Execution Copy
--------------
--------------------------------------------------------------------------------
CYTOTHERAPEUTICS, INC.
and
BANKBOSTON, N.A.
as Rights Agent
---------------
Rights Agreement
Dated as of July 27, 1998
--------------------------------------------------------------------------------
Table of Contents
-----------------
Section Page
------- ----
Section 1. Certain Definitions ................................................................. 1
Section 2. Appointment of Rights Agent ......................................................... 6
Section 3. Issue of Rights Certificates ........................................................ 7
Section 4. Form of Rights Certificates ......................................................... 8
Section 5. Countersignature and Registration ................................................... 9
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates ....................................... 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights ....................... 11
Section 8. Cancellation and Destruction of Rights Certificates ................................. 12
Section 9. Reservation and Availability of Shares of Preferred Stock; Other Covenants .......... 13
Section 10. Preferred Stock Record Date; Etc.................................................... 14
Section 11. Antidilution Adjustments ........................................................... 15
Section 12. Certificate of Adjustments ......................................................... 25
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power ............... 25
Section 14. Fractional Rights and Fractional Shares ............................................ 27
Section 15. Rights of Action ................................................................... 28
Section 16. Agreement of Rights Holders ........................................................ 28
Section 17. Rights Certificate Holder Not Deemed a Stockholder ................................. 29
Section 18. Concerning the Rights Agent ........................................................ 29
i
Section 19. Merger or Consolidation or Change of Name of Rights Agent .......................... 30
Section 20. Duties of Rights Agent ............................................................. 30
Section 21. Change of Rights Agent ............................................................. 33
Section 22. Issuance of New Rights Certificates ................................................ 34
Section 23. Redemption and Termination ......................................................... 34
Section 24. Exchange ........................................................................... 35
Section 25. Notice of Proposed Actions ......................................................... 36
Section 26. Notices ............................................................................ 37
Section 27. Supplements and Amendments ......................................................... 38
Section 28. Successors ......................................................................... 38
Section 29. Determinations and Actions by the Board; etc........................................ 39
Section 30. Benefits of this Agreement ......................................................... 39
Section 31. Severability ....................................................................... 39
Section 32. Governing Law ...................................................................... 40
Section 33. Counterparts ....................................................................... 40
Section 34. Descriptive Headings ............................................................... 40
ii
RIGHTS AGREEMENT
----------------
This Agreement dated as of July 27, 1998 is between CytoTherapeutics,
Inc., a Delaware corporation (the "Company"), and BankBoston, N.A., as rights
agent (the "Rights Agent").
W I T N E S S E T H:
--------------------
WHEREAS, on July 27, 1998 the Board of Directors of the Company (the
"Board") authorized the issuance of rights (collectively, the "Rights," and
individually a "Right"), each Right being a right to purchase, on the terms and
subject to the provisions of this Agreement, one one-hundredth of a share of the
Company's Junior Preferred Stock; and
WHEREAS, on July 27, 1998 (the "Declaration Date") the Board (a)
authorized and declared a dividend distribution of one Right for every share of
Common Stock, par value $.01 per share, of the Company outstanding at the Close
of Business (as hereinafter defined) on August 4, 1998 (the "Dividend Record
Date"), and (b) authorized the issuance of, and agreed to issue, one Right (as
such number may be adjusted in accordance with Section 11(i) or 11(p) hereof)
for every share of Common Stock of the Company issued between the Dividend
Record Date and the Distribution Date (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates of such Person, shall be the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of
the Company or of any Subsidiary of the Company, (iv) any Person organized,
appointed, or established by the Company or a Subsidiary of the Company pursuant
to the terms of any plan described in clause (iii) above or (v) any such Person
who has reported or is required to report such ownership on Schedule 13G under
the Exchange Act (or any comparable or successor report) or on Schedule 13D
under the Exchange Act (or any comparable or successor report) which Schedule
13D does not state any intention to or reserve the right to control or influence
the management or policies of the Company or engage in any of the actions
specified in Item 4 of such Schedule (other than the disposition of the Common
Stock) and, within 10 Business Days of being requested by the Company to advise
it regarding the same, certifies to the Company that such Person acquired
1
shares of Common Stock in excess of 14.9% inadvertently or without knowledge of
the terms of the Rights and who, together with all of such Person's Affiliates,
thereafter does not acquire additional shares of Common Stock while the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
provided, however, that if the Person requested to so certify fails to do so
within 10 Business Days, then such Person shall become an Acquiring Person
immediately after such 10 Business Day Period.
(b) "Act" shall mean the Securities Act of 1933 (or any successor
act), as amended and as may from time to time be in effect.
(c) "Affiliate," with respect to any Person, shall mean any other
Person who is, or who would be deemed to be, an "affiliate" or an "associate" of
such Person within the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as such Rule is in
effect on the Declaration Date.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" or have "Beneficial Ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates
has "beneficial ownership" of within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, as such Rule is
in effect on the Declaration Date;
(ii) which such Person or any of such Person's Affiliates
has, directly or indirectly, the right to acquire (whether such right
is exercisable immediately or after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing)
or upon the exercise of conversion, exchange or other rights, warrants
or options, or otherwise;
(iii) which such Person or any of such Person's Affiliates
has, directly or indirectly, the right to vote or dispose of, including
pursuant to any agreement, arrangement or understanding (whether or not
in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security for
purposes of this Section 1(d)(iii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable proxy solicitation
rules and regulations promulgated under the Exchange Act or (B) is made
in connection with, or is to otherwise participate in, a proxy or
consent solicitation made, or to be made, pursuant to, and in
accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act, in either case
described in clause (A) or (B) above, whether or not such agreement,
arrangement
2
or understanding is also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iv) which are beneficially owned, directly or indirectly,
by any other Person or any Affiliate thereof with which such Person or
any of such Person's Affiliates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or in
connection with a proxy or consent solicitation described in clause (A)
or (B) of the proviso to Section 1(d)(iii) hereof) or disposing of any
securities of the Company;
provided, however, that for purposes of this Section 1(d) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Common Stock Event, or (C) securities issuable
upon exercise of Rights which were held by a Person or its Affiliates prior to
the Distribution Date as long as such Person is not responsible for the
occurrence of the Common Stock Event giving rise to the Distribution Date; and
provided, further, however, that nothing in this Section 1(d) shall cause a
Person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
(e) "Board" shall have the meaning set forth in the preamble to
this Agreement.
(f) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in The Commonwealth of Massachusetts or
the city in which the principal office of the Rights Agent is located 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.,
Boston, Massachusetts time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 p.m., Boston, Massachusetts time, on
the next succeeding Business Day.
(h) "Closing Price" shall have the meaning set forth in Section
11(d) hereof.
(i) "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company, except that "Common Stock" when used with respect to any
Person other than the Company shall mean either (i) the common stock (or other
capital stock or shares of beneficial interest) of such Person with the greatest
voting power, or (ii) the equity securities or other equity interests having
power to control or direct the management and affairs of such Person, or if such
Person is a Subsidiary of another Person, the Person (A) who ultimately
3
controls such Person that is the Subsidiary and (B) which has outstanding such
common stock (or such other capital stock, equity securities or interests).
(j) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(k) "Common Stock Event" shall mean the occurrence of any event
described in (i) Section 11(a)(ii) hereof or (ii) clause (a), (b) or (c) of the
first sentence of Section 13 hereof.
(l) "Company" shall have the meaning set forth in the preamble to
this Agreement.
(m) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(n) "Current Value" shall have the meaning set forth in Section 11(a)
(iii) hereof.
(o) "Declaration Date" shall have the meaning set forth in the
preamble to this Agreement.
(p) "Directors" shall mean the members of the Board.
(q) "Disqualified Transferee" shall mean any Person who is a direct
or indirect transferee of any Right from an Acquiring Person or an Affiliate of
an Acquiring Person and became such a transferee (x) after the occurrence of a
Common Stock Event or (y) prior to or concurrently with the Acquiring Person
becoming such and received such Right pursuant to a transfer (whether or not for
value) (A) from the Acquiring Person to holders of its Common Stock or other
equity securities or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding (whether or not in writing)
regarding the transferred Right, or (B) which a majority of the Board reasonably
determines is part of a plan, arrangement, or understanding (whether or not in
writing) which has as a primary purpose or effect, the avoidance of Section 7(e)
hereof.
(r) "Distribution Date" shall mean the date which is the later of (A)
the earlier of (x) the 10th Business Day following the Stock Acquisition Date or
(y) the 10th Business Day following the Offer Commencement Date or (B) such
specified or unspecified date thereafter which is on or after the Dividend
Record Date, as may be determined by a majority of the Board.
(s) "Dividend Record Date" shall have the meaning set forth in the
preamble to this Agreement.
4
(t) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
(u) "Excess Amount" shall have the meaning set forth in Section
11(a)(iii) hereof.
(v) "Exchange Act" shall mean the Securities Exchange Act of 1934
(or any successor act), as in effect on the Declaration Date.
(w) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(x) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(y) "Offer Commencement Date" shall mean the date of the
commencement by any Person, other than (i) the Company, (ii) a Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company or (iv) any Person organized, appointed, or established by the
Company or such Subsidiary pursuant to the terms of any such plan, of a tender
or exchange offer (including when such offer is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act) if upon consummation thereof such Person and Affiliates
thereof would be the Beneficial Owner of 15% or more of the then outstanding
shares of Common Stock (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights on the Dividend Record Date or
thereafter).
(z) "Officers' Certificate" has the meaning set forth in Section
20(b) hereof.
(aa) "Other Consideration" has the meaning set forth in Section 6(a)
hereof.
(bb) "Person" shall mean a company, corporation, association,
partnership, joint venture, limited liability company, trust, estate,
organization, business, entity or individual.
(cc) "Preferred Stock" shall mean the Junior Preferred Stock, par
value $.01 per share, of the Company, having the rights and preferences set
forth in the form of Certificate of Designation attached hereto as Exhibit A.
(dd) "Purchase Price" shall have the meaning set forth in Section
7(b) hereof.
(ee) "Redemption Price" shall have the meaning set forth in Section
23 hereof.
(ff) "Rights" shall have the meaning set forth in the preamble to
this Agreement.
5
(gg) "Rights Agent" shall have the meaning set forth in the preamble
of this Agreement subject to the appointment of a successor Rights Agent
pursuant to Section 21 hereof.
(hh) "Rights Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(ii) "Stock Acquisition Date" shall mean the later of (i) the date
of the first public announcement by an Acquiring Person or the Company that an
Acquiring Person has become such (including the first date on which any filing
with any governmental authority disclosing that an Acquiring Person has become
such becomes available to the public), or (ii) the date on which an executive
officer of the Company has actual knowledge that an Acquiring Person has become
such.
(jj) "Subsidiary" shall mean, as of any date, any Person of which
the Company (or other specified Person) owns directly, or indirectly through a
Subsidiary or Subsidiaries, at least a majority of the outstanding capital stock
(or other shares of beneficial interest) entitled to vote generally, or holds
directly, or indirectly through a Subsidiary or Subsidiaries, at least a
majority of partnership or similar interests, or is a general partner, or of
which the Company (or other specified Person) owns voting securities sufficient
to elect at least a majority of the directors of such Person.
(kk) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ll) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(mm) "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a day which is a
Business Day.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time, upon prior written
notice to the Rights Agent, appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and in no event be
liable for, the acts or omissions of any such Co-Rights Agent.
6
Section 3. Issue of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates
representing shares of Common Stock registered in the names of the holders of
the Common Stock (which certificates shall be deemed also to be certificates for
the associated Rights) and not by separate rights certificates, and (ii) the
Rights will be transferable only in connection with the transfer of the
associated shares of Common Stock. As soon as practicable after the Distribution
Date, the Rights Agent will send by first-class, insured, postage prepaid mail,
to each record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the stock transfer
records of the Company, one or more rights certificates, in substantially the
form of Exhibit B hereto (the "Rights Certificates"), evidencing in the
aggregate that number of Rights to which such holder is entitled in accordance
with the provisions of this Agreement. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates. The Rights are
exercisable only in accordance with the provisions of Section 7 hereof and are
redeemable only in accordance with Section 23 hereof.
(b) As soon as practicable after the Dividend Record Date, the Company
will cause a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit C (the "Summary of Rights"), to be sent by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Dividend Record Date, at the address of such holder shown on
the stock transfer records of the Company. With respect to certificates for the
Common Stock outstanding as of the Dividend Record Date, until the Distribution
Date, the Rights associated with the shares of Common Stock represented by such
certificates will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the surrender for transfer of any of
the certificates representing shares of the Common Stock outstanding on the
Dividend Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock
issued (whether originally issued or delivered from the Company's treasury)
after the Dividend Record Date but prior to the earliest of (i) the Distribution
Date, (ii) the Expiration Date, or (iii) the redemption of the Rights.
Certificates representing such shares of Common Stock and certificates issued on
transfer of such shares of Common Stock, with or without a copy of the Summary
of Rights, prior to the Distribution Date (or earlier expiration or redemption
of the Rights) shall be deemed also to be certificates for the associated
Rights, and commencing as soon as reasonably practicable following the Dividend
Record Date shall bear the following legend (or a legend substantially in the
form thereof):
7
This certificate also evidences and entitles the holder to Rights set
forth in a Rights Agreement between the issuer and BankBoston, N.A., as
Rights Agent (the "Rights Agent"), dated as of July 27, 1998 (the
"Rights Agreement"), the terms of which are incorporated herein by
reference and a copy of which is on file at the principal offices of
both the issuer and the Rights Agent. The Rights Agent will mail to the
registered holder of this certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without charge upon written
request. Under certain circumstances set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held by any
Person who is, was or becomes, or acquires shares from, an Acquiring
Person or any Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement and generally relating to the ownership
or purchase of large shareholdings), whether currently held by or on
behalf of such Person or Affiliate or by certain subsequent holders,
may become null and void.
Until the Distribution Date or the earlier redemption, expiration or termination
of the Rights, the Rights associated with the Common Stock shall be evidenced by
the Common Stock certificates alone and the registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of assignment and the form
of exercise notice and certificate to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed or traded, or to conform to usage. Subject to
the provisions of Sections 11 and 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Dividend Record Date (or, if the shares
pursuant to which the Rights are attached are issued thereafter, such date of
issuance), shall include the date of countersignature and on their face shall
entitle the holders thereof to purchase such number of one one-hundredths of a
share of Preferred Stock as shall be set forth therein at the Purchase Price (as
hereinafter defined), but the amount and type of securities issuable upon the
exercise of each Right and the Purchase Price shall be subject to adjustment as
provided herein.
8
(b) Any Rights Certificate issued pursuant to Section 3(a) or 22
hereof that represents Rights beneficially owned by (i) any Acquiring Person or
any Affiliate of an Acquiring Person, or (ii) any Disqualified Transferee, and
any other Rights Certificate issued pursuant to Section 6 or 11 hereof upon the
transfer, exchange, replacement, or adjustment of any such Rights Certificate,
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 was or became an Acquiring Person or
an Affiliate (which includes both affiliates and associates) of an
Acquiring Person (as each such term is defined in the Rights Agreement
between the issuer and BankBoston, N.A., as Rights Agent, dated as of
July 27, 1998 (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 the Rights Agreement.
The Rights Agent will mail to the registered holder of this certificate
a copy of the Rights Agreement, as in effect on the date of such
mailing, without charge upon written request.
Section 5. Countersignature and Registration.
The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President, or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or
facsimile thereof which shall be attested by the Treasurer or an Assistant
Treasurer of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned, either manually or by facsimile signature,
by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent, issued, and delivered with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such officer of the
Company. Any Rights Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Agreement any such person was not
such an officer.
Following the Distribution Date, the Rights Agent shall keep or cause
to be kept, at the office of the Rights Agent designated for such purpose, books
for registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates, and the date of countersignature thereof by the Rights Agent.
9
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), and 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the earlier of the Close of Business on the Expiration Date or the
redemption of the Rights, any Rights Certificate may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a share of Preferred Stock (or, following a Common Stock Event, Common Stock
and/or such other securities, cash, or other assets as shall be issuable in
respect of the Rights in accordance with the terms of this Agreement (such other
securities, cash or other assets being referred to herein as "Other
Consideration")) as the Rights Certificate surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate to be transferred, split up, combined, or exchanged at
the office of the Rights Agent designated for such purpose, accompanied by a
signature guarantee and such other documentation as the Rights Agent may
reasonably request. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner from whom the Rights evidenced by such
Rights Certificate are to be transferred (or the Beneficial Owner to whom such
Rights are to be transferred) or Affiliates thereof as the Company shall
reasonably request. Thereupon, subject to Sections 4(b), 7(e) and 14 hereof, the
Company shall execute and the Rights Agent shall countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment by the holders of
Rights of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates which the Company is not required to pay in accordance with
Section 9(d) hereof.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, the receipt of
indemnity or security satisfactory to them, and upon reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights Certificate,
if mutilated, accompanied by a signature guarantee and such other documentation
as the Rights Agent may reasonably request, the Company will execute and deliver
a new Rights Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed, or mutilated.
10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Except as otherwise provided herein, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby in whole or in part
at any time from and after the Distribution Date and at or prior to the Close of
Business on July 27, 2008 (the "Expiration Date") or the earlier redemption of
the Rights. Immediately after the Close of Business on the Expiration Date (or
the earlier redemption of the Rights), all Rights shall be extinguished and all
Rights Certificates shall become null and void. To exercise Rights, the
registered holder of the Rights Certificate evidencing such Rights shall
surrender such Rights Certificate, with the form of election to purchase on the
reverse side thereof and the certificate contained therein duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
accompanied by a signature guarantee and such other documentation as the Rights
Agent may reasonably request, together with payment in cash, only if by
electronic or wire transfer, or by certified check or bank check, of the
Purchase Price with respect to the total number of one one-hundredths of a share
of Preferred Stock (or, after a Common Stock Event, shares and/or similar units
of Common Stock or Other Consideration) as to which the Rights are exercised
(which payment shall include any additional amount payable by such Person in
accordance with Section 9(d) hereof). The Rights Agent shall promptly deliver to
the Company all payments of the Purchase Price received in respect of Rights
Certificates accepted for exercise.
(b) The purchase price for each one one-hundredth of a share of
Preferred Stock issuable pursuant to the exercise of a Right (the "Purchase
Price") shall initially be $10.00, shall be subject to adjustment as provided in
Section 11 hereof, and shall be payable in lawful money of the United States of
America.
(c) Upon receipt of a Rights Certificate representing the Rights, with
the form of election to purchase set forth on the reverse side thereof and the
certificate contained therein duly executed, accompanied by payment of the
Purchase Price, with respect to each Right so exercised, the Rights Agent,
subject to Sections 7(e), 11(a)(iii) and 20(k) hereof, shall thereupon promptly
(i) requisition from any transfer agent of the Preferred Stock (or Common Stock,
as the case may be) (or from the Company if there shall be no such transfer
agent, or make available if the Rights Agent is such transfer agent)
certificates for the total number of one one-hundredths of a share of Preferred
Stock (or Common Stock, as the case may be) to be purchased and the Company
hereby irrevocably authorizes such transfer agent to comply with any such
request, (ii) after receipt of such certificates, cause the same to be delivered
to or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated in writing by such holder,
and (iii) when appropriate, requisition from the Company the amount of cash to
be paid in lieu of issuance of a fractional share in accordance with Section 14
hereof and after receipt promptly deliver such cash to or upon the order of the
registered holder of such Rights Certificate. After the occurrence of a Common
Stock Event, the Company shall make all necessary arrangements so that any Other
11
Consideration then deliverable in respect of the Rights is available for
distribution by the Rights Agent. For purposes of this Section 7, the Rights
Agent shall be entitled to rely, and shall be protected in relying, on an
Officers' Certificate from the Company to the effect that the Distribution Date
has occurred.
(d) Subject to Sections 4(b), 7(e) and 14 hereof, in case the
registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be executed and delivered by the
Company to the Rights Agent and countersigned and delivered by the Rights Agent
to the registered holder of such Rights Certificate or to such holder's duly
authorized assigns.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Common Stock Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate of an Acquiring Person, or (ii)
a Disqualified Transferee shall become null and void without any further action,
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but the Company shall
have no liability to any holder of Rights Certificates or other Person and none
of the terms of this Agreement or the Rights shall be deemed to be waived with
respect to such holder or other Person as a result of any failure by the Company
to make any determinations with respect to an Acquiring Person or any Affiliate
of an Acquiring Person or Disqualified Transferees hereunder or any failure to
have a legend placed on any Rights Certificate in accordance with Section 4(b)
hereof or on any Common Stock certificate in accordance with Section 3(c)
hereof.
(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 holder of any Rights Certificate upon the occurrence of
any purported exercise thereof unless such holder shall have (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
from whom the Rights evidenced by such Rights Certificate are to be transferred
(or the Beneficial Owner to whom such Rights are to be transferred) or
Affiliates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Rights Agent), be
12
delivered to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificates purchased or retired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or may, at the written request of
the Company, but shall not be required to, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock; Other
Covenants.
(a) The Company covenants and agrees that on and after the
Distribution Date, it shall use reasonable efforts to cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock (or,
following the occurrence of a Common Stock Event, out of its authorized and
unissued shares of Common Stock and/or Other Consideration, or out of its
authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (or, following a Common Stock Event, shares of Common Stock
and/or Other Consideration) that, except as provided in Section 11(a)(iii)
hereof, would then be sufficient to permit the exercise in full of all
outstanding Rights; provided, however, that the reservation of such shares shall
be subject and subordinate to any other reservation of such shares made by the
Company at any time for any lawful purpose; provided, further, however, that in
no event shall such failure to so reserve shares affect the rights of any holder
of Rights hereunder.
(b) The Company covenants and agrees that on and after the
Distribution Date so long as the Preferred Stock (or, following a Common Stock
Event, shares and/or similar units of Common Stock and/or Other Consideration)
issuable upon the exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause all shares (or similar
units) reserved for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) The Company covenants and agrees that it shall take all such
action as may be necessary to ensure that each one one-hundredth of a share of
Preferred Stock (or, following a Common Stock Event, each share and/or similar
unit of Common Stock or Other Consideration) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (or units),
subject to payment in full of the Purchase Price, be duly and validly authorized
and issued and fully paid and nonassessable.
(d) The Company covenants and agrees that it shall pay when due and
payable any and all federal and state transfer taxes and similar charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
or of any shares of Preferred Stock (or, following the occurrence of a Common
Stock Event, each share and/or similar unit of Common Stock or Other
Consideration) upon the exercise of Rights; provided, however, that the Company
shall not be required to pay any transfer tax which may be payable in respect of
any transfer involved in the transfer or delivery of Rights Certificates or in
the issuance or delivery of certificates for any shares of Preferred Stock (or,
following the occurrence of a Common Stock Event, each share and/or similar unit
of
13
Common Stock or Other Consideration) in a name other than that of the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
to issue or deliver any certificates for any shares of Preferred Stock (and,
following the occurrence of a Common Stock Event, any shares and/or similar
units of Common Stock or Other Consideration) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender thereof) or until it
has been established to the Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the first occurrence of a Common
Stock Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Act, with respect to the securities
issuable upon exercise of the Rights on an appropriate form, (ii) to cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, or (B) the Expiration Date or earlier redemption of the Rights. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states of the
United States in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section
9(e), the exercisability of the Rights in order to prepare and file such
registration statement or to permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. The Company shall
thereafter issue a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained.
Section 10. Preferred Stock Record Date; Etc.
Each Person in whose name any certificate for any shares of Preferred
Stock (or, following the occurrence of a Common Stock Event, shares and/or
similar units of Common Stock or Other Consideration) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such shares of Preferred Stock (or such shares and similar units of
Common Stock and/or Other Consideration, as the case may be)
14
represented thereby, and such certificate shall be dated the date which is the
later of (i) the date upon which the Rights Certificate evidencing such Rights
was duly surrendered, or (ii) the date upon which payment of the Purchase Price
(and any applicable transfer taxes) in respect thereof was made; provided,
however, that if such date is a date upon which the relevant transfer books of
the Company are closed, such Person shall be deemed to have become the record
holder of such shares (or Other Consideration) on, and such certificate shall be
dated, the next succeeding Business Day on which such transfer books of the
Company are open; provided, further, that the Company covenants and agrees that
it shall not close such transfer books for a period exceeding ten consecutive
days. Prior to the exercise of the Rights evidenced thereby (which shall be
deemed to have occurred on the date such certificate for shares and/or similar
units of Preferred Stock, Common Stock or Other Consideration shall be dated in
accordance with this Section 10), the holder of a Rights Certificate, as such,
shall not be entitled to any rights of a security holder of the Company with
respect to the shares of Preferred Stock or Common Stock (and/or such shares or
similar units of Common Stock or Other Consideration) 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 expressly provided herein.
Section 11. Antidilution Adjustments.
The Purchase Price and the number and kind of securities covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the
Declaration Date (A) declare and pay a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue, change, or alter any of its
shares of capital stock in a reclassification or recapitalization
(including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving Person),
except as otherwise provided in this Section 11(a) and Section 7(e)
hereof, then, and in each such case, the Purchase Price in effect at
the time of the record date for such dividend or the effective time of
such subdivision, combination, reclassification or recapitalization,
and the number and kind of shares of capital stock issuable upon
exercise of the Rights at such time, 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
Preferred Stock or other capital stock which, if such Right had been
exercised immediately prior to such time at the Purchase Price then in
effect and at a time when the transfer books for the Preferred Stock
(or other capital stock) of the Company were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of
such dividend,
15
subdivision, combination, reclassification or recapitalization. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event
(A) any Person shall at any time after the
Declaration Date become an Acquiring Person; or
(B) any Acquiring Person or any Affiliate of
any Acquiring Person, at any time after the Declaration Date,
directly or indirectly, shall (1) merge into the Company or
otherwise combine with the Company, and the Company shall be
the continuing or surviving corporation of such merger or
combination and the Common Stock of the Company shall remain
outstanding and no shares thereof shall be changed or
otherwise transformed into stock or other securities of any
other Person or the Company or cash or any other property, (2)
in one or more transactions, transfer any assets to the
Company in exchange (in whole or in part) for shares of any
class of its equity securities or for securities exercisable
for or convertible into shares of any such class or otherwise
obtain from the Company, with or without consideration, any
additional shares of any such class or securities exercisable
for or convertible into shares of any such class (other than
as part of a pro rata distribution to all holders of such
class), (3) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose (in one transaction or a series
of transactions) to, from or with the Company or any of the
Company's Subsidiaries, assets with an aggregate fair market
value in excess of 25% of the assets of the Company and its
Subsidiaries determined on a consolidated basis on terms and
conditions less favorable to the Company than the Company
would be able to obtain through arm's-length negotiation with
an unaffiliated third party, (4) receive any compensation from
the Company or any of the Company's Subsidiaries other than
compensation as a director of the Company or for full-time
employment as a regular employee at rates in accordance with
the Company's (or such Subsidiary's) past practices, (5)
receive the benefit (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other financial
assistance provided by the Company or any of its Subsidiaries
on terms and conditions less favorable to the Company (or such
Subsidiary) than the Company would be able to obtain through
arm's-length negotiation with an unaffiliated third party or
(6) commence a tender or exchange offer for securities of the
Company; or
(C) during such time as there is an Acquiring
Person at any time after the Declaration Date, there shall be
any reclassification of securities (including
16
any combination thereof), or recapitalization of the
Company, or any merger or consolidation of the Company with
any of its Subsidiaries (whether or not with or into or
otherwise involving an Acquiring Person or any Affiliate of
an Acquiring Person), or any repurchase by the Company or
any of its Subsidiaries of shares of the Common Stock of the
Company, or any other class or series of securities issued
by the Company, which reclassification, recapitalization,
merger, consolidation or repurchase is effected at a time
when a majority of the Board consists of persons who are the
Acquiring Person or its Affiliates, or nominees or designees
of any thereof, which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity
securities or securities exercisable for or convertible into
any class of equity securities of the Company or any of its
Subsidiaries which is directly or indirectly owned by an
Acquiring Person or any Affiliate of an Acquiring Person
then, in each such case, upon the Close of Business 10 Business Days
after the occurrence of such event, proper provision shall be made so
that each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon exercise thereof at
the Purchase Price in effect at the time of exercise in accordance with
the terms of this Agreement, in lieu of a number of one one-hundredths
of a share of Preferred Stock, such number of shares of Common Stock of
the Company as shall equal the result obtained by (x) multiplying an
amount equal to the then current Purchase Price by an amount equal to
the number of one one-hundredths of a share of Preferred Stock for
which a Right was or would have been exercisable immediately prior to
the first occurrence of any such event whether or not such Right was
then exercisable, and (y) dividing that product by 50% of the Current
Market Price per share of the Common Stock of the Company (as defined
in Section 11(d) hereof) determined as of the date of such first
occurrence.
(iii) In lieu of issuing whole or fractional shares of Common
Stock in accordance with Section 7(c) hereof, the Company shall (i) in
the event that the number of shares of Common Stock which are
authorized by the Company's charter 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 7(c) hereof, or (ii) if a majority of the Board determines
that it would be appropriate and not contrary to the interests of the
holders of Rights (other than any Acquiring Person or Disqualified
Transferee or any Affiliate of the Acquiring Person or Disqualified
Transferee), (A) determine an amount, if any, (the "Excess Amount")
equal to the excess of (1) the value (the "Current Value") of the whole
or fractional shares of Preferred Stock (or Common Stock) issuable upon
the exercise of a Right in accordance with Section 7(c) hereof, over
(2) the Purchase Price, and (B) with respect to each Right, (subject to
Section 7(e) hereof) make adequate provision to substitute for
17
such whole or fractional shares of Preferred Stock (or Common Stock),
upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares or
units of Preferred Stock or preferred stock which the Board has deemed
in good faith to have the same value as a share of Common Stock (such
shares of preferred stock being referred to herein as "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing (which would include the
additional consideration provided to any holder by reducing the
Purchase Price) having an aggregate value equal to the Current Value,
where such aggregate value has been determined by the Board; provided,
however, subject to the provisions of Section 9(e) hereof, that if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within 30 days following the Close of
Business 10 Business Days after the first occurrence of a Common Stock
Event described in Section 11(a)(ii) hereof, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, whole or fractional
shares of Preferred Stock (or Common Stock) (to the extent available)
and then, if necessary, cash, securities, and/or assets which in the
aggregate are equal to the Excess Amount. If the Board shall determine
in good faith that it is likely that sufficient additional shares of
Common Stock or Common Stock Equivalents could be authorized for
issuance upon exercise in full of the Rights, the 30-day period set
forth above may be extended to the extent necessary, but not more than
90 days following the Close of Business 10 Business Days after the
first occurrence of such a Common Stock Event (such 30 day period) as
it may be extended to 90 days, is referred to herein as the
"Substitution Period"). To the extent that the Company determines that
some action is to be taken pursuant to the preceding provisions of
this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that (except as to the form of consideration
which shall be determined as appropriate by a majority of the Board)
such action shall apply uniformly to all outstanding Rights which
shall not have become null and void, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to
such provisions and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended. The Company shall thereafter issue a public announcement at
such time as the suspension is no longer in effect. For purposes of
this Section 11(a)(iii), the value of the Common Stock issuable upon
exercise of a Right in accordance with Section 7(c) hereof shall be
the Current Market Price per share of the Common Stock (as determined
pursuant to Section 11(d) hereof) on the Close of Business 10 Business
Days after the date of the first occurrence of such a Common Stock
Event and the value of any Common Stock Equivalent shall be deemed to
be equal to the Current Market Price per share of the Common Stock on
such date.
18
(b) In the event the Company shall, after the Dividend Record Date,
fix a record date for the issuance of any options, warrants, or other rights to
all holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase (i) Preferred
Stock or (ii) shares having the same rights, privileges and preferences as the
shares of any number of one one-hundredths of a share of Preferred Stock
("Equivalent Preferred Stock") or (iii) securities convertible into Preferred
Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or
Equivalent Preferred Stock (or having a conversion price per share of Preferred
Stock or Equivalent Preferred Stock, if a security is convertible into Preferred
Stock or Equivalent Preferred Stock) less than the Current Market Price per
share of Preferred Stock (determined in accordance with Section 11(d) hereof)
determined as of such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of shares of Preferred Stock and/or Equivalent Preferred Stock
which the aggregate minimum offering price of the total number of shares of one
one-hundredths of a share of Preferred Stock and/or Equivalent Preferred Stock
so to be offered (and/or the aggregate minimum conversion price of such
convertible securities so to be offered) would purchase at such Current Market
Price, and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the maximum number of additional
shares of Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or the maximum number of shares into which such
convertible securities so to be offered are convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
shall be in a form other than cash, for purposes of this Section 11(b) the value
of such consideration shall be the fair market value thereof as determined in
good faith by the Board (which determination shall be described in an Officers'
Certificate filed with the Rights Agent). Shares of Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such options,
warrants or other rights 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 (subject, however, to such other adjustments as are provided
herein).
(c) In the event that the Company shall, after the Dividend Record
Date, fix a record date for the making of a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the surviving or continuing
Person) of evidences of indebtedness, cash (other than cash dividends paid out
of the earnings or retained earnings of the Company and its Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied), other property (other than a
dividend payable in a number of one one-hundredths of a share of Preferred
Stock, but including any dividend payable in capital stock other than Preferred
Stock), or subscription rights or warrants (excluding those referred to in
19
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, of which the numerator shall be (i) the
Current Market Price per share of Preferred Stock (as defined in Section 11(d)
hereof) determined as of such record date, less (ii) the sum of (A) that portion
of cash plus (B) the fair market value, as determined in good faith by the Board
(which determination shall be described in an Officers' Certificate filed with
the Rights Agent) of that portion of such evidences of indebtedness, such other
property, and/or such subscription rights or warrants applicable to one share of
Preferred Stock and of which the denominator shall be such Current Market Price
per share of the Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event 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 (subject,
however, to such other adjustments as are provided herein).
(d) For purposes of any computation pursuant to Section 11(a)(iii)
hereof, the "Current Market Price" per share (or unit) of any security on any
date shall be deemed to be the average of the daily Closing Price of such
security for the 10 consecutive Trading Days immediately after such date, and
for the purpose of any other computation hereunder, the "Current Market Price"
per share (or unit) of any security on any date shall be deemed to be the
average of the daily Closing Price of such security for the 20 consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the Current Market Price per share of such security is determined
during a period following the announcement by the issuer of such security of (i)
a dividend or distribution on such security payable in shares (or units) of such
security or securities convertible into shares (or units) of such security, or
(ii) any subdivision, combination or reclassification of such security, and
prior to the expiration of such 10 Trading Days or 20 Trading Days after (A) the
ex-dividend date for such dividend or distribution, or (B) the record date for
such subdivision, combination or reclassification, as the case may be, then, and
in each such case, the "Current Market Price" shall be the Closing Price of such
security on the last day of such respective 10 Trading Day or 20 Trading Day
period. For purposes of this Agreement, the "Closing Price" of any security on
any day shall be the last sale price, regular way, with respect to shares (or
units) of such security, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, with respect to such
security, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange; or, if such security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading; or, if such security is not so listed or admitted to
trading, the last quoted sale price with respect to shares (or units) of such
security, or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market with respect to shares (or units) of such
security, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other similar
20
system then in use; or, if on any such date such security is not quoted by any
such organization, the average of the closing bid and asked prices with respect
to shares (or units) of such security, as furnished by a professional market
maker making a market in such security selected by the Board; or, if no such
market maker is available, the fair market value of shares (or units) of such
security as of such day as determined in good faith by the Board (which
determination shall be described in an Officers' Certificate filed with the
Rights Agent); provided, however, that the "Closing Price" of one one-hundredth
of a share of Preferred Stock as of any Trading Day shall be equal to the
Closing Price of a whole share of Preferred Stock on such Trading Day divided by
100; provided, further, that if the Closing Price of such a share of Preferred
Stock as of any Trading Day cannot be reasonably determined by the foregoing
provisions, the "Closing Price" of one one-hundredth of a share of Preferred
Stock on such Trading Date shall be the Closing Price of a share of Common Stock
on such Trading Day.
(e) No adjustment in the Purchase Price shall be required unless
adjustment would require an increase or decrease of at least 1% in such 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 (x) ten-thousandth of a share (or similar
unit) of Common Stock or securities other than Preferred Stock or Equivalent
Preferred Stock or (y) one-millionth of a share of Preferred Stock or Equivalent
Preferred Stock. 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 mandates the
adjustment or (ii) the Expiration Date. 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 required by this Section 11, as it
in its discretion shall determine to be advisable in order that any dividends,
subdivision of shares, distribution of rights to purchase shares of beneficial
interest or other stock or securities, or distribution of securities convertible
into or exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable.
(f) In the event that at any time, as a result of an adjustment made
in respect of a Common Stock Event, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to such other shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (m) and (p)
hereof, and the provisions of Sections 7, 9, 10, 11(d), 13 and 14 hereof with
respect to the shares of Preferred Stock shall apply on like terms to any such
other shares.
21
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights represented thereby, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made pursuant to Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth of a share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share of Preferred Stock covered by a Right immediately
prior to this adjustment, by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) Assuming that no other adjustment pursuant to this Section 11
has been made, 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 one one-hundredths of a share of Preferred Stock
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
one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price by the Purchase Price in effect immediately after such 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 Rights Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i) the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed, and countersigned in the manner provided
for herein (and may bear, at the option of
22
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of whole or fractional shares of Preferred Stock issuable upon
exercise of such Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number of
one one-hundredths of a share of Preferred Stock which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue such number of fully paid and nonassessable one one-hundredths of a share
of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the number of one one-hundredths of a share of Preferred Stock or other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred Stock or 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 xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, by means of a resolution of the Board acting in good faith,
shall determine to be advisable in order that any consolidation or subdivision
of the Common Stock, issuance wholly for cash of any Common Stock at less than
the Current Market Price thereof, issuance wholly for cash of Common Stock (or
other securities which by their terms are convertible into or exchangeable for
Common Stock), dividends payable in shares of Common Stock or other capital
stock or shares of beneficial interest, or issuance of rights, options, or
warrants referred to hereinabove in this Section 11, hereafter made or declared
by the Company to the holders of its Common Stock, shall not be taxable to such
holders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the
23
Company in a transaction that complies with Section 11(o) hereof), (ii) merge
with or into any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or (iii) sell or transfer
(or permit any Subsidiary to sell or transfer), in one transaction or a series
of related transactions, more than 25% of (A) the assets (taken at net asset
value as stated on the books of the Company and determined on a consolidated
basis in accordance with generally accepted accounting principles consistently
applied) or (B) the earning power of the Company and its Subsidiaries
(determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied) to any other Person or Persons
(other than the Company or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale, there are any rights,
warrants or other instruments or securities outstanding or agreements (whether
or not in writing) in effect that would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of such other Person shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or 27 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Dividend Declaration Date
and prior to the Distribution Date (i) declare or pay a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, or (ii)
effect a subdivision, combination or consolidation of the outstanding Common
Stock (by reclassification or otherwise than by payment of dividends in shares
of Common Stock) into a greater or smaller number of shares, then in any such
case, (i) the number of one one-hundredths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event; and (ii) each share of
Common Stock outstanding immediately after such event shall have issued with
respect to it that number of Rights which each share of Common Stock outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
24
Section 12. Certificate of Adjustments.
Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall (a) promptly prepare an Officers' Certificate setting forth
such adjustment, including any adjustment in Purchase Price, the number of
shares or Other Consideration payable, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Stock and Common Stock a copy of such
Officers' Certificate, and (c) mail a brief summary thereof to each registered
holder of a Rights Certificate in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such Officers' Certificate and
on any adjustment therein contained, and shall not be deemed to have knowledge
of any such adjustment unless and until it shall have received such an Officers'
Certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
In the event that, following the Stock Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) and the Company shall not be the continuing
or surviving Person of such consolidation or merger, (b) any Person (other than
a Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) shall consolidate with, or merge with and into, the Company, the Company
shall be the continuing or surviving Person of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the Common Stock
of the Company shall be changed or otherwise transformed into other stock or
other securities of any other Person or the Company or cash or any other
property, or (c) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, more than 25% of (A) the assets (taken at net
asset value as stated on the books of the Company and determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (B) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any Person (other than
the Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o) hereof) then, from and after such event,
proper provision shall be made so that (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the Purchase Price in effect at the time of such
exercise in accordance with the terms of this Agreement, such number of whole or
fractional shares of validly authorized and issued, fully paid, non-assessable,
and freely tradeable Common Stock of such other Person (or in the case of a
transaction or series of transactions described in clause (c) above, the Person
receiving the greatest amount of the assets or earning power of the Company, or
if the Common Stock of such other Person is not and has not been continuously
registered under Section 12 of the Exchange Act for the preceding 12-month
period and such Person is a direct or indirect
25
Subsidiary of another Person, that other Person, or if such other Person is a
direct or indirect Subsidiary of more than one other Person, the Common Stock of
two or more of which are and have been so registered, such other Person whose
outstanding Common Stock has the greatest aggregate value), free and clear of
any liens, encumbrances, rights of first refusal, or other adverse claims, as
shall be equal to the result obtained by (x) multiplying the Purchase Price in
effect immediately prior to the first occurrence of any Common Stock Event
described in this Section 13 by the number of one one-hundredths of a share of
Preferred Stock for which a Right is exercisable immediately prior to such first
occurrence (and without taking into account any prior adjustment made pursuant
to 11(a)(ii)) and (y) dividing that product by 50% of the Current Market Price
per share (as defined in Section 11(d) hereof) of the Common Stock of such other
Person determined as of the date of consummation of such consolidation, merger,
sale, or transfer; (ii) the issuer of such Common Stock 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, for all purposes
of this Agreement, to refer to such issuer, it being specifically intended that
the provisions of Section 11 hereof (other than Section 11(a)(ii) hereof) shall
apply only to such issuer following the first occurrence of a Common Stock Event
described in this Section 13; (iv) such issuer shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock) 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 whole or fractional shares of its Common
Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Common Stock Event described in clauses (a), (b) or (c) of
this Section 13. The Company shall not consummate any such consolidation,
merger, sale or transfer unless (i) such issuer shall have a sufficient number
of authorized shares of its Common Stock which have not been issued or reserved
for issuance as will permit the exercise in full of the Rights in accordance
with this Section 13, and (ii) prior thereto the Company and such issuer shall
have executed and delivered to the Rights Agent a supplemental agreement so
providing and further providing that as soon as practicable after the date of
any Common Stock Event described above in this Section 13 such issuer shall (A)
prepare and file a registration statement under the Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such registration
statement to (I) become effective as soon as practicable after such filing and
(II) remain effective (with a prospectus at all times meeting the requirements
of the Act) until the Expiration Date, and (B) will deliver to holders of the
Rights historical financial statements of such issuer and each of its Affiliates
which comply in all respects with the requirements for registration on Form 10
under the Exchange Act. Furthermore, in case the Person which is to be party to
a transaction referred to in this Section 13 has any provision in any of its
authorized securities or in its charter or by-laws or other agreement or
instrument governing its affairs, which provision would have the effect of
causing such Person to issue, in connection with, or as a consequence of, the
consummation of a Common Stock Event
26
described in clauses (a), (b), or (c) of this Section 13, whole or fractional
shares of Common Stock of such Person at less than the then Current Market Price
per share thereof (as defined in Section 11(d) hereof), or to issue securities
exercisable for, or convertible into, Common Stock of such Person at less than
such then Current Market Price, then, in such event, the Company hereby agrees
with each holder of the Rights that it shall not consummate any such transaction
unless prior thereto the Company and such Person shall have executed and
delivered to the Rights Agent a supplemental agreement providing that such
provision in question shall have been canceled, waived, or amended so that it
will have no effect in connection with, or as a consequence of, the consummation
of the proposed transaction. The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other transfers. In
the event that a Common Stock Event described in this Section 13 shall occur at
any time after the occurrence of a Common Stock Event described in Section
11(a)(ii) hereof, the Rights which have not theretofore been exercised shall
thereafter become exercisable, except as provided in Section 7(e) hereof, in the
manner described in this Section 13.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute fractions of Rights, except prior to the Distribution Date as
provided in Section 11(i) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of issuing such fractional Rights, at the
election of the Company, there shall be paid to the registered holders of the
Rights 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.
(b) The Company shall not be required to issue fractions of shares of
its capital stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares (other than, in each case with respect to
Preferred Stock or Equivalent Preferred Stock, fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock or Equivalent
Preferred Stock, as the case may be). Fractions of shares of Preferred Stock or
Equivalent Preferred Stock, as the case may be, in integral multiples of one
one-hundredth of a share of Preferred Stock or Equivalent Preferred Stock may,
at the election of the Company, be evidenced by depositary receipts, pursuant to
an appropriate agreement between the Company and a depository selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock or the Equivalent Preferred
Stock represented by such depositary receipts. In lieu of fractional shares, at
the election of the Company, there shall be paid to the registered holders of
Rights at the time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current
27
market value of a share of such capital stock. For purposes of this Section
14(b), the current market value of a share of such capital stock shall be the
Closing Price of such capital stock 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 (except as
provided in Section 14(b) hereof) any fractional share upon exercise of a Right.
Section 15. Rights of Action.
Excepting the rights of action given the Rights Agent under Section 18
hereof and except as set forth in Section 20(l) hereof, all rights of action in
respect of this Agreement are vested in the registered holder of each Right; and
any registered holder of any Right, without the consent of the Rights Agent or
of the holder of any other Right, may, in its own behalf and for its 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 registered
holder's right to exercise the rights evidenced by such Right in the manner
provided in such Rights Certificate and in this Agreement, and the Company
hereby agrees to reimburse such registered holder for all expenses (including
reasonable attorneys' fees) incurred by such registered holder in connection
therewith. 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 the obligations
hereunder, and shall be entitled to injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) from and after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer with a form of assignment and certificate set
forth on the reverse side thereof duly executed, accompanied by a signature
guarantee and such other documentation as the Rights Agent may reasonably
request;
28
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or, prior to the Distribution Date, the associated Common Stock certificate,
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company agrees to use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends, or otherwise be deemed for any purpose the holder of
any securities of the Company which may be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote in
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any action by the Company, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or preemptive rights, or
otherwise, until the time specified in Section 10 hereof.
Section 18. Concerning the Rights Agent.
The Company agrees to pay to the Rights Agent such reasonable
compensation as shall be agreed to in writing between the Company and the Rights
Agent for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any and all loss, liability, damages, claims or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything
29
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses (including
reasonable attorneys' fees and expenses) of defending against any claim of
liability for any of the foregoing.
The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for any number of one one-hundredths of a share of Preferred Stock,
or for shares of Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed and executed by the
proper Person or Persons, and verified or acknowledged as required by this
Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the 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 shall be a party, or any corporation
succeeding to the shareholder services business of the Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement and any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
30
Section 20. Duties of Rights Agent.
The Rights Agent undertakes only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Rights Agent may consult with legal counsel of its selection
(who may be legal counsel to the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) 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 (an "Officers' Certificate") signed by a person believed by the
Rights Agent to be the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such Officers' 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 Officers' Certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature on such Rights Certificate) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11
or 13 hereof or be responsible for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedure (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt of a
certificate delivered pursuant to Section 12 hereof, describing any such
adjustment or
31
procedures); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Stock, Common Stock or other securities to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common Stock,
or any shares or similar units of other securities, will, when issued, be
validly authorized and issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer. Any application by the
Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent with respect to its duties or obligations under this Agreement
and the date on and/or after which such action shall be taken or omitted and the
Rights Agent shall not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after the date specified
therein (which date shall not be less than three Business Days after the date
any such officer actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received written instructions
from the Company in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any stockholder, director, officer, or
employee of the Rights Agent may buy, sell, or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other 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, however, that reasonable care was exercised in
the selection and continued employment thereof.
32
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certification appearing on the
reverse side thereof following the form of election to purchase has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
(l) The provisions of this Section 20 are solely for the benefit of
the Rights Agent or the Company and any failure or omission under this Section
20 shall not affect the rights of the Company under this Agreement and neither
the Rights Agent nor the Company shall have any liability to any holder of
Rights or other Person on account of such failure or omission.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock by
registered or certified mail, and, subsequent to the Distribution Date, to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent, to each transfer agent of the Common Stock by
registered or certified mail, and, subsequent to the Distribution Date, to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States, the State of New York or The
Commonwealth of Massachusetts (or of any other State of the United States so
long as such corporation is authorized to do business as a banking institution
in the State of New York or The Commonwealth of Massachusetts), in good
standing, having an office designated for such purpose in the State of New York
or The Commonwealth of Massachusetts, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
33
Rights Agent a combined capital and surplus of at least $50,000,000. 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; and, except as the context herein otherwise
requires, such successor Rights Agent shall be deemed to be the "Rights Agent"
for all purposes of this Agreement. Not later than the effective date of any
such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale by the Company
of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights evidenced
by a Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights would be issued, and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption and Termination.
The Board, by majority vote, may, at its option, at any time prior to
the Expiration Date, redeem all (but not less than all) of the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend, combination of shares, or similar
transaction occurring after the date hereof (such redemption price being
34
hereinafter referred to as the "Redemption Price"). Immediately upon the taking
of such action ordering the redemption of all of the Rights, evidence of which
shall have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights so redeemed will terminate
and the only right thereafter of the holders of such Rights so redeemed shall be
to receive the Redemption Price (without the payment of any interest thereon).
Within 10 days after such action ordering the redemption of all of the Rights,
the Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. 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 shall state the method by which the payment of the Redemption Price
shall be made.
Section 24. Exchange.
(a) The Board, by majority vote, 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 for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio, as the same may be so adjusted from time to time,
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board shall not be empowered to effect such exchange at any time
after any Person (other than (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any such
Subsidiary, or (iv) any entity holding Common Stock for or pursuant to the terms
of any such plan), together with all Affiliates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange shall state the method by which the exchange of the
Common Stock for Rights shall be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be
35
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Preferred Stock (or shares of Equivalent
Preferred Stock) for shares of Common Stock exchangeable for Rights, at the
initial rate of one one-hundredth of a share of Preferred Stock (or share of
Equivalent Preferred Stock) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of shares of Preferred
Stock pursuant to the terms thereof, so that the fraction of a share of
Preferred Stock delivered in lieu of each share of Common Stock shall have the
same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Common Stock or Preferred Stock for issuance upon exchange of the
Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to each registered holder of a Rights Certificate with regard to which
a fractional share of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (e), the current market value
of a whole share of Common Stock shall be the Closing Price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
In case the Company shall after the Distribution Date propose (a) to
pay any dividend payable in stock of any class to the holders of its Preferred
Stock or to make any other distribution to the holders of its Preferred Stock
(other than a cash dividend out of earnings or the retained earnings of the
Company), or (b) to offer to the holders of its Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred
Stock, Common Stock or shares of stock of any other class or any other
securities, rights, or options, or (c) to effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (d) 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
transaction or a series of related transactions, of more than 25% of (i) the
assets of the Company and its Subsidiaries (taken at net asset value as stated
on the books of the Company and determined on a
36
consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (ii) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons, or (e) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Rights Agent and
each holder of a Right, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a) or
(b) above at least 20 days prior to the record date for determining holders of
the Preferred Stock for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Common Stock
whichever shall be the earlier. The failure to give notice required by this
Section 25 or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
In case any Common Stock Event described in Section 11(a)(ii) hereof
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such Common
Stock Event, which shall specify such event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
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 Rights Certificate to 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:
37
CytoTherapeutics, Inc.
000 Xxxxxx Xxxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxx, M.D.
President and Chief Executive Officer
Copy to: Xxxxxxxx X. Xxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Subject to the provisions of Sections 19 and 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
BankBoston, N.A.
c/o Boston Equiserve Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Client Administration
(CytoTherapeutics, Inc. Rights Agreement)
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
Prior to the Distribution Date, the Board, upon the vote of a majority
of the Board, may from time to time supplement or amend this Agreement without
the approval of any holders of the Rights. From and after the Distribution Date,
the Board may, upon the vote of a majority of the Board, from time to time amend
this Agreement without the approval of any holders of the Rights in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to change any time period governing redemption of the Rights or any other time
period or (iv) to make any other provisions in regard to matters or questions
arising hereunder which the Board, upon the vote of a majority of the Board, may
deem necessary or desirable
38
and which shall not adversely affect the interests of the holders of the Rights
(other than any Acquiring Person or Disqualified Transferee or any Affiliate of
an Acquiring Person or Disqualified Transferee). Any amendment made pursuant to
this Section 27 after a Stock Acquisition Date shall require the approval of a
majority of the Board. The Rights Agent shall join with the Company in the
execution and delivery of any such supplement or amendment, unless such
supplement or amendment affects any of the rights, duties, or obligations of the
Rights Agent hereunder, in which case the Rights Agent may, but shall not be
required to, join in such execution and delivery.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board; etc.
The Board shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board, or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith and
with the concurrence of a majority of the Board then in office shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and (y) not subject any Director to any
liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent, and the registered holders of the
Rights (and, prior to the Distribution Date, the associated shares of Common
Stock) any legal or equitable right, remedy, or claim under this Agreement or
the Rights; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent, and the registered holders of the Rights (and,
prior to the Distribution Date, the associated Common Stock).
39
Section 31. Severability.
The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. 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; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
Close of Business on the tenth day following the date of such determination by
the Board.
Section 32. Governing Law.
This Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of said
State applicable to contracts to be made and performed entirely within said
State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
CYTOTHERAPEUTICS, INC.
By: /s/ XXXXXX XXXXXXXX
_______________________________________
Title: Senior Vice President
BANKBOSTON, N.A.,
AS RIGHTS AGENT
By: /s/ XXXXX XXXXXX
_______________________________________
Title: Director
41
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF JUNIOR PREFERRED STOCK
of
CYTOTHERAPEUTICS, INC.
Pursuant to Section 151 of the
Delaware General Corporation Law
CytoTherapeutics, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
(the "Board of Directors") by the Restated Certificate of Incorporation of the
Corporation, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors on July 27,
1998 adopted a resolution providing for the authorization of a series of
Preferred Stock, par value $.01 per share (the "Preferred Stock"), as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, a series of Preferred Stock of
the Corporation be and it hereby is created, and that the designation
and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are
as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Junior Preferred Stock" (the "Junior Stock") and the number of
shares constituting such series shall be 450,000. The number of shares of Junior
Stock may be increased or decreased by a resolution duly adopted by the Board of
Directors, but may not be decreased below the number of shares of Junior Stock
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon conversion of any
outstanding securities convertible into Junior Stock.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Junior Stock with respect to dividends, the
holders of shares of Junior Stock shall be entitled to receive,
A-1
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
last 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 Junior 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 set forth in
Section 8 hereof, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock, par value $.01 per share,
of the Corporation (the "Common Stock") or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a
share of Junior Stock.
(b) The Corporation shall declare a dividend or distribution
on the Junior Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of or a subdivision with
respect to Common Stock); provided, however, 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, a
dividend of $1.00 per share on the Junior Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Junior Stock,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Junior 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 Junior 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 Junior Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be
no more than 60 days prior to the date fixed for the payment thereof.
A-2
Section 3. Voting Rights. The holders of shares of Junior Stock shall
have the following voting rights:
(a) Subject to the provision for adjustment set forth in
Section 8 hereof, each share of Junior Stock shall entitle the holder
thereof to one hundred votes on all matters submitted to a vote of the
stockholders of the Corporation.
(b) Except as otherwise provided herein or required by
applicable law, the holders of shares of Junior Stock and the holders
of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein or required by applicable
law, holders of Junior 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.
Section 4. Certain Restrictions
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Junior Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Stock, except dividends paid
ratably on the Junior Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding
up) with the Junior Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of
any such parity stock (A) in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to
A-3
the Junior Stock or (B) in accordance with subparagraph (iv)
of this Section 4(a); or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Junior Stock, or any shares of
stock ranking on a parity with the Junior Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of the outstanding shares of such stock upon such
terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (a) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior Stock redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the
holders of shares of Common Stock or any other stock of the Corporation
ranking junior (upon liquidation, dissolution or winding up) to the
Junior Stock unless, prior thereto, the holders of shares of Junior
Stock shall have received $100.00 per share plus an amount equal to all
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Junior Liquidation
Preference"). Following the payment of the full amount of the Junior
Liquidation Preference, no additional distributions shall be made to
the holders of shares of Junior Stock unless, prior thereto, the
holders of shares of Common Stock (which term shall include, for the
purposes only of this Section 6, any series of the Corporation's
Preferred Stock ranking on a parity with the Common Stock upon
liquidation, dissolution or winding up) shall have received an amount
per share (the "Common Adjustment") equal to the quotient obtained by
dividing 44. the Junior Liquidation Preference by 45. 100 (as
appropriately adjusted as set forth in Section 8 hereof to reflect such
events as stock splits, stock
A-4
dividends and recapitalizations with respect to the Common Stock; such
number in this clause (ii), as the same may be adjusted from time to
time, is hereinafter referred to as the "Adjustment Number". In the
event, however, that there are not sufficient assets available to
permit payment in full of the Common Adjustment, then any remaining
assets shall be distributed ratably to the holders of Common Stock.
Following the payment of the full amount of the Junior Liquidation
Preference and the Common Adjustment in respect of all outstanding
shares of Junior Stock and Common Stock, respectively, holders of
shares of Junior Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of any remaining assets
to be distributed in the ratio of the Adjustment Number to one (1)
with respect to such Junior Stock and Common Stock, on a per share
basis, respectively.
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Junior Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Junior Stock,
then any remaining assets shall be distributed ratably to the holders
of the Junior Stock and the holders of such parity stock in proportion
to their respective liquidation preferences.
(c) None of the merger or consolidation of the Corporation
into or with any other entity, the sale of all or substantially all of
the property and assets of the Corporation or the distribution to the
stockholders of the Corporation of all or substantially all of the
consideration for such sale, unless such consideration (apart from the
assumption of liabilities) or the net proceeds thereof consists
substantially entirely of cash, shall be deemed to be a liquidation,
dissolution or winding up within the meaning of this Section 6.
(d) Each share of Junior Stock shall stand on a parity with
each other share of Junior Stock or any other series of the same class
of Preferred Stock upon voluntary or involuntary liquidation,
dissolution or distribution of assets or winding up of the Corporation.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the outstanding shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case the
outstanding shares of Junior Stock shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment set
forth in Section 8 hereof) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
A-5
Section 8. Certain Adjustments. In the event the Corporation shall at
any time declare or pay any dividend on 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 amounts set forth in
Sections 2(a) and (b), 3(a), 6(a) and 7 hereof with respect to the multiple of
48. cash and non-cash dividends, 49. votes, 50. the Junior Liquidation
Preference and 51. an aggregate amount of stock, securities, cash and/or other
property referred to in Section 7 hereof, 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.
Section 9. Ranking. The Junior Stock shall rank pari passu with (or if
determined by the Board of Directors in any vote establishing any other series
of Preferred Stock, either senior and prior in preference to, or junior and
subordinate to, as the case may be) each other series of Preferred Stock of the
Corporation with respect to dividends and/or preference upon liquidation,
dissolution or winding up.
Section 10. Redemption. The shares of Junior Stock may be purchased by
the Corporation at such times and on such terms as may be agreed to between the
Corporation and the redeeming stockholder, subject to any limitations which may
be imposed by law or the Restated Certificate of Incorporation, as amended.
Section 11. Amendment. The Restated Certificate of Incorporation of the
Corporation, as amended, shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Junior Stock so as to affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Junior Stock, voting
together as a single class.
Section 12. Fractional Shares. Junior 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 Junior
Stock.
A-6
IN WITNESS WHEREOF, this Certificate of Designation was executed on
behalf of the Corporation by its Senior Vice President on July __, 1998.
By________________________________
Senior Vice President
A-7
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JULY 27, 2008 OR EARLIER IF ORDER OF REDEMPTION
IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND
ASSOCIATES) OF AN ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID
SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED
OR BE OBTAINABLE. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND ASSOCIATES) OF AN
ACQUIRING PERSON (AS EACH SUCH TERM IS 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 THE RIGHTS AGREEMENT.]*
Rights Certificate
CYTOTHERAPEUTICS, 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 July 27, 1998 (the "Rights Agreement")
between CytoTherapeutics, Inc. (the "Company"), and BankBoston, N.A.,
as Rights Agent (the "Rights Agent"), to purchase from the Company at
any time after
----------
* The portion of the legend in brackets shall be inserted only if applicable.
B-1
the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 p.m. (Boston, Massachusetts time) on July
27, 2008 (the "Expiration Date") at the office of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a share of the Junior Preferred Stock, with a par
value of $.01 per share ("Preferred Stock"), of the Company per each
Right represented hereby, at a purchase price of $10.00 per share (the
"Purchase Price") upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase set forth on the
reverse side hereof and the certificate contained therein duly
completed and executed, accompanied by a signature guarantee and such
other documentation as the Rights Agent may reasonably request. The
number of Rights evidenced by this Rights Certificate (and the number
of shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the
number and Purchase Price as of July 27, 1998, based on the shares of
Common Stock of the Company as constituted at such date.
As more fully set forth in the Rights Agreement, upon the
occurrence of a Common Stock Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate
are beneficially owned by (i) an Acquiring Person or an Affiliate of an
Acquiring Person (as each such term is defined in the Rights Agreement)
or (ii) a Disqualified Transferee (as defined in the Rights Agreement),
such Rights shall automatically become null and void and no holder
hereof shall have any right with respect to such Rights from and after
the occurrence of such Common Stock Event.
The Rights evidenced by this Rights Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any
jurisdiction where the requisite qualification to the issuance to such
holder, or the exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be obtainable.
As provided in the Rights Agreement, the Purchase Price and
the number of whole or fractional shares of Preferred Stock which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the
happening of certain events.
In the circumstances described in Section 13 of the Rights
Agreement, the securities issuable upon the exercise of the Rights
evidenced hereby shall be the common stock or similar equity securities
or equity interests of an entity other than the Company.
This Rights Certificate is subject to all of the terms,
provisions, and conditions of the Rights Agreement, which terms,
provisions, and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of
rights, obligations, duties, and immunities hereunder of the Rights
Agent, the Company, and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the
exercisability of such Rights
B-2
under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights
Agent designated for such purpose and may be obtained by the holder of
any Rights upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent
designated for such purpose, accompanied by a signature guarantee and
such other documentation as the Rights Agent may reasonably request,
may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of whole or fractional shares of
Preferred Stock (or other consideration, as the case may be) as the
Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Rights Certificate may be redeemed by the Company by
a majority vote of the Board (as defined in the Rights Agreement) then
in office at any time prior to the Expiration Date, at a redemption
price of $.01 per Right (which amount is subject to adjustment as
provided in the Rights Agreement).
The Company is not obligated to issue whole or fractional
shares of Preferred Stock (or other securities) upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash
payment may be made at the election of the Company, as provided in the
Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the
holder of Preferred Stock or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any action by the Company,
or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-3
WITNESS the facsimile signature of the proper officers and the
seal of the Company. Dated as of ________, 199__.
CYTOTHERAPEUTICS, INC.
By______________________________
Title:
ATTEST:
_____________________
Title:
Countersigned:
_____________________
BANKBOSTON, N.A., as Rights Agent
By____________________
Authorized Signatory
Date of Countersignature:
B-4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED _______________________
hereby sells, assigns and transfers unto ______________________
________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________ whose
social security or tax identification number is ______________, the Rights
evidenced by this Rights Certificate, together with all right, title and
interest herein, and does hereby irrevocably constitute and appoint
____________________ Attorney, to transfer the within Rights Certificate on the
books of the within-named Company, with full power of substitution.
Dated: _________________________, ____.
__________________________
Signature
Signature Guaranteed:*
----------
* Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
B-5
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
after the occurrence of a Common Stock Event from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate of an Acquiring Person.
Dated:____________________ ______________________________
Signature
Signature Guaranteed:*
____________________________
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-6
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate)
To CytoTherapeutics, Inc.
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Rights Certificate to purchase the number of one
one-hundredths of a share of Preferred Stock (or other securities) issuable upon
the exercise of such Rights and requests that certificates for such shares be
issued in the name of:
Please insert social security
or other identifying number ________________________________________
____________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights 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 must conform in all respects to name of
holder as specified on the face of this Rights
Certificate)
Signature Guaranteed:**
--------
** Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
B-7
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate of any such Acquiring Person (as each such term is defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
after the occurrence of a Common Stock Event (as such term is defined in the
Rights Agreement) from any Person who is, was, or subsequently became an
Acquiring Person or an Affiliate of an Acquiring Person.
Dated: _________________, ____ _________________________
Signature
Signature Guaranteed:***
____________________________
----------
*** Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
B-8
EXHIBIT C
CYTOTHERAPEUTICS, INC.
SUMMARY OF PURCHASE RIGHTS
On July 27, 1998, the Board of Directors (the "Board") of
CytoTherapeutics, Inc. (the "Company") declared a dividend of one purchase right
(a "Right") for every outstanding share of the Company's common stock, $.01 par
value (the "Common Stock"). The Rights will be distributed on August 4, 1998 to
stockholders of record as of the close of business on that date (the "Dividend
Record Date"). The terms of the Rights are set forth in a Rights Agreement dated
as of July 27, 1998 (the "Rights Agreement") between the Company and BankBoston,
N.A., as Rights Agent (the "Rights Agent"). The Rights Agreement provides for
the issuance of one Right for every share of Common Stock issued and outstanding
on the Dividend Record Date and for each share of Common Stock which is issued
or sold after that date and prior to the "Distribution Date" (as defined below).
Each Right entitles the holder to purchase from the Company one
one-hundredth of a share of Junior Preferred Stock, par value $.01 per share, of
the Company (the "Junior Preferred Stock") at a price of $10.00 per one
one-hundredth of a share, subject to adjustment. The Rights will expire on July
27, 2008 (the "Expiration Date"), or upon the earlier redemption of the Rights,
and are not exercisable until the Distribution Date.
No separate Rights certificates will be issued at the present time.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
(i) the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Dividend Record Date upon transfer or new
issuance of the Company's Common Stock will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any of the
Company's Common Stock certificates will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
The Rights will separate from the Common Stock and Rights certificates
will be issued on the Distribution Date. Unless otherwise determined by a
majority of the Board then in office, the Distribution Date will occur on the
earlier of (i) the tenth business day following the later of (A) the date of a
public announcement that a person, including affiliates and associates of such
person (an "Acquiring Person"), except as described below, has acquired or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock or (B) the date on which an executive officer
of the Company has actual knowledge that an Acquiring Person became such (the
later being, the "Stock Acquisition
C-1
Date") or (ii) the tenth business day following commencement of a tender offer
or exchange offer that would result in any person, together with its affiliates
and associates, owning 15% or more of the Company's outstanding Common Stock. In
any event, the Board of Directors may delay the distribution of the
certificates. After the Distribution Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to holders of record of the
Company's Common Stock as of the close of business on the Distribution Date and
thereafter, such separate Rights Certificates alone will evidence the Rights.
If, at any time after the Board declares the Rights dividend, any
person or group of affiliated or associated persons (other than the Company and
its affiliates) shall become an Acquiring Person, each holder of a Right will
have the right to receive shares of the Company's Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
market value of two times the exercise price of the Right. For example, if the
exercise price is $10.00, the holder of each Right would be entitled to receive
$20.00 in market value of the Company's Common Stock for $10.00. Also, in the
event that the Company was acquired in a merger or other business combination,
or if more than 25% of its assets or earning power was sold, each holder of a
Right would have the right to exercise such Right and thereby receive common
stock of the acquiring company with a market value of two times the exercise
price of the Right. Thus, if the exercise price is $10.00, the holder of each
Right would be entitled to receive $20.00 in market value of the acquiring
company's common stock upon payment of $10.00. Following the occurrence of any
of the events described in this paragraph, any Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person shall immediately become null and void.
The Board 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 for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of declaration of the
Rights dividend (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). The Board, however, may not effect an exchange at any time
after any person (other than (i) the Company, (ii) any subsidiary of the
Company, (iii) any employee benefit plan of the Company or any such subsidiary
or any entity holding Common Stock for or pursuant to the terms of any such
plan), together with all affiliates of such person, becomes the beneficial owner
of 50% or more of the Common Stock then outstanding. Immediately upon the action
of the Board ordering the exchange of any Rights and without any further action
and without any notice, the right to exercise such Rights will terminate and the
only right thereafter of a holder of such Rights will be to receive that number
of shares of Common Stock equal to the number of such Rights held by the holder
multiplied by the Exchange Ratio.
The exercise price of the Rights, and the number of one one-hundredths
of a share of Junior Preferred Stock or other securities or property issuable
upon exercise of the Rights, are
C-2
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
Junior Preferred Stock, (ii) upon the grant to holders of the Junior Preferred
Stock of certain rights or warrants to subscribe for shares of the Junior
Preferred Stock or convertible securities at less than the current market price
of the Junior Preferred Stock or (iii) upon the distribution to holders of the
Junior Preferred Stock of evidences of indebtedness or assets (excluding cash
dividends paid out of the earnings or retained earnings of the Company and
certain other distributions) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustments in the exercise price of the
Rights will be required until cumulative adjustments equal at least 1% in such
price.
At any time prior to the close of business ten years after the Rights
Agreement becomes effective or the earlier redemption of the Rights (the
"Expiration Date"), the Company, by a majority vote of the Board, may redeem the
Rights at a redemption price of $.01 per Right (the "Redemption Price"), as
described in the Rights Agreement. Immediately upon the action of the Board
electing to redeem 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.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Neither the distribution of the Rights nor the subsequent separation of
the Rights on the Distribution Date will be a taxable event for the Company or
its stockholders. Holders of Rights may, depending upon the circumstances,
recognize taxable income upon the occurrence of certain Rights triggering events
including a tender offer for 15% or more of the Common Stock or a person or
group attaining beneficial ownership of 15% or more of the Common Stock
(collectively, "Common Stock Events"). In addition, holders of Rights may have
taxable income as a result of (i) an exchange by the Company of shares of Common
Stock for Rights as described above or (ii) certain anti-dilution adjustments
made to the terms of the Rights after the Distribution Date.
A redemption of the Rights would be a taxable event to holders.
The Rights Agreement may be amended by the Board at any time prior to
the Distribution Date without the approval of the holders of the Rights. From
and after the Distribution Date, the Rights Agreement may be amended by the
Board without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates or
associates or their transferees).
C-3
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to the Company's Form 8-A registration
statement with respect to the Rights. A copy of the Rights Agreement is
available free of charge from the Rights Agent, at the following address:
BankBoston, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Shareholder Services Division
(CytoTherapeutics, Inc. Rights Agreement)
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
c-4
