Exhibit 4.03
RIGHTS AGREEMENT
dated as of
April 4, 1997
between
FX ENERGY, INC.
and
FIDELITY TRANSFER CORP.,
as Rights Agent
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS................................................1
1.1 Certain Definitions..............................................1
1.2 Determinations...................................................7
ARTICLE II THE RIGHTS........................................................7
2.1 Legend on Common Share Certificates..............................7
2.2 Initial Exercise Price; Exercise of Rights; Detachment
of Rights........................................................7
2.3 Adjustments to Exercise Price; Number of Rights..................9
2.4 Date on Which Exercise is Effective.............................12
2.5 Execution, Authentication, Delivery and Dating of
Rights Certificates.............................................12
2.6 Registration, Registration of Transfer and Exchange.............12
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates.......13
2.8 Persons Deemed Owners...........................................13
2.9 Delivery and Cancellation of Certificates.......................13
2.10 Agreement of Rights Holders....................................14
ARTICLE III ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN
TRANSACTIONS.................................................................14
3.1 Flip-over Transaction or Event..................................14
3.2 Flip-in Event...................................................15
3.3 Obligations of the Company......................................16
ARTICLE IV THE RIGHTS AGENT.................................................16
4.1 General.........................................................16
4.2 Merger or Consolidation or Change of Name of Rights Agent.......17
4.3 Duties of Rights Agent..........................................17
4.4 Change of Rights Agent..........................................19
ARTICLE: V REDEMPTION.......................................................19
5.1 Redemption......................................................19
5.2 By the Board of Directors.......................................19
5.3 Rights Termination..............................................19
ARTICLE VI MISCELLANEOUS....................................................20
6.1 Expiration......................................................20
6.2 Issuance of New Rights Certificate..............................20
6.3 Supplements and Amendments......................................20
6.4 Fractional Rights...............................................20
6.5 Fractional Shares...............................................21
6.6 Rights of Action................................................21
6.7 Holder of Rights Not Deemed a Stockholder.......................21
6.8 Notice of Proposed Actions......................................22
6.9 Notices.........................................................22
6.10 Costs of Enforcement...........................................22
6.11 Successors.....................................................23
6.12 Benefits of this Agreement.....................................23
6.13 Descriptive Heading............................................23
6.14 Governing Law..................................................23
6.15 Counterparts...................................................23
6.16 Severability...................................................23
6.17 Effective Date.................................................23
6.18 Determinations and Actions by the Board of Directors...........23
i
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (this "Agreement"), dated as of the 4th day of
April, 1997, is entered into by and between FX ENERGY, INC., a Nevada
corporation (the "Company"), and FIDELITY TRANSFER CORP., a Utah corporation
authorized to conduct business in the state of Utah (the "Rights Agent").
WHEREAS, in order to preserve stockholder value, the Board of Directors
of the Company has determined that it is advisable for the Company to adopt a
stockholder rights plan (the "Rights Plan") to protect the Company and its
stockholders from abusive acquisition tactics;
WHEREAS, in order to implement the Rights Plan, the Board of Directors
of the Company has authorized and declared a dividend distribution of one right
("Right") effective 5:00 p.m. (Mountain time) on April 4, 1997 (the "Record
Date") for each Common Share (as hereinafter defined) outstanding at the close
of business (as hereinafter defined) on the Record Date; and has authorized the
issuance of one Right in respect of each Common Share issued after the Record
Date and until the earliest to occur of the Separation Date, the Expiration Date
or the Redemption Date (as such terms are hereinafter defined);
WHEREAS, each Right entitles the holder thereof, after the Separation
Date, to purchase securities of the Company (or in certain cases, of certain
other entities) pursuant to the terms and subject to the conditions set forth
herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act on
behalf of the Company, and the Rights Agent is willing to so act, in connection
with the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein.
NOW, THEREFORE, in consideration of the premises and respective
agreements set forth herein the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions.
For purposes of this Agreement, the following terms have the following
meanings:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of twenty percent (20%) or more of the Voting
Shares of the Company then outstanding, but shall not include the
Company, any Subsidiary of the Company or any employee benefit plan of
the Company or any Subsidiary of the Company, or any Person or entity
organized, appointed, or established by the Company or such Subsidiary
of the Company for or pursuant to the terms of any such employee
benefit plan. Notwithstanding the foregoing, no Person shall become an
Acquiring Person solely as the result of a reduction in the number of
Voting Shares outstanding due to an acquisition of Voting Shares by the
Company which increases the proportionate number of such Voting Shares
Beneficially Owned by such Person to twenty percent (20%) or more
unless and until that Person shall purchase or otherwise become (as a
result of actions by such Person or its Affiliates or Associates) the
Beneficial Owner of any additional Voting Shares of the Company.
(b) "Affiliate" of, or a person "affiliated" with, a specified
Person shall mean a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, such specified Person.
(c) "Associate", used to indicate a relationship with a
specified Person, shall mean:
(i) any corporation, partnership or other
organization of which such specified Person is an officer or
partner;
1
(ii) any trust or other estate in which such
specified Person has a substantial beneficial interest or as
to which such specified Person serves as trustee or in a
similar fiduciary capacity;
(iii) any relative or spouse of such specified Person
or any person of the opposite sex to whom such specified
Person is married or with whom such specified Person is living
in a conjugal relationship outside marriage, or any relative
of such spouse or other person, who has the same home as such
specified Person or who is a director or officer of the
Company or an Affiliate of the Company;
(iv) any Person who is a director, officer, partner
or trustee of such specified Person or of any corporation,
partnership or other organization (other than the Company or
any wholly-owned Subsidiary of the Company) which is an
Affiliate or Associate of such specified Person; and
(v) any corporation of which such specified Person
beneficially owns, directly or indirectly, voting securities
carrying more than 10 percent of the rights attaching to all
voting securities of such corporation for the time being
outstanding.
(d) A Person shall be deemed the "Beneficial Owner", and to
have "Beneficial Ownership", of and to "Beneficially Own" any
securities:
(i) as to which such Person or any of such Person's
Affiliates or Associates is or may be deemed to be the
beneficial owner pursuant to Rule 13d-3 or 13d-5 under the
Exchange Act (or pursuant to any comparable or successor laws
or regulations or, if such Rules shall be rescinded and there
shall be no comparable or successor laws or regulations,
pursuant to Rule 13d-3 or 13d-5 as in effect on the date of
this Agreement); and
(ii) as to which such Person or any of such Person's
Affiliates or Associates has the right to become Beneficial
Owner (whether such right is exercisable immediately or only
after the passage of time or only after the occurrence of
changes in market prices) pursuant to any contract, agreement,
arrangement or understanding, or upon the exercise of any
rights (other than the Rights), whether conversion rights,
exchange rights, warrants or options, or otherwise;
Provided, however, that a Person shall not be deemed the
"Beneficial Owner", or to have "Beneficial Ownership", of or to
"Beneficially Own", any security:
(i) tendered pursuant to a tender or exchange offer
or Takeover Bid made by such Person or any of such Person's
Affiliates or Associates until the earliest of such tendered
security being accepted for payment or exchange or being taken
up and paid for; or
(ii) as to which such Person's Affiliates or
Associates have or shares the voting power or has the power to
direct the voting pursuant to a revocable proxy given in
response to a public proxy solicitation made pursuant to and
in accordance with, the applicable rules and regulations under
the Securities Exchange Act of 1934, as amended, except if
such power (or the arrangement relating thereto) is then
reportable under Item 6 of Schedule 13D under the Securities
Exchange Act of 1934, as amended (or any similar provision of
a comparable or successor report).
For purposes of this Agreement, in determining the percentage
of the outstanding Voting Shares with respect to which a Person is the
Beneficial Owner, all Voting Shares as to which such Person is deemed
the Beneficial Owner shall be deemed outstanding.
(e) "Board of Directors" shall mean, as applicable, the Board
of Directors of the Company and/or any of its Subsidiaries.
2
(f) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the state of Utah are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean the time
on such date (or, if such date is not a Business Day, the time on the
next succeeding Business Day) at which the office of the transfer agent
for the Common Shares of the Company in Salt Lake City, Utah (or, after
the Separation Date, the offices of the Rights Agent, if different from
such transfer agent) is closed to the public.
(h) "Common Shares", when used with reference to the Company,
shall mean the shares of common stock, par value $0.001 per share (as
such par value may be changed from time to time), of the Company.
"Common Shares", when used with reference to any Person other than the
Company, shall mean the shares of capital stock (or equity interest)
with the most significant voting or decision-making power with respect
to management or control of such other Person or, if such other Person
is a Subsidiary of another Person, the Person or Persons which
ultimately controls such first-mentioned Person.
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(j) "Exercise Price" shall mean, as of any date, the price at
which a holder may purchase the securities issuable upon exercise of
one whole Right. Until adjustment thereof in accordance with the terms
hereof, the Exercise Price shall equal One Hundred Dollars ($100.00),
payable in lawful money of the United States of America.
(k) "Expiration Date" shall mean the close of business on the
tenth-year anniversary of the date hereof.
(l) "Flip-in Event" shall mean a transaction in which any
Person shall become an Acquiring Person; provided, however, that the
term "Flip-in Event" shall not include any transaction or event that
constitutes a "Flip-over Transaction or Event."
(m) "Flip-over Entity" shall mean:
(i) in the case of any transaction described in
clause (A) of the first sentence of Section l.l(n) hereof: (A)
the Person that is the issuer of the securities into which
Common Shares of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, that
issuer the Common Shares of which have the greatest Market
Price, or (B) if no securities are so issued, (x) the Person
that is the other party to the merger or consolidation and
that survives such merger or consolidation, or, if there is
more than one such Person, that Person the Common Shares of
which have the greatest Market Price, 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 (B) of the first sentence of Section l.l(n) hereof, the
Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same
portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons
is the issuer of Common Shares having the greatest Market
Price of shares outstanding; provided, however, that, in any
such case, if the Common Shares of such Person are not at such
time and have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange
Act and such Person is a direct or indirect Subsidiary of
another Person the Common Shares of which are and have been so
registered, the term "Flip-over Entity" shall refer to such
other Person, or if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of all
of which are and have been so registered, the term "Flip-over
Entity" shall refer to whichever of such Persons is the issuer
of the Common Shares having the greatest Market Price of the
shares outstanding.
3
(n) "Flip-over Transaction or Event" shall mean (A) a
transaction in which, directly or indirectly, the Company shall
consolidate with, merge with or into, or enter into an arrangement
with, any other Person (other than a wholly-owned Subsidiary of the
Company), or any other Person (other than a wholly-owned Subsidiary of
the Company) shall consolidate with, merge with or into, or enter into
an arrangement with the Company, and, in connection therewith, all or
part of the outstanding Common Shares of the Company shall be changed
in any way, reclassified or converted into or exchanged for shares or
other securities or cash or any other property, or (B) a transaction or
series of transactions in which, directly or indirectly, the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer) assets:
(i) aggregating more than fifty percent (50%) of the
assets (measured by either book value or Market Price,
whichever results in the greater percentage); or
(ii) which generated during the Company's last
completed fiscal year or is expected to generate in the
Company's then current fiscal year more than fifty percent
(50%) of the operating income or cash flow of the Company and
its Subsidiaries (taken as a whole) to any other Person (other
than the Company or one or more of its wholly-owned
Subsidiaries) or to two or more such Persons which are
affiliated or otherwise acting jointly or in concert.
(o) "Market Price" of any securities (including the Rights) on
any date of determination shall mean the average of the daily closing
prices per share (or right) of such securities (determined as described
below) on each of the 20 consecutive Trading Days through and including
the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in
Section 2.3 hereof shall have caused the closing prices used to
determine the Market Price on any Trading Days not to be fully
comparable with the closing price on such date of determination, each
such closing price so used shall be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section 2.3
hereof in order to make it fully comparable with the closing price on
such date of determination. The closing price per share of any
securities on any date shall be (i) the last sale price, regular way,
or, in case no such sale takes place on such date, the average of the
closing bid and asked prices, regular way, for each share of such
securities as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on any national securities exchange, (ii) if the securities are
not listed or admitted to trading on any national securities exchange,
the closing board lot sale price, (iii) if for any reason none of such
prices is available on such day or the securities are not listed or
admitted to trading on any national securities exchange, the average of
the high bid and low asked prices for each share of such securities in
the over-the-counter market, as reported by the Nasdaq Stock Market of
the National Association of Securities Dealers, Inc. ("Nasdaq"), or
such other system then in use, or (iv) if on any such date the
securities 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 securities selected in good faith by the
Board of Directors of the Company; provided, however, that if on any
such date the securities are not traded in the over the-counter market,
the closing price per share of such securities on such date shall mean
the fair value per share of securities on such date as determined in
good faith by the Board of Directors of the Company, after consultation
with a nationally recognized investment banking firm with respect to
the fair value per share of such securities.
(p) "Offer" shall mean a written proposal delivered to the
Company by any Person or Persons who (x) Beneficially Own in the
aggregate one percent (1%) or less of the outstanding Common Shares of
the Company and have not within the twelve month period preceding the
delivery of such written proposal Beneficially Owned in the aggregate
in excess of one percent (1%) of the outstanding Common Shares of the
Company and (y) within said 12 month period have not disclosed, or
caused the disclosure of, any intention which would result in the
acquisition or influence of control of the Company (any such persons
meeting the conditions specified in clauses x and y, an "Offeror"), and
which proposal:
(i) provides for acquisition of all of the
outstanding Voting Shares held by any Person other than the
Offeror and its Affiliates for cash at the same specified
price;
4
(ii) is, in the opinion of a nationally recognized
investment banking firm retained by the Offeror, fair to the
holders of Voting Shares other than the Offeror and its
Affiliates and is at a price which is not less than the book
value;
(iii) states that such offer shall remain open for at
least 90 days and shall include all Voting Shares outstanding
as of the date of the proposal or issued thereafter pursuant
to contracts in effect at the date of the proposal and that
the Offeror has obtained written financing commitments from
recognized financing sources, and/or has on hand, cash or cash
equivalents, for the full amount of all financing necessary to
consummate the offer; and
(iv) requests the Company to call a special meeting
of the holders of Voting Shares for the purpose of voting on a
resolution requesting the Board of Directors to accept such
offer and contains a written agreement of the Offeror to pay
(or share with any other Offeror) at least one-half of the
Company's costs of preparing and mailing proxy material for
its own solicitation.
(q) "Offer to Acquire" shall include:
(i) an offer to purchase, or a solicitation of an
offer to sell Voting Shares; and
(ii) an acceptance of an offer to sell Voting Shares,
whether or not such offer to sell has been solicited; or
any combination thereof, and the Person accepting an offer to sell
shall be deemed to be making an offer to acquire to the Person that
made the offer to sell.
(r) "Offeror's Securities" means Voting Shares Beneficially
Owned on the date of an Offer to Acquire by any Person who makes a
Takeover Bid or by any Person acting jointly or in concert with such
Person.
(s) "Person" shall mean any individual, firm, partnership,
association, group (as such term is used in Rule 13d-5 under the
Exchange Act as in effect on the date of this Agreement), corporation,
trust, business trust or other entity and shall include any successor
(by merger or otherwise) of such entity.
(t) "Preferred Shares" shall mean the currently authorized but
unissued shares of Series A Preferred Stock, par value $0.001 per
share, of the Company, having the rights and preferences set forth in
the form of Designation of Rights, Privileges, and Preferences attached
hereto as Exhibit A.
(u) "Redemption Date" means the date of the action of the
Board of Directors of the Company ordering the redemption of the Rights
Pursuant to Section 5.2 hereof.
(v) "Redemption Price" means a price of $0.01 per Right,
subject to adjustment as set forth in Article 5 hereof.
(w) "Right" means the right to purchase one one-hundredth of a
Preferred Share at the Exercise Price, subject to adjustment, or the
right to purchase, exchange or receive other securities or assets of
the Company or another issuer as set forth herein.
(x) "Right Certificate" means a certificate evidencing a Right
or Rights, substantially in the form of Exhibit B hereto.
5
(y) "Rights Redemption Committee" means a committee of the
Board of Directors, designated as the "Rights Redemption Committee."
consisting of at least three Continuing Directors, at least a majority
of whom are not employees of the Company. For the purpose of this
definition, the term "continuing director" means any duly constituted
director of the Company who was a director prior to the time the
Interested Stockholder, as defined in this Agreement, became such, and
any other director whose election or appointment as a director was
recommended for approval by a majority of the Continuing Directors. For
the purposes of this definition, the term "employee" means any person
who, at the time of action by such committee,. is or who has been
during the preceding 12 months a full-time employee of the Company. In
the event of the failure or refusal of the Board of Directors to duly
appoint a Rights Redemption Committee, then the persons constituting
the Audit Committee of the Board of Directors shall also constitute the
Rights Redemption Committee.
(z) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(aa) "Separation Date" shall mean the close of business on the
earliest of (i) the tenth day (or such later day as is determined by
unanimous vote of the Board of Directors and publicly announced) after
the Stock Acquisition Date (provided, however, that if prior to the
date which would otherwise be the Separation Date, the Acquiring Person
whose becoming such shall have caused the Stock Acquisition Date to
occur, shall cease to be an Acquiring Person and shall be the
Beneficial Owner of not more than 5% of the Common Stock of the
Company, as indicated in a public announcement or public filing by such
Person, then for purposes of this Section l.l(z), the Stock Acquisition
Date shall be deemed not to have occurred), or (ii) the tenth day after
the date of the commencement of, or first public announcement of the
intent of any Person (other than the Company or any Subsidiary of the
Company, or any Person or entity organized, appointed or established by
the Company or such Subsidiary of the Company for or pursuant to any
tender or exchange offer plan) to commence, a tender or exchange offer
or Takeover Bid to acquire (when added to any Voting Shares as to which
such Person is the Beneficial Owner immediately prior to such tender or
exchange offer or Takeover Bid) Beneficial Ownership of twenty percent
(20%) or more of the outstanding Voting Shares (provided that, if the
foregoing results in the Separation Date being prior to the Record
Date, the Separation Date shall be the Record Date and provided further
that, if any tender or exchange offer or Takeover Bid referred to in
clause (ii) of this Section l.l(z) expires, is canceled, terminated or
otherwise withdrawn prior to the date which would otherwise be the
Separation Date, such offer shall be deemed, for purposes of this
Section l.l(z), never to have been made), or (iii) such later date as
may be fixed by the Board of Directors from time to time by notice to
the Rights Agent and publicly announced by the Company.
(bb) "Stock Acquisition Date" shall mean the first date of
public announcement or filing by the Company or an Acquiring Person
that an Acquiring Person has become such, whether or not the term
"Acquiring Person" is used in fact in such announcement.
(cc) "Subsidiary" of any specified Person shall mean any
corporation or other entity of which a majority of the voting power of
the voting equity securities or a majority of the equity interest is
Beneficially Owned, directly or indirectly, by such Person.
(dd) "Takeover Bid" means an Offer to Acquire Voting Shares,
where the Voting Shares subject to the Offer to Acquire together with
the Offeror's Securities, constitute in the aggregate twenty percent
(20%) or more of the outstanding Voting Shares at the date of the Offer
to Acquire.
(ee) "Trading Day", when used with respect to any securities,
shall mean a day on which the principal securities exchange on which
such securities are listed or admitted to trading is open for the
transaction of business or, if the securities are not listed or
admitted to trading on any securities exchange, a Business Day.
6
(ff) "Voting Shares" shall mean (i) for purposes of
determining the number of outstanding Voting Shares of the Company,
only the Common Shares of the Company and any other shares of capital
stock of the Company entitled to vote generally in the election of
directors; and (ii) for purposes of determining the number or
percentage of Voting Shares Beneficially Owned by any Person, all of
the following shares Beneficially Owned by such Person: (x) Common
Shares of the Company and (y) shares of the capital stock of the
Company entitled to vote generally in the election of directors.
1.2 Determinations.
Any determination required to be made by the Board of Directors of the
Company for purposes of applying the definitions contained in this Article 1
shall be made by the Board of Directors in its good faith judgment, which
determination shall be conclusive and binding on the the Rights Redemption
Committee, the Rights Agent, and the holders of the Rights.
ARTICLE II
THE RIGHTS
2.1 Legend on Common Share Certificates.
Certificates for the Common Shares issued after the Record Date but
prior to the close of business on the Separation Date shall evidence one Right
for each Common Share represented thereby and shall have impressed on, printed
on, written on or otherwise affixed to them, the following legend:
Until the Separation Date (as defined in the Rights Agreement referred
to below), this certificate also evidences and entitles the holder
thereof to certain Rights as set forth in a Rights Agreement, dated as
of the 4th day of April, 1997 (the "Rights Agreement"), between FX
Energy, Inc. (the "Company"), and Fidelity Transfer Corp., as Rights
Agent, the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive office of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed by the Company, may expire, may
become void (if, in certain cases, they are "Beneficially Owned" by an
"Acquiring Person", as such terms are defined in the Rights Agreement,
or a transferee thereof) or may be evidenced by separate certificates
and may no longer be evidenced by this certificate. The Company will
mail or arrange for the mailing of a copy of the Rights Agreement to
the holder of this certificate without charge within five days after
the receipt of a written request therefor.
Certificates representing Common Shares of the Company that are issued and
outstanding at the Record Date shall evidence one Right for each Common Share
evidenced thereby notwithstanding the absence of the foregoing legend.
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights.
(a) Subject to adjustment as herein set forth, each Right will
entitle the holder thereof, after the Separation Date, to purchase,
subject to adjustment from time to time as provided herein, one
one-hundredth (1/100) of a Preferred Share at the Exercise Price.
(b) Until the Separation Date:
(i) no Right may be exercised; and
(ii) each Right will be evidenced by the certificate
for the associated Common Share and will be transferable only
together with, and will be transferred by a transfer of, such
associated Common Share. Notwithstanding any other provision
of this Agreement, any Rights held by the Company or any of
its Subsidiaries shall be void.
7
(c) After the Separation Date and prior to the Expiration
Date, the Rights, unless earlier redeemed in accordance with the
provisions of Article 5 hereof, (i) may be exercised and (ii) will be
transferable independent of Common Shares. Promptly following the
Separation Date, the Rights Agent will mail to each holder of record of
Common Shares as of the Separation Date, at such holder's address as
shown by the records of the Transfer Agent and Registrar of the
Company's Common Stock (the Company hereby agreeing to cause such
Transfer Agent and Registrar, if different from the Rights Agent, to
furnish copies of such records to the Rights Agent for this purpose)
(x) a Rights Certificate appropriately completed, representing the
number of Rights held by such holder at the Separation Date and having
such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock
exchange or quotation system on which the Rights may from time to time
be listed or traded, or to conform to usage, and (y) a disclosure
statement describing the Rights.
(d) Rights may be exercised on any Business Day after the
Separation Date and prior to the Expiration Date by submitting to the
Rights Agent the Rights Certificate evidencing such Rights with an
Election to Exercise (an "Election to Exercise") substantially in the
form attached to the Rights Certificate duly completed, accompanied by
payment in cash or by certified check or money order payable to the
order of the Company, of a sum equal to the Exercise Price multiplied
by the number of Rights being exercised and a sum sufficient to cover
any transfer tax or charge which may be payable in respect of any
transfer involved in the transfer or delivery of Rights Certificates or
the issuance or delivery of certificates for whole or fractional
Preferred Shares in a name other than that of the holder of the Rights
being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.2(d) above,
the Rights Agent will thereupon promptly:
(i) requisition from any transfer agent of the
capital stock of the Company certificates for the number of
whole or fractional Preferred Shares to be purchased (the
Company hereby irrevocably authorizing and directing such
transfer agent to comply with all such requisitions);
(ii) as provided in Section 6.5(b) hereof, at the
election of the Company, cause depository receipts to be
issued in lieu of fractional shares;
(iii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 6.5(b) hereof;
(iv) when appropriate, requisition from the Company
the amount of cash or other consideration to be paid in lieu
of capital stock as determined pursuant to the terms hereof;
and
(v) after receipt of such certificates, depository
receipts and/or cash or other consideration, deliver the same
to or upon the order of the registered holder of such Rights
Certificate, registered (in the case of certificates or
depository receipts) in such name or names as may be
designated by such holder.
(f) In case the holder of any Rights shall exercise less than
all the Rights evidenced by such holder's Rights Certificate, a new
Rights Certificate evidencing the Rights remaining unexercised will be
issued by the Rights Agent to such holder or to such holder's duly
authorized assigns.
(g) The Company covenants and agrees that it will:
(i) cause to be reserved and kept available out of
its authorized and unissued shares of Preferred Stock and
shares of Common Stock, respectively, or out of authorized and
issued Preferred Shares and shares of Common Stock,
respectively, held in its treasury, such number of Preferred
Shares and shares of Common Stock, respectively, as will from
time to time be sufficient to permit the exercise in full of
all outstanding Rights;
8
(ii) not effect any amendment to the Designation of
Rights, Privileges, and Preferences for the Preferred Shares
or any amendment to the articles of incorporation of the
Company, which would materially and adversely affect the
rights, privileges or powers of the Preferred Shares
(regardless of whether there are then any holders of Preferred
Shares), without the prior approval of the holders of
two-thirds or more of the then outstanding Preferred Shares
and the prior written consent of the holders of two-thirds or
more of the then outstanding Rights that are not Beneficially
Owned by any Acquiring Person. (For purposes of the taking of
any action by the holders of Rights, the Board of Directors of
the Company may establish a record date and may call and hold
a meeting of such holders or seek their consent to action by
the requisite number thereof in writing substantially in
accordance with the procedure applicable to action to be taken
by the holders of Preferred Shares and in accordance with
applicable law);
(iii) take all such action as may be necessary and
within its power to ensure that all Preferred Shares delivered
upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of
the Exercise Price), be duly and validly authorized, executed,
issued and delivered, and fully paid and nonassessable;
(iv) take all such action as may be necessary and
within its power to comply with any applicable requirements of
the Securities Act or the Exchange Act or the rules and
regulations thereunder and any other applicable law, rule or
regulation, in connection with the issuance and delivery of
the Rights Certificates and the issuance of any Preferred
Shares upon exercise of Rights;
(v) use its best efforts to cause all Preferred
Shares issued upon exercise of Rights to be listed on a
national securities exchange upon issuance; and
(vi) pay when due and payable any and all federal and
state transfer taxes (but not any income taxes of the holder
or exercising holder or any liability of the Company to
withhold tax) and charges which may be payable in respect of
the original issuance or delivery of the Rights Certificates;
provided that, the Company shall not be required to pay any
transfer tax or charge which may be payable in respect of any
transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for
shares in a name other than that of the holder of the Rights
being transferred or exercised.
2.3 Adjustments to Exercise Price; Number of Rights.
(a) In the event the Company shall at any time after the
Record Date and prior to the Expiration Date:
(i) declare or pay a dividend on the Common Shares
payable in Common Shares (or other capital stock or securities
exchangeable for or convertible into or giving a right to
acquire Common Shares or other capital stock) other than
pursuant to any optional stock dividend program:
(ii) subdivide or split the then outstanding Common
Shares into a greater number of Common Shares;
(iii) combine or consolidate the then outstanding
Common Shares into a smaller number of Common Shares or effect
a reverse split of the outstanding Common Shares; or
(iv) issue any Common Shares (or other capital stock
or securities exchangeable for or convertible into or giving a
right to acquire Common Shares or other capital stock) in
respect of, in lieu of or in exchange for, existing Common
Shares in a reclassification or recapitalization;
9
then, and in each such event, the Exercise Price and the number of
Rights outstanding, or, if the payment or effective date therefor shall
occur after the Separation Date, the Preferred Shares purchasable upon
exercise of Rights, shall be adjusted in the manner set forth below. If
the Exercise Price and number of Rights outstanding are to be adjusted,
(x) the Exercise Price in effect after such adjustment will be equal to
the Exercise Price in effect immediately prior to such adjustment
divided by the number of Common Shares (or other capital stock) (the
"Expansion Factor") that a holder of one Common Share immediately prior
to such dividend, subdivision, combination or issuance would hold
thereafter as a result thereof, and (y) each Right held prior to such
adjustment will become that number of Rights equal to the Expansion
Factor, and the adjusted number of Rights will be deemed to be
distributed among the Common Shares with respect to which the original
Rights were associated (if they remain outstanding) and the shares
issued in respect of such dividend, subdivision, combination or
issuance, so that each such Common Share (or other capital stock) will
have exactly one Right associated with it. If the Preferred Shares
purchasable upon exercise of Rights are split, subdivided, or combined,
or if any dividend (whether of cash or securities) is declared with
respect thereto, the Preferred Shares purchasable upon exercise of each
Right after such event will be automatically adjusted to be that number
of the Preferred Shares that a holder of the Preferred Shares
purchasable upon exercise of one Right (regardless of whether a Right
shall then be exercisable) immediately prior to such split,
subdivision, combination, or dividend would hold thereafter as a result
thereof. If after the Record Date and prior to the Expiration Date, the
Company shall issue any shares of capital stock other than Common
Shares in a transaction of a type described in the first sentence of
this Section 2.3(a), shares of such capital stock shall be treated
herein as nearly equivalent to Common Shares as may be practicable and
appropriate under the circumstances, and the Company and the Rights
Agent agree to amend this Agreement in order to effect such treatment,
and the Company will not consolidate with, merge with or into, or enter
into an arrangement with, any other Person unless such Person agrees to
be bound by the terms of an amendment effecting such treatment
In the event the Company shall at any time after the Record
Date and prior to the Separation Date issue any Common Shares otherwise
than in a transaction referred to in the preceding paragraph, each such
Common Share so issued shall automatically have one new Right
associated with it, which Right shall be evidenced by the certificate
representing such Share.
(b) In the event the Company shall at any time after the
Record Date and prior to the Separation Date fix a record date for the
making of a distribution to all holders of Common Shares of rights or
warrants entitling them to subscribe for or purchase Common Shares (or
securities convertible into or exchangeable for or carrying a right to
purchase or subscribe for Common Shares) at a price per Common Share
(or, if a security convertible into or exchangeable for or carrying a
right to purchase or subscribe for Common Shares), having a conversion,
exchange or exercise price (including the price required to be paid to
purchase such convertible or exchangeable security or right per share)
less than the Market Price per Common Share on such record date, the
Exercise Price shall be adjusted. The Exercise Price in effect after
such record date will equal the Exercise Price in effect immediately
prior to such record date multiplied by a fraction, of which the
numerator shall be the number of Common Shares outstanding on such
record date plus the number of Common Shares which the aggregate
offering price of the total number of Common Shares so to be offered
(and/or the aggregate initial conversion, exchange or exercise price of
the convertible or exchangeable securities or rights so to be offered
(including the price required to be paid to purchase such convertible
or exchangeable securities or rights)) would purchase at such Market
Price and of which the denominator shall be the number of Common Shares
outstanding on such record date plus the number of additional Common
Shares to be offered for subscription or purchase (or into which the
convertible or exchangeable securities or rights so to be offered are
initially convertible, exchangeable or exercisable). In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the
Company. For purposes of this Agreement, the granting of the right to
purchase Common Shares (whether from treasury shares or otherwise)
pursuant to any dividend or interest reinvestment plan and/or any
Common Share purchase plan providing for the reinvestment of dividends
or interest payable on securities of the Company and/or the investment
of periodic optional payments and/or employee benefit or similar plans
(so long as such right to purchase is in no case evidenced by the
delivery of rights or warrants) shall not be deemed to constitute an
issue of rights or warrants by the Company; provided, however, that, in
the case of any dividend or interest reinvestment plan, the right to
purchase Common Shares is at a price per share of not less than 90
percent of the current market price per share (determined as provided
in such plans) of the Common Shares.
10
(c) In the event the Company shall at any time after the
Record Date and prior to the Separation Date fix a record date for the
making of a distribution to all holders of Common Shares of evidences
of indebtedness or assets (other than a regular periodic cash dividend
or a dividend paid in Common Shares) or rights or warrants (excluding
those referred to in Section 2.3(b)), the Exercise Price shall be
adjusted. The Exercise Price in effect after such record date will
equal the Exercise Price in effect immediately prior to such record
date less the fair market value (as determined in good faith by the
Board of Directors of the Company) of the portion of the assets,
evidences of indebtedness, rights or warrants so to be distributed
applicable to the securities purchasable upon exercise of one Right.
(d) Each adjustment made pursuant to this Section 2.3 shall be
made as of:
(i) the record date for the applicable dividend or
distribution, in the case of an adjustment made pursuant to
subsection (b) or (c) above; and
(ii) the payment or effective date for the applicable
dividend, subdivision, change, combination or issuance, in the
case of an adjustment made pursuant to subsection (a) above.
(e) In the event the Company shall at any time after the
Record Date and prior to the Separation Date issue any shares of
capital stock (other than Common Shares), or rights or warrants to
subscribe for or purchase any such capital stock, or securities
convertible into or exchangeable for any such capital stock, in a
transaction referred to in clause (a)(i) or (a)(iv) above, if the Board
of Directors acting in good faith determines that the adjustments
contemplated by clauses (a), (b) and (c) above in connection with such
transaction will not appropriately protect the interests of the holders
of Rights, the Company may determine what other adjustments to the
Exercise Price, number of Rights and/or Preferred Shares purchasable
upon exercise of Rights would be appropriate and, notwithstanding
clauses (a), (b) and (c) above, such adjustments, rather than the
adjustments contemplated by clauses (a), (b) and (c) above, shall be
made. The Company and the Rights Agent shall amend this Agreement as
appropriate to provide for such adjustments.
(f) Each adjustment to the Exercise Price made pursuant to
this Section 2.3 shall be calculated to the nearest cent. Whenever an
adjustment to the Exercise Price is made pursuant to this Section 2.3,
the Company shall
(i) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for
such adjustment; and
(ii) promptly file with the Rights Agent and with
each transfer agent for the Common Shares a copy of such
certificate; and
(iii) mail a brief summary thereof to each holder of
Rights.
(g) Irrespective of any adjustment or change in the securities
purchasable upon exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the
securities so purchasable which were expressed in the initial Rights
Certificates issued hereunder.
2.4 Date on Which Exercise is Effective.
Each person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such Preferred Shares represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered for exercise and payment of the
Exercise Price for such Rights (and any applicable transfer taxes and other
governmental charges payable by the exercising holder hereunder) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Share transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such Preferred Shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Share transfer books of the Company are open.
11
2.5 Execution, Authentication, Delivery and Dating of Rights
Certificates.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or one of its Executive
Vice Presidents, attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Rights
Certificate may be manual or facsimile. Rights Certificates bearing the
manual or facsimile signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding
that such individuals or any of them have ceased to hold such offices
prior to the countersignature and delivery of such Rights Certificates.
Promptly after the Company learns of the Separation Date, the Company
will notify the Rights Agent of such Separation Date and will deliver
Rights Certificates executed by the Company to the Rights Agent for
countersignature and the Rights Agent shall countersign (manually or by
facsimile signature in a manner satisfactory to the Company) and
deliver such Rights Certificates to the holders of the Rights pursuant
to Section 2.2(c) hereof. No Rights Certificate shall be valid for any
purpose until countersigned by the Rights Agent as aforesaid.
(b) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.6 Registration, Registration of Transfer and Exchange.
(a) The Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company will provide for the registration and transfer
of Rights. The Rights Agent is hereby appointed "Rights Registrar" for
the purpose of maintaining the Rights Register for the Company and
registering Rights and transfers of Rights as herein provided. In the
event that the Rights Agent shall cease to be the Rights Registrar, the
Rights Agent will have the right to examine the Rights Register at all
reasonable times.
After the Separation Date and prior to the Expiration Date, upon
surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of Section 2.6(c) below, the
Company will execute, and the Rights Agent will countersign and
deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or
more new Rights Certificates evidencing the same aggregate number of
Rights as did the Rights Certificates so surrendered.
(b) All Rights issued upon any registration of transfer or
exchange of Rights Certificates shall be the valid obligations of the
Company, and such Rights shall be entitled to the same benefits under
this Agreement as the Rights surrendered upon such registration of
transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company or
the Rights Agent, as the case may be, duly executed by the holder
thereof or such holder's attorney duly authorized in writing. As a
condition to the issuance of any new Rights Certificate under this
Section 2.6, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto.
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates.
(a) If any mutilated Rights Certificates is surrendered to the
Rights Agent prior to the Expiration Date, the Company shall execute
and the Rights Agent shall countersign and deliver in exchange therefor
a new Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so surrendered.
12
(b) If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Date (i) evidence to their satisfaction
of the destruction, loss or theft of any Rights Certificate and (ii)
such security or indemnity as may be required by them to save each of
them and any of their agents harmless, then, in the absence of notice
to the Company or the Rights Agent that such Rights Certificate has
been acquired by a bona fide purchaser, the Company shall execute and
upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a new
Rights Certificate evidencing the same number of Rights as did the
Rights Certificate so destroyed, lost or stolen .
(c) As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this
Section 2.7 in lieu of any destroyed, lost or stolen Rights
Certificates shall evidence an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen
Rights certificate shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.8 Persons Deemed Owners.
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Date, the associated Common Share certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name such Rights Certificate
(or, prior to the Separation Date, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever. As used in this Agreement, unless the context otherwise
requires, the term "holder" of any Rights shall mean the registered holder of
such Rights (or, prior to the Separation Date, the associated Common Shares).
2.9 Delivery and Cancellation of Certificates.
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly canceled by the Rights Agent. The Company may at any time deliver to
the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Rights Certificates so delivered shall be promptly
canceled by the Rights Agent. No Rights Certificate shall be countersigned in
lieu of or in exchange for any Rights Certificates canceled as provided in this
Section 2.9, except as expressly permitted by this Agreement. The Rights Agent
shall destroy all canceled Rights Certificates and deliver a certificate of
destruction to the Company.
2.10 Agreement of Rights Holders.
Every holder of Rights by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of Rights that:
(a) prior to the Separation Date, each Right will be
transferable only together with, and will be transferred by a transfer
of, the associated Common Share;
(b) after the Separation Date, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
13
(c) prior to due presentment of a Rights Certificate (or,
prior to the Separation Date, the associated Common Share certificate)
for registration of transfer, the Company, the Rights Agent and any
agent of the Company or the Rights Agent may deem and treat the person
in whose name the Rights Certificate (or, prior to the Separation Date,
the associated Common Share certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on such Rights Certificate or the
associated Common Share certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) without the approval of any holder of Rights and upon the
sole authority of the Board of Directors of the Company acting in good
faith, this Agreement may be supplemented or amended from time to time
pursuant to Section 6.3, Section 2.3 (e) or the last sentence of the
first paragraph of Section 2.3(a) hereof.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT
OF CERTAIN TRANSACTIONS
3.1 Flip-over Transaction or Event.
(a) Subject to Section 3.3 hereof, in the event that prior to
the Expiration Date the Company enters into, consummates or permits to
occur any Flip-over Transaction or Event, the Company shall take such
action as shall be necessary to ensure, and shall not enter into,
consummate or permit to occur such Flip-over Transaction or Event until
it shall have entered into a supplemental agreement with the principal
Person engaging in such Flip-over Transaction or Event (the "Flip-over
Entity", as such term is more specifically defined in Section 1.1(m)
hereof) for the benefit of the holders of the Rights, providing, that
upon consummation of the Flip-over Transaction or Event:
(i) each Right shall thereafter constitute the right
to purchase from the Flip-over Entity, upon exercise thereof
in accordance with the terms hereof, that number of Common
Shares of such Flip-over Entity having an aggregate Market
Price on the date of consummation or occurrence of such
Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such
right to be appropriately adjusted in a manner analogous to
the applicable adjustment to the Rights provided for in
Section 2.3 in the event that after such date of consummation
or occurrence an event of a type analogous to any of the
events described in Section 2.3 shall have occurred with
respect to such Common Shares);
(ii) the Flip-over Entity shall thereafter be liable
for, and shall assume, by virtue of such Flip-over Transaction
or Event and such supplemental agreement, all the obligations
and duties of the Company pursuant to this Agreement;
(iii) the term "Company" for all purposes of this
Rights Agreement shall thereafter be deemed to refer to such
Flip-over Entity;
(iv) such Flip-over Entity shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its Common Shares, in the same manner
applicable to the reservation of Preferred Shares provided by
Section 2.2(g)(i) hereof) in connection with the consummation
of such Flip-over Transaction or Event as may be necessary to
assure that the provisions hereof shall thereafter be
applicable;
(v) confirming that all rights of first refusal or
preemptive rights in respect of the issuance of Common Shares
of the Flip-over Entity upon exercise of outstanding Rights
have been waived and that such transaction shall not result in
a default by the Flip-over Entity under this Rights Agreement;
and
14
(vi) providing that, as soon as practicable after the
date of such Flip-over Transaction or Event, the Flip-over
Entity will:
(A) prepare and file, as required by law, a
registration statement under the Securities Act with
respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form,
use its best efforts to cause such registration
statement to become effective as soon as practicable
after such filing, and use its best efforts to cause
such registration statement to remain effective (with
a prospectus at all times meeting the requirements of
the Securities Act), until the date of expiration of
the Rights, and similarly comply with applicable
state securities laws:
(B) use its best efforts to list (or
continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on
a national securities exchange or to meet the
eligibility requirements for quotation on the Nasdaq
Stock Market; and
(C) deliver to holders of the Rights
historical financial statements for the Flip-over
Entity which comply in all respects with the
requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
3.2 Flip-in Event.
(a) Subject to Section 3.3, in the event that prior to the
Expiration Date a Flip-in Event shall occur, the Company shall take
such action as shall be necessary to ensure and provide, within five
(5) Business Days or such longer period as may be required to satisfy
the requirements of the Securities Act and the Exchange Act that,
except as provided below, such Right shall thereafter constitute the
right to purchase from the Company, upon exercise thereof in accordance
with the terms hereof, that number of Common Shares of the Company
having an aggregate Market Price on the date of consummation or
occurrence of such Flip-in Event equal to the Exercise Price for an
amount in cash equal to one-half (1/2) the Exercise Price (such right
to be appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 in the event that after such
date of consummation or occurrence an event of a type analogous to any
of the events described in Section 2.3 shall have occurred with respect
to such Common Shares).
(b) Notwithstanding the foregoing, upon the occurrence of any
Flip-in Event, any Rights that are or were Beneficially Owned on or
after the earlier of the Separation Date or the Stock Acquisition Date
by (i) an Acquiring Person or (ii) a transferee, direct or indirect, of
an Acquiring Person (or any Affiliate or Associate of an Acquiring
Person) in a transfer, whether or not for consideration, that the Board
of Directors of the Company acting in good faith has determined is part
of a plan, arrangement or scheme of an Acquiring Person (or any
Affiliate or Associate of an Acquiring Person) that has the purpose or
effect of avoiding clause (i) of this Section 3.2(b), shall become void
and any holder of such Rights (including transferees) shall thereafter
have no right to exercise such Rights under any provision of this
Agreement;
(c) Any Rights Certificate issued pursuant to Section 2.2 that
represents Rights Beneficially Owned by an Acquiring Person and any
Rights Certificate issued at any time upon the transfer of any Rights
to an Acquiring Person or any Affiliate or Associate thereof or to any
nominee of any such Acquiring Person, Affiliate or Associate, and any
Rights Certificate issued upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain the following legend:
The Rights represented by this Rights Certificate were issued
to a person who was an Acquiring Person or an Affiliate or an Associate
of an Acquiring Person (as such terms are defined in the Rights
Agreement). This Rights Certificate and the Rights represented hereby
may become void in the circumstances specified in Section 3.2(b) of the
Rights Agreement.
15
Provided that, the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would require
the imposition of such legend but shall be required to impose such
legend only if instructed to do so by the Company, or if a holder fails
to certify upon transfer or exchange in the space provided on the
Rights Certificate that such holder is not an Acquiring Person or an
Affiliate or Associate thereof; provided further, however, that the
absence of such legend on any Rights Certificate shall not be deemed
dispositive of whether the holder thereof is an Acquiring Person.
3.3 Obligations of the Company.
(a) The Company shall not enter into or engage in any
transaction of the kind referred to in this Article III if at the time
of such transaction there are any rights, warrants or securities
outstanding or any other arrangements, agreements or instruments which
would eliminate or otherwise diminish in any respect the benefits
intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction. The provisions of this
Article III shall apply to successive mergers or consolidations or
sales or other transfers.
(b) In the event that there shall not be sufficient Common
Shares authorized to permit the exercise in full of the Rights in
accordance with Section 3.2(a), holders of Rights will receive upon
exercise Common Shares of the Company to the extent available and then
cash, property or other securities of the Company (which may be
accompanied by a reduction in the Exercise Price), in proportions
determined by the Company, so that the aggregate value received is
equal to the Exercise Price.
ARTICLE IV
THE RIGHTS AGENT
4.1 General.
(a) The Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of Rights in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable. In the event the Company
appoints such Co-Rights Agents, the respective duties of the Rights
Agents and Co-Rights Agents shall be as the Company may determine. The
Company agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time on demand
of the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability, which
right to indemnification will survive the termination of this
Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this Agreement in reliance
upon any certificate for Common Shares, Rights Certificate, certificate
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.
16
4.2 Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or amalgamated or with which it
may be consolidated or any corporation resulting from any merger, or
consolidation to which the Rights Agent or any successor Rights Agent
is a party, or any corporation succeeding to the stockholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any
of the parties hereto; provided that, such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 4.4 hereof. In case at the time such successor
Rights Agent succeeds to the agency created by this Agreement, any of
the Rights Certificates have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
have not been countersigned, any successor Rights Agent may countersign
such Rights Certificate either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificate will have full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificate shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificate 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.
4.3 Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel will
be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by a person believed by the Rights Agent to be the Chairman of
the Board, the President or any Executive Vice President or Vice
President and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate will be full authorization to
the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the certificates for Common Shares or the Rights Certificates
(except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to
have been made by the Company only.
17
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery hereof by
the Rights Agent) or in respect of the validity or execution of any
Common Share certificate, Preferred Share certificate or Rights
Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor will it
be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 3.2(b) hereof
or any adjustment required under the provisions of Section 2.3 hereof)
or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any
such adjustments (except with respect to the exercise of Rights after
receipt of the certificate contemplated by Section 2.3 describing any
such adjustment); nor will it by any act hereunder be deemed to make
any representation or warranty as to the authorization of any Preferred
Shares or Common Shares to be issued pursuant to this Agreement or any
Rights or as to whether any Preferred Shares or Common Shares will,
when issued, be duly and validly authorized, executed, issued and
delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any person believed by the Rights Agent to be the
Chairman of the Board, the President, any Executive Vice President or
Vice President or the Secretary or any Assistant Secretary or the
Treasurer or any Assistant Treasurer of the Company, and to apply to
such persons for advice or instructions in connection with its duties
and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such person.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Preferred Shares,
Common Shares, 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, subject to the terms, covenants, conditions, and
restrictions of this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent will not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct provided reasonable care was exercised in the selection and
continued employment thereof.
18
4.4 Change of Rights Agent.
The Rights Agent may resign and be discharged from its duties under
this Agreement upon 90 days' notice (or such lesser notice as is acceptable to
the Company) in writing mailed to the Company and to each transfer agent of
Common Shares by registered or certified mail, and to the holders of the Rights
in accordance with Section 6.9. The Company may remove the Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent and to each transfer agent
of the Common Shares by registered or certified mail and to the holders of the
Rights in accordance with Section 6.9. If the Rights Agent should resign or be
removed or otherwise become incapable of acting, the Company will appoint a
successor to the Rights Agent. If the Company fails to make such appointment
within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of any Rights (which holder shall, with such
notice, submit such holder's Rights Certificate for inspection by the Company),
then the holder of any Rights may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation incorporated
under the laws of any state or the United States that is authorized to carry on
in the state of Utah the business of a transfer agent registered in accordance
with the requirements of section 17A of the Securities Exchange Act or 1934 and,
if the duties hereunder are deemed to so require, a trust company. After
appointment, the successor Rights Agent will 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 will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and mail a
notice thereof in writing to the holders of the Rights. Failure to give any
notice provided for in this Section 4.4 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.
ARTICLE: V
REDEMPTION
5.1 Redemption.
The Rights may be redeemed solely by action of the Rights Redemption
Committee pursuant to Section 5.2 hereof and in no other manner.
5.2 By the Rights Redemption Committee.
Subject to any limitations contained in the Company's articles of
incorporation, the Rights Redemption Committee of the Company may, at its
option, at any time prior to the earlier of (i) the Expiration Date or (ii) the
close of business on the tenth day after the Stock Acquisition Date (or such
later date as may be determined by the majority vote of the Rights Redemption
Committee from time to time) by notice to the Rights Agent and public
announcement by the Company, redeem all, but not less than all, the
then-outstanding Rights at the Redemption Price, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof, and the Company may, at its option, pay the Redemption Price in
Common Shares (based on the current Market Price of the Common Shares at the
time of redemption), cash or any other form of consideration deemed appropriate
by the Rights Redemption Committee.
19
5.3 Rights Termination.
Immediately upon the action of the Rights Redemption Committee of the
Company ordering the redemption of the Rights pursuant to Section 5.2 hereof,
and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Rights Redemption Committee ordering the
redemption of the Rights pursuant to Section 5.2 hereof, the Company shall mail
a notice of redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Separation Date, on the registry books of the transfer agent
for the Common Stock of the Company, if different. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem any Rights at any time in any
manner other than that specifically set forth in this Article 5, and other than
in connection with the purchase of Common Shares of the Company prior to the
Separation Date.
ARTICLE VI
MISCELLANEOUS
6.1 Expiration.
No Person shall have any right pursuant to this Agreement or in respect
of any Right after the Expiration Date, except the Rights Agent as specified in
Section 4.1(a) of this Agreement.
6.2 Issuance of New Rights Certificate.
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 number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
6.3 Supplements and Amendments.
The Board of Directors of the Company may from time to time supplement
or amend this Agreement without the approval of any holders of Rights:
(a) to make any changes, except for a supplement or amendment
which would change the Expiration Date or the Exercise Price, which the
Board of Directors acting in good faith may deem necessary or
desirable; provided that, no such supplement or amendment made on or
after the Stock Acquisition Date shall materially adversely affect the
interests of the holders of Rights generally; and provided further
that, no such supplement or amendment shall be made to the provisions
of Article IV except with the written concurrence of the Rights Agent
to such supplement or amendment; or
(b) in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be inconsistent with any other
provisions herein or otherwise defective.
6.4 Fractional Rights.
(a) The Company shall not be required to issue fractions of
Rights or Right Certificates evidencing fractional Rights.
20
(b) In lieu of fractional Rights, the registered holders of
the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable shall be paid in cash an amount equal to
the same fraction of the current market price of a whole Right. For the
purposes of this Section 6.4, the current market price 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 determined in the same manner set forth in Section 1.1
(o).
6.5 Fractional Shares.
(a) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of
one one-hundredth of a share) or fractions of a share of Common Stock
upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth of a share) or
fractional shares of Common Stock. Nothing contained herein, however,
shall be deemed to prevent any holder of Rights from aggregating the
number of Rights exercised in any single transaction in such a manner
that the aggregate number of Rights exercised in a single transaction
may be convertible into an integral number of shares (or, in the case
of Preferred Stock, an integral multiple of one one-hundredth of a
share). A holder of fractional share certificates of Preferred Stock
shall have all such rights, privileges and preferences as he, she or it
may be entitled to pursuant to the Nevada Revised Statutes.
(b) In lieu of issuing fractions (other than fractions which
are integral multiples of one one-hundredth of a share) of Preferred
Shares, the Company may, at its election, issue depository receipts
evidencing fractions of Preferred Shares pursuant to an appropriate
agreement between the Company and a depository selected by it; provided
that, such agreement shall provide that the holders of such depository
receipts shall have all of the rights, privileges and preferences to
which they would be entitled as owners of Preferred Shares pursuant to
the Nevada Revised Statutes. With respect to fractional Preferred
Shares that are not integral multiples of one one-hundredth of a
Preferred Share, if the Company does not issue such fractional
Preferred Shares or depository receipts in lieu thereof, there shall be
paid to the holders of record of Right Certificates at the time such
Right Certificates are exercised as herein provided an amount in cash
equal to the same fraction of the Market Price of a Preferred Share.
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Preferred Shares
(other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of a Right.
6.6 Rights of Action.
Subject to the terms of this Agreement, rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent
are vested in the respective holders of the Rights and any holder of any Rights,
without the consent of the Rights Agent or of the holder of any other Rights,
may, on such holder's own behalf and for such holder's own benefit and the
benefit of other holders of Rights, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, such holder's right to exercise such holder's Rights in the manner
provided in such holder's Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
21
6.7 Holder of Rights Not Deemed a Stockholder.
No holder, as such, of any Rights shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Shares or any
other securities which may at any time be issuable on the exercise of such
Rights, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights, 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 6.8 hereof),
or to receive dividends or subscription rights or otherwise, until such Rights
shall have been exercised in accordance with the provisions hereof.
6.8 Notice of Proposed Actions.
In case the Company shall propose after the Separation Date and prior
to the Expiration Date
(a) to effect or permit (in cases where the Company's
permission is required) any Flip-in Event or Flip-over Transaction or
Event; or
(b) to effect the liquidation, dissolution or winding up of
the Company or the sale of all or substantially all of the Company's
assets;
then in each such case, the Company shall give to each holder of a Right, in
accordance with Section 6.9 hereof, a notice of such proposed action, which
shall specify the date on which such Flip-in Event or Flip-over Transaction or
Event, liquidation, dissolution, or winding up is to take place, and such notice
shall be so given at least 20 Business Days prior to the date of the taking of
such proposed action.
6.9 Notices.
Notices or demands authorized or required by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights to or on the Company
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
FX Energy, Inc.
3006 South Highland Drive, Suite 206
Salt Lake City, Utah 84106
Attention: Secretary
Any notice or demand authorized or required by this Agreement to be
given or made by the Company or by the holder of any Rights to or on the Rights
Agent shall be sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
Fidelity Transfer Corp.
P.O. Box 53
Salt Lake City, Utah 84115
Attention: President
Notices or demands authorized or required by this Agreement to be given
or made by the Company or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the registry books of the Rights Agent or prior to the Separation
Date, on the registry books of the Transfer Agent and Registrar of the Company's
capital stock, if different from 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.
22
6.10 Costs of Enforcement.
The Company agrees that if the Company or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfill any
of its obligations pursuant to this Agreement, then the Company or such Person
will reimburse the holder of any Rights for the costs and expenses (including
legal fees) incurred by such holder in actions to enforce his rights pursuant to
any Rights or this Agreement.
6.11 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.
6.12 Benefits of this Agreement.
Nothing in this Agreement shall be construed to give any Person other
than the Company, the Rights Agent and the holders of the Rights 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
holders of the Rights.
6.13 Descriptive Heading.
Descriptive headings appear herein for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
6.14 Governing Law.
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the internal laws of the state of Nevada and for all
purposes shall be governed by and construed in accordance with the internal
laws, including the corporate laws, of such state applicable to contracts to be
made and performed entirely within such state without giving effect to conflicts
of laws principles thereof.
6.15 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.
6.16 Severability.
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
enforceable, such term or provision shall be ineffective as to such jurisdiction
to the extent of such invalidity or unenforceability without invalidating or
rendering unenforceable the remaining terms and provisions hereof or the
application of such term or provision to circumstances other than those as to
which it is held invalid or unenforceable.
6.17 Effective Date.
This Agreement shall be effective as of April 4, 1997.
23
6.18 Determinations and Actions by the Board of Directors.
Subject to any limitations contained in the Company's articles of
incorporation, the Board shall have the exclusive power and authority to
administer and amend this Agreement and to exercise all rights and powers
specifically granted to the Board or the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not to
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including for purposes of clause (ii) below,
all omissions with respect to the foregoing) which are done or made by the
Board, in good faith, shall (i) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights Certificates and all other parties,
and (ii) not subject the Board to any liability to the holders of the Rights
Certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
FX ENERGY, INC.
By:
---------------------------------------
David N. Pierce
President and Chief Executive Officer
Fidelity Transfer Corp.
By:
---------------------------------------
Linda Kenner
President
24