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EXHIBIT 99.2
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AXYS PHARMACEUTICALS, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF OCTOBER 8, 1998
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TABLE OF CONTENTS
PAGE
SECTION 1. CERTAIN DEFINITIONS....................................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT............................................5
SECTION 3. ISSUE OF RIGHT CERTIFICATES............................................5
SECTION 4. FORM OF RIGHT CERTIFICATES.............................................7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION......................................8
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES................8
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS..........9
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES....................11
SECTION 9. AVAILABILITY OF PREFERRED SHARES......................................11
SECTION 10. PREFERRED SHARES RECORD DATE..........................................12
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS....13
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES............22
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER..22
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES...............................26
SECTION 15. RIGHTS OF ACTION......................................................27
SECTION 16. AGREEMENT OF RIGHT HOLDERS............................................28
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.....................28
SECTION 18. CONCERNING THE RIGHTS AGENT...........................................29
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.............29
SECTION 20. DUTIES OF RIGHTS AGENT................................................30
SECTION 21. CHANGE OF RIGHTS AGENT................................................32
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES....................................33
SECTION 23. REDEMPTION............................................................34
SECTION 24. EXCHANGE..............................................................36
SECTION 25. NOTICE OF CERTAIN EVENTS..............................................38
SECTION 26. NOTICES...............................................................39
SECTION 27. SUPPLEMENTS AND AMENDMENTS............................................39
SECTION 28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC..............40
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 29. SUCCESSORS............................................................40
SECTION 30. BENEFITS OF THIS AGREEMENT............................................40
SECTION 31. SEVERABILITY..........................................................41
SECTION 32. GOVERNING LAW.........................................................41
SECTION 33. COUNTERPARTS..........................................................41
SECTION 34. DESCRIPTIVE HEADINGS..................................................41
EXHIBIT A - CERTIFICATE OF DESIGNATION
EXHIBIT B - FORM OF RIGHT CERTIFICATE
EXHIBIT C - SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT ("AGREEMENT"), dated as of October 8, 1998,
between AXYS PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. ("Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as such term is hereinafter defined) outstanding at the close of business on
October 28, 1998 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a Preferred Share (as such term is hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest to occur of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined); provided, however, that
Rights may be issued with respect to Common Shares that shall become outstanding
after the Distribution Date and prior to the earlier of the Redemption Date and
the Final Expiration Date in accordance with the provisions of Section 22
hereof.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the
Common Shares then outstanding. Notwithstanding the
foregoing, (A) the term Acquiring Person shall not include
(i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee
benefit or compensation plan of the Company or any
Subsidiary of the Company, (iv) any entity holding Common
Shares for or pursuant to the terms of any such employee
benefit or compensation plan, and (B) no Person shall become
an "Acquiring Person" either (x) as the result of an
acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such
Person to 15% or more of the Common Shares then outstanding;
provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares then
outstanding by reason of share purchases by the Company and
shall, following written notice from, or public disclosure
by the Company of such share purchases by the Company,
become the Beneficial Owner of any additional Common Shares
without the prior consent of the Company
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and shall then Beneficially Own more than 15% of the Common
Shares then outstanding, then such Person shall be deemed to
be an "Acquiring Person," or (y) if the Board of Directors
determines in good faith that a Person who would otherwise
be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests, as promptly as
practicable (as determined in good faith by the Board of
Directors), but in any event within five Business Days,
following receipt of written notice from the Company of such
event, of Beneficial Ownership of a sufficient number of
Common Shares so that such Person would no longer be an
Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall no
longer be deemed to be an "Acquiring Person" for purposes of
this Agreement; provided, however, that if such Person shall
again become the Beneficial Owner of 15% or more of the
Common Shares then outstanding, such Person shall be deemed
an "Acquiring Person," subject to the exceptions set forth
in this Section 1(a).
(b) "AFFILIATE" and "ASSOCIATE" shall 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 (the "Exchange Act"), as in effect on the
date of this Agreement.
(c) A Person shall be deemed the "BENEFICIAL OWNER" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own, within the
meaning of Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect on the
date of this Rights Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement
or understanding (other than customary agreements with
and between underwriters and selling group members with
respect to a bona fide public offering of securities
and other than agreements between the Company and any
corporate partner pursuant to which the right to
purchase shares is conditioned upon the achievement of
research or development milestones) or upon the
exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of
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such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of
such Person's Affiliates or Associates has any
agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide
public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)
hereof) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase, "then outstanding,"
when used with reference to a Person's Beneficial Ownership
of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the
number of such securities not then actually issued and
outstanding which such Person would be deemed to own
beneficially hereunder.
(d) "BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State
of California are authorized or obligated by law or
executive order to close.
(e) "CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m.,
Pacific Time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 p.m., Pacific
Time, on the next succeeding Business Day.
(f) "COMMON SHARES" shall mean the shares of common stock, par
value $.001 per share, of the Company; provided, however,
that, "Common Shares," when used in this Agreement in
connection with a specific reference to any Person other
than the Company, shall mean the capital stock (or equity
interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such
first-mentioned Person.
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(g) "DISTRIBUTION DATE" shall have the meaning set forth in
Section 3 hereof.
(h) "FINAL EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(i) "INTERESTED STOCKHOLDER" shall mean any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or any
other Person in which any such Acquiring Person, Affiliate
or Associate has an interest, or any other Person acting
directly or indirectly on behalf of or in concert with any
such Acquiring Person, Affiliate or Associate.
(j) "PERSON" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or
otherwise) of such entity.
(k) "PREFERRED SHARES" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.001 per share, of
the Company having the designations and the powers,
preferences and rights, and the qualifications, limitations
and restrictions set forth in the Form of Certificate of
Designation attached to this Agreement as Exhibit A.
(l) "PURCHASE PRICE" shall have the meaning set forth in Section
7(b) hereof.
(m) "REDEMPTION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(n) "SHARES ACQUISITION DATE" shall mean the first date of
public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such; provided, however
that, if such Person is determined not to have become an
Acquiring Person pursuant to clause (y) of Subsection
1(a)(B) hereof, then no Shares Acquisition Date shall be
deemed to have occurred.
(o) "SUBSIDIARY" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
(p) "TRANSACTION" shall mean any merger, consolidation or sale
of assets described in Section 13(a) hereof or any
acquisition of Common Shares which would result in a Person
becoming an Acquiring Person or a Principal Party (as such
term is hereinafter defined).
(q) "TRANSACTION PERSON" with respect to a Transaction shall
mean (i) any Person who (x) is or will become an Acquiring
Person or a Principal Party (as such term is hereinafter
defined) if the Transaction were to be consummated and (y)
directly or indirectly proposed or nominated a director of
the Company which director is in office at the time of
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consideration of the Transaction, or (ii) an Affiliate or
Associate of such a Person.
SECTION 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.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Shares Acquisition Date or (ii)
the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such
time as any Person becomes an Acquiring Person) after the
date of the commencement (determined in accordance with Rule
14d-2 under the Exchange Act) by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the
terms of any such plan) of, or of the first public
announcement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the
terms of any such plan) to commence, a tender or exchange
offer (which intention to commence remains in effect for
five Business Days after such announcement), the
consummation of which would result in any Person becoming an
Acquiring Person (including any such date which is after the
date of this Agreement and prior to the issuance of the
Rights, the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights will be
evidenced by the certificates for Common Shares registered
in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the Rights (and the
right to receive Right Certificates therefor) will be
transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so
held, subject to the adjustment provisions of Section 11 of
this Rights Agreement. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
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(b) On the Record Date, or as soon as practicable thereafter,
the Company will send (directly or through the Rights Agent
or its transfer agent) a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form of
Exhibit C hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares
as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding
as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in
the names of the holders thereof. Until the Distribution
Date (or the earlier of the Redemption Date and the Final
Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date
shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares
referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
This certificate also evidences and entitles
the holder hereof to certain rights as set
forth in a Rights Agreement between Axys
Pharmaceuticals, Inc. (the "Corporation") and
ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agent"), dated as of
October 8, 1998, as amended from time to time
(the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference
and a copy of which is on file at the
principal executive offices of the
Corporation. 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 Corporation will mail to the
holder of this certificate a copy of the
Rights Agreement without charge after receipt
of a written request therefor addressed to the
Secretary of the Corporation. As described in
the Rights Agreement, Rights issued to any
Person who becomes an Acquiring Person or an
Affiliate or Associate thereof (as defined in
the Rights Agreement) and certain related
persons, whether currently held by or on
behalf of such Person or by any subsequent
holder, shall become null and void.
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With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated
with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed canceled
and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which
are no longer outstanding. Notwithstanding this Section
3(c), the omission of a legend shall not affect the
enforceability of any part of this Rights Agreement or the
rights of any holder of the Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the form of election to purchase
Preferred Shares, the form of assignment and the form of
certification to be printed on the reverse thereof) shall be
substantially the same as 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 or quotation system on
which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 7,
11 and 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth
therein at the price per one one-hundredth of a Preferred
Share set forth therein (the "Purchase Price"), but the
number of such one one-hundredths of a Preferred Share and
the Purchase Price shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights which are null and
void pursuant to Section 11(a)(ii) hereof and any Right
Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of
any other Right Certificate referred to in this sentence
shall contain (to the extent feasible) the following legend:
The Rights represented by this Right
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
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Right Certificate and the Rights represented
hereby are null and void.
The provisions of Section 11(a)(ii) hereof shall be
operative whether or not the foregoing legend is contained
on any such Right Certificate.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates shall
be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, its Vice
Chairman of the Board, its Chief Financial Officer, or any of its
Vice Presidents, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary
of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right
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 Right
Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the
execution of this Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purpose,
books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses
of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES. Subject to the provisions of Section 11(a)(ii),
Section 14 and Section 24 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close
of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates may
be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-hundredths of a
Preferred Share as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the office
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of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall
have completed and signed the certificate contained in the form
of assignment on the reverse side of such Right Certificate and
shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 11(a)(ii),
Section 14 and Section 24 hereof, countersign and deliver to the
person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right
Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company's request, 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 Right Certificate if mutilated, the Company
will issue, execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to
the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Notwithstanding any other provisions hereof, the Company and the
Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights
evidenced by Rights Certificates.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-hundredth of
a Preferred Share (or such other number of shares or other
securities) as to which the Rights are exercised, at or
prior to the earliest of (i) the Close of Business on
October 7, 2008 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which
such Rights are exchanged as provided in Section 24 hereof.
(b) The purchase price (the "Purchase Price") for each one
one-hundredth of a Preferred Share pursuant to the exercise
of a Right shall initially be $35.00
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and shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares
to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified
check, cashier's check, bank draft or money order payable to
the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent for the
Preferred Shares certificates for the number of Preferred
Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such
requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the Preferred Shares issuable
upon exercise of the Rights hereunder into a depository,
requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance 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 Right Certificate, registered in such name or names
as may be designated by such holder and (iv) when
appropriate, after receipt, deliver such cash to or upon the
order of the registered holder of such Right Certificate. In
the event that the Company is obligated to issue securities
of the Company other than Preferred Shares (including Common
Shares) of the Company pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such
other securities are available for distribution by the
Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11(a)(ii) hereof, the Rights
Agent shall return such Right Certificate to the registered
holder thereof after imprinting, stamping or otherwise
indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section
11(a)(ii) hereof, and, if fewer than all the Rights
represented by such Right Certificate were so exercised, the
Rights Agent shall indicate on the Right Certificate the
number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii) hereof.
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(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and
unissued Preferred Shares or any Preferred Shares held in
its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights in accordance with this Section 7.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder
upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have
(i) completed and signed the certification following 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 shall
reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent
for cancellation or in canceled form, or, if delivered or
surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement.
The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled
Right Certificates, and in such case shall deliver a certificate
of destruction thereof to the Company.
SECTION 9. AVAILABILITY OF PREFERRED SHARES. The Company covenants and
agrees that so long as the Preferred Shares (and, after the time
a person becomes an Acquiring Person, Common Shares or any other
securities) issuable upon the exercise of the Rights may be
listed on any national securities exchange or quotation system,
the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange or quotation
system upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares
(or Common Shares and other
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securities, as the case may be) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and
nonassessable shares or other securities.
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 Right Certificates or of any Preferred Shares
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Shares in a name other than
that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Preferred
Shares upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such
tax is due.
As soon as practicable after the Shares Acquisition Date, the
Company shall use its best efforts to:
(i) prepare and file a registration statement under the
Securities Act of 1933, as amended (the "Act"), with
respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form,
will use its best efforts to cause such registration
statement to become effective as soon as practicable
after such filing and will use its best efforts to
cause such registration statement to remain effective
(with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration
Date; and
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as
may be necessary or appropriate.
SECTION 10. PREFERRED SHARES RECORD DATE. Each person in whose name any
certificate for Preferred Shares or other securities is issued
upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the Preferred Shares or other
securities represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered with the forms of election and
certification duly executed and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon
which the Preferred Shares or other securities transfer books of
the Company are closed, such person shall be deemed to have
become the record holder of such
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shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares or other
securities transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right
Certificate, as such, shall not be entitled to any rights of a
holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number of Preferred 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 shall at any time after the
date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number
of Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred
Shares (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing or surviving Company), except
as otherwise provided in this Section 11(a), 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 capital stock issuable on
such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall
be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time
when the Preferred Shares 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;
provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of
one Right. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be
made prior to any adjustment required pursuant to
Section 11(a)(ii) hereof.
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(ii) Subject to Section 24 hereof and the provisions of the
next paragraph of this Section 11(a)(ii), in the event
any Person shall become an Acquiring Person, each
holder of a Right shall, for a period of 60 days after
the later of such time any Person becomes an Acquiring
Person or the effective date of an appropriate
registration statement under the Act pursuant to
Section 9 hereof (provided, however that, if at any
time prior to the expiration or termination of the
Rights there shall be a temporary restraining order, a
preliminary injunction, an injunction, or temporary
suspension by the Board of Directors, or similar
obstacle to exercise of the Rights (the "Injunction")
which prevents exercise of the Rights, a new 60-day
period shall commence on the date the Injunction is
removed), have a right to receive, upon exercise
thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-hundredths of
a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number
of Common Shares as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the
number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and dividing that
product by (B) 50% of the then current per share market
price of the Common Shares (determined pursuant to
Section 11(d) hereof) on the date such Person became an
Acquiring Person; provided, however, that if the
transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions
of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall
be made pursuant to this Section 11(a)(ii). In the
event that any Person shall become an Acquiring Person
and the Rights shall then be outstanding, the Company
shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the
Rights.
Notwithstanding anything in this Agreement to the
contrary, from and after the time any Person becomes an
Acquiring Person, any Rights beneficially owned by (i)
such Acquiring Person or an Associate or Affiliate of
such Acquiring Person, (ii) a transferee of such
Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring
Person became such, or (iii) a transferee of such
Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person's 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
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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
11(a)(ii), shall become null and void without any
further action and no holder of such Rights shall have
any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts
to insure that the provisions of this Section 11(a)(ii)
and Section 4(b) hereof are complied with, but shall
have no liability to any holder of Right 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. No
Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose
Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee
of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence shall be
canceled.
(iii) In lieu of issuing Common Shares in accordance with
Section 11(a)(ii) hereof, the Company may, if a
majority of the Board of Directors then in office
determines that such action is necessary or appropriate
and not contrary to the interests of holders of Rights,
elect to (and, in the event that the Board of Directors
has not exercised the exchange right contained in
Section 24(c) hereof and there are not sufficient
treasury shares and authorized but unissued Common
Shares to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the
Company shall) take all such action as may be necessary
to authorize, issue or pay, upon the exercise of the
Rights, cash (including by way of a reduction of the
Purchase Price), property, Common Shares, other
securities or any combination thereof having an
aggregate value equal to the value of the Common Shares
which otherwise would have been issuable pursuant to
Section 11(a)(ii) hereof, which aggregate value shall
be determined by a nationally recognized investment
banking firm selected by a majority of the Board of
Directors then in office. For purposes of the preceding
sentence, the value of the Common Shares shall be
determined pursuant to Section 11(d) hereof. Any such
election by the Board of Directors must be made within
60 days following the date on which the event described
in Section 11(a)(ii) hereof shall have
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occurred. Following the occurrence of the event
described in Section 11(a)(ii) hereof, a majority of
the Board of Directors then in office may suspend the
exercisability of the Rights for a period of up to 60
days following the date on which the event described in
Section 11(a)(ii) hereof shall have occurred to the
extent that such directors have not determined whether
to exercise their rights of election under this Section
11(a)(iii). In the event of any such suspension, the
Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily
suspended.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred
Shares entitling them to subscribe for or purchase Preferred
Shares (or shares having the same designations and the
powers, preferences and rights, and the qualifications,
limitations and restrictions as the Preferred Shares
("equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred
shares) less than the then current per share market price of
the Preferred Shares (as such term is hereinafter defined)
on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be
the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares
and/or equivalent preferred shares 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 the denominator of which shall be the
number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription
or purchase (or into which the convertible securities so to
be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may
be paid in a consideration part or all of which shall be in
a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in
the event that such rights, options or warrants
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are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the
continuing or surviving Company) of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) 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 shall be determined by multiplying
the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be
the then current per share market price of the Preferred
Shares (as such term is hereinafter defined) on such record
date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with
the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market
price of the Preferred Shares; provided, however, that in no
event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon
exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had
not been fixed.
(d)
(i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on
any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30
consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided,
however, that in the event that the current per share
market price of the Security is determined during a
period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such
Security payable in shares of such Security or
securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such
Security or securities convertible into such shares, or
(C) any subdivision, combination or reclassification of
such Security and prior to the expiration of 30 Trading
Days
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after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such
case, the current per share market price shall be
appropriately adjusted to reflect the current market
price per share equivalent of such Security. The
closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the
Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect
to securities listed on the principal national
securities exchange on which the Security is listed or
admitted to trading or as reported on the Nasdaq
National Market or, if the Security is not listed or
admitted to trading on any national securities exchange
or reported on the Nasdaq National Market, 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 Quotations System
("Nasdaq") or such other system then in use, or, if on
any such date the Security is 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 Security selected by the Board
of Directors of the Company or, if on any such date no
professional market maker is making a market in the
Security, the price as determined in good faith by the
Board of Directors. The term "Trading Day" shall mean a
day on which the principal national securities exchange
on which the Security is listed or admitted to trading
is open for the transaction of business or, if the
Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred
Shares shall be determined in accordance with the
method set forth in Section 11(d)(i) hereof. If the
Preferred Shares are not publicly traded, the "current
per share market price" of the Preferred Shares shall
be conclusively deemed to be the current per share
market price of the Common Shares as determined
pursuant to Section 11(d)(i) hereof (appropriately
adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof)
multiplied by one hundred. If neither the Common Shares
nor the Preferred Shares are publicly held or so listed
or traded, "current per share market price" shall mean
the fair value per share as determined in good
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faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed
with the Rights Agent.
(e) No adjustment in the Purchase Price shall 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 shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one one-hundredth of a Preferred Share or one
ten-thousandth of any other share or security as the case
may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or
(ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock
of the Company other than Preferred Shares, thereafter the
number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares
contained in Sections 11(a) through 11(c) hereof, inclusive,
and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Shares shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a Preferred Share
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of
the Purchase Price as a result of the calculations made in
Section 11(b) and Section 11(c) hereof, each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the
nearest one one-millionth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-hundredths of a
Preferred Share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the
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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
substitution for any adjustment in the number of one
one-hundredths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest 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 shall make a public announcement
of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date
of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as
a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Right
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of
record of Right 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 one one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the
then par value, if any, of
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the Preferred Shares issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the
Preferred Shares 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 shall
deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring
such adjustment.
(m) 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 the purpose of which is to,
or if at the time such action is taken it is reasonably
foreseeable that the effect of such action is to, materially
diminish or eliminate the benefits intended to be afforded
by the Rights. Any such action taken by the Company during
any period after any Person becomes an Acquiring Person but
prior to the Distribution Date shall be null and void unless
such action could be taken under this Section 11(m) from and
after the Distribution Date.
(n) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in
its sole discretion shall determine to be advisable in order
that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at
less than the current market price, issuance wholly for cash
of Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to
such stockholders.
(o) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Common Shares
payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends
in Common Shares) into a greater or lesser number of Common
Shares, then in any
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such case (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a Preferred Share so
purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares
outstanding immediately before such event and the
denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall
have issued with respect to it that number of Rights which
each Common Share outstanding immediately prior to such
event had issued with respect to it. The adjustments
provided for in this Section 11(o) shall be made
successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is
effected.
(p) The exercise of Rights under Section 11(a)(ii) hereof shall
only result in the loss of rights under Section 11(a)(ii)
hereof to the extent so exercised and shall not otherwise
affect the rights represented by the Rights under this
Agreement, including the rights represented by Section 13
hereof.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall promptly (a) prepare a certificate
setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent
and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have
knowledge of any adjustment unless and until it shall have
received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, following the Shares Acquisition Date or,
if a Transaction is proposed, the Distribution Date,
directly or indirectly (x) the Company shall consolidate
with, or merge with and into, any Interested Stockholder, or
if in such merger or consolidation all holders of Common
Stock are not treated alike, any other Person, (y) any
Interested Person, or if in such merger or consolidation all
holders of Common Stock are not treated alike, any other
Person shall consolidate with the Company, or merge with and
into the Company, and the Company shall be the continuing or
surviving Corporation of such merger (other than, in the
case of either transaction described in (x) or (y), a merger
or consolidation which would result in all of the voting
power represented by the securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into
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securities of the surviving entity) all of the voting power
represented by the securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation and the holders of such securities not
having changed as a result of such merger or consolidation),
or (z) the Company shall sell, mortgage or otherwise
transfer (or one or more of its subsidiaries shall sell,
mortgage or otherwise transfer), in one or more
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 Interested
Stockholder or Stockholders, or if in such transaction all
holders of Common Stock are not treated alike, any other
Person, (other than the Company or any Subsidiary of the
Company in one or more transactions each of which
individually and the aggregate does not violate Section
13(d) hereof) then, and in each such case, proper provision
shall be made so that (i) each holder of a Right, subject to
Section 11(a)(ii) hereof, shall have the right to receive,
upon the exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is
then exercisable in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of
freely tradeable Common Shares of the Principal Party (as
such term is hereinafter defined), free and clear of liens,
rights of call or first refusal, encumbrances or other
adverse claims, as shall be equal to the result obtained by
(A) multiplying the then current Purchase Price by the
number of one one-hundredths of a Preferred Share for which
a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii)
hereof) and dividing that product by (B) 50% of the then
current per share market price of the Common Shares of such
Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation,
merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11
hereof shall apply to such Principal Party; and (iv) such
Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares
of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to
its Common Shares thereafter deliverable upon the exercise
of the Rights.
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(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) hereof,
the Person that is the issuer of any securities into
which Common Shares are converted in such merger or
consolidation, and if no securities are so issued, the
Person that is the other party to the merger or
consolidation (or, if applicable, the Company, if it is
the surviving Company); and
(ii) in the case of any transaction described in (z) of the
first sentence of Section 13(a) hereof, 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 case, (1) if the Common
Shares of such Person are not at such time and have not been
continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a
direct or indirect subsidiary or Affiliate of another Person
the Common Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person; (2) if
such Person is a subsidiary, directly or indirectly, or
Affiliate of more than one Person, the Common Shares of two
or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate
market value; and (3) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply
to each of the chains of ownership having an interest in
such joint venture as if such party were a "subsidiary" of
both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct
or indirect interests in such Person bear to the total of
such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall
have a sufficient number of authorized Common Shares that
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 each
Principal Party and each other Person who may become a
Principal Party as a result of such consolidation, merger,
sale or transfer shall have (i) executed and delivered to
the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13
and (ii) prepared, filed and had declared and remain
effective a registration statement under the Act on the
appropriate form with respect to the Rights and the
securities exercisable upon exercise of the Rights and
further
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providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets mentioned
in paragraph (a) of this Section 13, the Principal Party at
its own expense will:
(i) cause the registration statement under the Act with
respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form to
remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final
Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions
as may be necessary or appropriate;
(iii) list the Rights and the securities purchasable upon
exercise of the Rights on each national securities
exchange on which the Common Shares were listed prior
to the consummation of such consolidation, merger,
sale or transfer of assets or on the Nasdaq National
Market if the Common Shares were listed on the Nasdaq
National Market or, if the Common Shares were not
listed on a national securities exchange or the Nasdaq
National Market prior to the consummation of the
consolidation, merger, sale or transfer of assets, on
a national securities exchange or the Nasdaq National
Market; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its
Affiliates which comply in all material respects with
the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
(d) After the Distribution Date, the Company covenants and
agrees that it shall not (i) consolidate with, (ii) merge
with or into, or (iii) sell or transfer to, in one or more
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, any other Person (other than
a Subsidiary of the Company in a transaction which does not
violate Section 11(m) hereof), if (x) at the time of or
after such consolidation, merger or sale there are any
charter or bylaw provisions or any rights, warrants or other
instruments or securities outstanding, agreements in effect
or any other action taken which would diminish or otherwise
eliminate the benefits intended to be afforded by the Rights
or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal
Party"
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for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or
any of its Affiliates and Associates. The Company shall not
consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such other Person shall
have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this
Section 13(d).
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right.
For the purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the
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 as reported on the Nasdaq National
Market or, if the Rights are not listed or admitted to
trading on any national securities exchange or reported on
the Nasdaq National Market, 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 shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a
Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-hundredth of a
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Preferred Share may, at the election of the Company, be
evidenced by depositary receipts; provided, however, that
holders of such depositary receipts shall have all of the
designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions to which they
are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples
of one one-hundredth of a Preferred Share, the Company shall
pay to the registered holders of Right 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 Preferred Share. For the purposes of this
Section 14(b), the current market value of a Preferred Share
shall be the current per share market price of the Preferred
Shares (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise (or, if not publicly
traded, in accordance with Section 11(d)(ii) hereof).
(c) Following the occurrence of one of the transactions or
events specified in Section 11 hereof giving rise to the
right to receive Common Shares, capital stock equivalents
(other than Preferred Shares) or other securities upon the
exercise of a Right, the Company shall not be required to
issue fractions of Common Shares or units of such Common
Shares, capital stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which
evidence fractional Common Shares, capital stock equivalents
or other securities. In lieu of fractional Common Shares,
capital stock equivalents or other securities, the Company
shall pay to the registered holders of Right 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 Common Share or unit of such Common
Shares, capital stock equivalents or other securities. For
purposes of this Section 14(c), the current market value
shall be the current per share market price (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise and, if such
capital stock equivalent is not traded, each such capital
stock equivalent shall have the value of one one-hundredth
of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise of a Right (except as
provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights
Agent under Sections 18 and 20 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares) and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any
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other Right Certificate (or, prior to the Distribution Date, of
the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right
Certificate and in this 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
under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this
Agreement. Holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys fees, incurred
by them in any action to enforce the provisions of this
Agreement.
SECTION 16. AGREEMENT OF RIGHT 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 the
Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable (subject to the provisions of this Rights
Agreement) only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent,
duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the
associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder, as
such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the
Preferred Shares or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as
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provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company shall indemnify the Rights Agent for, and
hold it harmless against, any loss, liability, claim or expense
("Loss") arising out of or in connection with its duties under
this Agreement, including the costs and expenses of defending
itself against any Loss, unless such Loss shall have been
determined by a court of competent jurisdiction to be a result of
the Rights Agent's gross negligence or intentional misconduct.
The indemnity provided herein shall survive the expiration of the
Rights and the termination of this Agreement.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it
in connection with, its administration of this Agreement in
reliance upon any Right Certificate or certificate for the
Preferred Shares or Common Shares 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, or
otherwise upon the advice of counsel as set forth in Section 20
hereof. In no case will the Rights Agent be liable for special,
indirect, incidental or consequential or consequential loss or
damage at any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of such loss
or damage.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. Any
corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party,
or any corporation succeeding to the shareholder services or
corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so
countersigned;
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and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
SECTION 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 Right Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel of its
choice (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter 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 any one of the Chairman of the Board,
the Chief Executive Officer, the President, the Chief
Financial Officer, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith
or willful misconduct. In no case will the Rights Agent be
liable for special, indirect, incidental or consequential
loss or damages of any kind whatsoever (including but not
limited to lost profits), even if the Rights Agent has been
advised of the possibility of such damages. Any liability of
the Rights Agent will be limited to the amount of fees paid
by the Company hereunder.
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(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of
any Right Certificate (except its countersignature thereof);
nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof)
or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Sections
3, 11, 13, 23 or 24 hereof, or the ascertaining of the
existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a
certificate pursuant to Section 12 hereof describing such
change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Right Certificate
or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Financial
Officer, any Vice President, the Secretary or the Treasurer
of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not
be liable for any action taken or suffered by it in good
faith in accordance with instructions of any such officer or
for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed
to be taken or omitted by the Rights Agent with respect to
its duties or obligations under this Agreement and the date
on and/or after which such action shall be taken or omitted
and the Rights Agent shall not
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be liable for any action taken or omitted in accordance with
a proposal included in any such application on or after the
date specified therein (which date shall not be less than
three Business Days after the date indicated in such
application unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received
written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other 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 shall not be answerable or accountable for
any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting
from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has not been executed, the
Rights Agent shall not take any further action with respect
to such requested exercise of transfer without first
consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company
and to each transfer agent for the Common Shares or Preferred
Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent for the
Common Shares or Preferred Shares by registered or
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certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be either (a) a corporation business trust
or limited liability company organized and doing business under
the laws of the United States or of any other state of the United
States which is authorized under such laws to exercise corporate
trust or stock transfer 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 $50 million or (b) a direct or indirect
wholly owned subsidiary of such an entity or its wholly-owning
parent. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent for the
Common Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of
Directors to 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 Right Certificates
made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earlier
of the Redemption Date and the Final Expiration Date, the Company
(a) shall with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any employee
plan or arrangement in existence prior to the Distribution Date,
or upon the exercise, conversion or exchange of securities, notes
or debentures issued by the Company and in existence prior to the
Distribution Date, and (b) may, in any other case, if deemed
necessary or
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appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that
(i) the Company shall not be obligated to issue any such Right
Certificates if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii)
no Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
SECTION 23. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of
Directors pursuant to Section 23(b) hereof and shall not be
redeemed in any other manner.
(b)
(i) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of such time
as any Person becoming an Acquiring Person or the Final
Expiration Date, redeem all but not less than all of
the then outstanding Rights at a redemption price of
$.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption
Price"), and the Company may, at its option, pay the
Redemption Price in Common Shares (based on the
"current per-share market price," as such term is
defined in Section 11(d) hereof, of the Common Shares
at the time of redemption), cash or any other form of
consideration deemed appropriate by the Board of
Directors. The redemption of the Rights by the Board of
Directors may be made effective at such time, on such
basis and subject to such conditions as the Board of
Directors in its sole discretion may establish.
Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable
pursuant to Section 11(a)(ii) hereof prior to the
expiration or termination of the Company's right of
redemption under this Section 23(b)(i).
(ii) In addition, the Board of Directors of the Company may,
at its option, at any time after the time a Person
becomes an Acquiring Person and the expiration of any
period during which the holder of Rights may exercise
the rights under Section 11(a)(ii) hereof but prior to
any event described in clause (x), (y) or (z) of the
first sentence of Section 13 hereof, redeem all but not
less than all of the then outstanding Rights at the
Redemption Price (x) in connection with any merger,
consolidation or sale or other transfer
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(in one transaction or in a series of related
transactions) of assets or earning power aggregating
50% or more of the assets or earning power of the
Company and its subsidiaries (taken as a whole) in
which all holders of Common Shares are treated alike
and not involving (other than as a holder of Common
Shares being treated like all other such holders) an
Interested Stockholder or a Transaction Person or
(y)(A) if and for so long as the Acquiring Person is
not thereafter the Beneficial Owner of 15% or more of
the then outstanding Common Shares, and (B) at the time
of redemption no other Persons are Acquiring Persons.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to
Section 23(b) hereof, 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 shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption;
provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of
Directors ordering the redemption of the Rights pursuant to
Section 23(b) hereof, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights
at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the
Common Shares, provided, however, that failure to give, or
any defect in, any such notice shall not affect the validity
of such redemption. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of
Common Shares prior to the Distribution Date.
(d) The Company may, at its option, discharge all of its
obligations with respect to any redemption of the Rights by
(i) issuing a press release announcing the manner of
redemption of the Rights and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at
their last addresses as they appear on the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares,
and upon such action, all outstanding Right Certificates
shall be null and void without any further action by the
Company.
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SECTION 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for
Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the
date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any
such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of
the Common Shares 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) hereof and without any further action and
without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent;
provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such
exchange. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state
the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held
by each holder of Rights.
(c) In lieu of issuing Common Shares in accordance with Section
24(a) hereof, the Company may, if a majority of the Board of
Directors then in office determines that such action is
necessary or appropriate and not contrary to the interests
of the holders of Rights, elect to (and, in the event that
there are not sufficient treasury shares and authorized but
unissued
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40
Common Shares to permit any exchange of the Rights in
accordance with Section 24(a) hereof, the Company shall)
take all such action as may be necessary to authorize, issue
or pay, upon the exchange of the Rights, cash (including by
way of a reduction of the Purchase Price), property, Common
Shares, other securities or any combination thereof having
an aggregate value equal to the value of the Common Shares
which otherwise would have been issuable pursuant to Section
24(a) hereof, which aggregate value shall be determined by a
nationally recognized investment banking firm selected by a
majority of the Board of Directors then in office. For
purposes of the preceding sentence, the value of the Common
Shares shall be determined pursuant to Section 11(d) hereof.
Any election pursuant to this Section 24(c) by the Board of
Directors must be made within 60 days following the date on
which the event described in Section 11(a)(ii) hereof shall
have occurred. Following the occurrence on the event
described in Section 11(a)(ii) hereof, a majority of the
Board of Directors then in office may suspend the
exercisability of the Rights for a period of up to 60 days
following the date on which the event described in Section
11(a)(ii) hereof shall have occurred to the extent that such
directors have not determined whether to exercise their
rights of election under this Section 24(c). In the event of
any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights
has been temporarily suspended.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence
fractional Common Shares. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of
the Right Certificates with regard to which such fractional
Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a
whole Common Share. For the purposes of this Section 24(d),
the current market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant
to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately after the date of the first public
announcement by the Company that an exchange is to be
effected pursuant to this Section 24.
(e) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) upon
exchange of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a
Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be evidenced by depositary
receipts; provided, however, that holders of such depositary
receipts shall have all of the designations and the powers,
preferences and
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rights, and the qualifications, limitations and restrictions
to which they are entitled as beneficial owners of the
Preferred Shares represented by such depositary receipts. In
lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Right
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 Preferred Share. For the
purposes of this Section 24(e), the current market value of
a Preferred Share shall be one hundred (100) times the
closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately after the date of the first public
announcement by the Company that an exchange is to be
effected pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its
Preferred Shares or to make any other distribution to the
holders of its Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of
stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving
only the subdivision of outstanding Preferred Shares), (iv)
to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer),
in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as
a whole), to any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or
(vi) to declare or pay any dividend on the Common Shares
payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends
in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purpose
of such stock dividend, or 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 Common Shares
and/or the Preferred Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the
case of any such other action, at least 10 days prior to the
date
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42
of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares
and/or the Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe the
event and the consequences of the event to holders of Rights
under Section 11(a)(ii) hereof.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent)
as follows:
Axys Pharmaceuticals, Inc.
000 Xxxxxxx Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Account Manager
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the
approval of any holders of the Rights. From and after the
Distribution Date, the Company and the Rights Agent shall, if the
Company so directs, from time to time supplement or amend any
provision of this Agreement without the approval of any holders
of Right Certificates in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained
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43
herein which may be defective or inconsistent with any other
provisions herein, or (iii) change any other provisions with
respect to the Rights which the Company may deem necessary or
desirable; provided, however, that no such supplement or
amendment shall be made which would adversely affect the
interests of the holders of Rights (other than the interests of
an Acquiring Person or its Affiliates or Associates). Any
supplement or amendment adopted during any period after any
Person has become an Acquiring Person but prior to the
Distribution Date shall become null and void unless such
supplement or amendment could have been adopted by the Company
from and after the Distribution Date. Any such supplement or
amendment shall be evidenced by a writing signed by the Company
and the Rights Agent. Upon delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or
amendment unless the Rights Agent shall have determined in good
faith that such supplement or amendment would adversely affect
its interest under this Agreement. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
SECTION 28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. For all
purposes of this Agreement, any calculation of the number of
Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such
outstanding Common Shares or any other securities of which any
Person is the Beneficial Owner, shall 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 as in effect on the date of
this Agreement. The Board of Directors of the Company shall have
the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the
Board, or the Company, or as may be necessary or advisable in the
administration of this Agreement, including without limitation,
the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (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, shall (x) be final, conclusive and
binding on the Rights Agent and the holders of the Rights, and
(y) not subject the Board to any liability to the holders of the
Rights.
SECTION 29. SUCCESSORS. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and
assigns hereunder.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the
Company, the Rights Agent and
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44
the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares).
SECTION 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 shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
SECTION 32. GOVERNING LAW. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within
such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of
the provisions hereof.
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45
IN WITNESS WHEREOF, parties whereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
ATTEST: AXYS PHARMACEUTICALS, INC.
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxx
---------------------------------- -----------------------------------
Print Name: Xxxxxxx X. Xxxxxx Print Name: Xxxx X. Xxxxxx
Title: Vice President, General Title: Chairman of the Board and
Counsel and Secretary Chief Executive Officer
ATTEST: CHASEMELLON SHAREHOLDER SERVICES,
L.L.C.
By: /s/ Xxx Xxxx By: /s/ Xxxxxx Xxxxxxx
---------------------------------- --------------------------------
Print Name: Xxx Xxxx Print Name: Xxxxxx Xxxxxxx
Title: Assistant Vice President Title: Relationship Manager
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46
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
AXYS PHARMACEUTICALS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
(EXHIBIT A TO RIGHTS AGREEMENT)
AXYS PHARMACEUTICALS, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Company"), hereby certifies that the following resolution was adopted by the
Board of Directors of the Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on October 8, 1998
RESOLVED, that pursuant to the authority granted to
and vested in the Board of Directors of the Company in
accordance with the provisions of its Amended and
Restated Certificate of Incorporation, the Board of
Directors hereby creates a series of Preferred Stock,
par value $.001 per share, of the Company and hereby
states the designation and number of shares, and fixes
the relative designations and the powers, preferences
and rights, and the qualifications, limitations and
restrictions thereof (in addition to the provisions
set forth in the Certificate of Incorporation of the
Company, which are applicable to the Preferred Stock
of all classes and series), as follows:
Series A Junior Participating Preferred Stock:
SECTION 1. DESIGNATION AND AMOUNT. Five Hundred Thousand (500,000)
shares of Preferred Stock, $ .001 par value, are designated "Series A Junior
Participating Preferred Stock" with the designations and the powers, preferences
and rights, and the qualifications, limitations and restrictions specified
herein (the "Junior Preferred Stock"). Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Junior Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of
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47
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Junior Preferred
Stock.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Junior Preferred Stock with respect to dividends, the holders of shares of
Junior Preferred Stock, in preference to the holders of Common Stock, par value
$.001 per share (the "Common Stock"), of the Company, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of April, July, October and January in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Junior Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $l.00
or (b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Company shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Company shall declare a dividend or distribution on
the Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, that in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Junior Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Junior
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48
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Junior Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
SECTION 3. VOTING RIGHTS. The holders of shares of Junior Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of the Company.
In the event the Company shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designation creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Junior Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Company
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Junior Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Junior Preferred Stock;
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49
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except dividends paid ratably on the Junior Preferred Stock and
all such parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock, provided
that the Company may at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of any stock of the Company ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in the Amended and
Restated Certificate of Incorporation, or in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Junior
Preferred Stock unless, prior thereto, the holders of shares of Junior Preferred
Stock shall have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, provided that the holders of shares of Junior Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of shares of Common Stock, or (2)
to the holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Junior Preferred Stock,
except distributions made ratably on the Junior Preferred Stock and all such
parity stock in proportion to the total amounts to which
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50
the holders of all such shares are entitled upon such liquidation, dissolution
or winding up. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Junior Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
SECTION 8. NO REDEMPTION. The shares of Junior Preferred Stock shall
not be redeemable.
SECTION 9. RANK. The Junior Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Company's Preferred Stock.
SECTION 10. AMENDMENT. The Amended and Restated Certificate of
Incorporation of the Company shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Junior Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the outstanding shares of Junior
Preferred Stock, voting together as a single class.
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51
IN WITNESS WHEREOF, the undersigned have executed this certificate as
of October 8, 1998.
________________________________________
Xxxx X. Xxxxxx, Chairman of the Board
And Chief Executive Officer
________________________________________
Xxxxxxx X. Xxxxxx, Secretary
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FORM OF RIGHT CERTIFICATE
(EXHIBIT B TO RIGHTS AGREEMENT)
CERTIFICATE NO. R- _____ RIGHTS
NOT EXERCISABLE AFTER OCTOBER 7, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
AXYS PHARMACEUTICALS, 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 October 8, 1998 (the "Rights Agreement"), between Axys
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C. (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., Pacific Time, on October 7, 2008 at the
office of the Rights Agent designated for such purpose, or at the office of its
successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, par value $ .001 per
share (the "Preferred Shares"), of the Company, at a purchase price of $35.00
per one one-hundredth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of October 8, 1998, based on
the Preferred Shares as constituted at such date.
From and after the time any Person becomes an Acquiring Person, (as
such terms are defined in the Rights Agreement), if the Rights evidenced by this
Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate who becomes a transferee after the Acquiring Person
becomes such, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of any such Acquiring Person, Associate or Affiliate who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and void without any further action and no
holder hereof shall have any right with respect to such Rights from and after
the time any Person becomes an Acquiring Person.
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53
As provided in the Rights Agreement, the Purchase Price and the number
of one one-hundredths of a Preferred Share which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, as amended from time to time, 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
Right Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $ .001 per share, or, upon circumstances set
forth in the Rights Agreement, cash, property or other securities of the
Company, including fractions of a share of Preferred Stock.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, 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.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of __________________.
ATTEST: AXYS PHARMACEUTICALS, INC.
_________________________________________ By:________________________________
Secretary Title:_____________________________
COUNTERSIGNED:
________________________________________
ChaseMellon Shareholder Services, L.L.C.
as Rights Agent
By:_____________________________________
Print Name:_____________________________
Title:__________________________________
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Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells,
assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________ this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ________________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________________
________________________________________
Signature
Form of Reverse Side of Right Certificate -- continued
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56
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
----------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person, an Interested Stockholder or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement); and (2) after due inquiry and to the best of the knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person, an Interested
Stockholder, or an Affiliate or Associate thereof.
________________________________________
Signature
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To ChaseMellon Shareholder Services, L.L.C.;
The undersigned hereby irrevocably elects to exercise
___________________________ Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number: ______________
__________________________________________________________________
(Please print name and address)
__________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number: ______________
__________________________________________________________________
(Please print name and address)
__________________________________________________________________
Dated: _________________
________________________________________
Signature
Form of Reverse Side of Right Certificate -- continued
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58
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not beneficially owned by nor are they being exercised on
behalf of an Acquiring Person, an Interested Stockholder or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement); and (2)
after due inquiry and to the best of the knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate from
any Person who is or was an Acquiring Person, an Interested Stockholder, or an
Affiliate or Associate thereof.
________________________________________
Signature
------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
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59
AXYS PHARMACEUTICALS, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
(EXHIBIT C TO RIGHTS AGREEMENT)
On October 8, 1998, the Board of Directors of AXYS PHARMACEUTICALS,
INC. (the "Company") declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of common stock, par value $ .001 per
share (the "Common Shares"), of the Company. The dividend is effective as of
October 28, 1998 (the "Record Date") with respect to the stockholders of record
on that date. The Rights will also attach to new Common Shares issued after the
Record Date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Junior Participating Preferred
Stock, par value $.001 per share (the "Preferred Shares"), of the Company at a
price of $35.00 per one one-hundredth of a Preferred Share (the "Purchase
Price"), subject to adjustment. Each Preferred Share is designed to be the
economic equivalent of 100 Common Shares. The description and terms of the
Rights are set forth in a Rights Agreement dated as of October 8, 1998 (the
"Rights Agreement"), between the Company and ChaseMellon Shareholder Services,
L.L.C. (the "Rights Agent").
DETACHMENT AND TRANSFER OF RIGHTS
Initially, the Rights will be evidenced by the stock certificates
representing Common Shares then outstanding, and no separate Right Certificates
will be distributed. Until the earlier to occur of (i) a public announcement
that a person or group of affiliated or associated persons, has become an
"Acquiring Person" (as such term is defined in the Rights Agreement) or (ii) 10
business days (or such later date as the Board may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer which would result in the beneficial ownership by an Acquiring
Person of 15% or more of the outstanding Common Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate. In general, an "Acquiring Person" is a
person, the affiliates or associates of such person, or a group, which has
acquired beneficial ownership of 15% or more of the outstanding Common Shares.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferable
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights) the
surrender or transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right
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Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
EXERCISABILITY OF RIGHTS
The Rights are not exercisable until the Distribution Date. The Rights
will expire on October 7, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable or payable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution. The number of
outstanding Rights and the number of one one-hundredths of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares, or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date. With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares will be issued (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share, which may, at
the election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of exercise.
TERMS OF PREFERRED SHARES
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $l per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by customary
anti-dilution provisions. Because of the nature of the Preferred Shares'
dividend, liquidation and voting rights, the value of the one one-hundredth
interest in a Preferred Share purchasable upon exercise of each Right should
approximate the value of one Common Share. The Preferred Shares would rank
junior to any other series of the Company's preferred stock.
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61
TRIGGER OF FLIP-IN AND FLIP-OVER RIGHTS
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
or any affiliate or associate thereof (which will thereafter be void), will
thereafter have the right to receive upon exercise, that number of Common Shares
having a market value of two times the exercise price of the Right. This right
will commence on the date of public announcement that a person has become an
Acquiring Person (or the effective date of a registration statement relating to
distribution of the rights, if later) and terminate 60 days later (subject to
adjustment in the event exercise of the rights is enjoined).
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, its affiliates or associates or certain
other persons in which such persons have an interest, proper provision will be
made so that each such holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right.
REDEMPTION AND EXCHANGE OF RIGHTS
At any time prior to the earliest of (i) the close of business on the
day of the first public announcement that a person has become an Acquiring
Person, or (ii) the Final Expiration Date, the Board of Directors of the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). In general, the redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
At any time after any Person becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one Common Share, or, under circumstances
set forth in the Rights Agreement, cash, property or other securities of the
Company, including fractions of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent designations and the
powers, preferences and rights, and the qualifications, limitations and
restrictions), per Right (with value equal to such Common Shares).
AMENDMENT OF RIGHTS
The terms of the Rights generally may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
except that from and after such time as the Rights are distributed no such
amendment may adversely affect the interests of the holders of the Rights
(excluding the interest of any Acquiring Person).
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ADDITIONAL INFORMATION
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated October
___, 1998. A copy of the Rights Agreement is available from the Company by
writing to: Axys Pharmaceuticals, Inc., 000 Xxxxxxx Xxx, Xxxxx Xxx Xxxxxxxxx, XX
00000, Attn: Chief Executive Officer. This summary description of the Rights is
not intended to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.
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