RIGHTS AGREEMENT
by and between
PATHOGENESIS CORPORATION
and
XXXXXX TRUST AND SAVINGS BANK,
as Rights Agent
Dated as of
June 26, 1997
TABLE OF CONTENTS
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Section Page
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1. Certain Definitions.................................................1
2. Appointment of Rights Agent.........................................9
3. Issuance of Right Certificates......................................9
4. Form of Right Certificates.........................................12
5. Countersignature and Registration..................................12
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates...............................................13
7. Exercise of Rights; Exercise Price: Expiration Date of Rights......15
8. Cancellation and Destruction of Right Certificates.................18
9. Reservation and Availability of Shares of Preferred Stock..........19
10. Preferred Stock Record Date........................................21
11. Adjustment of Exercise Price or Number of Shares...................22
12. Certification of Adjusted Exercise Price or Number of Shares.......28
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power............................................................29
14. Fractional Rights and Fractional Shares............................34
15. Rights of Action...................................................35
16. Agreement of Right Holders.........................................36
17. Right Certificate Holder Not Deemed a Stockholder..................37
18. Concerning the Rights Agent........................................37
19. Merger or Consolidation of, or Change in Name of, the Rights
Agent............................................................38
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20. Duties of Rights Agent.............................................39
21. Change of Rights Agent.............................................42
22. Issuance of New Right Certificates.................................43
23. Redemption.........................................................44
24. Exchange...........................................................45
25. Notice of Proposed Actions.........................................47
26. Notices............................................................49
27. Supplements and Amendments.........................................50
28. Successors.........................................................51
29. Benefits of this Rights Agreement..................................51
30. Delaware Contract..................................................51
31. Counterparts.......................................................51
32. Descriptive Headings...............................................52
33. Severability.......................................................52
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Certificate of Designations
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RIGHTS AGREEMENT
Agreement, dated as of June 26, 1997, by and between PathoGenesis
Corporation, a Delaware corporation (the "Company"), and Xxxxxx Trust and
Savings Bank, an Illinois banking corporation (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on June 26, 1997, the Board of Directors of the Company authorized
the issuance of, and declared a dividend payable in, one right (a "Right") for
each share of the Company's Common Stock, par value $0.001 per share (the
"Common Stock"), outstanding as of the close of business on July 10, 1997 (the
"Record Date"), each such Right representing the right to purchase one
one-thousandth of a share of Series A Junior Preferred Stock of the Company
(the "Preferred Stock") having the rights and preferences set forth in the form
of the Certificate of Designations attached hereto as Exhibit C authorized by
the Board of Directors on June 26, 1997, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Expiration Date or the Final Expiration Date (as such terms are
hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the Voting Stock (as such term is hereinafter
defined) of the Company then outstanding; provided, that, an Acquiring Person
shall not include (i) an Exempt Person (as such term is hereinafter defined),
or (ii) any Person, together with all Affiliates and Associates of such Person,
who or which would be an Acquiring Person solely by reason of (A) being the
Beneficial Owner of shares of Voting Stock of the Company, the Beneficial
Ownership of which was acquired by such Person pursuant to any action or
transaction or series of related actions or transactions approved by the Board
of Directors before such Person otherwise became an Acquiring Person, or (B) a
reduction in the number of issued and outstanding shares of Voting Stock of the
Company pursuant to a transaction or a series of related transactions approved
by the Board of Directors of the Company; provided, further, that in the event
such Person described in this clause (ii) does not become an Acquiring Person
by reason of subclause (A) or (B) of this clause (ii), such Person nonetheless
shall become an Acquiring Person in the event such Person thereafter acquires
Beneficial Ownership of an additional 1% or more of the Voting Stock of the
Company, unless the acquisition of such additional Voting Stock would not
result in such Person becoming an Acquiring Person by reason of subclause (A)
or (B) of this clause (ii). Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith (but only if at the time of
such determination by the Board of Directors there are then in office not less
than a majority of directors who are Continuing Directors (as such term is
hereinafter defined) and such action is approved by a majority of the
Continuing Directors then in office) that a Person who would otherwise be an
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"Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a) has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Voting Stock so that
such Person would no longer be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be
deemed an "Acquiring Person" for any purposes of this Rights Agreement.
(b) "Affiliate" of a Person shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), as in effect on the date of
this Rights Agreement.
(c) "Associate" of a Person shall mean (i) with respect to a
corporation, any officer or director thereof or of any Subsidiary (as such term
is hereinafter defined) thereof, or any Beneficial Owner of 10% or more of any
class of equity security thereof, (ii) with respect to a partnership, any
general partner thereof or any limited partner thereof who is, directly or
indirectly, the Beneficial Owner of a 10% ownership interest therein, (iii)
with respect to a business trust, any officer or trustee thereof or of any
Subsidiary thereof or any Beneficial Owner of 10% or more of any class of
beneficial interests therein, (iv) with respect to any association other than a
corporation, partnership or business trust, any officer or director or other
person performing similar functions thereof or of any Subsidiary thereof or any
Beneficial Owner of 10% or more of the Common Stock (as such term is
hereinafter defined) of the association, (v) with respect a trust that is not a
business trust or an estate, any trustee, executor or similar fiduciary or any
Person who has a 10% or greater interest as a beneficiary in the income from or
principal of such trust or estate, (vi) with respect to a natural person, any
relative or spouse of such person, or any relative of such spouse, who has the
same home as such person, and (vii) any Affiliate of such Person.
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(d) A Person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have
correlative meanings):
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Regulations 13D and 13G thereunder (or any
comparable or successor law or regulation), in each case as in effect on the
date hereof; or
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or the fulfillment of a condition
or both) pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, other rights (other than these
Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own",
securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such ten dered
securities are accepted for purchase or exchange, or (B) the right to vote,
alone or in concert with others, 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
securities if the agreement, arrangement or understanding to vote such
securities (1) arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act, and (2) is
not at the time reportable by such Person on a Schedule 13D report under the
Exchange Act (or any comparable or successor report), other than by reference
to a proxy or consent solicitation being conducted by such Person; or
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(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except as described in
clause (B) of subparagraph (ii) of this paragraph (d)) or disposing of any
securities of the Company; provided, however, that for purposes of determining
Beneficial Ownership of securities under this Rights Agreement, officers and
directors of the Company solely by reason of their status as such shall not
constitute a group (notwithstanding that they may be Associates of one another
or may be deemed to constitute a group for purposes of Section 13(d) of the
Exchange Act) and shall not be deemed to own shares owned by another officer or
director of the Company. Notwithstanding anything in this paragraph (d) to the
contrary, a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any security beneficially owned by another Person solely by
reason of an agreement, arrangement or understanding with such other Person for
the purposes of: (x) soliciting the Company's shareholders for the election of
director nominees or any other shareholder resolution, the formation of and
membership on any committee for the purpose of promoting or opposing any
shareholder resolution or for electing a slate of nominees to the Company's
Board of Directors, service on such a slate of nominees, or agreement to a
slate of director nominees; provided, that such other Person retains the right
at any time to withdraw as a nominee or member of any such committee, and to
withhold or revoke any vote or proxy for or against any such shareholder
resolution or for such slate of nominees; (y) entering into revocable voting
agreements or the granting or solicitation of revocable proxies with respect to
any of the matters described in the foregoing clause (x); or (z) the sharing of
expenses and the indemnifi cation against expenses and liabilities by any such
other Person with respect to expenses incurred
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or conduct occurring during the time such other Person is a nominee or a member
of any such committee described in the foregoing clause (x). Further,
notwithstanding anything in this paragraph (d) to the contrary, a Person
engaged in the business of underwriting securities shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," any securities acquired in
good faith in a firm commitment underwriting until the expiration of forty-five
days after the date of such acquisition.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of Illinois are authorized
or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Chicago Time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Chicago Time, on the next succeeding
Business Day.
(g) "Common Stock" when used with reference to the Company shall mean
the Company's Common Stock, par value $0.001 per share. "Common Stock" when
used with reference to any Person other than the Company which shall be
organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person. "Common
Stock" when used with reference to any Person other than the Company which
shall not be organized in corporate form shall mean units of beneficial
interest which shall represent the right to participate in profits of such
Person and which shall be entitled to exercise the greatest voting power per
unit of such Person.
(h) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of
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any such Affiliate or Associate, and who either (i) was a member of the Board
of Directors prior to the time that any Person became an Acquiring Person
(other than pursuant to a Qualifying Tender Offer), or (ii) subsequently became
a member of the Board of Directors, and whose nomination for election or
election to the Board of Directors was recommended or approved by a majority of
the Continuing Directors then on the Board of Directors.
(i) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
(j) "Exchange Act" shall have the meaning set forth in Section l(b)
hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of
the Company, or (iii) any employee benefit plan or employee stock plan of the
Company or any Subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding Common Stock for or pursuant to
the terms of any such plan.
(l) "Exchange Ratio" shall have the meaning set forth in Section 24
hereof.
(m) "Exercise Price" shall have the meaning set forth in Sections 4
and 7(b) hereof.
(n) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(o) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(b) hereof.
(p) "Person" shall mean any partnership, limited liability company,
business trust, other association, government entity, estate, trust, foundation
or natural person.
(q) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(r) "Qualifying Tender Offer" shall mean a tender or exchange offer
for all outstanding shares of Common Stock of the Company approved by a
majority of the Board of Directors (provided, that at the time of such approval
by the Board of Directors there are then in
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office not less than a majority of directors who are Continuing Directors and
such offer is approved by a majority of the Continuing Directors then in
office), after taking into account the potential long-term value of the Company
and all other factors that they consider relevant.
(s) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(t) "Rights Agent" shall mean the Rights Agent named above, and any
successor Rights Agent or co-Rights Agent appointed by the Company hereunder.
(u) "Right Certificate" shall have the meaning set forth in Section
3(d) hereof.
(v) "Stock Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) or such earlier date as a majority of the Continuing Directors
shall determine the existence of an Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person or by any corporation or other entity that is otherwise controlled
by such Person.
(x) "Summary of Rights" shall have the meaning set forth in Section
3(a) hereof.
(y) "Trading Day" shall have the meaning set forth in Section 11(b)
hereof.
(z) "Transfer Tax" shall mean any Tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or regulatory
authority in respect of any transfer of
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any security, instrument or right, including Rights, shares of Common Stock and
shares of Preferred Stock.
(aa) "Voting Stock" shall mean (i) the Common Stock of the Company,
and (ii) any other shares of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with the
Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or winding
up. For purposes of this Agreement, a stated percentage of the Voting Stock
shall mean a number of shares of the Voting Stock as shall equal in voting
power that stated percentage of the total voting power of the then outstanding
shares of Voting Stock in the election of a majority of the Board of Directors
or in respect of any merger, consolidation, sale of all or substantially all of
the Company's assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of the
Company for purposes of applying the definitions contained in this Section 1
shall be made by the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent, the holders of the Rights
and any Acquiring Person.
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 in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Company, or the Rights Agent at the request of the Company, shall send, at the
expense of the Company, a copy of
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a Summary of Rights, in substantially the form attached hereto as Exhibit A
(the "Summary of Rights"), by first class mail, postage prepaid, to each record
holder of the Common Stock as of the close of business on the Record Date, at
the address of such holder shown on the records of the Company.
(b) Until the close of business on the day which is the earlier of (i)
the tenth day after the Stock Acquisition Date, or (ii) the tenth Business Day
(or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person)
to commence, a tender or exchange offer (other than a Qualifying Tender Offer)
upon the successful consummation of which such Person, together with its
Affiliates and Associates, would be the Beneficial Owner of 15% or more of the
then outstanding shares of Voting Stock of the Company (irrespective of whether
any shares are actually purchased pursuant to any such offer) (the earlier of
such dates being herein referred to as the "Distribution Date"), (x) the Rights
shall be evidenced by the certificates for Common Stock registered in the name
of the holders of Common Stock and not by separate Right certificates and the
record holders of such certificates for Common Stock shall be the record
holders of the Rights represented thereby, and (y) each Right shall be
transferable only simultaneously and together with the transfer of a share of
Common Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Expiration Date or Final Expiration
Date), the surrender for transfer of any certificate for Common Stock shall
constitute the surrender for transfer of the Right or Rights associated with
the Common Stock evidenced thereby, whether or not accompanied by a copy of the
Summary of Rights.
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(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect
of shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or exchange of Common Stock) issued after the Record Date but prior to
the earliest of the Distribution Date, the Expiration Date, or the Final
Expiration Date (or, in certain circumstances as provided in Section 22 hereof,
after the Distribution Date) shall have impressed, printed, written or stamped
thereon or otherwise affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof to the same
number of Rights (subject to adjustment) as the number of shares of Common
Stock represented by this certificate, such Rights being on the terms provided
under the Rights Agreement between PathoGenesis Corporation and Xxxxxx Trust
and Savings Bank (the "Rights Agent"), dated as of June 26, 1997, as it may be
amended from time to time (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of PathoGenesis Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights shall be
evidenced by separate certificates and shall no longer be evidenced by this
certificate. PathoGenesis Corporation shall mail to the registered holder of
this certificate a copy of the Rights Agreement without charge within five days
after receipt of a written request therefor. Under certain circumstances as
provided in Section 7(e) of the Rights Agreement, Rights issued to or
Beneficially Owned by Acquiring Persons or their Affiliates or Associates (as
such terms are defined in the Rights Agreement) or any subsequent holder of
such Rights shall be null and void and may not be transferred to any Person.
(d) As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Distribution Date, as shown by the records
of the Company, at the address of such holder shown on such records, a
certificate in the form provided
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by Section 4 hereof (a "Right Certificate"), evidencing one Right (subject to
adjustment as provided herein) for each share of Common Stock so held. As of
and after the Distribution Date, the Rights shall be evidenced solely by Right
Certificates and may be transferred by the transfer of the Right Certificate as
permitted hereby, separately and apart from any transfer of one or more shares
of Common Stock.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares, certificate and assignment to be printed
on the reverse thereof), when, as and if issued, shall be substantially in the
form set forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Common Stock or the Rights may from time to time be listed or as the Company
may deem appropriate to conform to usage or otherwise and as are not
inconsistent with the provisions of this Rights Agreement. Subject to the
provisions of Section 22 hereof, Right Certificates evidencing Rights whenever
issued, (i) shall be dated as of the date of issuance of the Rights they
represent, and (ii) subject to adjustment from time to time as provided herein,
on their face shall entitle the holders thereof to purchase such number of
shares (including fractional shares which are integral multiples of
one-thousandth of a share) of Preferred Stock as shall be set forth therein at
the price payable upon exercise of a Right provided by Section 7(b) hereof as
the same may from time to time be adjusted as provided herein (the "Exercise
Price").
Section 5. Countersignature and Registration.
(a) Each Right Certificate 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,
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and have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. Each Right Certificate shall be
countersigned by the Rights Agent either manually or by facsimile signature and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any Right Certificate shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery of the certificate by the Company, such Right
Certificate, nevertheless, may be countersigned by the Rights Agent and issued
and delivered with the same force and effect as though the person who signed
such Right Certificates had not ceased to be-such officer of the Company. Any
Right Certificate may be signed on behalf of the Company by any person who, on
the date of the execution of such Right Certificate, shall be a proper officer
of the Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the earlier of
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the Expiration Date or the Final Expiration Date, any Right Certificate may be
(i) transferred, or (ii) split up, combined or exchanged for one or more other
Right Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer any Right Certificate shall surrender the Right
Certificate at the office of the Rights Agent designated for the surrender of
Right Certificates with the form of certificate and assignment on the reverse
side thereof duly endorsed (or enclosed with such Right Certificate a written
instrument of transfer in form satisfactory to the Company and the Rights
Agent), duly executed by the registered holder thereof or his attorney duly
authorized in writing, and with such signature duly guaranteed. Any registered
holder desiring to split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate to be split up, combined or exchanged at the office of
the Rights Agent designated therefor. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any Transfer Tax that may be
imposed in connection with any transfer, split up, combination or exchange of
any Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company shall issue and
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deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price: Expiration Date of Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e), 23(a) and 24 hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in Chicago, Illinois, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earlier of (i) June 26, 2007 (the
"Final Expiration Date"), (ii) the date on which the Rights are redeemed as
provided in Section 23 hereof, or (iii) the date on which the Rights are
exchanged as provided in Section 24 hereof (such earlier date being herein
referred to as the "Expiration Date").
(b) The Exercise Price shall initially be $250 for each one
one-thousandth (1/1000) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United
States of America, in accordance with paragraph (c) below.
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(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Company or the Rights Agent of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Right
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Preferred
Stock of the Company one or more certificates representing the number of shares
of Preferred Stock to be so purchased, and the Company hereby authorizes and
directs such transfer agent to comply with all such requests, (ii) as provided
in Section 14(b) hereof, at the election of the Company, cause depositary
receipts to be issued in lieu of fractional shares of Preferred Stock, (iii) if
the election provided for in the immediately preceding clause (ii) has not been
made, requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder, and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of
such Right Certificate; provided, however, that in the case of a purchase of
securities, other than Preferred Stock, pursuant to Section 13 hereof, the
Rights Agent shall promptly take the appropriate actions corresponding in such
case to that referred to in the foregoing clauses (i) through (v) of this
Section 7(c). Notwithstanding the foregoing provisions of this Section 7(c),
the Company may suspend the issuance of shares of Preferred Stock upon exercise
of a Right for a reasonable period, not in excess of 90 days, during which the
Company seeks to register under the
16
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
securities law of any other jurisdiction, the shares of Preferred Stock to be
issued pursuant to the Rights; provided, however, that nothing contained in
this Section 7(c) shall relieve the Company of its obligations under Section
9(c) hereof.
(d) In case the record holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or his assign,
subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, other than pursuant to a Qualifying Tender
Offer, any Rights that are beneficially owned by (x) such Acquiring Person (or
any Associate or Affiliate of such Acquiring Person), (y) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
after the invalidation time, or (z) a transferee of such Acquiring Person (or
any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the invalidation time pursuant to either (i) a transfer from
the Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding regarding
the transferred Rights, or (ii) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z) above,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Company shall use all reasonable
efforts
17
to ensure that the provisions of this Section 7(e) are complied with, but shall
have no liability to any holder of Right Certificates or any other Person as a
result of its failure to make any determination with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. No Right
Certificate shall be issued pursuant to Section 3 hereof that represents Rights
Beneficially Owned by an Acquiring Person whose Rights would be void pursuant
to the provisions of this Section 7(e) or any Associate or Affiliate thereof;
no Right Certificate shall be issued at any time upon the transfer of any
Rights to an Acquiring Person whose Rights would be void pursuant to the
provisions of this Section 7(e) or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the provisions of this Section 7(e)
shall be canceled.
(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 record holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such record holder shall have
(i) completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
18
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right 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.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
or out of authorized and issued shares of Preferred Stock held in its treasury,
such number of shares of Preferred Stock as will from time to time be
sufficient to permit the exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance in accordance with this Rights Agreement to be
listed, upon official notice of issuance, upon the principal national
securities exchange, if any, upon which the Common Stock is listed or, if the
principal market for the Common Stock is not on any national securities
exchange, to be eligible for quotation in The Nasdaq Stock Market or any
successor thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to insure that all shares of Preferred Stock delivered upon
exercise of Rights shall, at the
19
time of delivery of the certificates for such shares (subject to payment of the
Exercise Price in respect thereof), be duly and validly authorized and issued
and fully paid and nonassessable shares.
(d) If required by applicable law, the Company shall use its best
efforts to (i) file, as soon as practicable following the occurrence of the
event described in Section 11(a)(ii) hereof, or as soon as is required by law
following the Distribution Date, as the case may be, a registration statement
under the Securities Act, with respect to the shares of Preferred Stock
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable
for Preferred Stock, and (B) the date of the expiration of the Rights. The
Company may temporarily suspend, for a period of time not to exceed ninety
days, the issuance of shares of Preferred Stock upon exercise of a Right in
order to prepare and file a registration statement under the Securities Act and
permit it to become effective. 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 in connection with the exercisability of the Rights.
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 and until a registration
statement under the Securities Act (if required) shall have been declared
effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all federal and state Transfer Taxes which may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of Preferred Stock issued or delivered upon the exercise of
20
Rights. The Company shall not, however, be required to pay any Transfer Tax
which may be payable in respect of any transfer or delivery of a Right
Certificate to a Person other than, or the issuance or delivery of certificates
for Preferred Stock upon exercise of Rights in a name other than that of, the
registered holder of the Right Certificate, and the Company shall not be
required to issue or deliver a Right Certificate or certificate for Preferred
Stock to a Person other than such registered holder until any such Transfer Tax
shall have been paid (any such Transfer Tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock represented thereby on, and such certificate shall be dated as
of, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated as of, the next succeeding
Business Day on which the Preferred Stock transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
21
Section 11. Adjustment of Exercise Price or Number of Shares. The Exercise
Price and the number of shares of Preferred Stock which may be purchased upon
exercise of a Right are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare or pay any dividend on Common Stock payable
in shares of Common Stock, (B) subdivide or split the outstanding shares of
Common Stock into a greater number of shares, or (c) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares or effect a
reverse split of the outstanding shares of Common Stock, then and in each such
event the number of shares of Preferred Stock issuable upon the exercise of a
Right after the record date for such event (if one shall have been established
or, if not, after the date of such event) shall be the number of shares of
Preferred Stock issuable immediately prior to such event multiplied by a
fraction the numerator of which is the number of Rights outstanding immediately
prior to such event and the denominator of which is the number of Rights
outstanding immediately after such event and the Exercise Price after such
event shall be the Exercise Price in effect immediately prior to such event
multiplied by such fraction. 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 for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) In event that any Person (other than an Exempt Person), alone or
together with its Affiliates and Associates, shall become an Acquiring Person,
except pursuant to a Qualifying Tender Offer, then, subject to the last
sentence of Section 23(a) hereof and except as otherwise provided in this
Section 11 and Section 24 hereof, each holder of a Right, except as provided in
22
Section 7(e) hereof, shall thereafter have the right to receive upon exercise
of such Right in accordance with the terms of this Rights Agreement and payment
of the Exercise Price, the greater of (1) the number of one one-thousandths of
a share of Preferred Stock for which such Right was exercisable immediately
prior to the first occurrence of the event described in this Section 11(a)(ii),
or (2) such number of one one-thousandths of a share of Preferred Stock, based
on the per share Fair Market Value of the Preferred Stock (determined pursuant
to Section 11(b) hereof) on the date of such first occurrence, having a value
equal to twice the Exercise Price; provided, however, that if the transaction
that would otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii).
(iii) In the event that the Company does not have available sufficient
authorized but unissued Preferred Stock to permit the adjustments required
pursuant to the foregoing subparagraph (i) or the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize and reserve for issuance
such number of additional shares of Preferred Stock as may from time to time be
required to be issued upon the exercise in full of all Rights from time to time
outstanding and, if necessary, shall use its best efforts to obtain stockholder
approval thereof. In lieu of issuing shares of Preferred Stock in accordance
with the foregoing subparagraphs (i) and (ii), the Company may, if the Board of
Directors determines (but only if at the time of such determination by the
Board of Directors there are then in office not less than a majority of
directors who are Continuing Directors and such action is approved by a
majority of the Continuing Directors then in office) that such action is
necessary or appropriate and not contrary to the interests of holders of
Rights, elect to issue or pay, upon the
23
exercise of the Rights, cash, property, shares of Preferred or Common Stock, or
any combination thereof, having an aggregate Fair Market Value equal to the
Fair Market Value of the shares of Preferred Stock which otherwise would have
been issuable pursuant to Section 11(a)(ii) hereof, which Fair Market Value
shall be determined by an investment banking firm selected by the Board of
Directors (but only if at the time of such selection there are then in office
not less than a majority of directors who are Continuing Directors and such
selection is approved by a majority of the Continuing Directors then in
office). For purposes of the preceding sentence, the Fair Market Value of the
Preferred Stock shall be as determined pursuant to Section 11(b) hereof.
Subject to Section 23 hereof, any such election by the Board of Directors of
the Company must be made and publicly announced within thirty (30) days after
the date on which the event described in Section 11(a)(ii) hereof occurs.
(b) For the purpose of this Rights Agreement, the "Fair Market Value"
of any share of Preferred Stock, Common Stock or any other stock or any Right
or other security or any other property on any date shall be determined as
provided in this Section 11(b). In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to be the average
of the daily closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Fair Market Value per share of any share of Common Stock is determined
during a period which includes any date that is within 30 Trading Days after
(i) the ex-dividend date for a dividend or distribution on such stock payable
in shares of Common Stock or securities convertible into shares of Common
Stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in
24
each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the Nasdaq National Market), or, if
the securities are not listed or admitted to trading on the Nasdaq National
Market, as reported in the applicable 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 not listed or admitted
to trading on any national securities exchange, the last quoted price (or, if
not so quoted, the average of the high bid and low asked prices) in the
over-the-counter market, as reported by The Nasdaq Stock Market or such other
system then in use; or, if no bids for such security are quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security selected by the
Board of Directors of the Company. The term "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 Business Day. If a security is not publicly held or not so listed
or traded, "Fair Market Value" shall mean the fair value per share of stock or
per other unit of such other security, as determined by an independent
investment banking firm experienced in the valuation of securities selected in
good faith by the Board of Directors of the Company, or, if no such investment
banking firm is, in the good faith judgment of the Board of Directors,
available to make such determination, in good faith by the Board of Directors
of the Company; provided, however, that for purposes of
25
making the adjustment provided for by Section 11(a)(ii) hereof, the Fair Market
Value of a share of Preferred Stock shall not be less than 100% of the product
of the Fair Market Value of a share of Common Stock multiplied by the higher of
the then Dividend Multiple or Vote Multiple applicable to the Preferred Stock
(as such terms are defined in the Certificate of Designations relating to the
Preferred Stock) and shall not exceed 105% of the product of the then Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock. In the
case of property other than securities, the "Fair Market Value" thereof shall
be determined in good faith by the Board of Directors of the Company based upon
such appraisals or valuation reports of such independent experts as the Board
of Directors of the Company shall in good faith determine to be appropriate in
accordance with good business practices and the interests of the holders of
Rights. Any such determination of Fair Market Value shall be described in a
statement filed with the Rights Agent and shall be binding upon the Rights
Agent.
(c) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-thousandth of a share, as the case may
be.
(d) Irrespective of any adjustment or change in the Exercise Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price and the number of shares to be issued upon
exercise of the Rights as in the initial Right Certificates issued hereunder
but, nevertheless, shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an adjustment reducing
the purchase price per whole share of Preferred Stock upon exercise of the
Rights below the then par value, if any,
26
of the shares of Preferred Stock, the Company shall use its best efforts to
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of such Preferred Stock at such adjusted purchase
price per share.
(f) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Company or any
recapitalization, reorganization or partial liquidation of the Company or
similar transaction, the Company shall be entitled to make such further
adjustments in the number of shares of Preferred Stock which may be acquired
upon exercise of the Rights, and such adjustments in the Exercise Price
therefor, in addition to those adjustments expressly required by the other
paragraphs of this Section 11, as the Board of Directors of the Company shall
determine to be necessary or appropriate in order for the holders of the Rights
in such event to be treated equitably and in accordance with the purpose and
intent of this Rights Agreement or in order that any such event shall not, but
for such adjustment, in the opinion of counsel to the Company, result in the
stockholders of the Company being subject to any United States federal income
tax liability by reason thereof.
(g) In the event the Company shall at any time after the Record Date
make any distribution on the shares of Common Stock of the Company, whether by
way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Company or otherwise, in cash or
any debt security, debt instrument, real or personal property or any other
property (other than any shares of Common Stock or other capital stock of the
Company and other than any right or warrant to acquire any such shares,
including any debt security convertible into or exchangeable for any such
share, at less than the Fair Market Value of such shares) and the amount
27
of such cash dividend or the Fair Market Value of such debt security, debt
instrument or property exceeds 150% of the aggregate amount of the cash
dividends declared or paid on the Common Stock of the Company in the 15-month
period immediately preceding such distribution, then and in each such event,
unless such distribution is part of or is made in connection with a transaction
to which Section 11(a)(ii) or Section 13 hereof applies, the Exercise Price
shall be reduced by an amount equal to the cash or the Fair Market Value of
such distribution, as the case may be, per share of Common Stock of the
Company. For purposes hereof, the Fair Market Value of any property distributed
to the holders of shares of Common Stock of the Company shall be the Fair
Market Value of such property as determined by an independent investment
banking firm experienced in the valuation of securities or the other property
so distributed, as the case may be, selected in good faith by the Board of
Directors of the Company, or, if no such investment banking firm is in the good
faith judgment of the Board of Directors available to make such determination,
in good faith by the Board of Directors of the Company, whose determination
shall be final and binding on the Company, the Rights Agent, the holders of
Rights and any Acquiring Person.
Section 12. Certification of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11, 13 or 23(c) hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 26
hereof. Notwithstanding the foregoing sentence, the failure of the Company to
make such certification or give such notice shall not affect the validity of or
the force or effect of the requirement for such adjustment. Any adjustment to
be made pursuant
28
to Section 11, 13 or 23(c) of this Rights Agreement shall be effective as of
the date of the event giving rise to such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment
therein contained shall not be obligated or responsible for calculating any
adjustment, and shall not be deemed to have knowledge of any adjustment unless
and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) Except for any transaction approved by the Board of Directors (but
only if at the time of such approval by the Board of Directors there are then
in office not less than a majority of directors who are Continuing Directors
and such action is approved by a majority of the Continuing Directors then in
office), in the event that, at any time on or after the Distribution Date, (x)
the Company shall, directly or indirectly, consolidate with, or merge with and
into, any other Person or Persons (other than an Exempt Person) and the Company
shall not be the surviving or continuing corporation of such consolidation or
merger or the Company shall divide into two or more corporations and the
Company shall not survive the division, or (y) any Person or Persons (other
than an Exempt Person) shall, directly or indirectly, consolidate with, or
merge with and into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of any
other Person (other than an Exempt Person) or of the Company or cash or any
other property, or (z) the Company or one or more of its Subsidiaries shall,
directly or indirectly, sell or otherwise transfer to any other Person or any
Affiliate or Associate of such Person, in one or more transactions, or the
Company or one or more of its Subsidiaries shall sell or otherwise transfer to
any Persons in one or
29
a series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken
as a whole), then, on the first occurrence of any such event, proper provision
shall be made so that (i) each holder of record of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof and payment of the Exercise Price in accordance with the terms
of this Rights Agreement, such number of shares of validly issued, fully paid,
non-assessable and freely tradeable Common Stock of the Principal Party (as
defined herein), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall, based on the Fair Market Value of
the Common Stock of the Principal Party on the date of the Consummation of such
consolidation, merger, sale or transfer, equal twice the Exercise Price; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all the obligations and
duties of the Company pursuant to this Rights Agreement; (iii) the term
"Company" for all purposes of this Rights Agreement shall thereafter be deemed
to refer to such Principal Party; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with the provisions of Section 9
hereof applicable to the reservation of Preferred 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
its shares of Common Stock thereafter deliverable upon the exercise of the
Rights; provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets,
recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Exercise Price, such cash, shares, rights, war-
30
rants and other property which such holder would have been entitled to receive
had it, at the time of such transaction, owned the shares of Common Stock of
the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property, and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which shares of Common Stock of the Company are
changed or otherwise exchanged or converted in such merger, consolidation or
other fundamental transaction, or, if there is more than one such issuer, the
issuer of the Common Stock of which has the greatest market value or (B) if no
securities are so issued, (x) the Person that is the other party to the merger,
consolidation or other fundamental transaction and that survives such merger,
consolidation or other fundamental transaction, or, if there is more than one
such Person, the Person the Common Stock of which has the greatest market value
or (y) if the Person that is the other party to the merger, consolidation or
other fundamental transaction does not survive the merger, consolidation or
other fundamental transaction, the Person that does survive the merger,
consolidation or other fundamental transaction (including the Company if it
survives); and
(ii) in the case of any transaction described in clause (z) of the
first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning
31
power transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the same
portion of the assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons as is the issuer of Common Stock having
the greatest market value of shares outstanding; provided, however, that in any
such case, if the Common Stock of such Person is not at such time and has not
been continuously over the preceding 12-month period registered under Section
12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered, the
term "Principal Party" shall refer to such other Person, or if such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Stocks
of all of which are and have been so registered, the term "Principal Party"
shall refer to whichever of such Persons is the issuer of the Common Stock
having the greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger, other
fundamental transaction or sale or transfer of assets or earning power referred
to in Section 13(a) unless the Principal Party shall have a sufficient number
of authorized shares of its Common Stock that have not been issued or reserved
for issuance to permit exercise in full of all Rights in accordance with this
Section 13 and unless prior thereto the Company and the Principal Party
involved therein shall have executed and delivered to the Rights Agent an
agreement confirming that the Principal Party shall, upon consummation of such
consolidation, merger, other fundamental transaction or sale or transfer of
assets or earning power, assume this Rights Agreement in accordance with
Section 13(a) hereof and that all rights of first refusal or preemptive rights
in respect of the issuance of shares of Common Stock of the Principal Party
upon exercise of outstanding Rights have been waived and that
32
such transaction shall not result in a default by the Principal Party under
this Rights Agreement, and further providing that, as soon as practicable after
the date of any consolidation, merger, other fundamental transaction or sale or
transfer of assets or earning power referred to in Section 13(a) hereof, the
Principal Party will
(i) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after such
filing and use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the date of expiration of the Rights, and similarly
comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for quotation on
The Nasdaq Stock Market; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act. In the event that any of the transactions described in Section
13(a) hereof shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have not theretofore
been exercised shall, subject to the provisions of Section 7(e) hereof,
thereafter be exercisable in the manner described in Section 13(a) hereof.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation
33
or By-laws or other instrument governing its corporate affairs, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the then Fair Market Value per share (determined pursuant to
Section 11(b) hereof) or securities exercisable for, or convertible into,
Common Stock of such Principal Party at less than such then Fair Market Value
(other than to holders of Rights pursuant to this Section 13) or (ii) providing
for any special tax or similar payment in connection with the issuance to any
holder of a Right or Common Stock of such Principal Party pursuant to the
provisions of this Section 13, then, in such event, the Company shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights (i.e., Rights
to acquire less than one one-thousandth of a share of Preferred Stock), unless
such fractional Rights result from a transaction referred to in Section
11(a)(i) hereof. If the Company shall determine not to issue such fractional
Rights, then, in lieu of such fractional Rights, there shall be paid to the
holders of record of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the Fair Market Value of a whole Right.
34
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of
one-thousandth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-thousandth of a share). In lieu of issuing fractions
of shares of Preferred Stock, the Company may, at its election, issue
depositary receipts evidencing fractions of shares pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all of the rights, privileges and preferences to which they would be
entitled as owners of the Preferred Stock. With respect to fractional shares
that are not integral multiples of one-thousandth of a share, if the Company
does not issue such fractional shares or depositary receipts in lieu thereof,
there shall be paid to the holders of record of Right Certificates at the time
such Right Certificates are exercised as herein provided an amount in cash
equal to the same fraction of the Fair Market Value of a share of Preferred
Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, on his
35
own behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Rights
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Rights Agreement.
Section 16. Agreement of Right Holders. Each 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 shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together, as applicable, with the Summary of Rights), which
certificates for Common Stock shall also constitute certificates for Rights,
and not by separate Right Certificates, and each Right shall be transferable
only simultaneously and together with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any
36
notations of ownership or writing on the Right Certificates or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes what soever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Preferred Stock or any other
securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, or willful
misconduct on the part of the Rights Agent, for anything done or omitted to be
done by the Rights Agent in connection with the
37
acceptance and administration of this Rights Agreement, or the exercise or
performance of its duties hereunder, including the cost and expenses of
defending against any claim of liability in the premises. The indemnification
provided for hereunder shall survive the expiration of the Rights, the
termination of this Agreement and the resignation or removal of the Rights
Agent. The costs and expenses of enforcing this right of indemnification shall
also be paid by the Company.
(b) The Rights Agent may conclusively rely upon and shall be protected
against, 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 Rights
Agreement in reliance upon any Right Certificate or certificate for Preferred
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document reasonably believed
by it to be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper Person or Persons, or otherwise upon the advice
of counsel.
Section 19. Merger or Consolidation of, or Change in Name of, the Rights
Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed
38
to the agency created by this Rights Agreement any of the Right Certificates
shall have been counter signed but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; in case at that
time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name
or in its changed name; in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Rights Agreement upon the following terms and
conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Right Certificates by their acceptance thereof shall be bound:
(a) Before the Rights Agent acts or refrains from acting, the Rights
Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
39
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board,
the President or any Vice President and by the Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent. Any such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence 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 Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the
40
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after receipt of a
certificate describing any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock to be issued pursuant to this
Rights Agreement or any Right Certificate or as to whether any shares of
Preferred Stock 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 the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to any such officer 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 or for any delay in acting while waiting for
those instructions. 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 under
this Agreement and the date on or after which such action shall be taken or
such omission shall be effective. The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any officer of the Company actually
41
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application subject to the
proposed action or omission and/or specifying the action to be taken or
omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, provided that the Rights Agent shall be
accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) 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.
42
(k) The Rights Agent shall not be required to take notice or be deemed
to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail at the expense of the Company. The Company may remove the Rights
Agent or any successor Rights Agent or any co-Rights Agent (with or without
cause) upon 30 days' notice in writing, mailed to the Rights Agent, successor
Rights Agent or co-Rights Agent, as the case may be, and to each transfer agent
of the Common Stock and the Preferred Stock by registered or certified 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.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days
after such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the holder
of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the incumbent Rights Agent or
the holder of record of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the
43
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of any state thereof, in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination in the
conduct of its corporate trust or stock transfer business by federal or state
authorities and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000, or (b) an Affiliate
controlled by a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed, but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock
and Preferred Stock, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be. Notwithstanding
the foregoing provisions, in the event of resignation, removal or incapacity of
the Rights Agent, the Company shall have the authority to act as the Rights
Agent until a successor Rights Agent shall have assumed the duties of the
Rights Agent hereunder.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to
44
reflect any adjustment or change in the Exercise Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Rights Agreement.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a majority
of the Board of Directors then in office, redeem all but not less than all of
the then outstanding Rights, at any time prior to the Close of Business on the
earlier of (i) the tenth day following the Stock Acquisition Date (subject to
extension by the Company as provided in Section 27 hereof), or (ii) the Final
Expiration Date, at a redemption price of $0.01 per Right, subject to
adjustments as provided in subsection (c) below (the "Redemption Price");
provided, however, that from and after the time that any Person shall become an
Acquiring Person (other than pursuant to a Qualifying Tender Offer), the
Company may redeem the Rights only if at the time of the action of the Board of
Directors there are then in office not less than a majority of directors who
are Continuing Directors and such redemption is approved by a majority of the
Continuing Directors then in office. Notwithstanding anything contained in this
Rights Agreement to the contrary, the Rights shall not be exercisable pursuant
to Section 11(a)(ii) hereof prior to the expiration of the Company's right of
redemption hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the effective time of the
action of the Board of Directors ordering the redemption of the Rights and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the effective time of the action of the
Board of Directors ordering the redemption 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
45
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 notice of
redemption will state the method by which the payment of the Redemption Price
will be made. At the option of the Board of Directors, the Redemption Price may
be paid in cash (rounded to the nearest $0.01) to each Rights holder or by the
issuance of shares (and, at the Company's election, cash or depositary receipts
in lieu of fractions of shares other than fractions which are integral
multiples of one one-thousandth (1/1000) of a share of Preferred Stock) of
Preferred Stock or Common Stock having a Fair Market Value equal to such cash
payment.
(c) In the event the Company shall at any time after the date of this
Rights Agreement (A) pay any dividend on Common Stock in shares of Common
Stock, (B) subdivide or split the out standing shares of Common Stock into a
greater number of shares, or (c) combine or consolidate the outstanding shares
of Common Stock into a smaller number of shares or effect a reverse split of
the outstanding shares of Common Stock, then, and in each such event, the
Redemption Price shall be adjusted so that the Redemption Price after such
event shall equal the Redemption Price immediately prior to such event
multiplied 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 outstanding immediately prior to
such event; provided, however, that in each case such adjustment to the
Redemption Price shall be made only if the amount of the Redemption Price shall
be reduced or increased by at least $0.01 per Right.
46
Section 24. Exchange.
(a) The Company, at its option and upon approval by the Board of
Directors (but only if at the time of such approval by the Board of Directors
there are then in office not less than a majority of directors who are
Continuing Directors and such action is approved by a majority of the
Continuing Directors then in office), at any time after any Person becomes an
Acquiring Person, may issue shares of Common Stock in exchange for all or part
of the then-outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof) 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 being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any such Subsidiary, or any entity holding shares of Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the issuance of Common Stock in exchange for 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
47
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 actually
receives the notice. Each such notice of exchange will state the method by
which the exchange of the shares of Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 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 for shares of Common Stock
exchangeable for Rights, at the initial rate of one one-thousandth of a share
of Preferred Stock for each share of Common Stock, as appropriately adjusted to
reflect adjustments in the voting rights of the 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) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Preferred Stock (except as hereinafter provided) or fractional shares of Common
Stock, but if the exchange is for shares of Preferred Stock, the Company shall
be obligated to issue fractional shares so long as any fraction of a share of
Preferred Stock so to be issued is at least equal to one one-thousandth of a
share of Preferred Stock. In lieu of such fractional shares, the Company shall
pay to the registered holders of the Rights Certificates with regard to which
such fractional shares would otherwise be issuable
48
an amount in cash equal to the same fraction of the Fair Market Value of a
whole share, as determined in accordance with Section 11(b) hereof.
Section 25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall propose
(i) to effect any of the transactions referred to in Section 11(a)(i) or 11(g)
hereof, (ii) to offer to the holders of record of its Common Stock options,
warrants, or other rights to subscribe for or to purchase shares of Common
Stock (including any security convertible into or exchangeable for Common
Stock) or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, (iii) to
effect any reclassification of its Preferred Stock or Common Stock or any
recapitalization or reorganization of the Company, (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 26
hereof, notice of such proposed action, which shall specify the record date for
the purposes of such transaction referred to in Section 11(a)(i) hereof or such
dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution, or winding up is to take place and the record
date for determining participation therein by the holders of record of Common
Stock or 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 (i) or (ii) above
at least 10 days prior to the record date for determining holders of record of
49
the Preferred Stock for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of record of Common
Stock or Preferred 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.
(b) In case any of the transactions referred to in Section 11(a)(i),
11(g) or 13 of this Rights Agreement are proposed, then, in any such case, the
Company shall give to each holder of Rights, in accordance with Section 26
hereof, notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event
and the consequences of the event to holders of Rights under Section 11(a)(i),
11(g) or 13 hereof, as the case may be, and, upon consummating such
transaction, shall similarly give notice thereof to each holder of Rights.
Section 26. Notices. Notices or demands authorized by this Rights Agreement
to be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
PathoGenesis Corporation
Attention: Xxxxxx X. Xxxxx
000 Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by registered or
50
certified mail and shall be deemed given upon receipt and addressed (until
another address is filed in writing with the Company) as follows:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Corporate Trust, Xxxxx Xxxxxx
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right
Certificate or Right 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. For as long as the Rights are then
redeemable and except as provided in the last sentence of this Section 27, the
Company may in its sole and absolute discretion, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Agreement
without the approval of any holders of the Rights. At any time when the Rights
are not then redeemable and except as provided in the last sentence of this
Section 27, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend this Rights Agreement without the approval of any
holders of Right Certificates (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, or (iii) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable, provided that no such supplement or amendment pursuant to this
clause (iii) shall materially adversely affect the interest of the holders of
Right Certificates. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment.
51
This Agreement may be amended or supplemented at any time with the approval of
a majority of the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock). Notwithstanding anything contained in
this Rights Agreement to the contrary, (i) no supplement or amendment shall be
made which changes the Redemption Price or the Final Expiration Date, and (ii)
supplements or amendments may be made after the time that any Person becomes an
Acquiring Person (other than pursuant to a Qualifying Tender Offer) only if at
the time of the action of the Board of Directors approving such supplement or
amendment there are then in office not less than a majority of directors who
are Continuing Directors and such supplement or amendment is approved by a
majority of the Continuing Directors then in office.
Further, notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights of the Rights Agent under this
Agreement shall be effective without the written consent of the Rights Agent.
Section 28. Successors. All of the covenants and provisions of this Rights
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. Benefits of this Rights Agreement. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right,
remedy or claim under this Rights Agreement; but this Rights Agreement shall be
for the sole and exclusive benefit of the Company, the Rights Agent and the
holders of record of the Right Certificates (and,
52
prior to the Distribution Date, the holders of Common Stock in their capacity
as holders of the Rights).
Section 30. Governing Law. This Rights Agreement and each Right 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 and
enforced in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state, except as to Sections 18, 20,
and 21 which shall be governed by and construed in accordance with the laws of
the State of Illinois.
Section 31. Counterparts. This Rights 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 32. Descriptive Headings. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 33. Severability. If any term, provision, covenant or restriction
of this Rights 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 Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
53
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed, all as of the day and year first above written.
PATHOGENESIS CORPORATION
Attest: By: /s/ Xxxx X. Xxxxx
--------------------------- --------------------------------
(SEAL) Name: Xxxx X. Xxxxx
Title: Senior Vice President
XXXXXX TRUST AND SAVINGS BANK,
As Rights Agent
Attest: By: /s/ Xxxxx X. Xxxxxx
--------------------------- --------------------------------
(SEAL) Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
54
EXHIBIT A
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
PATHOGENESIS CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On June 26, 1997, the Board of Directors of PathoGenesis Corporation
(the "Company"), declared a dividend distribution of one Preferred Stock
Purchase Right for each outstanding share of the Company's Common Stock, par
value $0.001 per share (the "Common Stock"). The distribution is payable as of
July 10, 1997 to shareholders of record on that date. Each Right entitles the
registered holder to purchase from the Company one one-thousandth (1/1000) of a
share of preferred stock of the Company, designated as Series A Junior
Preferred Stock (the "Preferred Stock"), at a price of $250 per one
one-thousandth (1/1000) of a share (the "Exercise Price"). The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement"), between the Company and Xxxxxx Trust and Savings Bank, as Rights
Agent (the "Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date"),
which is the earlier of (i) the tenth day following a public announcement that
a person or group of affiliated or associated persons, with certain exceptions
set forth below, has acquired beneficial ownership of 15% or more of the
outstanding voting stock of the Company (an "Acquiring Person"), and (ii) the
tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or
exchange offer the consummation of which would result in the ownership of 15%
or more of the Company's outstanding voting stock (even if no shares are
actually purchased pursuant to such offer); prior thereto, the Rights would not
be exercisable, would not be represented by a separate certificate, and would
not be transferable apart from the Company's Common Stock, but will instead be
evidenced, with respect to any of the Common Stock certificates outstanding as
of July 10, 1997,
by such Common Stock certificate. An Acquiring Person does not include (A) the
Company, (B) any subsidiary of the Company, (C) any employee benefit plan or
employee stock plan of the Company or of any subsidiary of the Company, or any
trust or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan, or (D) any person or group whose
ownership of 15% or more of the shares of voting stock of the Company then
outstanding results solely from (i) any action or transaction or transactions
approved by the Board of Directors before such person or group became an
Acquiring Person, or (ii) a reduction in the number of issued and outstanding
shares of voting stock of the Company pursuant to a transaction or transactions
approved by the Board of Directors (provided that any person or group that does
not become an Acquiring Person by reason of clause (i) or (ii) above shall
become an Acquiring Person upon acquisition of an additional 1% or more of the
Company's voting stock unless such acquisition of additional voting stock will
not result in such person or group becoming an Acquiring Person by reason of
such clause (i) or (ii)).
Until the Distribution Date (or earlier redemption or expiration of
the Rights), new Common Stock certificates issued after July 10, 1997 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as
of July 10, 1997, with or without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and such separate certificates
alone will evidence the Rights from and after the Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on June 26, 2007, unless earlier redeemed
by the Company as described below.
The Preferred Stock is nonredeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of the Company's preferred stock. The Preferred
Stock may not be issued except upon exercise of Rights. Each share of Preferred
Stock will be entitled to receive when, as and if declared, a quarterly
dividend in an amount equal to the greater of $100 per share or 1,000 times the
cash dividends declared on the Company's Common Stock. In addition, each share
of Preferred Stock is entitled to 1,000 times any non-cash dividends (other
than dividends payable in equity securities or certain rights or warrants)
declared on each share of Common Stock, in like kind. In the event of the
liquidation of the Company, the holders of Preferred Stock will be entitled to
receive, for each share of Preferred Stock, a payment in an amount equal to the
greater of $250 per one one-thousandth share of Preferred Stock or 1,000 times
the payment made per share of Common Stock. Each share of Preferred Stock will
have 1,000 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of
2
Preferred Stock will be entitled to receive 1,000 times the amount received per
share of Common Stock. The rights of Preferred Stock as to dividends,
liquidation and voting are protected by anti-dilution provisions.
The number of shares of Preferred Stock issuable upon exercise of the
Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock. The
Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed or exchanged, or the
transaction is approved by the Board of Directors and the Continuing Directors
(as defined in the Rights Agreement), if the Company at any time after the
Distribution Date were to be acquired in a merger or other business combination
(in which any shares of Common Stock are changed into or exchanged for other
securities or assets) or more than 50% of the assets or earning power of the
Company and its subsidiaries (taken as a whole) were to be sold or transferred
in one or a series of related transactions, the Rights Agreement provides that
proper provision will be made so that each holder of record of a Right will
from and after such date have the right to receive, upon payment of the
Exercise Price, that number of shares of common stock of the acquiring company
having a market value at the time of such transaction equal to two times the
Exercise Price. In addition, unless the Rights are earlier redeemed or
exchanged, in the event that a person or group becomes the beneficial owner of
15% or more of the Company's voting stock (other than pursuant to a tender or
exchange offer (a "Qualifying Tender Offer") for all outstanding shares of
Common Stock that is approved by the Board of Directors, after taking into
account the long-term value of the Company and all other factors they consider
relevant in the circumstances), the Rights Agreement provides that proper
provisions will be made so that each holder of record of a Right, other than
the Acquiring Person (whose Rights will thereupon become null and void), will
thereafter have the right to receive, upon payment of the Exercise Price, that
number of shares of the Preferred Stock having a market value at the time of
the transaction equal to two times the Exercise Price (such market value to be
determined with reference to the market value of the Company's Common Stock as
provided in the Rights Agreement).
Fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one-thousandth of a share) may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash
in lieu of fractional shares which are not integral multiples of one
one-thousandth of a share.
At any time on or prior to the close of business on the earlier of (i)
the tenth day after the time that a person has become an Acquiring Person (or
such later date as a majority of the Board of Directors and, if applicable, a
majority of the Continuing Directors may determine) or (ii) June 26, 2007, the
Company may redeem the Rights in whole, but not in part, at a price of $0.01
per Right, subject to adjustment (the "Redemption Price"). The Rights may be
redeemed after the time that any
3
Person has become an Acquiring Person only if approved by a majority of the
Continuing Directors. Immediately upon the effective time of the action of the
Board of Directors of the Company authorizing redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
The Board of Directors may, at its option, exchange all or part of the
then outstanding and exercisable Rights (other than those held by the Acquiring
Person) for shares of Common Stock at a ratio of one share of Common Stock per
Right, as adjusted; provided, however, that such Rights cannot be exchanged
once a Person, together with such Person's Affiliates and Associates, becomes
the owner of 50% or more of the shares of Common Stock then outstanding. If the
Board of Directors authorizes such an exchange, the Rights will immediately
cease to be exercisable.
For as long as the Rights are then redeemable, the Company may, except
with respect to the Redemption Price or date of expiration of the Rights, amend
the Rights in any manner, including an amendment to extend the time period in
which the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement from and after the time that any Person
becomes an Acquiring Person requires the approval of a majority of the
Continuing Directors (as provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
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 dated
July 10, 1997. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
which is incorporated in this summary description herein by reference.
4
EXHIBIT B
[Form of Right Certificate]
Certificate No. W- _______ Rights
NOT EXERCISABLE AFTER JUNE 26, 2007 OR EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND UNDER CERTAIN OTHER
CIRCUMSTANCES, AT $0.01 PER RIGHT (SUBJECT TO ADJUSTMENT), ON THE TERMS SET
FORTH OR REFERRED TO IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED
TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE
TRANSFERRED TO ANY PERSON.
Right Certificate
PATHOGENESIS CORPORATION
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 June 26, 1997 (the "Rights Agreement") between
PathoGenesis Corporation, a Delaware corporation (the "Company"), and Xxxxxx
Trust and Savings Bank, an Illinois banking corporation, (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M. (Eastern
Standard time) on June 26, 2007 at the office of the Rights Agent designated in
the Rights Agreement for such purpose, or its successor as Rights Agent, in
[City], [State], one one-thousandth (1/1000) of a fully paid nonassessable
share of Series A Junior Preferred Stock (the "Preferred Stock") of the Company
at a purchase price of $250, as the same may from time to time be adjusted in
accordance with the Rights Agreement (the "Exercise Price"), upon presentation
and
surrender of this Right Certificate with the Form of Election to Purchase
attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
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 of the Rights Agent,
the Company and the holders of record of Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
2
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option or
under certain other circumstances at a redemption price of $0.01 per Right.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be acquired by the Company at its option in
exchange for shares of the Company=s Common Stock at an initial exchange ratio
of one share of Common Stock for each Right, subject to adjustment under
certain circumstances.
No fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-thousandth (1/1000) of a share) are required
to be issued upon the exercise of any Right or Rights evidenced hereby, and in
lieu thereof the Company may cause depositary receipts to be issued and/or a
cash payment may be made, as provided in the Rights Agreement.
No holder of this Right 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 meeting
thereof, or to give or withhold consent to any corporate action or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
3
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of .
ATTEST: PATHOGENESIS CORPORATION
By:
---------------------------------- --------------------------------
[Secretary or Assistant Secretary] Name:
Title:
Countersigned:
XXXXXX TRUST AND SAVINGS BANK
By:
-------------------------------
Authorized Signature
4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED hereby sells,
assigns and transfers unto
(Please print name and address of transferee)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint ________
Attorney to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: .
-------------------------
----------------------------------
Signature
Signature Guaranteed:
5
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are 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 Right Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Dated: .
-------------------- ----------------------------------
Signature
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
6
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO PATHOGENESIS CORPORATION:
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of such Rights and requests that certificates for
such share(s) be issued in the name of the registered holder of this Right
Certificate.
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to the registered holder of
this Right Certificate.
Dated:
------------------ ---------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
fact of this Right Certificate)
Signature Guaranteed:
7
EXHIBIT C
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PREFERRED STOCK
OF
PATHOGENESIS CORPORATION
Pursuant to Section 151 of the Delaware
General Corporation Law
I, Xxxx X. Xxxxx, Senior Vice President of PathoGenesis Corporation, a
corporation organized and existing under the Delaware General Corporation Law
(the "Company"), in accordance with the provisions of Section 151 of such law,
DO HEREBY CERTIFY that at a meeting of the Board of Directors on June 26, 1997,
at which meeting a quorum was present, that the following resolutions were
adopted:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Company in accordance with the provisions of Article FOURTH of the
Company's Amended and Restated Certificate of Incorporation, as amended, a
series of Preferred Stock of the Company be, and hereby is, created, and the
powers, designations, preferences and relative, participating, optional or
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof, be, and hereby are, as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting such series shall be 200,000,
however, if more than a total of 200,000 shares of Series A Preferred Stock
shall be issuable upon the exercise of Rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of June 26, 1997, between the Company and Xxxxxx
Trust and Savings Bank, as Rights Agent (as such agreement may be amended from
time to time, the "Rights Agreement"), the Board of Directors of the Company
shall direct by resolution or resolutions that the total number of shares of
Series A Preferred Stock authorized to be issued be increased (to the extent
that the Certificate of Incorporation, as amended, then permits) to the largest
number of whole shares (rounded up to the nearest whole number) issuable upon
exercise of such Rights.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Series A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount per share (rounded
to the nearest cent) equal to 1,000 times the aggregate per share amount of all
cash dividends declared or paid on the Company's Common Stock, $0.001 par value
per share (the "Common Stock"), and (ii) a preferential cash dividend (the
"Preferential Dividends"), if any, in preference to the holders of Common
Stock, on the first day of March, June, September and December of each year
(each a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Stock, payable in an amount (except in the case of
the first Quarterly Dividend Payment if the date of the first issuance of
Series A Preferred Stock is a date other than a Quarterly Dividend Payment
Date, in which case such payment shall be a prorated amount of such amount)
equal to $100 per share of Series A Preferred Stock less the per share amount
of all cash dividends declared on the Series A Preferred Stock pursuant to
clause (i) of this sentence since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first
2
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Company
shall, at any time after the issuance of any share or fraction of a share of
Series A Preferred Stock, make any distribution on the shares of Common Stock
of the Company, whether by way of a dividend or a reclassification of stock, a
recapitalization, reorganization or partial liquidation of the Company or
otherwise, which is payable in cash or any debt security, debt instrument, real
or personal property or any other property (other than cash dividends subject
to the immediately preceding sentence, a distribution of shares of Common Stock
or other capital stock of the Company or a distribution of rights or warrants
to acquire any such share, including any debt security convertible into or
exchangeable for any such share, at a price less than the Fair Market Value (as
hereinafter defined) of such share), then, and in each such event, the Company
shall simultaneously pay on each then outstanding share of Series A Preferred
Stock of the Company a distribution, in like kind, of 1,000 times such
distribution paid on a share of Common Stock (subject to the provisions for
adjustment hereinafter set forth). The dividends and distributions on the
Series A Preferred Stock to which holders thereof are entitled pursuant to
clause (i) of the first sentence of this paragraph and pursuant to the second
sentence of this paragraph are hereinafter referred to as "Dividends" and the
multiple of such cash and non-cash dividends on the Common Stock applicable to
the determination of the Dividends, which shall be 1,000 initially but shall be
adjusted from time to time as hereinafter provided, is hereinafter referred to
as the "Dividend Multiple". In the event the Company shall at any time after
July 10, 1997, declare or pay any dividend or make any distribution on Common
Stock payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock
3
into a greater or lesser number of shares of Common Stock, then in each such
case the Dividend Multiple thereafter applicable to the determination of the
amount of Dividends which holders of shares of Series A Preferred Stock shall
be entitled to receive shall be the Dividend Multiple applicable immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash
dividend or distribution on the Common Stock in respect of which a Dividend is
required to be paid shall be paid or set aside for payment on the Common Stock
unless a Dividend in respect of such dividend or distribution on the Common
Stock shall be simultaneously paid, or set aside for payment, on the Series A
Preferred Stock.
(C) Preferential Dividends shall begin to accrue on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series A Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series A 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.
Section 3. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
4
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the holders of the Common
Stock. The number of votes which a holder of Series A Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple". In the event the
Company shall at any time after July 10, 1997 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding
shares of Common Stock into a greater or lesser number of shares of Common
Stock, then in each such case the Vote Multiple thereafter applicable to the
determination of the number of votes per share to which holders of shares of
Series A Preferred Stock shall be entitled after such event shall be the Vote
Multiple immediately prior to such event multiplied by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Company's Certificate
of Incorporation or By-laws, in each case as the same may be amended, the
holders of shares of Series A 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 Company.
(C) In the event that the Preferential Dividends accrued on the Series
A Preferred Stock for four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or irrevocably set
aside for payment, the holders of record of Preferred Stock of the Company of
all series (including the Series A Preferred Stock), other than
5
any series in respect of which such right is expressly withheld by the
authorizing resolutions therefor, shall have the right, at the next meeting of
stockholders called for the election of directors, to elect two members to the
Board of Directors, which directors shall be in addition to the number required
by the By-laws, as amended, prior to such event, to serve until the next Annual
Meeting and until their successors are elected and qualified or their earlier
resignation, removal or incapacity or until such earlier time as all accrued
and unpaid Preferential Dividends upon the outstanding shares of Series A
Preferred Stock shall have been paid (or irrevocably set aside for payment) in
full. The holders of shares of Series A Preferred Stock shall continue to have
the right to elect directors as provided by the immediately preceding sentence
until all accrued and unpaid Preferential Dividends upon the outstanding shares
of Series A Preferred Stock shall have been paid (or set aside for payment) in
full. Such directors may be removed and replaced by such stockholders, and
vacancies in such directorships may be filled only by such stockholders (or by
the remaining director elected by such stockholders, if there be one) in the
manner permitted by law; provided, however, that any such action by
stockholders shall be taken at a meeting of stockholders and shall not be taken
by written consent thereto.
(D) Except as otherwise required by the Certificate of Incorporation
or Bylaws or set forth herein, in each case as the same may be amended, holders
of Series A Preferred Stock shall have no other 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 the taking of any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in arrears or the
6
Company shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been
paid or set irrevocably aside for payment in full, and in addition to any and
all other rights which any holder of shares of Series A Preferred Stock may
have in such circumstances, the Company 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 Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity as to dividends with the Series
A Preferred Stock, unless dividends are paid ratably on the Series A
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 if the full dividends accrued thereon
were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
4(A), 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 Series A Preferred Stock, provided
that the Company may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Company ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; or
7
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in accordance with a purchase offer
made 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 Company shall not permit any Subsidiary (as hereinafter
defined) of the Company to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Company could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner. A "Subsidiary" of the Company shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors of such
corporation or other entity or other persons performing similar functions are
beneficially owned, directly or indirectly, by the Company or by any
corporation or other entity that is otherwise controlled by the Company.
(C) The Company shall not issue any shares of Series A Preferred Stock
except upon exercise of Rights issued pursuant to the Rights Agreement, a copy
of which is on file with the Secretary of the Company at its principal
executive office and shall be made available to stockholders of record without
charge upon written request therefor addressed to said Secretary.
Notwithstanding the foregoing sentence, nothing contained in the provisions
hereof
8
shall prohibit or restrict the Company from issuing for any purpose any series
of Preferred Stock with rights and privileges similar to, different from, or
greater than, those of the Series A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and canceled promptly after the acquisition thereof. All such shares
upon their retirement and cancellation shall become authorized but unissued
shares of Preferred Stock, without designation as to series, and such shares
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless the holders of shares of Series A Preferred
Stock shall have received for each share of Series A Preferred Stock, subject
to adjustment as hereinafter provided, (A) $250 per one one-thousandth of a
share plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment or, (B) if
greater than the amount specified in clause (i)(A) of this sentence, an amount
equal to 1,000 times the aggregate amount to be distributed per share to
holders of Common Stock, as the same may be adjusted as hereinafter provided,
and (ii) to the holders of stock ranking on a parity upon liquidation,
dissolution or winding up with the Series A Preferred Stock, unless
simultaneously therewith distributions are made ratably on the Series A
Preferred Stock and all other shares of such parity stock in proportion to the
total amounts to which the
9
holders of shares of Series A Preferred Stock are entitled under clause (i)(A)
of this sentence and to which the holders of such parity shares are entitled,
in each case upon such liquidation, dissolution or winding up. The amount to
which holders of Series A Preferred Stock may be entitled upon liquidation,
dissolution or winding up of the Company pursuant to clause (i)(B) of the
foregoing sentence is hereinafter referred to as the "Participating Liquidation
Amount" and the multiple of the amount to be distributed to holders of shares
of Common Stock upon the liquidation, dissolution or winding up of the Company
applicable pursuant to said clause to the determination of the Participating
Liquidation Amount, as said multiple may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Liquidation Multiple".
In the event the Company shall at any time after July 10, 1997, declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then, in each such case, the Liquidation Multiple thereafter
applicable to the determination of the Participating Liquidation Amount to
which holders of Series A Preferred Stock shall be entitled after such event
shall be the Liquidation Multiple applicable immediately prior to such event
multiplied 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 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the Company
10
receive after July 10, 1997, in respect of their shares of Common Stock any
share of capital stock of the Company (other than any share of Common Stock of
the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a "Transaction"),
then, and in each such event, the dividend rights, voting rights and rights
upon the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall be adjusted so that after such event the holders
of Series A Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such adjustment, to (i)
such additional dividends as equal the Dividend Multiple in effect immediately
prior to such Transaction multiplied by the additional dividends which the
holder of a share of Common Stock shall be entitled to receive by virtue of the
receipt in the Transaction of such capital stock, (ii) such additional voting
rights as equal the Vote Multiple in effect immediately prior to such
Transaction multiplied by the additional voting rights which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock, and (iii) such additional distributions
upon liquidation, dissolution or winding up of the Company as equal the
Liquidation Multiple in effect immediately prior to such Transaction multiplied
by the additional amount which the holder of a share of Common Stock shall be
entitled to receive upon liquidation, dissolution or winding up of the Company
by virtue of the receipt in the Transaction of such capital stock, as the case
may be, all as provided by the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the Company
receive after July 10, 1997, in respect of their shares of Common Stock any
right or warrant to
11
purchase Common Stock (including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for Common Stock) at a
purchase price per share less than the Fair Market Value of a share of Common
Stock on the date of issuance of such right or warrant, then and in each such
event the dividend rights, voting rights and rights upon the liquidation,
dissolution or winding up of the Company of the shares of Series A Preferred
Stock shall each be adjusted so that after such event the Dividend Multiple,
the Vote Multiple and the Liquidation Multiple shall each be the product of the
Dividend Multiple, the Vote Multiple and the Liquidation Multiple, as the case
may be, in effect immediately prior to such event multiplied by a fraction the
numerator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the maximum number
of shares of Common Stock which could be acquired upon exercise in full of all
such rights or warrants and the denominator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights
or warrants plus the number of shares of Common Stock which could be purchased,
at the Fair Market Value of the Common Stock at the time of such issuance, for
the maximum aggregate consideration payable upon exercise in full of all such
rights or warrants.
(C) In the event that holders of shares of Common Stock of the Company
receive after July 10, 1997, in respect of their shares of Common Stock any
right or warrant to purchase capital stock of the Company (other than shares of
Common Stock), including as such a right, for all purposes of this paragraph,
any security convertible into or exchangeable for capital stock of the Company
(other than Common Stock), at a purchase price per share less than the Fair
Market Value of such shares of capital stock on the date of issuance of such
right or warrant,
12
then and in each such event the dividend rights, voting rights and rights upon
liquidation, dissolution or winding up of the Company of the shares of Series A
Preferred Stock shall each be adjusted so that after such event each holder of
a share of Series A Preferred Stock shall be entitled, in respect of each share
of Series A Preferred Stock held, in addition to such rights in respect thereof
to which such holder was entitled immediately prior to such event, to receive
(i) such additional dividends as equal the Dividend Multiple in effect
immediately prior to such event multiplied, first, by the additional dividends
to which the holder of a share of Common Stock shall be entitled upon exercise
of such right or warrant by virtue of the capital stock which could be acquired
upon such exercise and multiplied again by the Discount Fraction (as
hereinafter defined), and (ii) such additional voting rights as equal the Vote
Multiple in effect immediately prior to such event multiplied, first, by the
additional voting rights to which the holder of a share of Common Stock shall
be entitled upon exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise and multiplied again by the
Discount Fraction, and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such event multiplied, first, by the additional
amount which the holder of a share of Common Stock shall be entitled to receive
upon liquidation, dissolution or winding up of the Company upon exercise of
such right or warrant by virtue of the capital stock which could be acquired
upon such exercise and multiplied again by the Discount Fraction. For purposes
of this paragraph, the "Discount Fraction" shall be a fraction the numerator of
which shall be the difference between the Fair Market Value of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph
13
immediately after the distribution thereof and the purchase price per share for
such share of capital stock pursuant to such right or warrant and the
denominator of which shall be the Fair Market Value of a share of such capital
stock immediately after the distribution of such right or warrant.
(D) For purposes of this Certificate of Designations, the "Fair Market
Value" of a share of capital stock of the Company (including a share of Common
Stock) on any date shall be deemed to be the average of the daily closing price
per share thereof over the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that,
in the event that such Fair Market Value of any such share of capital stock is
determined during a period which includes any date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or distribution on stock
payable in shares of such stock or securities convertible into shares of such
stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case, no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or,
if the shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares are listed or admitted to trading or, if the shares are not
listed or admitted to trading on any national securities
14
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by The
Nasdaq Stock Market or such other system then in use, or if on any such date
the shares are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in the shares selected by the Board of Directors of the Company. The
term "Trading Day" shall mean a day on which the principal national securities
exchange on which the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or admitted to trading
on any national securities exchange, on which the New York Stock Exchange or
such other national securities exchange as may be selected by the Board of
Directors of the Company is open. If the shares are not publicly held or not so
listed or traded on any day within the period of 30 Trading Days applicable to
the determination of Fair Market Value thereof as aforesaid, "Fair Market
Value" shall mean the fair market value thereof per share as determined in good
faith by the Board of Directors of the Company. In either case referred to in
the foregoing sentence, the determination of Fair Market Value shall be
described in a statement filed with the Secretary of the Company.
Section 8. Consolidation, Merger. etc. In case the Company 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 each outstanding share of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into the aggregate amount of stock, securities, cash and/or other
property (payable in like kind), as the case may be, for which or into which
each share of Common Stock is changed or exchanged multiplied by the highest of
the Vote Multiple, the
15
Dividend Multiple or the Liquidation Multiple in effect immediately prior to
such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each holder of a
share of Series A Preferred Stock of the effect of any adjustment to the voting
rights, dividend rights or rights upon liquidation, dissolution or winding up
of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
Section 10. No Redemption. The shares of Series A Preferred Stock shall not
be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may acquire
shares of Series A Preferred Stock in any other manner permitted by law, and
the provisions hereof and the Certificate of Incorporation of the Company, in
each case as the same may be amended.
Section 11. Ranking. Unless otherwise provided in a Certificate of
Designations relating to a subsequent series of preferred stock of the Company,
the Series A Preferred Stock shall rank junior to all other series of the
Company's preferred stock, as to the payment of dividends and the distribution
of assets on liquidation, dissolution or winding up and senior to the Common
Stock.
Section 12. Amendment. The provisions hereof and the Certificate of
Incorporation, as amended, of the Company shall not be amended in any manner
which would adversely affect the
16
rights, privileges or powers of the Series A Preferred Stock without, in
addition to any other vote of stockholders required by law, the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Designations and do affirm the foregoing as true under the penalties of perjury
this 7th day of July, 1997.
/s/ Xxxx X. Xxxxx
------------------------------
Xxxx X. Xxxxx
Senior Vice President
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