Exhibit 4.1
Rights Agreement
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GULF ISLAND FABRICATION, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
as Rights Agent
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Dated as of March 25, 2009
TABLE OF CONTENTS
Page
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Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Issue of Right Certificates 6
Section 4. Form of Right Certificates 7
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; 9
Mutilated, Destroyed, Lost or Stolen Right Certificates
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights 9
Section 8. Cancellation and Destruction of Right Certificates 11
Section 9. Availability of Preference Shares 11
Section 10. Preference Shares Record Date 12
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights 12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares 19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 19
Section 14. Fractional Rights and Fractional Shares 21
Section 15. Rights of Action 22
Section 16. Agreement of Right Holders 22
Section 17. Right Certificate Holder Not Deemed a Shareholder 23
Section 18. Concerning the Rights Agent 23
Section 19. Merger or Consolidation or Change of Name of Rights Agent 24
Section 20. Duties of Rights Agent 24
Section 21. Change of Rights Agent 26
Section 22. Issuance of New Right Certificates 27
Section 23. Redemption 27
Section 24. Exchange 28
Section 25. Notice of Certain Events 29
Section 26. Notices 30
Section 27. Supplements and Amendments 30
Section 28. Successors 30
Section 29. Benefits of this Agreement 30
Section 30. Severability 31
Section 31. Governing Law 31
Section 32. Counterparts 31
Section 33. Descriptive Headings 31
Section 34. Determinations and Actions by the Board of Directors 31
Exhibits
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Exhibit A - Form of Articles of Amendment A-1
Exhibit B - Form of Right Certificate B-1
Exhibit C - Summary of Rights to Purchase Preference Shares C-1
RIGHTS AGREEMENT
This Rights Agreement ("Agreement" or this "Agreement"), dated as of
March 25, 2009, is entered into between Gulf Island Fabrication, Inc., a
Louisiana corporation (the "Company"), and American Stock Transfer & Trust
Company, LLC, a New York limited liability trust company, as Rights Agent
hereunder (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on March 24, 2009, the Board of Directors of the Company (the
"Board of Directors") has authorized and declared a dividend, payable as of
March 25, 2009, of one preference share purchase right (a "Right") for each
Common Share (as such term is hereinafter defined) of the Company outstanding on
March 24, 2009 (the "Record Date"), each Right representing the right to
purchase 1/1,000th of a Preference Share (as such term is hereinafter defined),
upon the terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date (as such
terms are hereinafter defined);
NOW, THEREFORE, the parties agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated below:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding, but shall not include the Company, any Subsidiary (as
such term is hereinafter defined) of the Company, any employee benefit plan of
the Company or any Subsidiary of the Company, or any trust or other entity
holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall thereafter,
become the Beneficial Owner of any additional Common Shares of the Company, then
such Person shall be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement unless and until
the date that the Board of Directors subsequently determines in good faith that
such Person failed to divest Common Shares as described above as promptly as
practicable.
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(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) "Agreement" shall have the meaning set forth in the preamble
hereof.
(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 beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than the
above-defined Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted by such Person for purchase or exchange; or (B) the right to
vote pursuant to any agreement, arrangement or understanding; provided,
further, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or
consent solicitation made publicly pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report);
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(d)(ii)(B)) or disposing of any securities of the Company; or
(iv) in respect of which such Person or any of such Person's
Affiliates or Associates has a Synthetic Long Position (as hereinafter
defined); provided, however, that a Person will not be deemed the
Beneficial Owner of, or to beneficially own, any security if such
beneficial ownership arises solely as a result of such Person's status
as a "clearing agency," as defined in Section 3(a)(23) of the Exchange
Act; provided further, however, that nothing in this Section 1 will
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 an
underwriting syndicate until the expiration of 40 calendar days after
the date of such acquisition, or such later date as the Board of
Directors may determine in any specific case.
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Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to beneficially own hereunder.
(e) "Board of Directors" shall have the meaning set forth in the
recitals hereto.
(f) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of the principal office of
the Rights Agent are authorized or obligated by law or executive order to close.
(g) "close of business" on any given date shall mean 5:00 P.M., local
time in the State of the principal office of the Rights Agent, on such date;
provided, however, that if such date is not a Business Day it shall mean 5:00
P.M., local time of the principal office of the Rights Agent, on the next
succeeding Business Day.
(h) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, no par value per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power with
respect to the election of directors of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(i) "Company" shall have the meaning set forth in the preamble and
Section 13 hereof.
(j) "current per share market price" shall have the meaning set forth
in Section 11(d)(i) hereof.
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(l) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(m) "equivalent preference shares" shall have the meaning set forth in
Section 11(b) hereof.
(n) "Excess Amount" shall have the meaning set forth in Section
11(a)(iii) hereof.
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(o) "Exchange Ratio" shall have the meaning set forth in Section 24
hereof.
(p) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(q) "Flip-In Event" shall have the meaning set forth in Section
11(a)(ii) hereof.
(r) "NASDAQ" shall have the meaning set forth in Section 11(d)(1)
hereof.
(s) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(t) "Preference Shares" shall mean shares of Series A Participating
Cumulative Preferred Stock, no par value per share, of the Company, having the
rights and preferences set forth in the form of Articles of Amendment attached
to this Agreement as Exhibit A.
(u) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(v) "Record Date" shall have the meaning set forth in the recital
hereto.
(w) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(x) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(y) "Right" shall have the meaning set forth in the recital hereto.
(z) "Right Certificate" shall have the meaning set forth Section 3(a)
hereof.
(aa) "Rights Agent" shall have the meaning set forth in the preamble
hereof.
(bb) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(cc) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(dd) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(ee) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(ff) "Synthetic Long Position" shall mean any option, warrant,
convertible security, stock appreciation right or other contractual right,
whether or not presently exercisable, which has an exercise or conversion
privilege or a settlement payment or mechanism at a price related to Common
Shares or a value determined in whole or part with reference to, or derived in
whole or in part from, the market price or value of Common Shares, whether or
not such right is subject to settlement in whole or in part in Common Shares,
and which increases in value as the value of Common Shares increases or which
provides to the holder of such right an opportunity, directly or indirectly, to
profit or share in any profit derived from any increase in the value of Common
Shares, but shall not include:
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(i) rights of a pledgee under a bona fide pledge of Common
Shares;
(ii) rights of all holders of Common Shares to receive Common
Shares pro rata, or obligations to dispose of Common Shares, as a
result of a merger, exchange offer, or consolidation involving the
Company;
(iii) rights or obligations to surrender Common Shares, or
have Common Shares withheld, upon the receipt or exercise of a
derivative security or the receipt or vesting of equity securities, in
order to satisfy the exercise price or the tax withholding consequences
of receipt, exercise or vesting;
(iv) interests in broad-based index options, broad-based index
futures, and broad-based publicly traded market baskets of stocks
approved for trading by the appropriate federal governmental authority;
(v) interests or rights to participate in employee benefit
plans of the Company held by employees or former employees of the
Company; or
(vi) options granted to an underwriter in a registered public
offering for the purpose of satisfying over-allotments in such
offering.
The Common Shares in respect of which a Person has a Synthetic
Long Position shall be the notional or other number of Common Shares
specified in a filing by such Person or any of such Person's Affiliates
or Associates with the Securities and Exchange Commission in respect of
which Common Shares are the "subject security" or in the documentation
evidencing the Synthetic Long Position as being subject to be acquired
upon the exercise or settlement of the applicable right or as the basis
upon which the value or settlement amount of such right, or the
opportunity of the holder of such right to profit or share in any
profit, is to be calculated in whole or in part or, if no such number
of Common Shares is specified in any filing or documentation, as
determined by the Board of Directors in good faith to be the number of
Common Shares to which the Synthetic Long Position relates.
(gg) "Trading Day" shall have the meaning set forth in Section 11(d)(1)
hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable. If the Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agent and any co-Rights Agents shall be as the Company
shall determine, and the Company will notify, in writing, the Rights Agent and
any co-Rights Agents of any such respective duties.
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Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the tenth calendar day after the Share
Acquisition Date or (ii) the tenth Business Day (or such later date as may
hereafter be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any trust or
other entity holding Common Shares for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention of any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any trust or other
entity holding Common Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming the Beneficial Owner of Common Shares aggregating 15% or
more of the then outstanding Common Shares, irrespective of whether any shares
are actually purchased pursuant to any such offer (including any such date which
is after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto (a "Right Certificate"), evidencing one Right for each
Common Share so held. In the event that an adjustment in the number of Rights
per Common Share is made pursuant to Section 11(i) hereof, at the time of
distribution of the Right Certificates the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Right Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates. The Company shall promptly notify the Rights Agent in writing upon
the occurrence of the Distribution Date and, if such notification is given
orally, the Company shall confirm such notification in writing on or prior to
the Business Day next following. Until such notice is received by the Rights
Agent, the Rights Agent may presume conclusively for all purposes that the
Distribution Date has not occurred.
(b) On or about March 25, 2009, or as promptly as reasonably
practicable thereafter, the Company shall send a copy of the Summary of Rights
to Purchase Preference Shares, in substantially the form of Exhibit C hereto
(the "Summary of Rights"), by postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to certificates
for Common Shares outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates registered in the names
of the holders thereof together with a copy of the Summary of Rights. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.
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(c) Certificates for Common Shares which are issued and become
outstanding (including, without limitation, reacquired Common Shares referred to
in the last sentence of this paragraph (c)) after the date hereof but prior to
the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them a legend substantially in the following form:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between Gulf
Island Fabrication, Inc. (the "Company") and American Stock Transfer
and Trust Company (the "Rights Agent"), dated as of March 25, 2009, (as
amended from time to time, the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal 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 any Person who becomes an Acquiring Person
or its Affiliates or Associates (as such terms are defined in the
Rights Agreement) and any subsequent holder of such Rights are null,
void and nontransferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Preference Shares and of assignment to be printed on the reverse thereof) shall
be substantially in the form set forth in Exhibit B hereto, and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of 1/1,000th of a Preference Share as
shall be set forth therein at the price per 1/1,000th of a Preference Share set
forth therein (the "Purchase Price"), but the number of such 1/1,000th of a
Preference Share or other securities purchasable and the Purchase Price shall be
subject to adjustment as provided herein.
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(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
11(i) hereof that represents Rights beneficially owned by: (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 (whether or not in writing)
regarding the transferred Rights or (B) a transfer which the Board of Directors,
in its sole discretion, has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of the
provisions 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:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who is, 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.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board of Directors, its Chief Executive Officer, its
President, or any of its Vice Presidents, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
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 Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
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 Right Certificates had not ceased to be such officer of the Company, and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
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(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates, the date of each
of the Right Certificates and the certificate number for each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 14 hereof, at any time after
the close of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
1/1,00ths of a Preference Share as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will execute and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each 1/1,000th of a Preference
Share as to which the Rights are exercised, at or prior to the earliest of (i)
the close of business on March 25, 2012 (the "Final Expiration Date"), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
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(b) The Purchase Price for each 1/1,000th of a Preference Share
purchasable pursuant to the exercise of a Right shall initially be $30.00, and
shall be subject to adjustment from time to time as provided in Section 11 or 13
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preference Shares to be purchased and an
amount equal to any applicable tax or charge required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) requisition from any transfer agent of
the Preference Shares certificates for the number of Preference Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, (ii) as provided in Section 14(b), at the
election of the Company, cause depositary receipts in lieu of fractional shares
to be issued, (iii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional Preference Shares in
accordance with Section 14 hereof, (iv) 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 Right Certificate, registered in such name or names as
may be designated by such holder, and (v) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such Right
Certificate. The payment of the Purchase Price may be made (x) in cash or by
certified bank check or bank draft payable to the order of the Company, or (y)
by delivery of a certificate or certificates (with appropriate stock powers
executed in blank attached thereto) evidencing a number of Common Shares of the
Company equal to the then Purchase Price divided by the current per share market
price (as determined pursuant to Section 11(d) hereof) per Common Share on the
date of such exercise. In the event that the Company is obligated to issue other
securities (including Common Shares) of the Company, pay cash or distribute
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are at any time beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, (ii) a transferee of any such
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after such Acquiring Person becomes such or (iii) a transferee of any
such Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with such Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from such 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 (whether or not in writing)
regarding the transferred Rights or (B) a transfer that the Board of Directors
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 notify the Rights Agent when this
Section 7(e) applies and shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
neither the Company nor the Rights Agent shall have any liability to any holder
of Rights Certificates or other Person as a result of the Company's failure to
make any determinations with respect to an Acquiring Person or any of its
Affiliates, Associates or transferees hereunder.
10
(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 Section 7 unless such registered holder shall have (i) properly
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preference Shares.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preference Shares or any
Preference Shares held in its treasury, the number of Preference Shares that
will be sufficient to permit the exercise in full of all outstanding Rights in
accordance with Section 7. The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all Preference Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preference Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
11
(b) So long as the Preference Shares issuable upon the exercise of
Rights may be listed on any national securities exchange or automated quotations
system, 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 or admitted for trading on such exchange or automated quotations
system upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all of the Preference Shares (and, following
the time that a Person becomes an Acquiring Person, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such (subject to payment of the Purchase Price and
compliance with all other applicable provisions of the Agreement), be duly and
validly authorized and issued and fully paid and nonassessable.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any Preference Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preference
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preference Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. Preference Shares Record Date. Each person in whose name
any certificate for Preference Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preference Shares represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preference Shares transfer books of the Company
are closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preference Shares transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preference 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 of Shares or Number of
Rights. The Purchase Price, the number and kind of Preference Shares or other
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.
12
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preference Shares payable in
Preference Shares, (B) subdivide the outstanding Preference Shares, (C) combine
the outstanding Preference Shares into a smaller number of Preference Shares or
(D) issue any shares of its capital stock in a reclassification of the
Preference Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preference Shares transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the greater of the aggregate
par value of the shares of capital stock of the Company issuable upon exercise
of one Right or $.01 per share of capital stock of the Company issuable upon
exercise of one Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) below, 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) below.
(ii) Subject to Section 24 of this Agreement, in the event any
Person, alone or together with its Affiliates and Associates, becomes an
Acquiring Person (a "Flip-In Event"), each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of 1/1,000ths of a Preference
Share for which the Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of Preference Shares, such number of Common Shares of
the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of 1/1,000ths of a Preference Share for
which a Right is then exercisable and dividing that product by (y) 50% of the
then current per share market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date of the occurrence of the Flip-In
Event. In the event that any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Company shall not take any action which
would eliminate or diminish the benefits intended to be afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary, from and after the
time at which any Person, alone or together with its Affiliates and Associates,
becomes an Acquiring Person, any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Associate or Affiliate of
such Acquiring Person) shall be null and void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Agreement. No Right Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be null and void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be null and
void pursuant to the preceding sentence or any Associate or Affiliate thereof or
to any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be null and void pursuant to the preceding sentence shall be
cancelled.
13
(iii) If the number of Common Shares that are authorized by
the Company's Articles of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights in accordance with Section
11(a)(ii) hereof, the Company shall endeavor in good faith to take all such
actions as may be necessary to authorize additional Common Shares for issuance
upon exercise of the Rights. If the Company, after such good faith effort,
determines that it is unable to take all such actions as may be necessary to
authorize additional Common Shares, the Company shall (A) determine an amount
(the "Excess Amount") equal to the excess of the value (the "Current Value") of
the aggregate number of Common Shares that would otherwise be issuable upon the
exercise of a Right in accordance with Section 11(a)(ii) hereof over the
Purchase Price and (B) with respect to each Right, substitute for such Common
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a reduction
in the Purchase Price, (3) Common Shares (to the extent available) or other
equity securities of the Company, (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 (less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined by the Board of Directors, based
upon the advice of a nationally recognized investment banking firm selected by
the Board of Directors. To the extent that action is to be taken pursuant to
this Section 11(a)(iii), the Company (1) shall provide, subject to the
exceptions specified in Section 11(a)(ii) hereof, that such action shall to the
maximum extent possible apply uniformly to the holders of all outstanding Rights
that shall not have become null and void and (2) may suspend the exercisability
of the Rights for up to 90 days in order to seek any corporate or shareholder
authorizations, to decide the appropriate form of distribution to be made
pursuant to the second sentence of this section, to determine the value thereof,
or to take any combination of such actions. 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.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preference Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preference Shares (or shares having the same rights,
privileges and preferences as the Preference Shares ("equivalent preference
shares")) or securities convertible into Preference Shares or equivalent
preference shares at a price per Preference Share or equivalent preference share
(or having a conversion price per share, if a security convertible into
Preference Shares or equivalent preference shares) less than the then current
per share market price (as defined in Section 11(d)) of the Preference Shares 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 Preference Shares outstanding on such record date plus the number of
Preference Shares which the aggregate offering price of the total number of
Preference Shares and/or equivalent preference shares so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preference Shares outstanding on such record date
plus the number of additional Preference Shares and/or equivalent preference
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. 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, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and holders of the Rights.
Preference Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
14
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preference Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preference Shares) 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 then current per share market price of the Preference Shares on
such record date, less the fair market value (as determined in good faith by the
Board of Directors, 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) of the portion of the assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applicable to one
Preference Share and the denominator of which shall be such then-current per
share market price of the Preference Shares on such record date; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any particular date shall be deemed to be the average of
the daily closing prices per share of such Security for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market
price of the Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares, or (B) any subdivision, combination or reclassification of such Security
and prior to the expiration of 30 Trading Days 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 per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. 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 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 Nasdaq
Stock Market ("NASDAQ") or, if the Security is not listed or admitted to trading
on NASDAQ, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Security is listed or admitted to trading or, if the
Security is 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 Security is 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 Security
selected by the Board of Directors or, if on any such date no such market maker
is making a market in the Security, the fair value of the Security on such date
as determined in good faith by the Board of Directors. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
15
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preference Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preference
Shares are not publicly traded, the "current per share market price" of one
Preference Share shall be conclusively deemed to be the current per share market
price of one Common Share as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand. If
neither the Common Shares nor the Preference Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-millionth of a
Preference Share or one ten-thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
16
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preference Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preference Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preference Shares
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 1/1,000ths of a
Preference Share 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 1/1,000ths of a
Preference Share (calculated to the nearest 1/1,000,000th of a Preference Share)
obtained by (i) multiplying (x) the number of 1/1,000ths 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 substitution for any
adjustment in the number of 1/1,000ths of a Preference Share purchasable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of 1/1,000ths of a
Preference Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
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, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 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
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
17
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of 1/1,000ths of a Preference Share issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of 1/1,000ths of a Preference Share
which were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below 1/1,000th of the then par value, if any, of the
Preference Shares 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 Preference Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the Preference Shares and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the Preference Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preference Shares, issuance
wholly for cash of any Preference Shares at less than the current market price,
issuance wholly for cash of Preference Shares or securities which by their terms
are convertible into or exchangeable for Preference Shares, dividends on
Preference Shares payable in Preference Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preference Shares, shall not be taxable to such shareholders.
(n) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of 1/1,00ths of a Preference Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number of
1/1,000ths of a Preference Share so purchasable immediately prior to such event
by a fraction, the numerator of which is the number of Common Shares outstanding
immediately before such event and the denominator of which is the number of
Common Shares outstanding immediately after such event, and (B) each Common
Share outstanding immediately after such event shall have issued with respect to
it that number of Rights which each Common Share outstanding immediately prior
to such event had issued with respect to it. The adjustments provided for in
this Section 11(n) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
18
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preference Shares a copy of such certificate and (c) subject to Section 25(c),
mail a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25 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 of such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event, directly or indirectly, at any time after a Person
has become an Acquiring Person, (x) the Company shall consolidate with, or merge
with and into, any other Person, (y) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) 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 or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries (any such event described in clauses (x), (y) or (z) being referred
to herein as a "Flip-Over Event"), then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then current Purchase Price multiplied by the number of
1/1,000ths of a Preference Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preference Shares,
such number of validly issued, fully paid, non-assessable and freely tradable
Common Shares of the Principal Party (as hereinafter defined) (including the
Company as successor thereto or as the surviving corporation), unencumbered and
not subject to any liens, encumbrances, rights of call or first refusal or other
adverse claims, as shall equal the result obtained by (A) multiplying the then
current Purchase Price by the number of 1/1,000ths of a Preference Share for
which a Right is exercisable immediately prior to the first occurrence of a
Flip-Over Event (or, if a Flip-In Event has occurred prior to the first
occurrence of a Flip-Over Event, multiplying the number of such 1/1,000ths of a
Preference Share for which a Right was exercisable immediately prior to the
first occurrence of a Flip-Over Event times the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product by (B)
50% of the then current per share market price of the Common Shares of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) the Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed hereunder to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party following the first occurrence of a Flip-Over Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights; and (v) the provisions of Section 11(a)(i) hereof shall be of no
effect following the first occurrence of any Flip-Over Event.
19
(b) "Principal Party" shall mean
(i) In the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the
other party to the merger or consolidation; and
(ii) in the case of any transaction described in (z) of the
first sentence of Section 13(a), the Person that is the other party to such
transaction or, if more than one, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction;
provided, however, that in any such case, (x) 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, "Principal Party" shall refer to such other
Person; (y) in case 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, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market value of shares
held by the public, and (z) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth in (x) and (y)
above shall apply to each of the chains of ownership having an interest in such
joint venture as if such party were a Subsidiary of both or all of such joint
venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and 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 or sale or transfer of assets mentioned in paragraph (a)
of this Section 13, the Principal Party will
20
(i) prepare and file 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, will use its best efforts (A) to
cause such registration statement to become effective as soon as practicable
after such filing, (B) 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 (C) to similarly comply with
applicable state securities laws, and 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; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
The Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the "current
market value of a whole Right" shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price 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 NASDAQ or, if the Rights are not
listed or admitted to trading on NASDAQ, 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. 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 shall be used.
21
(b) The Company shall not be required to issue fractions of Preference
Shares (other than fractions which are integral multiples of 1/1,000ths of a
Preference Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preference Shares (other than fractions which are
integral multiples of 1/1,000th of a Preference Share). Fractions of Preference
Shares in integral multiples of 1/1,000th of a Preference Share may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preference Shares represented by such
depositary receipts. In lieu of fractional Preference Shares that are not
integral multiples of 1/1,000th of a Preference Share, the Company shall pay to
the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preference Share. For the purposes of this Section
14(b), the current market value of a Preference Share shall be the closing price
of a Preference Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, 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 the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting such Right, 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 not be evidenced by
a Rights Certificate and will be transferable only in connection with the
transfer of the Common Shares;
22
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Shares
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) 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 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. Right Certificate Holder Not Deemed a Shareholder. No
holder of a Right, as such, shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of the Preference Shares or any other
securities of the Company which may at any time be issuable upon the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Rights, as such,
any of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. The Rights Agent shall promptly notify the Company of
any claim for which it may seek indemnity. The Company shall defend any such
claim for which the Rights Agent is entitled to indemnification and the Rights
Agent shall cooperate in the defense. The Rights Agent may engage separate
counsel to review the progress of the defense to any claim and to advise the
Rights Agent as to its obligation to cooperate in such defense, and the Company
shall pay the reasonable fees and expenses of such counsel.
23
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preference Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate (including certificates delivered under Section 12), 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 hereof.
(c) The Rights Agent has no duty to determine when an adjustment under
this Agreement should be made, how it should be made, or what it should be. The
Rights Agent makes no representation as to the validity or value of any
securities or assets issued upon exercise of the Rights. The Rights Agent shall
not be responsible for the Company's failure to comply with this Agreement. Any
Co-Rights Agent named under Section 2 hereof shall have the same protection
under this Section as the Rights Agent.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, but only if such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
24
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board of
Directors, the Chief Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preference Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preference Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
25
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board of Directors, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preference Shares by registered or certified mail, and,
after the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent (with or without cause) upon 30 days' notice in writing mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares or Preference Shares by registered or
certified mail, and, after the Distribution Date, to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificates for inspection by
the Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of any other state of the United States, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority, or
which is a Subsidiary of such banking institution, and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at least $50
million. 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 Shares
or Preference Shares, and, after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, 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.
26
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem all but not less
than all of the then outstanding Rights at a redemption price of $.01 per Right,
as such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The redemption
of the Rights by the Board of Directors may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish.
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23, 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 ten days after such action of the Board of Directors ordering the
redemption of the Rights, 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 Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof, and other
than in connection with the purchase of Common Shares prior to the Distribution
Date.
27
Section 24. Exchange.
(a) The Board of Directors may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary, or any trust or other entity holding Common Shares for
or pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to paragraph (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 a holder of such Rights shall
be to receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company may take
any such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary to authorize
such additional Common Shares in a timely manner, the Company may, at its
option, substitute, for each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preference Shares or fraction thereof such that
the current per share market price of one Preference Share multiplied by such
number or fraction is equal to the current per share market price of one Common
Share as of the date of issuance of such Preference Shares or fraction thereof.
28
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (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.
Section 25. Notice of Certain Events.
(a) In case the Company shall, at any time after the Distribution Date,
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preference Shares or to make any other distribution to the holders of its
Preference Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preference Shares rights or warrants to subscribe for or
to purchase any additional Preference Shares or shares of stock of any class or
any other securities, rights or options, (iii) to effect any reclassification of
its Preference Shares (other than a reclassification involving only the
subdivision of outstanding Preference Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person, or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Right Certificate, 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, or 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
Preference Shares, 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 10
days prior to the record date for determining holders of the Preference Shares
for purposes of such action, and in the case of any such other action, at least
10 days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preference Shares, whichever shall
be the earlier.
(b) In case a Flip-In Event shall occur, then the Company shall as soon
as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof.
29
(c) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given.
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 Right 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:
Gulf Island Fabrication, Inc.
583 Thompson Road
Houma, Louisiana 70363
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company, LLC
59 Maiden Lane
New York, New York 10038
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement, amend or restate this Agreement without the approval of any
holders of Rights in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, to extend the term of the Rights, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement, amendment or restatement to be evidenced by a
writing signed by the Company and the Rights Agent; provided, however, that from
and after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner which would adversely affect the interests of
the holders of Rights.
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.
30
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Louisiana 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.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. 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.
Section 34. Determinations and Actions by the Board of Directors. The
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise the rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary and 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, without limitation, a determination to redeem or not
redeem the Rights or to amend or not amend this Agreement). All such actions,
calculations, interpretations and determinations that are done or made by the
Board of Directors in good faith shall be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights, as such, and all other
parties.
31
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
ATTEST: GULF ISLAND FABRICATION, INC.
/s/ Catherine Blume By: /s/ Kerry J. Chauvin
- ---------------------- ---------------------------------------
Name: Kerry J. Chauvin
Title: Chief Executive Officer
ATTEST: AMERICAN STOCK TRANSFER & TRUST
COMPANY, LLC
/s/ Joseph F. Wolf By: /s/ Herbert J. Lemmer
- ---------------------- ---------------------------------------
Name: Herbert J. Lemmer
Title: Vice President
32
EXHIBIT A
To Rights Agreement
ARTICLES OF AMENDMENT
to the
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
GULF ISLAND FABRICATION, INC.
Gulf Island Fabrication, Inc., a Louisiana corporation (the
"Corporation"), by and through its undersigned Vice President and Chief
Financial Officer and by authority of its Board of Directors (the "Board of
Directors"), does hereby certify:
FIRST: Immediately prior hereto, the authorized capital stock of the
Corporation consisted of (i) 20,000,000 shares of Common Stock, no par value per
share; and (ii) 5,000,000 shares of Preferred Stock, no par value per share. The
Amended and Restated Articles of Incorporation of the Corporation filed with the
Louisiana Secretary of State on February 14, 1997, sets forth the authority
vested in the Board of Directors to amend the Articles of Incorporation to fix
the relative rights, preferences and limitations of the shares of any class and
to establish and fix variations in relative rights as between series of any
preferred or special class; and
SECOND: At a meeting of the Board of Directors held on March 24, 2009,
the Board of Directors, acting pursuant to Section 33A of the Business
Corporation Law of Louisiana, duly adopted resolutions approving an Amendment to
Article III of the Corporation's Amended and Restated Articles of Incorporation,
as in effect prior to the date hereof, by amending and restating Article III so
as to read in its entirety as follows:
Article III
Capital
A. Authorized Stock. The Corporation shall have the authority to issue
an aggregate of 25,000,000 shares of capital stock, of which 20,000,000 shares
shall be Common Stock, no par value per share, and 5,000,000 shares shall be
Preferred Stock, no par value per share.
B. Preferred Stock. Shares of Preferred Stock may be issued from time
to time in one or more series. Authority is hereby vested in the Board of
Directors to amend these Articles of Incorporation from time to time to fix the
preferences, limitations and relative rights as between the Preferred Stock and
the Common Stock, and to fix variations in the preferences, limitations and
relative rights as between different series of Preferred Stock.
C. Series A Preferred Stock. The Corporation's Series A Participating
Cumulative Preferred Stock shall consist of 15,000 shares of Preferred Stock
having the preferences, limitations and relative rights set forth below. Such
number of shares may be increased or decreased by resolution of the Board of
Directors; provided, however, that no decrease shall reduce the number of shares
of Series A Participating Cumulative 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 or rights or upon the
conversion of any outstanding securities issued by the Corporation convertible
into Series A Participating Cumulative Preferred Stock.
A-1
(1) The holders of Series A Participating Cumulative Preferred
Stock shall have the following dividend rights.
(a) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Participating Cumulative Preferred Stock with respect
to dividends, the holders of shares of Series A Participating Cumulative
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 fifteenth day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Participating Cumulative Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision
for adjustment hereinafter set forth, 1,000 times the aggregate per share amount
of all cash dividends, and 1,000 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock,
no par value, 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 A Participating Cumulative Preferred Stock. In the
event the Corporation shall at any time after March 25, 2009 (the "Declaration
Date") (i) declare or pay any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Participating Cumulative
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(b) The Corporation shall declare a dividend or
distribution on the Series A Participating Cumulative Preferred Stock as
provided in paragraph (a) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Series A Participating Cumulative Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
A-2
(c) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Participating Cumulative Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Participating Cumulative 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 of such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Participating Cumulative
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Participating Cumulative Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Participating Cumulative
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 45 days prior to the
date fixed for the payment thereof.
(2) In addition to any voting rights otherwise required by
law, the holders of shares of Series A Participating Cumulative Preferred Stock
shall have the following voting rights:
(a) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Participating Cumulative Preferred
Stock shall entitle the holder thereof to 1,000 votes on all matters submitted
to a vote of the shareholders of the Corporation. In the event the Corporation
shall at any time after the Declaration Date (i) declare or pay any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of votes per share to which
holders of shares of Series A 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.
(b) Except as otherwise provided in the Corporation's
Articles of Incorporation or by law, the holders of shares of Series A
Participating Cumulative Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(c) Except as set forth herein, holders of Series A
Participating Cumulative 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.
(3) Any shares of Series A Participating Cumulative Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the
shareholders or the Board of Directors, subject to the conditions and
restrictions on issuance set forth in the Corporation's Articles of
Incorporation.
A-3
(4) The Corporation shall abide by the following restrictions:
(a) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Participating Cumulative Preferred
Stock as provided for in Section 1 are in arrears or the Corporation shall be in
default in payment thereof, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Cumulative Preferred Stock outstanding shall have been paid or set
aside for payment in full, and in addition to any and all other rights which any
holder of shares of Series A Participating Cumulative Preferred Stock may have
in such circumstances, the Corporation shall not:
1. declare or pay dividends, or make any other
distributions, on any shares of stock
ranking junior (either as to dividends or
upon liquidation, dissolution or winding up)
to the Series A Participating Cumulative
Preferred Stock;
2. declare or pay dividends, or make any other
distributions, on any shares of stock
ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding
up) with the Series A Participating
Cumulative Preferred Stock, unless dividends
are paid ratably on the Series A
Participating Cumulative 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;
3. redeem or purchase or otherwise acquire for
consideration shares of any stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to
the Series A Participating Cumulative
Preferred Stock, provided that the
Corporation may at any time redeem, purchase
or otherwise acquire shares of any such
junior stock in exchange for shares of any
stock of the Corporation ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A
Participating Cumulative Preferred Stock; or
4. redeem or purchase or otherwise acquire for
consideration any shares of Series A
Participating Cumulative Preferred Stock, or
any shares of stock ranking on a parity with
the Series A Participating Cumulative
Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding
up), 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-4
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
(5) Upon any liquidation, dissolution or winding up of the
Corporation, the holders of Series A Participating Cumulative Preferred Stock
shall have the following rights:
(a) No distribution shall be made (1) to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Cumulative Preferred
Stock unless, prior thereto, the holders of shares of Series A Participating
Cumulative Preferred Stock shall have received $1,000 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that following such payment the
holders of Series A Participating Cumulative Preferred Stock shall be further
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of shares of Common Stock or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Participating
Cumulative Preferred Stock, except distributions made ratably on the Series A
Participating Cumulative Preferred Stock and all such parity stock in proportion
to the total amounts to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up.
(b) In the event, however, that there are not
sufficient assets available to permit payment in full of the above-described
liquidation preference of the Series A Participating Cumulative Preferred Stock
and the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Participating Cumulative Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of
all such parity shares in proportion to their respective liquidation
preferences.
(c) In the event the Corporation shall at any time,
after the Declaration Date, declare or pay a dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Participating Cumulative
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of paragraph (a) of this Section 5 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.
A-5
(6) In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or converted into other stock or securities, cash
and/or any other property, then in any such case the shares of Series A
Participating Cumulative Preferred Stock shall at the same time be similarly
exchanged or converted in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is converted or
exchanged. In the event the Corporation shall at any time after the Declaration
Date (i) declare or pay 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
conversion of shares of Series A Participating Cumulative 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.
(7) The shares of Series A Participating Cumulative Preferred
Stock shall not be redeemable.
(8) The Series A Participating Cumulative Preferred Stock
shall rank, with respect to the payment of dividends and the distribution of
assets, junior to all shares or series of shares of any other class of the
Corporation's Preferred Stock.
(9) The Articles of Incorporation of the Corporation shall not
be further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Participating Cumulative
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Series A
Participating Cumulative Preferred Stock, voting separately as a class.
(10) Series A Participating Cumulative Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Participating Cumulative Preferred Stock.
* * * * * * * * * *
A-6
IN WITNESS WHEREOF, the undersigned duly authorized officers of the
Corporation have executed and delivered these Articles of Amendment on this
_____ day of March, 2009.
GULF ISLAND FABRICATION, INC.
By:
--------------------------
Name: Robin A. Seibert
Title: Vice President and
Chief Financial Officer
A-7
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF __________
BEFORE ME, the undersigned authority, personally came and
appeared Robin A. Seibert, to me known to be the Vice President and Chief
Financial Officer of Gulf Island Fabrication, Inc., and the person who executed
the foregoing instrument in such capacity, and who, being duly sworn,
acknowledged in my presence and in the presence of the undersigned witnesses,
that he was authorized to and did execute the foregoing instrument in such
capacity for such corporation, as its and their free act and deed.
IN WITNESS WHEREOF, the appearer, witnesses and I have
hereunto affixed our hands on this ______ day of March, 2009.
WITNESSES:
- ------------------------------------- -------------------------------------
Name:
------------------------------
- -------------------------------------
Name:
------------------------------
----------------------------------------
NOTARY PUBLIC
A-8
EXHIBIT B
To Rights Agreement
Form of Right Certificate
Certificate No. R-
________ Rights
NOT EXERCISABLE AFTER MARCH 25, 2012 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
GULF ISLAND FABRICATION, INC.
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 March 25, 2009 (the "Rights Agreement"),
between Gulf Island Fabrication, Inc., a Louisiana corporation (the "Company"),
and American Stock Transfer & Trust Company, LLC (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., local time in the
State of the principal office of the Rights Agent, on March 25, 2012 at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, 1/1,000th of a fully paid non-assessable share of Series A
Participating Cumulative Preferred Stock, no par value per share (the
"Preference Shares"), of the Company, at a purchase price of $30.00 per
1/1,000th of a Preference Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of 1/1,000ths of a Preference Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of March 25, 2009, based on the Preference Shares as
constituted as of such date. As provided in the Rights Agreement, the Purchase
Price and the number of 1/1,000ths of a Preference Share (or other securities)
which may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the occurrence of
certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
B-1
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preference Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be (i) redeemed by the Company at a redemption price of
$.01 per Right or (ii) exchanged in whole or in part for Preference Shares or
shares of the Company's Common Stock, no par value.
No fractional Preference Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of 1/1,000th of a Preference Share, 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 Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preference
Shares 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______________, 20__.
ATTEST: GULF ISLAND FABRICATION, INC.
By:
- ------------------------------ ---------------------------------
Name:
Title:
Countersigned:
AMERICAN STOCK TRANSFER &
TRUST COMPANY, LLC
By:
-------------------------------------
Authorized Signature
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Right Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated:
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
B-4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
the Right Certificate.)
To: GULF ISLAND FABRICATION, INC.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Preference Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preference Shares be issued in the name of:
Please insert social security or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number
(Please print name and address)
Dated:
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
B-5
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
EXHIBIT C
To Rights Agreement
SUMMARY OF RIGHTS TO PURCHASE PREFERENCE SHARES
On March 24, 2009, the Board of Directors of Gulf Island Fabrication,
Inc. (the "Company") declared a dividend of one preference share purchase right
(a "Right") for each outstanding share of common stock, no par value (the
"Common Shares"), of the Company. The dividend was payable on March 25, 2009 to
shareholders of record at close of business on March 24, 2009 (the "Record
Date"). The Company has also issued, and will continue to issue, Rights with
respect to new Common Shares issued after the Record Date. The description and
terms of the Rights are set forth in a Rights Agreement dated as of March 25,
2009 between the Company and American Stock Transfer & Trust Company, LLC, as
the Rights Agent (the "Rights Agent").
Under the Rights Agreement, each Right entitles the registered holder
to purchase from the Company 1/1,000th of a share of Series A Participating
Cumulative Preferred Stock, no par value per share (the "Preference Shares"), of
the Company at a price of $30.00 per 1/1,000th of a Preference Share (the
"Purchase Price"), subject to adjustment. The summary description of the Rights
that follows is not intended to be complete, and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference.
Detachment and Transfer of Rights
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached thereto.
The Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates issued after the
Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
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Exercisability of Rights
The Rights are not exercisable until the Distribution Date. The Rights
will expire on March 25, 2012 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a shareholder of
the Company, including, without limitation, the right to vote or to receive
dividends.
The Purchase Price payable, and the number of Preference Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preference Shares, (ii) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares or (iii) upon
the distribution to holders of the Preference Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preference Shares) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of 1/1,000ths of a
Preference Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
No adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No
fractional Preference Shares will be issued (other than fractions which are
integral multiples of 1/1,000th of a Preference Share, which may, at the
election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preference Shares on the last trading day prior to the date of exercise.
Terms of Preference Shares
Preference Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preference Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $1 per share or 1,000 times
the cash and non-cash dividend declared per Common Share since the immediately
preceding quarterly dividend payment date. In the event of liquidation, the
holders of the Preference Shares will be entitled to a minimum preferential
liquidation payment of $1,000 per share, plus accrued and unpaid dividends
thereon, and will be further entitled to an aggregate payment of 1,000 times the
payment made per Common Share. Each Preference Share will have 1,000 votes,
voting together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preference Share will be entitled to receive 1,000 times the amount received per
Common Share. These rights are protected by customary antidilution provisions.
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Because of the nature of the Preference Shares' dividend, liquidation
and voting rights, the value of each 1/1,000th interest in a Preference Share
purchasable upon exercise of each Right should approximate the value of one
Common Share. The Preference Shares would rank junior to any other series of the
Company's preferred stock.
Flip-In and Flip-Over Rights
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
which will have become void, will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right.
Redemption and Exchange of Rights
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights, other than Rights owned by such person or group which will have
become void, in whole or in part, at an exchange ratio of one Common Share per
Right (subject to adjustment).
At any time prior to the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 15% or more of the outstanding
Common Shares, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Amendment
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights. However, the Board of
Directors may not cause a person or group to become an Acquiring Person by
lowering the threshold below the percentage interest that such person or group
already owns. After a person or group becomes an Acquiring Person, the Board of
Directors may not amend the Rights Agreement to adversely affect holders of the
Rights.
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Additional Information
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. 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 hereby incorporated
herein by reference.
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