AMENDMENT NO. 1 TO
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 dated as of March 16, 1999 (the "Amendment") to the
Shareholder Protection Rights Agreement dated as of September 15, 1997 (the
"Agreement"), between CollaGenex Pharmaceuticals, Inc., a Delaware company (the
"Company") and American Stock Transfer & Trust Company, as Rights Agent (the
"Agent").
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. AMENDMENT. The definition of an Acquiring Person, as contained in
Section 1.1 of the Agreement shall be revised in its entirety to read as
follows:
""Acquiring Person" shall mean any Person who is a Beneficial Owner of
more than the Specified Percentage of the outstanding shares of Common
Stock; provided, however, that the term "Acquiring Person" shall not
include any Person (i) who is the Beneficial Owner of more than the
Specified Percentage (as defined below) of the outstanding shares of
Common Stock on the date of this Agreement, or who shall become the
Beneficial Owner of more than the Specified Percentage of the outstanding
shares of Common Stock solely as a result of an acquisition by the Company
of shares of Common Stock, or who shall become the Beneficial Owner of
more than the Specified Percentage of the outstanding shares of Common
Stock as a result of the transactions contemplated by that certain Stock
Purchase Agreement dated March 1999, by and among the Company and the
Investor and Purchasers set forth therein, until such time as any of such
Persons shall become the Beneficial Owner (other than by means of a stock
dividend or stock split) after the date hereof of an additional 1% of the
outstanding shares of Common Stock, provided, that, for the purpose of
determining whether any Person has become the Beneficial Owner of an
additional 1% of the outstanding shares of Common Stock, compensatory
management stock options and other stock-based management awards issued by
the Company subsequent to the date of this Agreement shall not be
included, (ii) who becomes the Beneficial Owner of more than the Specified
Percentage of the outstanding shares of Common Stock but who acquired
Beneficial Ownership of shares of Common Stock without any plan or
intention to seek or affect control of the Company, if such Person
promptly enters into an irrevocable commitment to divest, and thereafter
promptly divests (without exercising or retaining any power, including
voting, with respect to such shares), sufficient shares of Common Stock
(or securities convertible into, exchangeable into or exercisable for
Common Stock) so that such Person ceases to be the Beneficial Owner of
more than the Specified Percentage of the outstanding shares of Common
Stock or (iii) who Beneficially Owns shares of Common Stock consisting
solely of one or more of (A) shares of Common Stock Beneficially Owned
pursuant to the grant or exercise of an option granted to such Person (an
"Option Holder") by the Company in connection with an agreement to merge
with, or acquire, the Company entered into prior to a Flip-in Date,
(B) shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Stock), Beneficially Owned by such Option
Holder or its Affiliates or Associates at the time of grant of such
option, and (C) shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) acquired by Affiliates
or Associates of such Option Holder after the time of such grant which, in
the aggregate, amount to less than 1% of the outstanding shares of Common
Stock. In addition, the Company, any wholly-owned Subsidiary (as defined
below) of the Company and any employee stock ownership or other employee
benefit plan of the Company or a wholly-owned Subsidiary of the Company
shall not be an Acquiring Person."
2. EFFECT ON THE AGREEMENT. Except as expressly amended by this Amendment,
the Agreement shall remain in full force and effect.
3. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware.
4. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
5. EFFECTIVE DATE. This Amendment shall be effective immediately prior to
the execution by the Company of the Stock Purchase Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first above written.
COLLAGENEX PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxx
Vice President and Chief Financial
Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
Vice President
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