RIGHTS AGREEMENT (the "RIGHTS AGREEMENT"), effective as of September 8,
2006, between SYNOVICS PHARMACEUTICALS, INC., a Nevada corporation (the
"COMPANY") with executive offices at 0000 Xxxx Xxxxxxxxx Xxxx, Xxx. 000,
Xxxxxxx, Xxxxxxx 00000, and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, (the
"RIGHTS AGENT"), a New York corporation with executive offices located at 00
Xxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000.
INTRODUCTION
On September 8, 2006, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") authorized and declared a dividend of one common share purchase
Right (as hereinafter defined) for each share of Common Stock (as hereinafter
defined) outstanding at the close of business on September ___, 2006, (the
"RECORD DATE"), each right representing the right to purchase one share of
Common Stock upon the terms, and subject to the conditions, herein set forth. At
that time, the Board of Directors further authorized and directed the issuance
of one right with respect to each share of Common Stock that became outstanding
between the Record Date and the Distribution Date (as hereinafter defined).
AGREEMENT
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. Purposes of this Rights Agreement, the
following terms have the meanings set forth below:
(a) "ACQUIRING PERSON" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall become, at any time after
the date of this Rights Agreement (whether or not such status continues for any
period), the Beneficial Owner of shares of Common Stock representing 20% or more
of the Common Stock then outstanding, other than as a result of a Permitted
Offer, or any Person who or which, on the date hereof, together with all
Affiliates and Associates of such Person, owns in excess of 20% or more of the
Common Stock outstanding as of the date hereof, who or which becomes, at any
time after the date hereof (whether or not such status continues for any
period), the Beneficial Owner of additional shares of Common Stock representing
1% or more of the Common Stock then outstanding above that number of shares of
Common Stock of which such Person, together with all Affiliates and Associates
of such Person, was the Beneficial Owner on the date hereof, other than as a
result of a Permitted Offer. Notwithstanding the foregoing, (A) the term
"ACQUIRING PERSON" shall not include (i) the Company, any Subsidiary of the
Company, or any employee benefit plan of the Company or any Subsidiary of the
Company, or (ii) any Person, which together with all Affiliates and Associates
of such Person, shall become the Beneficial Owner of 20% or more of the then
outstanding Common Stock as a result of the acquisition of shares of Common
Stock directly from the Company following the date hereof (provided, however,
that if, after such acquisition, such Person, or an Affiliate or Associate of
such Person, becomes the Beneficial Owner of any additional shares of Common
Stock in an acquisition not made directly from the Company, then such Person
shall be deemed an Acquiring Person), or (iii) any Person, which
together with all Affiliates and Associates of such Person, owns in excess of
20% or more of the Common Stock outstanding as of the date hereof, shall become
the Beneficial Owner of an additional 1% or more of the then outstanding Common
Stock as a result of the acquisition of shares of Common Stock directly from the
Company following the date hereof (provided, however, that if, after such
acquisition, such Person, or an Affiliate or Associate of such Person, becomes
the Beneficial Owner of any additional shares of Common Stock in an acquisition
not made directly from the Company, then such Person shall be deemed an
Acquiring Person) and (B) no Person shall be deemed to be an "ACQUIRING PERSON"
either (X) as a result of the acquisition of shares of Common Stock by the
Company which, by reducing the number of shares of Common Stock outstanding,
increases the proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person; except that if (i) a
Person would become an Acquiring Person (but for the operation of this subclause
(X)) as a result of the acquisition of shares of Common Stock by the Company,
and (ii) after such share acquisition by the Company, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial Owner of any
additional shares of Common Stock, then such Person shall be deemed an Acquiring
Person, or (Y) if (x) (i) such Person, or an Affiliate or Associate of such
Person inadvertently becomes the Beneficial Owner of 20% or more of the
outstanding Common Stock, (ii) within eight days thereafter such Person notifies
the Board of Directors that such Person did so inadvertently, and (iii) within
two days after such notification, such Person is the Beneficial Owner of less
than 20% of the outstanding Common Stock, or (y) (i) such Person, together with
all Affiliates and Associates of such Person, that owns in excess of 20% or more
of the Common Stock outstanding as of the date hereof, shall inadvertently
become the Beneficial Owner of an additional 1% or more of the then outstanding
Common Stock, (ii) within eight days thereafter such Person notifies the Board
of Directors that such Person did so inadvertently, and (iii) within two days
after such notification, such Person is the Beneficial Owner of less than that
number of share of Common Stock held as of the date hereof plus 1% of the then
outstanding Common Stock.
(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
Exchange Act.
(c) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be deemed
to have acquired "beneficial ownership" of, or to "beneficially own", any
securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act as of the
date hereof;
(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), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise;
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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, 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
acquiring, holding, voting (except to the extent contemplated by the
proviso to Section 1(c)(ii)(B)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of "BENEFICIAL OWNER" 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) "BOARD OF DIRECTORS" shall have the meaning set forth in the recitals
to this Rights Agreement.
(e) "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in the City of New York, New York, are
authorized or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M., New York
City local time on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City local time on the next
succeeding Business Day.
(g) "COMMON STOCK," when used with reference to the Company, shall mean the
Company's common stock, par value $0.001 per share, and any other class or
classes or series of common stock of the Company resulting from any subdivision,
combination, recapitalization, or reclassification of shares of such common
stock. "COMMON STOCK" when used with 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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(h) "COMPANY" shall have the meaning set forth in the introductory
paragraph to this Rights Agreement.
(i) "DISTRIBUTION DATE" shall have the meaning set forth in Section 3(a)
hereof.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "EXCHANGE RATIO" shall have the meaning set forth in Section 24(a)
hereof.
(l) "FINAL EXPIRATION DATE" shall have the meaning set forth in Section
7(a) hereof.
(m) "NASDAQ" shall have the meaning set forth in Section 11(d) hereof.
(n) "PERMITTED OFFER" shall mean a tender or exchange offer or other offer
which is for all outstanding Common Stock at a price and on terms determined,
prior to the purchase of shares under such tender or exchange offer, by at least
a majority of the members of the Board of Directors who are not officers of the
Company and who are not (or would not be, if the offer were consummated)
Acquiring Persons or Affiliates, Associates, nominees, or representatives of an
Acquiring Person, to be adequate and otherwise in the best interest of the
Company and its stockholders (other than the Person or any Affiliate or
Associate thereof on whose basis the offer is being made). In determining
whether an offer is adequate or in the best interests of the Company and its
stockholders, the Board of Directors may take into account all factors that it
deems relevant including, without limitation, (1) the consideration being
offered in the proposal in relation to the Board's estimate of: (i) the current
value of the Company in a freely negotiated sale of either the Company by
merger, consolidation, or otherwise, or all or substantially all of the
Company's assets, (ii) the current value of the Company if orderly liquidated,
and (iii) the future value of the Company over a period of years as an
independent entity discounted to current value; (2) then existing political,
economic, and other factors bearing on security prices generally or the current
market value of the Company's securities in particular; (3) whether the proposal
might violate federal, state, or local laws; (4) the financial conditions and
earnings prospects of the person making the proposal, including the person's
ability to service its debt and other existing or likely financial obligations;
and (5) the competence, experience, and integrity of the person making the
acquisition proposal.
(o) "PERSON" shall mean any individual, firm, partnership, corporation,
trust, association, joint venture, or other entity, and shall include any
successor (by merger or otherwise) of such entity. Notwithstanding anything
herein to the contrary, when two or more Persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring, holding, or
disposing of shares of Common Stock or other securities of the Company, such
partnership, limited partnership, syndicate, or group shall be deemed a "PERSON"
for the purposes of this Agreement.
(p) "PRINCIPAL PARTY" shall have the meaning set forth in Section 13(b)
hereof.
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(q) "PURCHASE PRICE" shall have the meaning set forth in Section 7(a)
hereof.
(r) "RECORD DATE" shall have the meaning set forth in the recitals to this
Rights Agreement.
(s) "REDEMPTION DATE" shall have the meaning set forth in Section 7(a)
hereof.
(t) "REDEMPTION PRICE" shall have the meaning set forth in Section 23
hereof.
(u) "RIGHTS" shall mean the rights to purchase shares of Common Stock
authorized by the Board of Directors of the Company after the Record Date.
(v) "RIGHTS AGENT" shall have the meaning set forth in the introductory
paragraph to this Rights Agreement.
(w) "RIGHTS AGREEMENT" shall have the meaning set forth in the introductory
paragraph to this Rights Agreement.
(x) "RIGHT CERTIFICATES" shall have the meaning set forth in the Section
3(a) hereof.
(y) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(z) "SHARES ACQUISITION DATE" shall mean the first date of a public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such;
provided, that, if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a) hereof, then no Shares Acquisition Date shall be
deemed to have occurred.
(aa) "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.
(bb) "SUMMARY OF RIGHTS" shall have the meaning set forth in Section 3(b)
hereof.
(cc) "TRADING DAY" shall have the meaning set forth in Section 11(d)
hereof.
(dd) "VOTING SECURITIES" shall have the meaning set forth in Section 13(a)
hereof.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall, prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, and which will be deemed a "Rights Agent" for all purposes hereunder.
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SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the close of business on the tenth day after
the Shares Acquisition Date, or (ii) the close of business on the tenth day (or
such later date as may be determined by action of the Board of Directors of the
Company prior to such time as any Person becomes an Acquiring Person) after the
date that a tender or exchange offer 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 shares of Common Stock for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2 of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would be either (X) the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding,
or (Y) the Beneficial Owner of an additional 1% of the Common Stock then
outstanding, provided (with respect to clause (Y)) such Person owned in excess
of 20% or more of Common Stock outstanding as of the date hereof (the earlier of
such dates being herein referred to as the "DISTRIBUTION DATE"), (x) the Rights
will be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for the shares of Common Stock registered in the names of the
holders thereof (which certificates shall also be deemed to be certificates for
Rights) and not by separate certificates, and (y) the Rights (and the right to
receive separate certificates ("RIGHT CERTIFICATES")) will be transferable only
in connection with the transfer of the underlying shares of Common Stock
(including a transfer to the Company) as more fully set out below. 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, postage-prepaid
mail, to each record holder of shares of Common Stock as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, which shall be in substantially the
form of Exhibit A hereto, evidencing one Right for each share of Common Stock so
held. As of and after the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) As promptly as reasonably practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Shares of Common
Stock, in substantially the form of Exhibit B hereto (the "SUMMARY OF RIGHTS"),
by first-class, postage-prepaid mail, to each record holder of shares of Common
Stock as of the close of business on the Record Date, at the address of such
holder shown on the records of the Company. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for shares of Common Stock outstanding, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with such shares of Common Stock.
(c) Certificates for shares of Common Stock which become outstanding
(including, without limitation, reacquired shares which are subsequently
disposed of by the Company) 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 a legend
in substantially the form set forth below:
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"THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT, AS IT MAY FROM TIME TO TIME BE
SUPPLEMENTED OR AMENDED, BETWEEN SYNOVICS PHARMACEUTICALS, INC. AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, THE TERMS OF WHICH ARE HEREBY
INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF SYNOVICS PHARMACEUTICALS, INC. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE
REDEEMED OR EXCHANGED, MAY EXPIRE, OR MAY BE EVIDENCED BY SEPARATE
CERTIFICATES AND NO LONGER BE EVIDENCED BY THIS CERTIFICATE. SYNOVICS
PHARMACEUTICALS, INC. WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF A
WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES, RIGHTS ISSUED TO, OR
HELD BY, ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID."
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the shares of Common Stock
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 therewith. In the event that the Company
purchases or acquires any shares of Common Stock prior to the Distribution Date,
any Rights associated with such shares of Common Stock shall be deemed canceled
and retired unless and until such shares of Common Stock are subsequently issued
by the Company so that the Company shall not be entitled to exercise any Rights
associated with the shares of Common Stock which are no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall be substantially the same
as provided for in Section 3(a) hereof 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 Rights Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto, or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Section 22 hereof,
the Right Certificates shall entitle the holders thereof to purchase such number
and kind of shares of Common Stock as shall be set forth therein at the price
per share set forth therein, but the number and kind of such shares of Common
Stock and the price per share shall be subject to adjustment as provided herein.
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(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) of this Rights Agreement and any Right Certificate issued pursuant to
Section 6, Section 11, or Section 22 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 RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY ARE NULL AND VOID."
Notwithstanding the above provision, failure to place such legend on any
Right Certificate representing Rights which are otherwise null and void pursuant
to the terms of this Rights Agreement shall not affect the null and void status
of such Rights.
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, any of its Vice Presidents, or its Treasurer,
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 Rights 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 principal office or offices designated as the appropriate place for
surrender or transfer of such Right Certificate, 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 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have
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become void pursuant to Section 11(a)(ii) hereof or that have been exchanged
pursuant to Section 24 hereof) may be transferred, split up, combined, or
exchanged for another Right Certificate or Right Certificates, respectively,
entitling the registered holder to purchase a like number and kind of shares of
Common Stock 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 principal office or offices of the Rights Agent
designated for such purpose. Thereupon, the Rights Agent shall countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any 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 make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed, or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 11(a)(ii) hereof, 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 principal
office or offices of the Rights Agent designated for such purpose, together with
payment of the price per share (rounded to the nearest cent) provided for in
paragraph (b) below (the "PURCHASE PRICE") for each share of Common Stock as to
which the Rights are exercised, at or prior to the earliest of (i) the Close of
Business on September 7, 2011 (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 for each share of Common Stock pursuant to the
exercise of a Right shall initially be $1,200, 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 of Common Stock 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, or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) requisition from any transfer agent of the
Common
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Stock certificates for the number and kind of shares of Common Stock to be
purchased (or depository receipts when appropriate) and the Company hereby
irrevocably authorizes its transfer agents to comply with all such requests,
(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, 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.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) So long as the Common Stock issuable upon the exercise of Rights may be
listed on any national securities exchange, the Company shall use its reasonable
best efforts to cause all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(f) Notwithstanding the foregoing, the Rights shall not be exercisable
under any circumstances unless there shall be at the time of exercise an
effective registration statement under the Securities Act relating to the
issuance of the shares of Common Stock upon the exercise thereof or the exchange
thereof pursuant to Section 24 hereof.
(g) Notwithstanding anything herein to the contrary, no Right shall
constitute an offer to sell or the solicitation of an offer to buy any
securities, nor shall there by any sale of Rights or the issuance of securities
upon exercise of the Rights in any state in which such offer, solicitation, or
sale would be unlawful prior to registration or qualification under the
securities laws of any such states.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination, or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof, except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise that 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 SHARES OF COMMON STOCK.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Common Stock or any Common
Stock held in its treasury, the number and kind of shares of Common Stock that
will be sufficient to permit the exercise in full of all outstanding Rights in
accordance with this Rights Agreement.
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(b) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Common Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares of Common Stock.
(c) The Company 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 shares
of Common Stock upon the exercise of Rights. The Company shall not, however, be
required (i) 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 depository receipts for the shares of
Common Stock in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or (ii) to issue or to
deliver any certificates for shares of Common Stock 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.
SECTION 10. RECORD HOLDERS OF COMMON STOCK ISSUED UPON EXERCISE OF RIGHTS.
Each person in whose name any certificate for shares of Common Stock is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the shares of Common Stock represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered 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 Company's transfer books for the
shares of Common Stock are closed, such person shall be deemed to have become
the record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which such transfer books are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Common Stock for which the
Rights evidenced thereby 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 AND KIND OF SHARES OF
COMMON STOCK OR NUMBER OF RIGHTS. The Purchase Price, the number of shares of
Common Stock or other securities covered by each Right, and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time after the Record Date
(A) declare a dividend on the Common Stock payable in Common Stock,
(B) subdivide the outstanding shares of Common Stock into a greater
number of such shares, (C) combine the outstanding shares of Common
Stock into a smaller
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number of such shares, or (D) issue any shares of its capital stock in
a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
for Rights 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, upon payment of the Purchase
Price then in effect, 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 Common
Stock transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such
dividends, subdivision, combination, or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one such Right be less than the per share par value of the
Common Stock. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii), 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).
(ii) Subject to Section 24 of this Rights Agreement, in the event any
Person becomes an Acquiring Person, then the Purchase Price for each
share of Common Stock issuable upon exercise of Rights shall be
reduced to an amount equal to 33 1/3% of the current per share market
price of such Common Stock (determined pursuant to Section 11(d)) on
the Shares Acquisition Date). Notwithstanding the above, if the
transaction that would otherwise give rise to the classification of a
Person as an Acquiring Person 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).
From and after the occurrence of a Person becoming an Acquiring
Person, any Rights that are or were acquired or beneficially owned by
such Acquiring Person, or any subsequently deemed Acquiring Person (or
any Associate or Affiliate of each such Acquiring Person) shall be
void and any such Acquiring Person shall thereafter have no right to
exercise such Rights under any provision of this Rights Agreement. No
Right Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Right Certificate shall be issued
at any time upon the transfer of any Rights to or from an Acquiring
Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to or from any nominee of
such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to or from an
Acquiring Person (or any Associate, Affiliate or nominee of such
Acquiring Person) whose Rights would be void pursuant to the preceding
sentence shall be canceled.
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(iii) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph, the Company shall, to the extent permitted by applicable
law, take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exercise of the Rights,
including the calling of a meeting of stockhholders; provided,
however, if the Company is unable to cause the authorization of
additional shares of Common Stock, then the Company, to the extent
necessary and permitted by applicable law and any agreements or
instruments in effect on the date hereof to which it is a party,
shall, at its option (A) pay cash equal to twice the applicable
Purchase Price (as adjusted pursuant to this Section 11) in lieu of
issuing any such shares of Common Stock and requiring payment
therefor, (B) issue equity securities having a value equal to the
market price of the shares of Common Stock which otherwise would have
been issuable pursuant to the foregoing subparagraph, which value
shall be determined by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent, or (C) distribute a combination of Common Stock, cash, and/or
other equity securities having a value equal to the market price of
the shares of the Common Stock which are otherwise issuable pursuant
to the foregoing subparagraph (ii), determined in accordance with the
preceding clause (B), upon exercise of the related Rights.
(b) In case the Company shall fix a record date for the issuance of rights
(other than the Rights), options, or warrants to all holders of Common Stock
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase shares of Common Stock, or securities
convertible into shares of Common Stock at a price per share (or having a
conversion price per share, if a security convertible into Common Stock) less
than the then current per share market price (as defined in Section 11(d)) of
the Common Stock 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 shares of Common Stock outstanding on such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of 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 per share market price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock 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 per share 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 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.
Shares of Common Stock owned by, or held for the account of, the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is
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fixed; and in the event that such rights, options, or warrants 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 shares of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, a dividend
payable in shares of Common Stock or other distribution referred to in Section
11(a) hereof) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price 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 Common Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent) of the portion of such
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of Common Stock and the denominator
of which shall be such current per share market price of the Common Stock;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the per share 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 if 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) For the purpose of any computation hereunder, the "CURRENT PER SHARE
MARKET PRICE" of a share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of Common Stock for the 30
consecutive Trading Days immediately prior to such date; provided, however, that
in the event that the current per share market price of a share of Common Stock
is determined during a period following the announcement by the Company of (A) a
dividend or distribution to holders of the shares of Common Stock, payable in
shares of Common Stock or securities convertible into shares of Common Stock, or
(B) any subdivision, combination, or reclassification of the Common Stock, and
prior to the expiration of 30 Trading Days 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 by the Board of Directors. 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 Common Stock 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 Common Stock is listed
or admitted to trading or, if Common Stock is not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by The Nasdaq Stock Market, Inc. ("NASDAQ") then in use, or, if on
any such date Common Stock is
-14-
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 Common
Stock, selected by the Board of Directors of the Company. If on any such date no
market-maker is making a market in the Common Stock, the fair value of Common
Stock on such date as determined in good faith by the Board of Directors of the
Company shall be used, whose determination shall be described in a statement
filed with the Rights Agent. The term "TRADING DAY" shall mean a day on which
the principal national securities exchange on which Common Stock is listed or
admitted to trading is open for the transaction of business or, if the Common
Stock is not listed or admitted to trading on any national securities exchange,
a Business Day. If the Common Stock is not publicly held or so listed or traded,
"current per share market price" shall mean the fair value per share 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.
(e) Anything herein to the contrary notwithstanding, 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 ten-thousandth of a share as the case may be.
(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 shares of Common Stock,
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 Common
Stock contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Common Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made hereunder to the Purchase Price applicable thereto shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
shares of Common Stock or other capital stock purchasable from time to time
hereunder upon exercise of such Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each related Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, the number of shares of
Common Stock (calculated to the nearest one ten-thousandth of a share) obtained
by (i) multiplying (x) the number of shares covered by such Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior
to such Purchase Price adjustment, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such Purchase Price adjustment.
-15-
(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 shares of Common Stock purchasable upon the exercise of a
Right. Each of such Rights outstanding after such adjustment of the number of
such Rights shall be exercisable for the number of shares of Common Stock for
which such Right was exercisable immediately prior to such adjustment. Each such
Right held of record prior to such adjustment of the number of Rights shall
become that number of such Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of such Purchase Price by the Purchase Price in effect immediately
after such adjustment. 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 such Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of such Right Certificates on such
record date 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 such
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 shares of Common Stock 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 shares of Common Stock which were expressed in
such Right Certificates theretofore issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Common Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any related Right exercised after such record date of
the Common Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company 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.
-16-
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make any adjustments 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 (i) any consolidation or subdivision of the Common Stock, (ii)
issuance wholly for cash or any Common Stock at less than the current market
price, (iii) issuance wholly for cash or Common Stock or securities which by
their terms are convertible into or exchangeable for shares of Common Stock,
(iv) dividends on the Common Stock payable in shares of Common Stock, or (v)
issuance of rights, options, or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of shares of Common Stock, shall
not be taxable to such stockholders.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Sections 23 or 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 otherwise eliminate the benefits intended to be
afforded by the Rights. Notwithstanding the foregoing, prior to the Distribution
Date the Company shall be entitled to amend this Rights Agreement and the Rights
in any and all respects.
SECTION 12. CERTIFICATE OF ADJUSTMENT. Whenever an adjustment is made as
provided in Sections 11 or 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 Stock a copy of such certificate, and (c) include
a brief summary thereof in the next quarterly or current report filed pursuant
to the Exchange Act by the Company, and, following the Distribution Date, mail
such summary to each holder of a Right Certificate in accordance with Section 25
hereof.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, on or following the Distribution Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person, (y) the Company shall consolidate with, or merge with, any other
Person, and the Company shall be the continuing or surviving corporation of such
consolidation or merger (other than, in a case of any transaction described in
(x) or (y), a merger or consolidation which would result in all of the
securities generally entitled to vote in the election of directors ("VOTING
SECURITIES") of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into securities
of the surviving entity) all of the voting 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 or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person (other than the Company or any Subsidiary
-17-
of the Company in one or more transactions each of which does not violate
Section 11(n) hereof), then, and in each such case (except as provided in
Section 13(d) hereof), proper provision shall be made so that (i) each holder of
a Right, except as provided in Section 11(a) hereof, shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then current
Purchase Price (without giving effect to any adjustment to such Purchase Price
pursuant to Section 11(a)(ii)) multiplied by the number of shares of Common
Stock for which such Right is then exercisable, in accordance with the terms of
this Rights Agreement, such number of freely tradable shares of Common Stock of
the Principal Party, not subject to any liens, encumbrances, rights of first
refusal, or other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price (without giving effect to any
adjustment to such Purchase Price pursuant to Section 11(a)(ii)) by the number
of shares of Common Stock for which such Right is then exercisable and (B)
dividing that product by 50% of the then current per share market price of the
Common Stock 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 of the
obligations and duties of the Company pursuant to this Rights 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 only to such Principal Party following the first occurrence of an event
described in this Section 13; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its shares of Common Stock 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
the shares of Common Stock thereafter deliverable upon the exercise of the
Rights.
(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), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation (including, if applicable, the Company if it is the
surviving corporation); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earnings power
transferred pursuant to such transaction or transactions; provided,
however, that in any of the foregoing cases, (1) if the shares of
Common Stock of such Person are not at such time and have not been
continuously over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the shares of Common Stock of
which are and have been so registered, "Principal Party" shall refer
to such other Person; (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the shares of Common
Stock 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
-18-
Common Stock having the greatest aggregate market value; and (3) in
case 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 ventures as if such party were a "Subsidiary"
of both or all of such joint ventures 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 shares
of its authorized shares of Common Stock which have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal Party
shall have 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 further providing that, as soon as practicable after the date of any
consolidation, merger, sale, or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the 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; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event
that the events described in this Section 13 shall occur at any time
after the occurrence of the events described in Section 11(a)(ii), the
Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a Permitted Offer (or a wholly
owned subsidiary of any such Person or Persons), (ii) the price per share of the
Common Stock offered in such transaction is not less than the price per share of
Common Stock whose shares were purchased pursuant to such tender offer or
exchange
-19-
offer, and (iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this Section 13(d),
all Rights hereunder shall expire.
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 such 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 closing
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if such Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such 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 such Rights on such date 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, shall be used.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or exchange of the Rights for shares of
Common Stock pursuant to Section 24 of this Rights Agreement, or to distribute
certificates which evidence fractional shares of such securities. Fractions of
shares of Common Stock may, at the election of the Company, be evidenced by
depository receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided that such agreement shall provide that
the holders of such depositary receipts shall have the rights, privileges, and
preferences to which they are entitled as beneficial owners of the shares of
Common Stock represented by such depositary receipts. In lieu of fractional
shares of Common Stock or depositary receipts, the Company may 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 share of Common Stock. For the purposes of this Section
14(b), the current market value of a share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to the second sentence
of Section 11(d) hereof) for the Trading Day immediately prior to the date of
such exercise.
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(c) The holder of a Right by the acceptance of such 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
Rights Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
shares of Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the shares of Common Stock), without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the shares of Common Stock), 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 Rights Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Rights Agreement and will
be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to, this Rights Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. 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 shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by
a proper instrument of transfer;
(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 certificates for shares of Common Stock) 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 certificates for shares of Common Stock
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;
(d) notwithstanding anything in this Rights Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or a beneficial interest in a Right or other
Person as a result of its inability to perform any of its obligations
under this Rights Agreement by reason of any preliminary or permanent
injunction or other order, decree, or ruling issued by a court of
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competent jurisdiction or by a governmental, regulatory, or
administrative agency or commission, or any statute, rule, regulation,
or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best
reasonable efforts to have any such order, decree, or ruling lifted or
otherwise overturned as soon as possible; and
(e) prior to the Distribution Date and notwithstanding anything herein to
the contrary, the Company shall be entitled to amend this Rights
agreement and the Rights in any and all respects.
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 shares of Common Stock 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 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,
counsel fees, and other disbursements incurred in the administration and
execution of this Rights Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith, or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Rights Agreement, including the costs and
expenses of defending against any claim of liability in the indemnity provided
for herein. Such right to indemnification shall survive the expiration of the
Rights and the termination of this Rights 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 Rights Agreement in reliance upon any Right Certificate
or certificate for shares of Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed, and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
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
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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 stock transfer of all or
substantially all of the corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Rights 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; and in case at that time any of the
Right Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Rights Agreement.
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 the
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 Rights Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations imposed by this Rights Agreement upon the following terms and
conditions, 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 (who may be, but need
not be, legal counsel for the Company or its own in-house counsel), 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 Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board of
Directors, the Chief Executive Officer, the President, 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 Rights
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 gross negligence, bad faith, or willful misconduct.
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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 Rights Agreement or in the
Right Certificates (except its countersignature on such Rights Certificates) or
be required to verify the same, but all such statements and recitals are, and
shall be deemed to have been, made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any 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, 7, 11, 13, 23, 24, 27 or
29 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 actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Common Stock will, when issued, be
validly authorized and issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge, and
deliver, or cause to be performed, executed, acknowledged, and delivered, all
such further and other acts, instruments, and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights 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 of Directors, the Chief Executive Officer, the
President, any Vice President, the Treasurer, or the Secretary 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.
(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
Rights Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect, or misconduct of any such attorneys
or agent or for any loss to the Company resulting from any such act, default,
neglect, or misconduct, provided reasonable care was exercised in the selection.
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SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the shares of Common Stock 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 of the shares of Common Stock by registered
or 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 (a) a corporation organized and
doing business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust 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 $25
million, or (b) an affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties, and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act, or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the shares of
Common Stock and mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights, 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 Rights Agreement
In addition, in connection with the issuance or sale of shares of Common
Stock 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 shares
of Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise,
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conversion, or exchange of securities, notes, or debentures issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue 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 Board of Directors of the Company may, at its option, at any time
prior to such time as any Person becomes an Acquiring Person, redeem all, but
not less than all, of the then outstanding Rights at an initial redemption price
of $0.0001 per Right (the "REDEMPTION PRICE"). The Redemption Price shall be
appropriately adjusted to reflect any stock split, stock dividend, or similar
transaction occurring after the date hereof. The redemption of the Rights by the
Board of Directors may be made effective at such time, on such basis, and with
such conditions as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 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, 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, if such Board of Director
action occurs prior to the Distribution Date, on the registry books of the
transfer agent for the shares of Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption 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
shares of Common Stock prior to the Distribution Date.
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 shares
of Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend, or similar
transaction occurring after the date hereof (such exchange ratio being
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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, any entity
holding shares of Common Stock for or pursuant to the terms of any such plan or
any trust agreement entered into by the Company to secure benefits payable under
any employee benefit plan of the Company or any Subsidiary of the Company),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of shares of Common Stock representing 50% or more of the
shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly mail a notice
of any such exchange to all of the holders of the Rights at such last addresses
as they appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the shares of Common Stock for Rights will be effected
and, in the event of any partial exchange, the number and kind of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights being exchanged (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
such Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
issued, but not outstanding or authorized, but unissued to permit any exchange
of Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company, following the Distribution Date, shall propose (i)
to pay any dividend payable in stock of any class or series to holders of shares
of Common Stock or to make any other distribution to holders of shares of Common
Stock (other than a regular quarterly cash dividend), (ii) to offer to holders
of shares of Common Stock rights or warrants to subscribe for, or to purchase,
any additional shares of Common Stock or any other securities, rights, or
options, (iii) to effect any reclassification of the Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of Common
Stock), (iv) to effect any consolidation or merger with or into, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which does not violate Section
11(n) hereof), or (v) to effect the liquidation, dissolution, or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
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Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action to the extent feasible, which shall specify the record date for
the purposes 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 holders of shares of Common Stock if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of shares of Common Stock for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by holders
of shares of Common Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any of the events 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 such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
SECTION 26. NOTICES. Notices or demands authorized by this Rights Agreement
to be given or made by the Rights Agent or by the holder of 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:
Synovics Pharmaceuticals, Inc.
0000 Xxxx Xxxxxxxxx Xxxx, Xxx. 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by the
holder of 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:
Continental Stock Transfer & Trust Company
00 Xxxxxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Compliance Department
Notices or demands authorized by this Rights 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
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provision of this Rights Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Rights Agreement without the approval of any
holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to change or supplement the provisions hereunder
in any manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Right Certificates (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Rights Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing, or clarifying the rights of, and/or the
benefits to, the holders of Rights. Without limiting the foregoing, the Company
may at any time prior to such time as any Person becomes an Acquiring Person
amend this Rights Agreement to lower the thresholds set forth in Sections 1(a)
and 3(a) hereof with respect to (x) any Person who or which, on the date hereof,
together with Affiliate and Associates of such Person, owns less than 20% of the
outstanding Common Stock of the Company, decrease the triggering ownership
percentage from 20% to not less than the greater of (i) any percentage greater
than the largest percentage of the then outstanding shares of Common Stock then
known by the Company to be beneficially owned by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any Subsidiary of the Company, any entity holding shares of Common Stock for
or pursuant to the terms of any such plan, or any person exempted from the
definition of Acquiring Person pursuant to the last sentence of the definition
thereof set forth in Section 1 of this Rights Agreement) together with all
Affiliates or Associates of such Person, or (ii) 10%; and (y) any Person who or
which, on the date hereof, together with all Affiliates and Associates of such
Person, owns in excess of 20% or more of the Common Stock outstanding as of the
date hereof, decrease the triggering ownership percentage from an additional 1%
of the then current outstanding Common Stock to not less than 0.01%. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment,
provided that such supplement or amendment does not adversely affect the rights
or obligations of the Rights Agent under Section 18 or Section 20 of this Rights
Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of shares of
Common Stock.
SECTION 28. SUCCESSORS. All the covenants and provisions of this Rights
Agreement by, or for the benefit of, the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS BY THE BOARD OF DIRECTORS. For all purposes of
this Rights Agreement, any calculation of the number of shares of Common Stock
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and
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Regulations under the Exchange Act. The Board of Directors of the Company shall
have the exclusive power and authority to administer this Rights Agreement and
to exercise all rights and powers specifically granted to the Board of Directors
or to the Company, or as may be necessary or advisable in the administration of
this Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including a determination to redeem or not redeem the Rights
or to amend the Rights Agreement or a determination that an adjustment to the
Redemption Price or Exchange Ratio is or is not appropriate). All such actions,
calculations, interpretations, and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board of Directors in good faith, shall (x) be final, conclusive,
and binding on the Company, the Rights Agent, the holders of the Rights, and all
other parties, and (y) not subject the Board of Directors to any liability to
the holders of the Rights.
SECTION 30. BENEFITS OF THE RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent, and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the shares of Common Stock) any legal or equitable
right, remedy, or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent,
and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the shares of Common Stock).
SECTION 31. SEVERABILITY. If any term, provision, covenant, or restriction
of this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, or unenforceable, the remainder of the terms,
provisions, covenants, and restrictions of this Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired, or invalidated.
SECTION 32. GOVERNING LAW. This Rights Agreement and each Right Certificate
issued hereunder shall be deemed to be 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 Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed and attested, all as of the day and year first written above.
ATTEST: SYNOVICS PHARMACEUTICALS, INC.
BY: BY:
------------------------ -------------------------------------
ASSISTANT SECRETARY XXXXXX X. XXXX, PH.D.
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT, AND CHIEF EXECUTIVE
OFFICER
ATTEST: CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
BY: BY:
------------------------ -------------------------------------
ASSISTANT SECRETARY VICE PRESIDENT
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EXHIBIT A
FORM OF RIGHT CERTIFICATE
CERTIFICATE NO. R-_______ ______ RIGHTS
NOT EXERCISABLE AFTER SEPTEMBER 7, 2011 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.0001 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
SYNOVICS 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 September 8, 2006 (the "RIGHTS AGREEMENT"), between
Synovics Pharmaceuticals, Inc., a Nevada corporation (the "COMPANY") and
Continental Stock Transfer & Trust Company (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. New York City local
time, on September 7, 2011, at the principal office of the Rights Agent, or at
the office of its successor as Rights Agent, one fully paid non-assessable share
of Synovics Pharmaceuticals, Inc. Common Stock, par value $0.001 per share (the
"STOCK"), at a purchase price of $1,200 per 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 shares of Stock which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number of Rights and Purchase Price as of September 8, 2006 (the "RECORD
DATE") based on the shares of Stock of the Company as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number of shares
of Stock which may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent 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 Rights Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like
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aggregate number of shares of Stock as the Rights evidenced by the Right
Certificate or 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
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate (i) may be redeemed by the Company at its option at a
redemption price of $0.0001 per Right, or (ii) may be exchanged in whole or in
part for shares of Stock. No fractional shares of Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, 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, receive
dividends, or be deemed for any purpose the holder of the shares of Stock or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any 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.
Witness the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of September ___, 2006.
ATTEST: SYNOVICS PHARMACEUTICALS, INC.
BY:
--------------------------------------
XXXXXX X. XXXX PH.D.
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT, AND CHIEF EXECUTIVE
OFFICER
COUNTERSIGNED:
---------------------
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
BY:
--------------------------------------
[AUTHORIZED SIGNATURE]
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EXHIBIT A - 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 will all right, title, and interest therein,
and does hereby irrevocably constitute and appoint _________________________,
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
------------------- --------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
----------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
--------------------------
Signature
ELECTION TO EXERCISE
To: Synovics Pharmaceuticals, Inc.
The undersigned hereby exercises his, her, or its rights to purchase shares
of Common Stock, par value $0.001 per share ("the Common Stock"), of Synovics
Pharmaceuticals, Inc., a Nevada corporation (the "COMPANY"), covered by the
within Right Certificate and tenders a lump sum payment herewith in the amount
of $_________ in accordance with the terms thereof, and requests that
certificates for the securities constituting such shares of Common Stock be
issued in the name of, and delivered to:
(Print Name, Address, and Social Security or Tax Identification Number)
Dated: Name
------------------ -------------------------------
(Print)
Address:
-------------------------------
(Signature)
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EXHIBIT B
SUMMARY OF RIGHTS TO
PURCHASE SHARES OF COMMON STOCK
Effective as of September 8, 2006, the Board of Directors of Synovics
Pharmaceuticals, Inc. (the "COMPANY") adopted a Rights Agreement (the "RIGHTS
AGREEMENT") and authorized and declared a dividend of one common share purchase
right (a "RIGHT") for each outstanding share of common stock, par value $0.001
per share of the Company (the "COMMON STOCK"). The dividend is payable on
September 8, 2006, to the stockholders of record on that date (the "RECORD
DATE"), and with respect to shares of Common Stock issued thereafter until the
Distribution Date (as hereinafter defined) or the expiration or earlier
redemption or exchange of the Rights. Except as set forth below, each Right
entitles the registered holder to purchase from the Company, at any time after
the Distribution Date one share of Common Stock at a price per share of $1,200,
subject to adjustment (the "PURCHASE PRICE"). The description and terms of the
Rights are as set forth in the Rights Agreement.
Initially the Rights will be attached to all certificates representing
shares of Common Stock then outstanding, and no separate Rights Certificates
will be distributed. The Rights will separate from the shares of Common Stock
upon the earlier to occur of (i) 10 days after the public announcement of a
person's or group of affiliated or associated persons' having acquired
beneficial ownership of 20% or more of the outstanding shares of Common Stock
or, in the case of any Person or group of affiliated or associated persons'
beneficially owning in excess of 20% of the outstanding shares of Common Stock
as of September 8, 2006, the increase in the beneficial ownership of such person
or group of affiliated or associated person by 1% or more (such person or group
being hereinafter referred to as an "ACQUIRING PERSON"); or (ii) 10 days in (or
such later date as the Board of Directors may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group's
becoming an Acquiring Person (the earlier of such dates being called the
"DISTRIBUTION DATE").
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with, and only with, the shares of Common Stock. Until the
Distribution Date (or earlier redemption or expiration), new Common Stock
certificates issued after the Record Date upon transfer or new issuance of
shares of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock 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 shares of Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (the "RIGHT
CERTIFICATES") will be mailed to holders of record of the shares of Common Stock
as of the close of business on the Distribution Date (and to each initial record
holder of certain shares of Common Stock issued after the Distribution Date),
and such separate Right Certificates alone will evidence the Rights.
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The Rights are not exercisable until the Distribution Date. The Rights will
expire on September ___, 2011 (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.
In the event that any person becomes an Acquiring Person (except pursuant
to a tender or exchange offer or other offer which is for all outstanding shares
of Common Stock at a price and on terms which a majority of certain members of
the Board of Directors determines to be adequate and in the best interests of
the Company, its stockholders and other relevant constituencies, other than such
Acquiring Person, its affiliates and associates (a "PERMITTED OFFER")), each
holder of a Right will thereafter have the right (the "FLIP-IN RIGHT") to
acquire one share of Common Stock for a purchase price equal to 33 1/3% of the
then current market price. Notwithstanding the foregoing, all Rights that are,
or were, beneficially owned by an Acquiring Person or any affiliate or associate
thereof will be null and void and not exercisable.
In the event that, at any time following the Distribution Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the holders of all of the outstanding shares of Common Stock immediately
prior to the consummation of the transaction are not the holders of all of the
surviving corporations' voting power, or (ii) more than 50% of the Company's
assets or earning power is sold or transferred, then each holder of a Right
(except Rights which have been previously voided as set forth above) shall
thereafter have the right (the "FLIP-OVER RIGHT") to receive, upon exercise and
payment of the Purchase Price, shares of Common Stock of the acquiring company
having a value equal to two times the Purchase Price. If a transaction would
otherwise result in a holder's having a Flip-In as well as a Flip-Over Right,
then only the Flip-Over Right will be exercisable; if a transaction results in a
holder's having a Flip-Over Right subsequent to a transaction resulting in a
holder's having a Flip-In Right, a holder will have Flip-Over Rights only to the
extent such holder's Flip-In Rights have not been exercised.
The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of the Common
Stock, (ii) upon the grant to holders of shares of Common Stock of certain
rights or warrants to subscribe for or purchase Common Stock at a price, or
securities convertible into shares of Common Stock with a conversion price, less
than the then current market price of the Common Stock, or (iii) upon the
distribution to holders of the shares of Common Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in shares of Common Stock) or
of subscription rights or warrants (other than those referred to above).
However, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1%.
No fractional shares of Common Stock will be issued and in lieu thereof, an
adjustment in cash will be made based on the market price of the Common Stock on
the last trading day prior to the date of exercise.
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At any time prior to the time a person becomes an Acquiring Person, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.0001 per Right (the "REDEMPTION PRICE"). The redemption
of the Rights may be made effective at such time on such basis and 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 shares of Common Stock representing 50%
or more of the then outstanding shares of Common Stock, the Board of Directors
of the Company may exchange the Rights (other than Rights which have become null
and void), in whole or in part, at an exchange ratio of one share of Common
Stock per Right (subject to adjustment).
All of the provisions of the Rights Agreement may be amended prior to the
Distribution Date by the Board of Directors of the Company for any reason it
deems appropriate. Prior to the Distribution Date, the Board is also authorized,
as it deems appropriate, to lower the thresholds for distribution and Flip-In
Rights to not less than the greater of (i) any percentage greater than the
largest percentage then held by any stockholder (other than certain exempted
parties), or (ii) 10%. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board of Directors in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten or lengthen
any time period under the Rights Agreement.
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. While the distribution of the Rights will not
be taxable to stockholders of the Company, stockholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
Notwithstanding anything herein to the contrary, no Right shall constitute
an offer to sell or the solicitation of an offer to buy any securities, nor
shall there by any sale of Rights or the issuance of securities upon exercise of
the Rights in any state in which such offer, solicitation, or sale would be
unlawful prior to registration or qualification under the securities laws of any
such states.
Notwithstanding the foregoing, the Rights shall not be exercisable under
any circumstances unless there shall be at the time of exercise an effective
registration statement under the Securities Act of 1933, as amended, relating to
the issuance of the shares of Common Stock issuable upon the exercise or
exchange of the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Registration Statement on
Form 8-A with respect to the Rights filed with the Securities and Exchange
Commission (Commission File No. 0-22011). A copy of the Rights Agreement is
available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference.
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