EXHIBIT 1
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AMENDMENT NO. 4
This AMENDMENT NO. 4 made as of the 14th day of March, 2001, between
Boston Life Sciences, Inc. (formerly, Greenwich Pharmaceuticals Incorporated), a
Delaware corporation (the "Company"), and Continental Stock Transfer & Trust
Company, a Delaware corporation ("Continental"), as successor Rights Agent under
that certain Rights Agreement between the Company and Pittsburgh National Bank,
as Rights Agent, dated as of September 26, 1991, as amended (the "Rights
Agreement').
WHEREAS, as of September 26, 1991, the Company originally entered into
the Rights Agreement with Pittsburgh National Bank, as Rights Agent;
WHEREAS, Pittsburgh National Bank resigned as Rights Agent effective
November 21, 1991, and the Company appointed Manufacturers Hanover Trust Company
as successor Rights Agent pursuant to Amendment No. 1 to Rights Agreement, dated
as of November 21, 1991;
WHEREAS, the Rights Agreement was amended pursuant to Amendment No. 2,
dated as of June 25, 1993, between the Company and Chemical Bank, a New York
banking association ("Chemical Bank"), as Rights Agent (Chemical Bank having
succeeded to the business of Manufacturers Hanover Trust Company);
WHEREAS, the Rights Agreement was amended pursuant to Amendment No. 3,
dated as of August 1, 1994, between the Company and Chemical Bank;
WHEREAS, at a meeting on March 17, 1998, the Board of Directors of the
Company (i) resolved to amend certain provisions of the Rights Agreement, (ii)
resolved to replace Chemical Bank with Continental as Rights Agent and (iii)
authorized the officers of the Company to effect such other changes to the
Rights Agreement as in their judgment necessary or desirable to make the
provisions of the Rights Agreement accurate and to carry out the purposes of
such resolutions (the "Authorized Actions");
WHEREAS, the Company now desires to amend the Rights Agreement to
memorialize and give effect to the Authorized Actions; and
WHEREAS, at a meeting duly called and held on March 1, 2001, the Board
of Directors of the Company ratified, confirmed and authorized the Authorized
Actions, took certain other actions in connection with the Rights Agreement and
adopted and approved this Amendment No. 4.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth and intending to be legally bound, the parties
hereby agree as follows:
1. The following sections of the Rights Agreement are hereby amended
to replace the phrase "80%" with the phrase "15%":
(i) Section 1 (a), Lines 3, 12, and 14;
(ii) Section 3 (a), Line 13;
(iii) Section 11 (a)(ii)(C), Line 8; and
(iv) Section 27, Line 45 (2 references).
2. The following sections of the Rights Agreement are hereby amended
to replace the phrase "$.10" with the phrase "$.01":
(i) First Recital, Line 4; and
(ii) Section 1(f), Line 2.
3. Exhibit A to the Rights Agreement shall be amended and restated in
its entirety as set forth on Schedule I hereto.
4. Exhibit C to the Rights Agreement shall be amended and restated in
its entirety as set forth on Schedule II hereto.
5. All the references to "Greenwich Pharmaceuticals Incorporated" or
"the Company" in the Rights Agreement shall be deemed to refer to Boston Life
Sciences, Inc.
6. The definition of "Preferred Stock" in Section 1(j) of the Rights
Agreement shall be amended to read in its entirety as follows:
"(j) "Preferred Stock" shall mean the Series D Preferred
Stock, par value $.01 per share, of the Company."
7. All of the references to "Series A Preferred Stock" in the Rights
Agreement and Exhibit B thereto shall be amended to read "Series D Preferred
Stock."
8. The phrase ",as amended" shall be inserted:
(i) after the phrase "September 26, 1991" in the fifth line of
the legend set forth in Section 3(c) of the Rights
Agreement; and
(ii) after the phrase "September 26, 1991" in the fifth line of
the first paragraph of Exhibit B to the Rights Agreement.
9. The following sentence shall be inserted at the end of Section 7(a)
of the Rights Agreement: "Immediately after the close of business on the
Expiration Date, all Rights shall be extinguished and all Rights Certificates
shall become null and void."
10. The following proviso shall be inserted after the phrase "such
event" but before the period in the last line of Section 11(p) of the Rights
Agreement:
"; provided, however, that no such adjustment shall be made
pursuant to this section with respect to the one-for-ten reverse stock
split of the Common Stock (the "Reverse Stock Split") that was
approved by the stockholders of the Company on June 6, 1997 and there
shall be one Right in respect of each share of Common Stock that is or
shall become outstanding after the Reverse Stock Split."
11. Section 21 of the Rights Agreement shall be amended to delete the
following language: "and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50,000,000".
12. Pursuant to the provisions of Section 21 of the Rights Agreement,
as amended by this Amendment No. 4, the Company hereby appoints Continental as
successor Rights Agent. As a result of such appointment and in accordance with
Section 21 of the Rights Agreement, Continental shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as the Rights Agent under the Rights Agreement, without further act or deed.
13. Continental hereby represents and warrants that it meets the
requirements to serve as successor Rights Agent that are set forth in the Rights
Agreement, as amended by this Amendment No. 4.
14. The address of the Rights Agent in Section 26 of the Rights
Agreement for any notices or demands under the Rights Agreement shall be:
Continental Stock Transfer & Trust Company
0 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Compliance Department
15. Except as expressly amended herein, all other terms and conditions
of the Rights Agreement shall remain in full force and effect.
16. This Amendment No. 4 may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one in the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 4 as of the day and year first above written.
BOSTON LIFE SCIENCES, INC.
By: /s/ S. Xxxxx Xxxxxxx
---------------------------
Name: S. Xxxxx Xxxxxxx
Title: President
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
SCHEDULE I
Exhibit A
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FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES D PREFERRED STOCK
of
BOSTON LIFE SCIENCES, INC.
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, S. Xxxxx Xxxxxxx, President, and Xxxxxx X. Xxxxxx, Secretary, of
Boston Life Sciences, Inc. (the "Corporation"), organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Amended and Restated Certificate of Incorporation of the Corporation, as
amended, the Board of Directors on March 1, 2001, adopted the following
resolution creating a series of 500,000 shares of Preferred Stock designated as
Series D Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Amended
and Restated Certificate of Incorporation, as amended, 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 "Series D Preferred Stock" and the number of shares constituting
such series shall be 500,000. Such number of shares may be increased or
decreased by resolution of Board of Directors, provided that (i) no increase
shall increase the number of shares of Series D Preferred Stock to a number
above the total number of authorized shares of Preferred Stock and (ii) no
decrease shall reduce the number of shares of Series D Preferred Stock to a
number less than the number of shares of Series D Preferred Stock then
outstanding plus the number of shares of Series D Preferred Stock reserved for
issuance upon the exercise of outstanding options, rights or warrants, or the
conversion of any outstanding securities, issued by the Corporation exercisable
for or convertible into Series D Preferred 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 (or any similar stock) ranking prior and
superior to the Series D Preferred Stock with respect to dividends, the holders
of shares of Series D Preferred Stock, in preference to the shares of Common
Stock, par value $.01 per share, of the Corporation (the "Common Stock"), and
any other stock of the Corporation ranking junior to the Series D Preferred
Stock with respect to dividends, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the 15th day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series D Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series D Preferred Stock. In the event the Corporation
shall at any time after September 26, 1991 (the "Rights Declaration Date") (i)
declare or pay any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the amount
to which holders of shares of Series D Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number shares of Common Stock that were outstanding
immediately prior to such event; provided, however, that no such adjustment
shall be made with respect to the one-for-ten reverse stock split of the Common
Stock that was approved by the stockholders of the Corporation on June 6, 1997.
(B) The Corporation shall declare a dividend or distribution on the
Series D Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series D Preferred
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 Series D Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series D Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the
date of issue is a
Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series D Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series D Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series D Preferred
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.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series D Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series D Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series D Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event; provided, however, that no such adjustment shall be made with
respect to the one-for-ten reverse stock split of the Common Stock that was
approved by the stockholders of the Corporation on June 6, 1997.
(B) Except as otherwise provided herein, in any other Certificate of
Designation, Preferences and Rights establishing a series of Preferred Stock or
any similar stock, or by law, the holders of shares of Series D Preferred 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, holders of Series D Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series D Preferred 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 Series D Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on or make any other distributions on
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series D Preferred 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 Series D Preferred Stock,
except dividends paid ratably on the Series D Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series D Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series D Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series D Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series D Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(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 Series D Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein, in the Certificate
of Incorporation, or in any other Certificate of Designation, Preferences and
Rights establishing a series of Preferred Stock or any similar stock, or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series D
Preferred Stock unless, prior thereto, the holders of shares of Series D
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Series D Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of Common Stock, or (2) to the
holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series D Preferred Stock,
except distributions made ratably on the Series D Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time after the Rights Declaration Date
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 aggregate amount to which holders of
shares of Series D Preferred Stock were entitled immediately prior to such event
under the proviso in Clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event; provided, however, that no such
adjustment shall be made with respect to the one-for-ten reverse stock split of
the Common Stock that was approved by the stockholders of the Corporation on
June 6, 1997.
Section 7. Consolidation, Merger, etc. In cases the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series D Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series D Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event; provided, however, that no such adjustment shall be made with respect to
the one-for-ten reverse stock split of the Common Stock that was approved by the
stockholders of the Corporation on June 6, 1997.
Section 8. No Redemption. The shares of Series D Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series D Preferred Stock shall rank junior with
respect to payment of dividends and on liquidation to all other series of the
Corporation's Preferred Stock
except to the extent that any such other series specifically provides that it
shall rank on a parity with or junior to the Series D Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation and these resolutions shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series D Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of a majority of the outstanding shares of Series D
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series D Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series D Preferred Stock.
SCHEDULE II
Exhibit C
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SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On September 26, 1991, the Board of Directors of Boston Life Sciences,
Inc. (formerly, Greenwich Pharmaceuticals Incorporated) (the "Company") adopted
a Shareholder Rights Plan and declared a dividend of one preferred stock
purchase right (a "Right") for each outstanding share of Common Stock of the
Company at the close of business on October 7, 1991, and for all shares of
Common Stock issued after October 7, 1991 and on or prior to the earlier of the
Distribution Date (as defined below) or September 26, 2001. The Rights are not
exercisable until the Distribution Date and will expire at the close of business
on September 26, 2001 unless previously redeemed or exchanged by the Company as
described below. When exercisable, each Right will entitle the registered holder
to purchase from the Company one one-hundredth of a share of Series D Preferred
Stock, par value $.01 per share, at a cash Purchase Price of $60, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of September 26, 1991, between the Company and Pittsburgh
National Bank, as original Rights Agent, as amended by Amendment Nos. 1-4
thereto (the "Rights Agreement"). Continental Stock Transfer & Trust Company is
currently the Rights Agent under the Rights Agreement.
Initially, the Rights will be evidenced by the Common Stock
certificates, and no separate Right Certificates will be issued. The Rights will
separate from the Common Stock and a Distribution Date will occur upon the
earlier of: (i) 10 days following a public announcement that a person, entity or
group of affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15 percent or more of the shares of Common Stock then
outstanding (the "Stock Acquisition Date"), or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to
such time as any person or group becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer that would, if consummated, result in a person, entity or group
beneficially owning 15 percent or more of the shares of Common Stock then
outstanding. Until the Distribution Date (or earlier redemption, exchange 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 October 7, 1991
will contain a notation incorporating the Rights Agreement by reference, and
(iii) the surrender for transfer of any certificates representing Common Stock
will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
As soon as practicable after the Distribution Date, Right Certificates
will be mailed to holders of record of Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise
determined by the Board of Directors, only shares of Common Stock issued prior
to the Distribution Date will be issued with Rights.
Each share of Series D Preferred Stock purchasable upon exercise of
the Rights will be entitled to a minimum preferential quarterly dividend payment
of $1.00 per share but will be entitled to an aggregate dividend of 100 times
the dividend, if any, declared per share of Common Stock. In the event of
liquidation, the holders of the Series D Preferred Stock will be entitled to a
minimum preferential liquidation payment of $100 per share but will be entitled
to an aggregate payment of 100 times the payment made per share of Common Stock.
Each share of Series D Preferred Stock will have 100 votes and will vote
together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Series D Preferred Stock will be entitled to receive
100 times the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions. Because of the nature of the
Series D Preferred Stock's dividend, liquidation and voting rights, the value of
the one one-hundredth of a share of Series D Preferred Stock purchasable upon
exercise of each Right should approximate the value of one share of Common
Stock. The Series D Preferred Stock ranks junior with respect to payment of
dividends and on liquidation to all other series of the Company's preferred
stock except to the extent that any such other series specifically provides that
it shall rank on a parity with or junior to the Series D Preferred Stock.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction or (ii) 50 percent or more of the Company's assets or earning power
is sold, each holder of a Right shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value at the time of
the transaction equal to two times the exercise price of the Right. In the event
that (i) the Company is the surviving corporation in a merger with an Acquiring
Person and the Common Stock is not changed or exchanged, or (ii) an Acquiring
Person engages in one of a number of self-dealing transactions specified in the
Rights Agreement, or (iii) a person becomes the beneficial owner of 15 percent
or more of the then outstanding shares of Common Stock, proper provision will be
made so that each holder of an outstanding Right, other than Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person or an affiliate or associate of an
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of shares of Common Stock having a market
value at the time of the transaction of two times the exercise price of the
Right. The events described in this paragraph are referred to as the "Triggering
Events."
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or one one-hundredth of a share of Series D Preferred Stock (or of a share of a
class or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
The Purchase Price payable, and the number of shares of Series D Preferred
Stock or other securities or property issuable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on or a subdivision, combination or reclassification of, the
Series D Preferred Stock, (ii) if holders of the Series D Preferred Stock are
granted certain rights or warrants to subscribe for Series D Preferred Stock or
convertible securities at less than the then current market price of the Series
D Preferred Stock, or (iii) upon the distribution to holders of the Series D
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends) or of subscription rights or warrants (other than those
referred to above).
The number of Rights associated with each share of Common Stock is
also subject to adjustment in the event of a stock dividend on the outstanding
shares of Common Stock payable in shares of Common Stock or a subdivision or
combination of the Common Stock occurring, in any such case, prior to the
Distribution Date. No such adjustment has been or will be made with respect to
the one-for-ten reverse stock split of the Common Stock of the Company approved
by the stockholders of the Company on June 6, 1997.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1
percent of the Purchase Price. No fractional shares of Series D Preferred Stock
(other than integral multiples of one one-hundredth of a share) will be issued
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Series D Preferred Stock on the last trading date prior to the date
of exercise.
The Rights may be redeemed in whole, but not in part, at a price of
$.01 per Right by the Board of Directors at any time until the tenth day after
the Stock Acquisition Date (or such later date as a majority of the Continuing
Directors (as defined in the Rights Agreement) then in office may determine
while the Rights are redeemable). The redemption of the Rights may be made
effective at such time and on such basis with such conditions as the Board of
Directors in its sole discretion may establish. After the redemption period has
expired, the right to redeem may be reinstated if an Acquiring Person reduces
his Common Stock ownership to 10 percent or less of the then outstanding shares
in one or more transactions not involving the Company. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, the right to
exercise the Rights will terminate and thereafter the only right of the holders
of Rights will be to receive the redemption price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower the 15 percent threshold described above to not less than the
greater of (i) the largest percentage of the outstanding Common Stock then known
to the Company to be beneficially owned by any person, entity or group and (ii)
10 percent, except that from and after such time as any person or group becomes
an Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights (other than an Acquiring Person or an affiliate or
associate thereof).
Until a Right is exercised, the holder will have no rights as a stockholder
of the Company (beyond those as an existing stockholder), including the right to
vote or to receive dividends.
While the distribution of the Rights will not be taxable to stockholders or to
the Company, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common Stock
(or other consideration) of the Company or for common stock of an acquiring
company as set forth above.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
