stock Acquisition
Date"), or (ii) 10 business days following the commencement of a
tender offer or exchange offer that would result in a person or group
(other than an Exempt Person or a person approved by the Company)
beneficially owning 20% or more of such outstanding shares of Common
Stock.
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), (i) the Rights will be evidenced by the
capital stock certificates and this
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<PAGE> C-2
Summary of Rights and will be transferred with and only with such
certificates, (ii) new capital stock certificates issued after
December 8, 1999 will contain a notation incorporating the Rights Agreement
by reference, and (iii) the surrender for transfer of any certificates for
capital stock outstanding will also constitute the transfer of the Rights
associated with the stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 8, 2009, unless earlier
redeemed or exchanged by the Company or terminated, as described in
the Rights Agreement.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock
(and Class B Stock, if applicable) as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates
alone will represent the Rights.
In the event that at any time following the Rights Dividend
Declaration Date, a person becomes an Acquiring Person, (except
pursuant to an offer for all outstanding shares of Common Stock which
a majority of the independent directors determine to be fair to and
otherwise in the best interests of the Company and its stockholders),
then each holder of a Right will thereafter have the right to receive,
upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to
two times the exercise price of the Right. Rights are exercisable
following the occurrence of the foregoing only at such time as the
Rights are not redeemable by the Company. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
An example of the effect of the preceding paragraph is as follows. At
an exercise price of $30.00 per Right, each Right not owned by an
Acquiring Person (or by certain related parties) following the event
set forth in the preceding paragraph would entitle its holder to
purchase $60.00 worth of Common Stock (or other consideration, as
noted above) for $30.00. Assuming that the Common Stock had a per
share value of $10.00 at such time, the holder of each valid Right
would be entitled to purchase six shares of Common Stock for $30.00.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation or
in which the Company's outstanding Common Stock is exchanged for cash,
stock or other property (other than a merger which follows an offer
described in the second preceding paragraph), or (ii) 50% or more of
the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as
set forth above) shall thereafter
C-2
<PAGE> C-3
have the right to receive, upon exercise, common stock of the Principal
Party in such transaction, having a value equal to two times the exercise
price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution, as
set forth in the Rights Agreement. With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. No
fractional Rights, fractions of shares of Preferred Stock (other than
fractions which are integral multiples of one one-hundredth of a
share), or fractional shares of Common Stock will be issued and, in
lieu thereof, an adjustment in cash will be made based on the market
price of the Rights, Preferred Stock, or Common Stock, respectively,
on the last trading date prior to the date of exercise.
In general, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right, at any time until the
Distribution Date. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the
$0.01 per right redemption price. After the Distribution Date, the
Company's ability to redeem the rights could be reinstated in certain
circumstances, subject to certain conditions, in connection with a
permitted transaction not involving an Acquiring Person or where an
Acquiring Person has decreased its beneficial ownership in the Company
to less than 10% of the then outstanding shares of Common Stock and
there is no other Acquiring Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Board has the option, under certain circumstances, to exchange the
rights for stock instead of requiring holders to exercise their
rights, whereupon the holders' rights to exercise their rights would
terminate.
Other than those provisions relating to the redemption price or the
final expiration date of the Rights, any of the provisions of the
Rights Agreement may be supplemented or amended by the Company prior
to the Distribution Date, without approval of the Rights holders,
whether or not a supplement or amendment is adverse to the Rights
holders. After the Distribution Date, the provisions of the Rights
Agreement (other than the provisions relating to the redemption price
or the final expiration date of the Rights) may be amended by the
Company in order to make changes which do not materially and adversely
affect the interests of holders of Rights (excluding the interests of
any Acquiring Person).
C-3
<PAGE> C-4
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form
8-A dated December 7, 1999. A copy of the Rights Agreement is
available free of charge from the Company. This summary description
of the Rights does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is incorporated
herein by reference. Capitalized terms not otherwise defined herein
shall have the meaning given to them in the Rights Agreement.
