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RIGHTS AGREEMENT
BETWEEN
ALKERMES, INC.
AND
EQUISERVE TRUST COMPANY, N.A.
AS
RIGHTS AGENT
DATED AS OF FEBRUARY 7, 2003
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TABLE OF CONTENTS
Page
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1. Certain Definitions......................................................................................1
2. Appointment of Rights Agent..............................................................................5
3. Issuance of Rights Certificates..........................................................................6
4. Form of Rights Certificates..............................................................................7
5. Countersignature and Registration........................................................................8
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates............................................................................8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights............................................9
8. Cancellation and Destruction of Rights Certificates.....................................................11
9. Reservation and Availability of Capital Stock...........................................................11
10. Preferred Stock Record Date.............................................................................13
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.............................13
12. Certificate of Adjusted Purchase Price or Number of Shares..............................................20
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power....................................20
14. Fractional Rights and Fractional Shares.................................................................23
15. Rights of Action........................................................................................24
16. Consent and Agreement of Rights Holders.................................................................24
17. Rights Certificate Holder Not Deemed a Shareholder......................................................25
18. Concerning the Rights Agent.............................................................................25
19. Merger or Consolidation or Change of Name of Rights Agent...............................................25
20. Duties of Rights Agent..................................................................................26
21. Change of Rights Agent..................................................................................28
22. Issuance of New Rights Certificates.....................................................................29
23. Redemption and Termination..............................................................................29
24. Exchange................................................................................................30
25. Notice of Certain Events................................................................................31
26. Notices.................................................................................................32
27. Supplements and Amendments..............................................................................32
28. Successors..............................................................................................33
29. Determinations and Actions by the Board of Directors, etc...............................................33
30. Benefits of This Agreement..............................................................................33
31. Severability............................................................................................34
32. Governing Law...........................................................................................34
33. Counterparts............................................................................................34
34. Descriptive Headings; Construction......................................................................34
Exhibit A -- Form of Statement of Designation, Preferences and Rights of Series A Junior Participating
Preferred Stock
Exhibit B -- Form of Rights Certificate
Exhibit C -- Summary of Rights to Purchase Series A Junior Participating Preferred Stock
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 7, 2003 (the "AGREEMENT"), between
Alkermes, Inc., a Pennsylvania corporation (the "COMPANY"), and EquiServe Trust
Company, N.A., a national banking association (the "RIGHTS AGENT").
RECITALS
A. On February 7, 2003 (the "RIGHTS DIVIDEND DECLARATION DATE"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of
common stock, par value $0.01 per share, of the Company (the "COMMON
STOCK") outstanding at the close of business on February 20, 2003
(the "RECORD DATE"), and has authorized the issuance of one Right
(as such number may hereinafter be adjusted pursuant to the
provisions of Section 11(p) hereof) for each share of Common Stock
issued between the Record Date (whether originally issued or
delivered from the Company's treasury) and the Distribution Date (as
hereinafter defined).
B. Each Right initially represents the right to purchase one
one-thousandth (1/1000) of a share (a "UNIT") of Series A Junior
Participating Preferred Stock (the "PREFERRED STOCK") of the Company
having the rights, powers and preferences substantially as set forth
in the form of Certificate of Designation, Preferences and Rights
attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "RIGHTS").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties, intending to be legally bound hereby, agree as
follows:
1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" will mean any Person who or which,
together with all Affiliates and Associates of such Person, is the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding, but will
not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company, (iv)
any Person organized, appointed or established by the Company for or pursuant to
the terms of any such employee benefit plan, or (v) any Exempted Person.
(b) "AFFILIATE" and "ASSOCIATE" will have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and in effect
on the date of this Agreement (the "EXCHANGE ACT").
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(c) A Person will be deemed the "BENEFICIAL OWNER" of, and will be
deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time or the occurrence
of an event) pursuant to any agreement, arrangement or understanding (whether or
not in writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a Person will
not be deemed the "Beneficial Owner" of, or to "beneficially own," (1)
securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, (2) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, (3) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering
Event, which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof (the "ORIGINAL RIGHTS") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to any Original
Rights, or (4) securities issued or issuable pursuant to any employee benefit
plan of the Company or any Subsidiary of the Company or any employment
agreement, arrangement or other understanding between the Company or any
Subsidiary of the Company and any Person or any of such Person's Affiliates or
Associates; or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person will not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (c)(ii) as a result of
(1) an agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report), or (2) securities issued or issuable pursuant to any employee benefit
plan of the Company or any Subsidiary of the Company or any employment
agreement, arrangement or other understanding between the Company or any
Subsidiary of the Company and any Person or any of such Person's Affiliates or
Associates; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) 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 pursuant to a revocable proxy as described in
the proviso to subparagraph (c)(ii) above) or disposing of any voting securities
of the Company;
provided, however, that nothing in this Section 1(c) will cause a Person engaged
in business as an underwriter of securities to be the "Beneficial Owner" of, or
to "beneficially own," any
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securities acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition; and
provided, further, however, that any shareholder of the Company, with
Affiliates, Associates or other Persons who may be deemed representatives of
such shareholder serving as directors or officers of the Company, will not be
deemed to beneficially own securities held by other Persons as a result of (x)
Persons affiliated or otherwise associated with such shareholder serving as
directors or officers or taking any action in connection therewith, (y)
discussing the status of its shares with the Company or other shareholders of
the Company similarly situated or (z) voting or acting in a manner similar to
other shareholders similarly situated, absent a specific finding by the Board of
Directors of an express agreement among such shareholders to act in concert with
one another as shareholders so as to cause, in the good faith judgment of the
Board of Directors, each such shareholder to be the Beneficial Owner of the
shares held by the other shareholders.
(d) "BUSINESS DAY" will mean any day other than a Saturday, Sunday
or a day on which banking institutions in the Commonwealth of Massachusetts are
authorized or obligated by law or executive order to close.
(e) "CLOSE OF BUSINESS" on any given date will mean 5:00 P.M.,
Cambridge, Massachusetts time, on such date; provided, however, that if such
date is not a Business Day it will mean 5:00 P.M., Cambridge, Massachusetts
time, on the next succeeding Business Day.
(f) "COMMON STOCK" will have the meaning set forth in the recital to
this Agreement, except that "Common Stock" when used with reference to any
Person other than the Company will mean the capital stock of such Person with
the greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person.
(g) "DISTRIBUTION DATE" will mean the earlier of
(i) the close of business on the 10th day after the Stock
Acquisition Date (or, if the 10th day after the Stock Acquisition Date occurs
before the Record Date, the close of business on the Record Date), or
(ii) the close of business on the 10th business day (or such
later date as the Board of Directors of the Company will determine) after the
date that a tender or exchange offer by any Person (other than any Exempted
Person, the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person organized,
appointed or established by the Company for or pursuant to the terms of any such
employee benefit plan) is first published or sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if
upon consummation thereof, such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding.
(h) "EXEMPTED PERSON" will mean any Person who, together with all
Affiliates and Associates of such Person,
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(i) is the Beneficial Owner of securities (as disclosed in
public filings with the Securities and Exchange Commission on the Rights
Dividend Declaration Date), representing 15% or more of the shares of Common
Stock outstanding on the Rights Dividend Declaration Date, so long as such
Person continues to be the Beneficial Owner of 15% or more of the then
outstanding shares of Common Stock; provided, however, that any such Person
described in this clause (i) will no longer be deemed to be an Exempted Person
and will be deemed an Acquiring Person if (x) such Person, together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner, at any
time after the Rights Dividend Declaration Date, of securities representing 20%
or more of the then outstanding shares of Common Stock, unless such Person
inadvertently becomes the Beneficial Owner of the 20% or more of the then
outstanding shares and, as soon as practicable, divests itself of a sufficient
amount of such shares so as to Beneficially Own less than 20% of such then
outstanding shares of Common Stock, or (y) such Person publishes or sends or
gives a tender or exchange offer by such Person within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding; or
(ii) becomes the Beneficial Owner of securities representing
15% or more of the shares of Common Stock then outstanding because of a
reduction in the number of outstanding shares of Common Stock then outstanding
as a result of the purchase by the Company or a Subsidiary of the Company of
shares of Common Stock; provided, however, that any such Person described in
this clause (ii) will no longer be deemed to be an Exempted Person and will be
deemed an Acquiring Person if such Person, together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner, at any time after the
date such Person became the Beneficial Owner of (and so long as such Person
continues to be the Beneficial Owner of) 15% or more of the then outstanding
shares of Common Stock, of additional securities representing 1,000 or more
shares of Common Stock, except (x) pursuant to the exercise of options or
warrants to purchase Common Stock outstanding and beneficially owned by such
Person as of the date such Person became the Beneficial Owner of 15% or more of
the then outstanding shares of Common Stock or as a result of an adjustment to
the number of shares of Common Stock for which such options or warrants are
exercisable pursuant to the terms thereof, or (y) as a result of a stock split,
stock dividend or the like. A purchaser, assignee or transferee of the shares of
Common Stock (or warrants or options exercisable for Common Stock) from an
Exempted Person will not thereby become an Exempted Person, except that a
transferee from the estate of an Exempted Person who receives Common Stock as a
bequest or inheritance from an Exempted Person will be an Exempted Person so
long as such Person continues to be the Beneficial Owner of 15% or more of the
then outstanding shares of Common Stock.
(i) "EXPIRATION DATE" will mean the earlier of (i) the close of
business on the Rights Plan Expiration Date, or (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof.
(j) "FLIP-IN EVENT" will mean any event described in Section
11(a)(ii) hereof.
(k) "FLIP-OVER EVENT" will mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
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(l) "PERSON" will mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity.
(m) "PREFERRED STOCK" will mean shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company, and,
to the extent that there are not a sufficient number of shares of Series A
Junior Participating Preferred Stock authorized to permit the full exercise of
the Rights, any other series of Preferred Stock, par value $0.01 per share, of
the Company designated for such purpose containing terms substantially similar
to the terms of the Series A Junior Participating Preferred Stock.
(n) "PURCHASE PRICE" will mean the exercise price per Unit, as set
forth in Sections 4(a), 7, 11 and 13.
(o) "QUALIFYING OFFER" will mean an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by at least a majority of the
members of the Board of Directors of the Company who are not officers of the
Company and who are not representatives, nominees, Affiliates or Associates of
an Acquiring Person, after receiving advice from one or more investment banking
firms, to be (i) at a price which is fair to shareholders (taking into account
all factors which such members of the Board deem relevant, including prices
which could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value), and (ii) otherwise in the best
interests of the Company and its shareholders.
(p) "RECORD DATE" will be the date set forth in the recital to this
Agreement.
(q) "RIGHTS PLAN EXPIRATION DATE" will mean February 19, 2013.
(r) "STOCK ACQUISITION DATE" will mean the first date of public
announcement (which, for purposes of this definition, will include a report
filed pursuant to Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(s) "SUBSIDIARY" will mean, with reference to any Person, any
corporation or other entity of which an amount of voting securities sufficient
to elect at least a majority of the directors of such corporation is
beneficially owned, directly or indirectly, by such Person or otherwise
controlled by such Person.
(t) "TRIGGERING EVENT" will mean any Flip-in Event or any Flip-over
Event.
2. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent to act as agent for the Company 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, upon ten (10) days' prior
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written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and in no event be liable for, the acts or omissions of any such
co-Rights Agent.
3. Issuance of Rights Certificates.
(a) Until the Distribution Date,
(i) subject to Section (3)(b) below, the Rights will be
evidenced by the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates will be deemed also to be
certificates for the Rights) and not by separate certificates, and
(ii) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company).
As soon as practicable after the Distribution Date, the Rights Agent will send
by first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit B hereto (the "RIGHTS
CERTIFICATES"), evidencing one right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the
Company will make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "SUMMARY OF RIGHTS"), by first-class, postage
prepaid mail, 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. The registered holders of the Common Stock as of the Record Date
will also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock in respect of which Rights have
been issued will also constitute the transfer of the Rights associated with such
shares of Common Stock.
(c) Rights will be issued in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates representing such shares of Common Stock will also
be deemed to be certificates for Rights, and will bear the following legend:
"This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Alkermes, Inc. (the
"COMPANY") and EquiServe Trust Company, N.A. (the "RIGHTS AGENT"), dated
as of February 7, 2003 (the "RIGHTS AGREEMENT"), the terms of which are
hereby incorporated
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herein by reference and a copy of which is on file at the principal
offices of the Rights Agent. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Rights Agent will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void."
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates will likewise
be evidenced by such certificates alone and registered holders of Common Stock
will also be the registered holders of the associated Rights, and the transfer
of any of such certificates will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) will each be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, will be
dated as of the Record Date and on their face will entitle the holders thereof
to purchase such number of Units of Preferred Stock as will be set forth therein
at the price set forth therein (such exercise price per Unit, the "PURCHASE
PRICE"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof will be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6
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or Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, will contain (to the
extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined
in the Rights Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of such Agreement."
5. Countersignature and Registration.
(a) The Rights Certificates will be executed on behalf of the
Company by its Chief Executive Officer, President, Chief Financial Officer or
any Vice President, either manually or by facsimile signature, and will have
affixed thereto the Company's seal or a facsimile thereof, which will be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates will be
countersigned by the Rights Agent, either manually or by facsimile signature,
and will not be valid for any purpose unless so countersigned. In case any
officer of the Company who will have signed any of the Rights Certificates will
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificates may be signed on behalf of the Company by any person
who, at the Securities Actual date of the execution of such Rights Certificate,
will be a proper officer of the Company to sign such Rights 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 offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books will show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of Units of Preferred Stock (or,
following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
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combine or exchange any Rights Certificate or Certificates will make such
request in writing delivered to the Rights Agent, and will surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company will be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder will have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and will have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company will reasonably request. Thereupon the Rights
Agent will, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including the restrictions on exercisability set
forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or
in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of
Units of Preferred Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercisable, at or prior to
the Expiration Date.
(b) The Purchase Price for each Unit of Preferred Stock pursuant to
the exercise of a Right will initially be $80.00, and will be subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof and
will be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per Units of Preferred Stock (or other shares, securities, cash or other
assets, as the case may be) to be purchased as set
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forth below and an amount equal to any applicable transfer tax, the Rights Agent
will, subject to Section 20(k) hereof, thereupon promptly:
(i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of Units of Preferred Stock
to be purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Company will have elected to
deposit the total number of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of Units of Preferred Stock
as are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts will be deposited by the transfer agent with
the depositary agent) and the Company will direct the depositary agent to comply
with such request,
(ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to, or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and
(iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) will be made in cash or by certified bank check or
bank draft payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate. The Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock would be
issued.
(d) In case the registered holder of any Rights Certificate will
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised will be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Flip-in Event, any Rights beneficially owned
by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
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for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), will become null
and void without any further action and no holder of such Rights will have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company will use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with but will have no liability to any holder of Rights Certificates or
other Person as a result of its failure to make any determinations with respect
to an Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company will be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder will have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company will reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, will be canceled by it, and no Rights
Certificates will be issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company will deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent will so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent will deliver all
canceled Rights Certificates to the Company, or will, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case will
deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Capital 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 (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company will use its best efforts to cause, from and
after such time as the Rights become
-11-
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) The Company will use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Flip-in
Event on which the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with Section 11(a)(iii) hereof, a
registration statement under the Securities Act of 1933 (the "SECURITIES ACT")
with respect to the securities 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 such securities, and (B) the date
of the expiration of the Rights. The Company will also take such action as may
be appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed 90 days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company will determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights will not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction will not have been obtained, the
exercise thereof will not be permitted under applicable law or a registration
statement will not have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Units of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights will, at the time of delivery of
the certificates for such shares (or Units) (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of Units of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company will not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of Units of Preferred
Stock (or Common Stock and/or other securities, as the case may be) in respect
of a name other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for a number of Units of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax will have been
paid (any such tax being payable by the
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holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
10. Preferred Stock Record Date. Each Person in whose name any certificate
for a number of Units of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights will for
all purposes be deemed to have become the holder of record of such fractional
shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) represented thereby on, and such certificate will be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are closed, such Person will be deemed to
have become the record holder of such shares (fractional or otherwise) on, and
such certificate will be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate will not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights will be exercisable, including the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and will not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company will at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock, as the case may
be, issuable on such date, will be proportionately adjusted so that the holder
of any Right exercised after such time will be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. 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) will be in addition
to, and will be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
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(ii) In the event any Person (other than an Exempted Person,
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person organized, appointed
or established by the Company for or pursuant to the terms of any such plan),
alone or together with its Affiliates and Associates, will, at any time after
the Rights Dividend Declaration Date, become the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding, unless the event causing the 15%
threshold to be crossed is a transaction set forth in Section 13(a) hereof or is
a Qualifying Offer, then, promptly following the occurrence of such event (a
"FLIP-IN EVENT"), proper provision will be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) will thereafter have the
right to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of Units of
Preferred Stock, such number of shares of Common Stock of the Company (the
"ADJUSTMENT SHARES") as will equal the result obtained by (1) multiplying the
then current Purchase Price by the then number of Units of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of a
Flip-in Event, and (2) dividing that product (which, following such first
occurrence, will thereafter be referred to as the "PURCHASE PRICE" for each
Right and for all purposes of this Agreement) by 50% of the current market price
(determined pursuant to Section 11(d) hereof) per share of Common Stock on the
date of such first occurrence.
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's Articles of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing Section 11(a)(ii) above, the Company will (1)
determine the value of the Adjustment Shares issuable upon the exercise of a
Right (the "CURRENT VALUE"), and (2) with respect to each Right (subject to
Section 7(e) hereof), make adequate provision to substitute for the Adjustment
Shares, upon the exercise of a Right and payment of the applicable Purchase
Price, (A) cash, (B) a reduction in the Purchase Price, (C) Common Stock or
other equity securities of the Company (including shares, or units of shares, of
preferred stock, such as the Preferred Stock, which the Board of Directors of
the Company has deemed to have essentially the same value or economic rights as
shares of Common Stock (such shares of preferred stock being referred to as
"COMMON STOCK EQUIVALENTS")), (D) debt securities of the Company, (E) other
assets, or (F) any combination of the foregoing, having an aggregate value equal
to the Current Value (less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined by the Board based upon the
advice of a nationally recognized investment banking firm selected by the Board;
provided, however, that if the Company will not have made adequate provision to
deliver value pursuant to clause (2) of this Section 11(a)(iii) within 30 days
following the later of (x) the first occurrence of a Flip-in Event and (y) the
date on which the Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the "FLIP-IN
TRIGGER DATE"), then the Company will be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the Spread. For
purposes of the preceding sentence, the term "SPREAD" will mean the excess of
(i) the Current Value over (ii) the Purchase Price. If the Board of Directors of
the Company determines in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the 30-day period set
-14-
forth above may be extended to the extent necessary, but not more than 90 days
after the Flip-in Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such 30-day period, as
it may be extended, is herein called the "SUBSTITUTION PERIOD"). To the extent
that action is to be taken pursuant to the first and/or third sentences of this
Section 11(a)(iii), the Company (I) will provide, subject to Section 7(e)
hereof, that such action will apply uniformly to all outstanding Rights, and
(II) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek such shareholder approval for such
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company will issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of each Adjustment Share will be the Current Market Price per share of the
Common Stock on the Flip-in Trigger Date and the per share or per unit value of
any Common Stock Equivalent will be deemed to equal the Current Market Price per
share of the Common Stock on such date.
(b) In case the Company will fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or shares having the same rights, privileges
and preferences as the shares of Preferred Stock ("EQUIVALENT PREFERRED STOCK"))
or securities convertible into Preferred Stock or equivalent preferred stock at
a price per share of Preferred Stock or per share of equivalent preferred stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or equivalent preferred stock) less than the current market
price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such record
date will be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, (i) the numerator of which will be the
number of shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or equivalent preferred stock so
to be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
(ii) the denominator of which will be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than cash, the
value of such consideration will be as determined in good faith by the Board of
Directors of the Company, whose determination will be described in a statement
filed with the Rights Agent and will be binding on the Rights Agent and the
holders of the Rights. Shares of Preferred Stock owned by or held for the
account of the Company will not be deemed outstanding for the purpose of any
such computation. Such adjustment will be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price will be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
-15-
(c) In case the Company will fix a record date for a distribution
to all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, (i) the
numerator of which will be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination will be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
share of Preferred Stock and (ii) the denominator of which will be such current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock. Such adjustments will be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Purchase Price will be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) above, the Current Market Price
per share of Common Stock on any date will be deemed to be the average of the
daily closing prices per share of such Common Stock for the 30 consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) above, the Current Market Price per share of
Common Stock on any date will be deemed to be the average of the daily closing
prices per share of such Common Stock for the 10 consecutive Trading Days
immediately following such date; provided, however, that in the event that the
Current Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification will not have occurred
prior to the commencement of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, then, and in each such case, the Current Market
Price will be properly adjusted to take into account ex-dividend trading. The
closing price for each day will be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any such date the shares of Common
Stock are not
-16-
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 Common Stock
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of such shares on
such date as determined in good faith by the Board will be used. The term
"TRADING DAY" will mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so listed or
traded, Current Market Price per share will mean the fair value per share as
determined in good faith by the Board, whose determination will be described in
a statement filed with the Rights Agent and will be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock will be determined in the same manner
as set forth above for the Common Stock in Section 11(d)(i) (other than the last
sentence thereof). If the Current Market Price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in Section 11(d)(i),
the Current Market Price per share of Preferred Stock will be conclusively
deemed to be an amount equal to 1,000 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and recapitalizations
with respect to the Common Stock occurring after the date of this Agreement)
multiplied by the Current Market Price per share of the Common Stock. If neither
the Common Stock nor the Preferred Stock is publicly held or so listed or
traded, Current Market Price per share of the Preferred Stock will mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination will be described in a statement filed with the
Rights Agent and will be conclusive for all purposes. For all purposes of this
Agreement, the Current Market Price of a Unit will be equal to the Current
Market Price of one share of Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price will be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made will be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 will be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other share
or one-ten millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 will be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
will become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof will be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock will apply on like
terms to any such other shares.
-17-
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder will evidence the right to
purchase, at the adjusted Purchase Price, the number of Units of Preferred Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company will have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment will thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Units of Preferred Stock (calculated to the nearest one-ten millionth) obtained
by (i) multiplying (1) the number of Units covered by a Right immediately prior
to this adjustment, by (2) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of Units of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights will be exercisable for the number of Units of Preferred Stock for which
a Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights will become that number
of Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company will make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, will be at least 10 days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company will, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders will be entitled as a result of such adjustment, or, at the option of
the Company, will cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
will be entitled after such adjustment. Rights Certificates so to be distributed
will be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Purchase Price) and
will be registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of Units of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per Units and the number of Units which were
expressed in the initial Rights Certificates issued hereunder.
-18-
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the number
of Units of Preferred Stock issuable upon exercise of the Rights, the Company
will 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 such number of Units of Preferred Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 will require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of that number of Units of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the number of
Units of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company will deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board of Directors of the Company
will determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock will
not be taxable to such shareholders.
(n) The Company covenants and agrees that it will not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating 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 (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "PRINCIPAL PARTY" for purposes of Section
13(a) hereof will have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
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(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27 hereof, take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company will at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event will equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator which
will be the total number of shares of Common Stock outstanding immediately prior
to the occurrence of the event and the denominator of which will be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company will (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 hereof. The Rights Agent will be
fully protected in relying on any such certificate and on any adjustment therein
contained.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company will consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), and the Company will not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) will consolidate with, or merge with or into, the
Company, and the Company will 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 will be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company will sell or otherwise transfer (or one or more of
its Subsidiaries will sell or otherwise transfer), in one transaction or 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) to any Person or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case
-20-
(except as may be contemplated by Section 13(d) hereof) (a "FLIP-OVER EVENT"),
proper provision will be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof, will thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid, non-assessable and
freely tradeable shares of common stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as will be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of Units of Preferred
Stock for which a Right is exercisable immediately prior to the first occurrence
of a Flip-over Event (or, if a Flip-in Event has occurred prior to the first
occurrence of a Flip-over Event, multiplying the number of such Units for which
a Right was exercisable immediately prior to the first occurrence of a Flip-in
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of
a Flip-over Event, will be referred to as the "PURCHASE PRICE" for each Right
and for all purposes of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the common stock
of such Principal Party on the date of consummation of such Flip-over Event;
(ii) such Principal Party will thereafter be liable for, and
will assume, by virtue of such Flip-over Event, all the obligations and duties
of the Company pursuant to this Agreement;
(iii) the term "COMPANY" will thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof will apply only to such Principal Party following the first
occurrence of a Flip-over Event;
(iv) such Principal Party will take such steps (including the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof will 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; and
(v) the provisions of Section 11(a)(ii) hereof will be of no
effect following the first occurrence of any Flip-over Event.
(b) "PRINCIPAL PARTY" will mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any such case, (A) 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
-21-
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, "Principal
Party" will refer to such other Person; and (B) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the common stocks
of two or more of which are and have been so registered, "Principal Party" will
refer to whichever of such Persons is the issuer of the common stock having the
greatest aggregate market value.
(c) The Company will not consummate any such consolidation,
merger, sale or transfer unless the Principal Party will have a sufficient
number of authorized shares of its common stock, which have not been issued or
reserved for issuance, to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party will have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Sections 13(a) and
13(b) and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in Section 13(a), 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, and will use its best efforts to
cause such registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 will similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Flip-over Event
will occur at any time after the occurrence of a Flip-in Event, the Rights which
have not theretofore been exercised will thereafter become exercisable in the
manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 will not be applicable to a transaction described in clauses (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a Qualifying Offer (or a
wholly owned Subsidiary of any such Person or Persons), (ii) the price per share
of Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such tender offer or exchange offer, and (iii) the form of
consideration being offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder will
expire.
14. Fractional Rights and Fractional Shares.
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(a) The Company will not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there will be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right will be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day will be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange, or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker is
making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company will be used.
(b) The Company will not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of Units
of Preferred Stock) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions which
are integral multiples of Units of Preferred Stock). In lieu of fractional
shares of Preferred Stock that are not integral multiples of Units of Preferred
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of Units of Preferred Stock. For
purposes of this Section 14(b), the current market value of Units of Preferred
Stock will be one one-thousandth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company
will not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one share of Common Stock. For purposes of this Section
14(c), the current market value of one share of Common Stock will be the closing
price of one share of Common Stock (as determined pursuant to Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise.
-23-
(d) The holder of a Right by the acceptance of the Rights
expressly waives his or her right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this Section
14.
15. Rights of Action. All rights of action in respect of this Agreement
are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Rights 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 Rights Certificate (or, prior to the Distribution Date, of
the Common Stock), may, in such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
16. Consent and Agreement of Rights Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, will be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent will have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation;
-24-
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as
such, of any Rights Certificate will be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of Units of Preferred Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor will anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate will have been exercised in accordance with the
provisions hereof.
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
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent will be protected and will incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common 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 believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent will be a party, or any corporation succeeding to
the corporate trust or shareholder services business of the Rights Agent or any
successor Rights Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
will succeed to the agency created by this Agreement, any
-25-
of the Rights Certificates will have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates will not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent will be
changed and at such time any of the Rights Certificates will have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates will not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates will have the full force provided in the Rights Certificates and in
this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, will be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent will deem it necessary or desirable that any fact or matter
(including the identity of any Acquiring Person and the determination of
"current market price") 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 Chief
Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution
-26-
hereof by the Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor will it be responsible for
any adjustment required under the provisions of Section 11 or Section 13 hereof
or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor will it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock or Preferred Stock will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it will 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.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein will preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement will 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 will be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of
-27-
election to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent
will not take any further action with respect to such requested exercise of
transfer without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days' notice in writing mailed to the Company, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. In the event that the
Rights Agent ceases to be the transfer agent for the Company's Common Stock, the
Rights Agent will be deemed to resign automatically on the effective date
thereof; and any required notice will be sent by the Company. The Company may,
in its sole discretion, remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent will resign or be
removed or will otherwise become incapable of acting, the Company will appoint a
successor to the Rights Agent. If the Company will fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who will,
with such notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, will be
either (a) a corporation organized and doing business under the laws of the
United States or of any state of the United States, in good standing, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100,000,000, or (b) an Affiliate of such a corporation. After
appointment, the successor Rights Agent will 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 will 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 will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, will 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.
22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of shares of Common Stock following the Distribution Date and prior to
the redemption
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or expiration of the Rights, the Company (a) will, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
will be issued if, and to the extent that, the Company will be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate will be issued if, and to
the extent that, appropriate adjustment will otherwise have been made in lieu of
the issuance thereof.
23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (i) the close of business on the 10th day
following the Stock Acquisition Date (or, if the Stock Acquisition Date will
have occurred prior to the Record Date, the close of business on the 20th day
following the Record Date), or (ii) the Rights Plan Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of
$0.001 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "REDEMPTION
PRICE"). Notwithstanding anything contained in this Agreement to the contrary,
the Rights will not be exercisable after the first occurrence of a Flip-in Event
until such time as the Company's right of redemption hereunder has expired. The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the "Current Market Price," as defined in Section 11(d)(i)
hereof, of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which will have been
filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights will be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company will give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears 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 will be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
24. Exchange.
(a) The Company may, at its option, at any time after the Stock
Acquisition Date, upon resolution by the Board of Directors of the Company,
exchange all or part of the then outstanding and exercisable Rights (which will
not include Rights that have
-29-
become void pursuant to the provisions of Section 7(e) hereof) for Common Stock
at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO"). Notwithstanding the foregoing,
the Company may not effect such exchange at any time after any Acquiring 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 exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights will terminate and the only right thereafter of a holder of such Rights
will be to receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
will promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice will not affect the validity
of such exchange. The Company promptly will 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 will be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the 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 will 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 the event that there will not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company will make adequate provision to substitute, to the extent that there are
insufficient shares of Common Stock available, (1) cash, (2) other equity
securities of the Company, (3) debt securities of the Company, (4) other assets,
or (5) any combination of the foregoing, having an aggregate value per Right
equal to the then current per share market price (determined pursuant to Section
11(d) hereof) of the Common Stock multiplied by the Exchange Ratio, where such
aggregate value has been determined by a majority of the Board of Directors,
after receiving advice from a nationally recognized investment banking firm. To
the extent that the Company determines that any such substitution must be made,
the Company will provide, subject to Section 7(e) hereof, that such substitution
will apply uniformly to all outstanding Rights.
(d) The Company will not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence fractional shares
of Common Stock. In lieu of such fractional shares of Common Stock, the Company
will pay to the registered holders of the Rights Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this paragraph (d), the current
market value of a whole share of Common Stock will be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(d) hereof) for the Trading Day immediately prior to the date of the exchange
pursuant to this Section 24.
25. Notice of Certain Events.
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(a) In case the Company will propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
will give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which will
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice will be so given in the
case of any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock, whichever
will be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof will occur, then, in any such case, (i) the Company will as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which will specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock will be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate to
or on the Company will 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:
Alkermes, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights
-31-
Agent will be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)
as follows:
EquiServe Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) will 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.
27. Supplements and Amendments.
(a) Prior to the Distribution Date and subject to Section 27(d),
the Company and the Rights Agent will, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. If there are uncertainties
about the appropriate treatment of accounting or other matter, the parties may
wish to discuss the issue with the SEC Staff prior to the filing. If a
pre-filing conference is arranged, it is desirable to submit a written statement
of the issues in advance, so that the conference can be more focused.
(b) From and after the Distribution Date and subject to Section
27(d), the Company and the Rights Agent will, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder,
or (iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which will not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person); provided, however, this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights.
(c) 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 will execute such
supplement or amendment.
(d) Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment will be made which changes the Redemption
Price, the Rights Plan Expiration Date, the Purchase Price or the number of
Units of Preferred Stock for which a Right is exercisable.
-32-
(e) Prior to the Distribution Date, the interests of the holders
of Rights will be deemed coincident with the interests of the holders of Common
Stock.
28. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent will bind and inure to the
benefit of their respective successors and assigns hereunder.
29. Determinations and Actions by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, will be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company will have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including the
right and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith,
will (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board to
any liability to the holders of the Rights.
30. Benefits of This Agreement. Nothing in this Agreement will be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement will be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
31. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof will be reinstated and
will not expire until the close of business on the twentieth day following the
date of such determination by the Board of Directors.
32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder will be deemed to be a contract made under the laws
of the Commonwealth of
-33-
Pennsylvania and for all purposes will be governed by and construed in
accordance with the laws of such state applicable to contracts made and to be
performed entirely within such state.
33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instrument.
34. Descriptive Headings; Construction. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and will
not control or affect the meaning or construction of any of the provisions
hereof. All words used in this Agreement will be construed to be of such gender
or number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ALKERMES, INC.
By:
--------------------------------------
(Name, Title)
EQUISERVE TRUST COMPANY, N.A.
By:
--------------------------------------
(Name, Title)
-34-
Exhibit A
FORM OF
STATEMENT OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
ALKERMES, INC.
Pursuant to Section 1522(c) of the Pennsylvania Business Corporation
Law of 1988, the undersigned officers of Alkermes, Inc., a Pennsylvania
corporation (the "CORPORATION"), DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Third Amended and Restated Articles of Incorporation of the Corporation, the
Board of Directors on February 7, 2003 adopted the following resolution creating
a series of 110,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of Article
FOURTH of its Third Amended and Restated Articles of Incorporation, a series of
Preferred Stock of the Corporation be and it hereby is created, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series will be
designated as "SERIES A JUNIOR PARTICIPATING PREFERRED STOCK" and the number of
shares constituting such series will be 110,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Junior Participating
Preferred Stock will be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of March, June, September and December
in each year (each such date being referred to herein as a "QUARTERLY DIVIDEND
PAYMENT DATE"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $0.01 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock,
par value $0.01 per share, of the Corporation (the "COMMON STOCK") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. In
A-1
the event the Corporation will at any time after February 7, 2003 (the "RIGHTS
DECLARATION DATE") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence will be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation will declare a dividend or distribution on the
outstanding shares of Series A Junior Participating Preferred Stock as provided
in Section 2(A) above immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution will have been declared
on the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$0.01 per share on the outstanding shares of Series A Junior Participating
Preferred Stock will nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends will begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares will begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends will begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends will not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares will be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date will be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock will have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock will entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation will at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Junior
A-2
Participating Preferred Stock were entitled immediately prior to such event will
be adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock will vote together as one class on all matters submitted
to a vote of shareholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock will be in arrears in an amount equal to six
quarterly dividends thereon, the occurrence of such contingency will xxxx the
beginning of a period (herein called a "DEFAULT PERIOD") which will extend until
such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series A Junior Participating Preferred Stock then outstanding will have been
declared and paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in an amount equal to
six quarterly dividends thereon, voting as a class, irrespective of series, will
have the right to elect two Directors.
(ii) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to Section 3(C)(iii) or at any
annual meeting of shareholders, and thereafter at annual meetings of
shareholders, provided that such voting right will not be exercised unless the
holders of 10% in number of shares of Preferred Stock outstanding will be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock will not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock will
exercise such voting right initially during an existing default period, they
will have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two
Directors or, if such right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock will have the
right to make such increase in the number of Directors as will be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock will have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors will not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock will, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any shareholder or shareholders
owning in the aggregate not less than 10% of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which meeting will
thereupon be called by the President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are
A-3
entitled to vote pursuant to this Section 3(C)(iii) will be given to each holder
of record of Preferred Stock by mailing a copy of such notice to such holder at
such holder's last address as the same appears on the books of the Corporation.
Such meeting will be called for a time not earlier than 20 days and not later
than 60 days after such order or request, or in default of the calling of such
meeting within 60 days after such order or request, such meeting may be called
on similar notice by any shareholder or shareholders owning in the aggregate not
less than 10% of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this Section 3(C)(iii), no such special
meeting will be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the shareholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, will continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock will have exercised their right to elect two Directors voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock will continue in office until their successors will have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in Section
3(C)(ii)) be filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the Director whose
office will have become vacant. References in this Section 3(C) to Directors
elected by the holders of a particular class of stock will include Directors
elected by such Directors to fill vacancies as provided in clause (y) of the
foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect Directors will
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class will terminate, and (z) the number of Directors will be such number
as may be provided for in the Articles of Incorporation or Bylaws of the
Corporation irrespective of any increase made pursuant to the provisions of
Section 3(C)(ii) (such number being subject, however, to change thereafter in
any manner provided by law or in the Articles of Incorporation or Bylaws of the
Corporation). Any vacancies in the Board of Directors effected by the provisions
of clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock will have no special voting rights and their
consent will not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 hereof are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Participating Preferred Stock outstanding will have been paid in
full, the Corporation will 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
A-4
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series A
Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A Junior
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, will determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation will not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Section 4(A),
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever will be retired and canceled promptly after the
acquisition thereof. All such shares will upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution will be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock will have received an amount equal to $100,000 per share of
Series A Junior Participating Preferred Stock, plus an amount equal to accrued
and unpaid
A-5
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "SERIES A LIQUIDATION PREFERENCE"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions will be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock will have received an amount per share (the "COMMON ADJUSTMENT")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in Section 6(C)
below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii)
being referred to as the "ADJUSTMENT NUMBER"). Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock will receive their ratable
and proportionate share of the remaining assets to be distributed in the ratio
of the Adjustment Number to one with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Junior Participating Preferred Stock, then such
remaining assets will be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets will be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation will at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event will be adjusted
by multiplying such Adjustment Number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation will
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock will at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation will at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock will be
adjusted by multiplying such amount by a fraction
A-6
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 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock will not be redeemable.
Section 9. Amendment. The Articles of Incorporation of the Corporation
will not be further amended in any manner which would materially alter or change
the powers, preferences or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a class.
Section 10. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which will entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this _____
day of February, 2003.
ALKERMES, INC.
By:
--------------------------------
(Name, Title)
A-7
Exhibit B
[Form of Rights Certificate]
Certificate No. R-_____ _____ Rights
NOT EXERCISABLE AFTER FEBRUARY 19, 2013 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.](1)
Rights Certificate
ALKERMES, INC.
This certifies that [ ], or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of February 7, 2003 (the "RIGHTS AGREEMENT"), between
Alkermes, Inc., a Pennsylvania corporation (the "Company"), and EquiServe Trust
Company, N.A., a national banking association (the "RIGHTS AGENT"), to purchase
from the Company at any time prior to 5:00 P.M. (Cambridge, Massachusetts time)
on February 19, 2013 at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-thousandth of a fully
paid, non-assessable share of Series A Junior Participating Preferred Stock (the
"PREFERRED STOCK") of the Company, at a purchase price of $80.00 per one
one-thousandth of a share (the "PURCHASE PRICE"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of February 20, 2003 based on the Preferred
Stock as constituted at such date. The Company reserves the right to require
prior to the occurrence of a Triggering Event (as such term is defined in the
Rights Agreement) that a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued.
Upon the occurrence of a Flip-in Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an
--------
(1) The portion of the legend in brackets will be inserted only if
applicable and will replace the preceding sentence.
B-1
Acquiring Person or an Affiliate or Associate of any Acquiring Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
such Rights will become null and void and no holder hereof will have any right
with respect to such Rights from and after the occurrence of such Flip-in Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of "Units" (each Unit representing one
one-thousandth of a share) of Preferred Stock as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered will have entitled such
holder to purchase. If this Rights Certificate will be exercised in part, the
holder will be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $0.001 per Right at any time prior to the earlier of the close of
business on (i) the 10th day following the Stock Acquisition Date (as such time
period may be extended pursuant to the Rights Agreement), and (ii) the Rights
Plan Expiration Date. In addition, the Rights may be exchanged, in whole or in
part, for shares of the Common Stock, or shares of preferred stock of the
Company having essentially the same value or economic rights as such shares.
Immediately upon the action of the Board of Directors of the Company authorizing
any such exchange, and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange) will terminate and
the Rights will only enable holders to receive the shares issuable upon such
exchange.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of Units of Preferred Stock, which may, at the election of
the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
B-2
No holder of this Rights Certificate will be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor will anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate will have been exercised as provided in the Rights Agreement.
This Rights Certificate will not be valid or obligatory for any purpose
until it will 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: ALKERMES, INC.
By:_______________________________________ By:________________________
Secretary Name:
Title:
Countersigned:
EquiServe Trust Company, N.A.
By: ______________________________
Authorized Signature
B-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED___________________________________ hereby sells, assigns and
transfers unto _______________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ________________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ________________ _____, ___
_____________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ________________ _____, ___
_____________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: Alkermes, Inc.:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security
or other identifying number ____________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights will not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights will
be registered in the name of and delivered to:
Please insert social security
or other identifying number ____________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ________________ ______, ____
_____________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
B-5
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ________________ ______, ____
_____________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-6
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On February 7, 2003, the Board of Directors of Alkermes, Inc. (the
"COMPANY") adopted a Shareholder Rights Plan, providing that one right (a
"RIGHT") will be attached to each share of common stock, par value $0.01 per
share, of the Company (the "COMMON STOCK"). Each Right entitles the registered
holder to purchase from the Company a unit (a "UNIT") consisting of one
one-thousandth (1/1000) of a share of Series A Junior Participating Preferred
Stock, par value $0.01 per share (the "PREFERRED STOCK"), at a Purchase Price of
$80.00 per Unit (the "PURCHASE PRICE"), subject to adjustment. The description
and terms of the Rights are set forth in the Rights Agreement (the "RIGHTS
AGREEMENT"), dated as of February 7, 2003, between the Company and EquiServe
Trust Company, N.A., a national banking association, as Rights Agent (the
"RIGHTS AGENT").
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificate will be
distributed. The Rights will separate from the Common Stock on a Distribution
Date, which will occur upon the earlier of
(i) 10 days following a public announcement that a person or
group of affiliated or associated persons (an "ACQUIRING PERSON") has
acquired, or obtained the right to acquire, beneficial ownership of 15%
or more of the outstanding shares of Common Stock (the "STOCK
ACQUISITION DATE"), or
(ii) 10 business days following the commencement of a tender
offer or exchange offer that would result in a person or group
beneficially owning 15% or more of such outstanding shares of Common
Stock.
The definition of Acquiring Person excludes any Exempted Person (as defined
below). Until the Distribution Date, (x) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (y) new Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference, and (z) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
An "EXEMPTED PERSON" will be any person who, together with all
affiliates and associates of such person, is the beneficial owner of Common
Stock, options and/or warrants exercisable for shares of Common Stock
representing 15% or more of the shares of Common Stock outstanding on the date
the Board of Directors authorizes the rights dividend (the "RIGHTS DIVIDEND
DECLARATION DATE"), provided, however, that any such person will generally no
longer be an Exempted Person and will be deemed an Acquiring Person if (x) such
person, together with all affiliates and associates of such person, becomes the
beneficial owner, at any time after the Rights Dividend Declaration Date, of
additional securities representing 20% or more of the then outstanding shares of
Common Stock, or (y) such person commences a tender or exchange offer for
additional securities of the Company. In addition, an "EXEMPTED PERSON" will
also be any person who, together with all affiliates and associates of such
person, becomes the beneficial
C-1
owner of Common Stock, options and/or warrants exercisable for shares of Common
Stock representing 15% or more of the shares of Common Stock then outstanding as
a result of a purchase by the Company or any of its Subsidiaries of shares of
Common Stock, provided, however, that such person will no longer be an Exempted
Person and will be deemed to be an Acquiring Person if such person, together
with all affiliates and associates of such person, becomes the beneficial owner,
at any time after the date such person became the beneficial owner of 15% or
more of the then outstanding shares of Common Stock, of additional securities
representing 1,000 or more shares of Common Stock (unless such additional
securities are acquired (x) pursuant to the exercise of options or warrants to
purchase Common Stock outstanding and beneficially owned by such person as of
the date such person became the beneficial owner of 15% or more of the then
outstanding shares of Common Stock or as a result of an adjustment to the number
of shares of Common Stock for which such options or warrants are exercisable
pursuant to the terms thereof, or (y) as a result of a stock split, stock
dividend or the like). A purchaser, assignee or transferee of the shares of
Common Stock (or options or warrants exercisable for Common Stock) from an
Exempted Person will not thereby become an Exempted Person, except that a
transferee from the estate of an Exempted Person who receives Common Stock as a
bequest or inheritance from an Exempted Person will be an Exempted Person so
long as such transferee continues to be the beneficial owner of 15% or more of
the then outstanding shares of Common Stock.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on February 19, 2013 unless earlier redeemed by
the Company as described below. At no time will the Rights have any voting
power.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that an Acquiring Person, other than an Exempted Person,
becomes the beneficial owner of 15% or more of the then outstanding shares of
Common Stock (unless such acquisition is made pursuant to a tender or exchange
offer for all outstanding shares of the Company, at a price determined by a
majority of the independent directors of the Company who are not
representatives, nominees, Affiliates or Associates of an Acquiring Person, to
be fair and otherwise in the best interest of the Company and its shareholders)
after receiving advice from one or more investment banking firms (a "QUALIFYING
OFFER"), each holder of a Right will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company), having a value equal to two times the Exercise Price
of the Right. The Exercise Price is the Purchase Price times the number of Units
associated with each Right (initially, one). Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph (the "FLIP-IN EVENTS"), all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights are not exercisable
following the occurrence of any of the Flip-in Events set forth above until such
time as the Rights are no longer redeemable by the Company as set forth below.
C-2
In the event that following the Stock Acquisition Date, (i) the Company
engages in a merger or business combination transaction in which the Company is
not the surviving corporation (other than a merger consummated pursuant to a
Qualifying Offer); (ii) the Company engages in a merger or business combination
transaction in which the Company is the surviving corporation and the Common
Stock is changed or exchanged; or (iii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights
which have previously been voided as set forth above) will thereafter have the
right to receive, upon exercise of the Right, common stock of the acquiring
company having a value equal to two times the Exercise Price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time after the Stock Acquisition Date, the Board of Directors of
the Company may exchange the Rights (other than Rights owned by an Acquiring
Person), in whole or in part, at an exchange ratio equal to (i) a number of
shares of Common Stock per Right with a value equal to the spread between the
value of the number of shares of Common Stock for which the Rights may then be
exercised and the Purchase Price, or (ii) if prior to the acquisition by the
Acquiring Person of 50% or more of the then outstanding shares of Common Stock,
one share of Common Stock per Right (subject to adjustment).
At any time until 10 days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $0.001
per Right. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $0.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company as set
forth above or in the event the Rights are redeemed.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights
C-3
Agreement may be amended by the Board in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption will be made at such time as the
Rights are not redeemable.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
Summary of Rights does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is incorporated herein by
reference.
C-4
