ARTES MEDICAL, INC. PREFERRED SHARES RIGHTS AGREEMENT
Exhibit 4.22
Execution Copy
Execution Copy
ARTES MEDICAL, INC.
This Preferred Shared Rights Agreement, dated as of June 13, 2008 (this “Agreement”),
is made between Artes Medical, Inc., a Delaware corporation (the “Company”), and Mellon
Investor Services LLC, a New Jersey limited liability company, as rights agent (the “Rights
Agent”).
RECITALS
On May 29, 2008 (the “Rights Dividend Declaration Date”), the Board of Directors of
the Company authorized and declared a dividend of one Preferred Share (as hereinafter defined)
purchase right (a “Right”) for each Common Share (as hereinafter defined) of the Company
outstanding as of the Close of Business (as hereinafter defined) on June 23, 2008 (the “Record
Date”), each Right representing the right to purchase one one-thousandth of a Preferred Share
(as such number may be adjusted pursuant to the provisions of this Agreement), having the rights,
preferences and privileges set forth in the form of Certificate of Designations attached to this
Agreement as Exhibit A, upon the terms and subject to the conditions herein set forth, and
further authorized and directed the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earlier of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined), and in certain circumstances after the
Distribution Date.
AGREEMENT
The parties agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following terms have the
meanings indicated:
(a) “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 20% or more of the Common Shares then
outstanding without prior approval of the Board of Directors, but shall not include the Company,
any Subsidiary of the Company or any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring Person solely as the
result of an acquisition of Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by such Person to 20%
or more of the Common Shares of the Company then outstanding; provided, however,
that if a Person shall become the Beneficial Owner of 20% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of an additional 1% or more of the Common
Shares of the Company then outstanding, (other than pursuant to a dividend or distribution paid or
made by the Company on the outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the
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outstanding Common Shares), then such Person shall be deemed to be an Acquiring Person unless upon
becoming the Beneficial Owner of such additional Common Shares of the Company such Person does not
beneficially own 20% or more of the Common Shares of the Company then outstanding. Notwithstanding
the foregoing, (i) if the Board of Directors of the Company determines in good faith that a Person
who would otherwise be an “Acquiring Person” as defined pursuant to the foregoing provisions of
this Section 1(a) has become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of the Common Shares that would
otherwise cause such Person to be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this Section 1(a) or (B) such Person was aware of the extent of the Common Shares it
beneficially owned but had no actual knowledge of the consequences of such beneficial ownership
under this Agreement) and without any intention of changing or influencing control of the Company,
and if such Person divested or divests as promptly as practicable a sufficient number of Common
Shares to that such Person would no longer be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed to be or to have
become an “Acquiring Person” for any purposes of this Agreement; and (ii) if, as of the date
hereof, any Person is the Beneficial Owner of 20% or more of the Common Shares outstanding, such
Person shall not be or become an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this Section 1(a), unless and until such time as such Person shall become the
Beneficial Owner of an additional 1% or more of the Common Shares then outstanding (other than
pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares
in Common Shares or pursuant to a split or subdivision of the outstanding Common Shares), unless,
upon becoming the Beneficial Owner of such additional Common Shares, such Person is not then the
Beneficial Owner of 20% or more of the Common Shares then outstanding.
(b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), as in effect on the date of this Agreement.
(c) A Person shall be deemed the “Beneficial Owner” of and shall be deemed to
“beneficially own” any securities:
(i) which such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Rule 13d-3 thereunder
(or any comparable or successor law or regulation);
(ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, 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, whether or not
in writing (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;
provided, however, that a Person shall not be deemed pursuant to this Section
l(c)(ii)(A) to be the Beneficial Owner of, or to beneficially own, (1) 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
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exchange
or (2) securities which a Person or any of such Person’s Affiliates or Associates may be deemed to
have the right to acquire pursuant to any merger or other acquisition agreement between the Company
and such Person (or one or more of its Affiliates or Associates) if such agreement has been
approved by the Board of Directors prior to a Triggering Event; 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 under this
Section l(c)(ii)(B) 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
of 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 (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section l(c)(ii)(B)) or disposing of any securities of the
Company; provided, however, that in no case shall an officer or director of the
Company be deemed (x) the Beneficial Owner of any securities beneficially owned by another officer
or director of the Company solely by reason of actions undertaken by such persons in their capacity
as officers or directors of the Company or (y) the Beneficial Owner of securities held of record by
the trustee of any employee benefit plan of the Company or any Subsidiary of the Company for the
benefit of any employee of the Company or any Subsidiary of the Company, other than the officer or
director, by reason of any influence that such officer or director may have over the voting of the
securities held in the plan.
(d) “Board of Directors” shall mean the Board of Directors of the Company then in
office.
(e) “Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in New York, New Jersey and/or California 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., California time, on
such date; provided, however, that if such date is not a Business Day it shall mean
5:00 P.M., California time, on the next succeeding Business Day.
(g) “Common Shares” when used with reference to the Company shall mean the shares of
Common Stock of the Company, $0.001 par value. “Common Shares” when used with reference to
any Person other than the Company which shall be organized in corporate form shall mean the capital
stock (or other equity interest) with the greatest per share 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. “Common Shares” when used with reference to any
Person other than the Company which shall not be organized in corporate
form shall mean units of beneficial interest with shall represent the right to participate in
profits,
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losses, deductions and credits of such Person and which shall be entitled to exercise the
greatest voting power per unit of such Person.
(h) “common stock equivalents” shall have the meaning set forth in Section 11(a)(iii)
of this Agreement.
(i) “current per share market price” shall have the meaning set forth in Section 11(d)
of this Agreement.
(j) “Current Value” shall have the meaning set forth in Section 11(a)(iii) of this
Agreement.
(k) “Distribution Date” shall mean the earlier of (i) the Close of Business on the
tenth day after the Shares Acquisition Date (or, if the tenth day after the Shares Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date) or (ii) the Close of
Business on the tenth day (or such later date as may be determined by action of a majority of the
Board of Directors) after the date that a tender or exchange offer is commenced, or the first
public announcement of the intention to commence (which intention to commence remains in effect for
five Business Days after such announcement) 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 Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or sent or given within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if,
assuming the successful consummation thereof, such Person (together with its Affiliates and
Associates) would be the Beneficial Owner of 20% or more of the Common Shares then outstanding.
(l) “Equivalent Shares” shall mean Preferred Shares and any other class or series of
capital stock of the Company that is entitled to participate in dividends and other distributions,
including distributions upon the liquidation, dissolution or winding up of the Company, on a
proportional basis with the Common Shares. In calculating the number of any class or series of
Equivalent Shares for purposes of Section 11 of this Agreement, the number of shares, or fractions
of a share, of such class or series of capital stock that is entitled to the same dividend or
distribution as a whole Common Share shall be deemed to be one share.
(m) “Expiration Date” shall mean the earliest of (i) the Close of Business on the
Final Expiration Date, (ii) the Redemption Date, (iii) the time at which the Board of Directors
orders the exchange of the Rights as provided in Section 24 of this Agreement or (iv) the
consummation of a transaction contemplated by Section 13(d) of this Agreement.
(n) “Final Expiration Date” shall mean June 12, 2018.
(o) “Nasdaq” shall have the meaning set forth in Section 11(d) of this Agreement.
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(p) “Person” shall mean any individual, firm, corporation, partnership, trust,
association, limited liability company or other entity, and shall include any successor (by merger
or otherwise) of such entity.
(q) “Post Transferee” shall have the meaning set forth in Section 7(e) of this
Agreement.
(r) “Preferred Shares” shall mean shares of Series A Participating Preferred Stock of
the Company, $0.001 par value, having the rights, preferences and privileges set forth in the form
of Certificate of Designations attached to this Agreement as Exhibit A and, to the extent
that there is not a sufficient number of Preferred Shares authorized to permit the full exercise of
the Rights, any other series of preferred stock of the Company, $0.01 par vale, designated for such
purpose containing terms substantially similar to the terms of the Preferred Shares.
(s) “Principal Party” shall have the meaning set forth in Section 13(b) of this
Agreement.
(t) “Prior Transferee” shall have the meaning set forth in Section 7(e) of this
Agreement.
(u) “Purchase Price” shall have the meaning set forth in Section 4(a) of this
Agreement.
(v) “Ratio of Exchange” shall have the meaning set forth in Section 24(a) of this
Agreement.
(w) “Record Date” shall have the meaning set forth in the recitals at the beginning of
this Agreement.
(x) “Redemption Date” shall mean the time at which the Board of Directors of the
Company orders redemption of the Rights as provided in Section 23 of this Agreement.
(y) “Redemption Price” shall have the meaning set forth in Section 23(a) of this
Agreement.
(z) “Right” shall have the meaning set forth in the recitals at the beginning of this
Agreement.
(aa) “Rights Agent” shall have the meaning set forth in the preamble of this
Agreement.
(bb) “Rights Certificate” shall have the meaning set forth in Section 3(a)of this
Agreement.
(cc) “Rights Dividend Declaration Date” shall have the meaning set forth in the
recitals at the beginning of this Agreement.
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(dd) “Section 11(a)(ii) Trigger Date” shall have the meaning set forth in
Section 11(a)(iii) of this Agreement.
(ee) “Section 13 Event” shall mean any event described in clause (i), (ii) or (iii) of
Section 13(a) of this Agreement.
(ff) “Securities Act” shall have the meaning set forth in Section 9(c) of this
Agreement.
(gg) “Security” shall have the meaning set forth in Section 11(d) of this Agreement.
(hh) “Shares Acquisition Date” shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a report filed pursuant
to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such or such earlier date as a majority of the members of the Board of Directors
shall become aware of the existence of an Acquiring Person; provided that, if such
person is determined not to have become an Acquiring Person pursuant to Section l(a)(ii) of this
Agreement, then no Shares Acquisition Date shall be deemed to have occurred.
(ii) “Spread” shall have the meaning set forth in Section 11(a)(iii) of this
Agreement.
(jj) “Subsidiary” of any Person shall mean any corporation or other entity of which an
amount of voting securities sufficient to elect a majority of the directors or Persons having
similar authority of such corporation or other entity is beneficially owned, directly or
indirectly, by such Person, or any corporation or other entity otherwise controlled by such Person.
(kk) “Substitution Period” shall have the meaning set forth in Section 11(a)(iii) of
this Agreement.
(ll) “Summary of Rights” shall have the meaning set forth in Section 3(b) of this
Agreement.
(mm) “Trading Day” shall have the meaning set forth in Section 11(d) of this
Agreement.
(nn) “Total Exercise Price” shall have the meaning set forth in Section 4(a) of this
Agreement.
(oo) “Trading Day” shall have the meaning set forth in Section 11(d) of this
Agreement.
(pp) A “Triggering Event” shall be deemed to have occurred upon any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares for or
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pursuant to the terms of any such plan), together with all Affiliates and Associates of such
Person, becoming an Acquiring Person.
Any determination required by the definitions contained in this Agreement shall e made by the
Board of Directors in its good faith judgment, which determination shall be binding on the Rights
Agent and the holders of the Rights.
2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act
as rights agent for the Company in accordance with the terms and conditions of this Agreement, 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. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of, any such co-rights
agents. In the event that the Company appoints one or more co-rights agents, the respective duties
of the Rights Agent and any co-rights agents shall be as the Company shall reasonably determine and
as shall be set forth in a written notice to the Rights Agent.
3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject to the provisions
of Sections 3(b) and 3(c) of this Agreement) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates and (ii) the right to receive Rights
Certificates will be transferable only in connection with the transfer of Common Shares. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for transfer of such
certificates for Common Shares shall also constitute the surrender for transfer of the Rights
associated with the Common Shares represented thereby. 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 and provided with
all the necessary information, send) by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Rights Certificate in substantially the form of
Exhibit B to this Agreement (a “Rights Certificate”), evidencing one Right for each
Common Share so held, subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per Common Share has been made pursuant to Section 11(a)(i), Section 11(i) or
Section 11(p) of this Agreement, then at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in accordance with
Section 14(a) of this Agreement) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As of the Distribution
Date, the Rights will be evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart from any transfer of
one or more Common Shares, and the holders of such Rights Certificates as listed in the records of
the Company or any transfer agent or registrar for the Rights shall be the record holders thereof.
The Company shall promptly notify the Rights Agent in writing upon the occurrence of a Distribution
Date and, if such notification is given orally, the Company shall confirm the same in writing on or
prior to the Business Day next following. Until such notice is
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received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that
the Distribution Date has not occurred.
(b) On the Record Date or as soon as practicable thereafter, the Company will send (or cause
to be sent) a copy of a Summary of Rights in substantially the form of Exhibit C to this
Agreement (the “Summary of Rights”), by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on the Record Date, at the address of such
holder shown on the records of the Company.
(c) Unless the Board of Directors, by resolution adopted at or before the time of the issuance
(including pursuant to the exercise of rights under the Company’s benefit plans) of any Common
Shares, specifies to the contrary, Rights shall be issued in respect of all Common Shares that are
issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration
Date or, in certain circumstances provided in Section 22 of this Agreement, after the Distribution
Date. Certificates representing such Common Shares shall also be deemed to be certificates for
Rights, and the Company shall cause such certificates to bear a legend in substantially the
following form:
This certificate also evidences and entitles the holder hereof to certain rights as
set forth in a Preferred Shares Rights Agreement between Artes Medical, Inc. and
Mellon Investor Services LLC, as the Rights Agent, dated as of June 13, 2008 (the
“Rights Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of Artes
Medical, Inc. Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Artes Medical, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person
or any Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed canceled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Shares which are no longer outstanding.
4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase Common Shares and of
assignment to be printed on the reverse thereof) shall be substantially in the form
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of Exhibit
B to this Agreement and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate (but which do not
affect the rights, duties or responsibilities of the Rights Agent) and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 of this Agreement, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date (or in the case of Rights issued with respect to
Common Shares issued by the Company after the Record Date, as of the date of issuance of such
Common Shares), shall show the date of countersignature by the Rights Agent, and on their face
shall entitle the holders thereof to purchase such number of one-thousandths of a Preferred Share
as shall be set forth therein at the price set forth therein (such exercise price per one
one-thousandth of a Preferred Share being hereinafter referred to as the “Purchase Price”
and the aggregate exercise price of all Preferred Shares issuable upon exercise of one Right being
hereinafter referred to as the “Total Exercise Price”), but the number and type of
securities purchasable upon the exercise of each Right and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 of this Agreement
that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a
transfer that the Board of Directors of the Company has determined is part of a plan, arrangement
or understanding that has as a primary purpose or effect avoidance of Section 7(e) of this
Agreement, or (iv) any subsequent transferee receiving transferred Rights from a Post Transferee or
a Prior Transferee, either directly or through one or more intermediate transferees, and any Rights
Certificate issued pursuant to Section 6 or Section 11 of this Agreement upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this sentence, shall be
null and void and no holder of such Rights shall have any rights whatsoever with respect to such
Rights pursuant to Section 7(e) hereof and such Rights Certificates shall contain (to the extent
the Rights Agent has notice thereof and to the extent feasible) a legend in substantially the
following form:
The Rights represented by this Rights Certificate are or were beneficially owned by
a Person who was or became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Preferred Shares Rights Agreement
between Artes Medical, Inc. and Mellon Investor Services LLC, as the
Rights Agent, dated as of June 13, 2008 (the “Rights Agreement”)).
Accordingly, this Rights Certificate and the Rights represented hereby are null and
void in the circumstances specified in Section 7(e) of the Rights Agreement.
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In the event that the Rights become exercisable, the Company shall notify the Rights Agent of which
Rights Certificates will be so legended.
5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President or any Vice President, either manually or by
facsimile signature, and by the Secretary or an Assistant Secretary of the Company, either manually
or by facsimile signature, and shall have affixed thereto the Company’s seal (if any) or a
facsimile thereof. The Rights Certificates shall be manually countersigned by an authorized
signatory of 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 Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any such person was not
such an officer.
(b) Following the Distribution Date, receipt of the Rights Agent of notice to that effect and
all other relevant information referred to in Section 3(a) of this Agreement, the Rights Agent will
keep or cause to be kept, at its office designated for such purposes, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on
its face by each of the Rights Certificates and the date of each of the Rights Certificates.
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 14 and 24 of this Agreement, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Rights Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one-thousandths of a Preferred Share (or, following
a Triggering Event, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Rights Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. The Rights Certificates
are transferable only on the registry books of the Rights Agent. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have properly completed and
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duly
signed the certificate contained in the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights
Agent shall reasonably request. Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e),
14 and 24 of this Agreement, countersign and deliver to the person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The Company or the Rights
Agent may require from the holders of the Rights Certificates payment of a sum sufficient to cover
any tax or charge that may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates. The Rights Agent shall have no duty or obligation to take any
action under any Section of this Agreement which requires the payment by a Rights holders of
applicable taxes and charges unless and until the Rights Agent is satisfied that all such taxes
and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence satisfactory to them of the
loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if mutilated, the Company will make and deliver a
new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Sections 4(b), 7(e), 23(b) or 24 of this Agreement, the registered holder of
any Rights 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 Rights
Certificate, with the form of election to purchase on the reverse side thereof duly executed and
properly completed, to the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one-thousandth of a Preferred Share
as to which the Rights are exercised, at or prior to the Expiration Date.
(b) The Purchase Price for each one-thousandth of a Preferred Share issuable pursuant to the
exercise of a Right shall initially be $50.00, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 of this Agreement and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase duly executed and properly completed, accompanied by payment of the Purchase
Price for the number of one-thousandths of a Preferred Share (or other securities or property, as
the case may be) to be purchased and an amount equal to any applicable tax or charge required to be
paid by the holder of such Rights Certificate in accordance with Section 9 of this Agreement in
cash, or by certified check or cashier’s check payable to the order of the Company, the Rights
Agent shall, subject to Section 20(k) of this Agreement, thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent for the Preferred Shares) a certificate or certificates for the
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number of
one-thousandths of a Preferred Share to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests or (B) if the Company shall have elected to
deposit the total number of one-thousandths of a Preferred Share issuable upon exercise of the
Rights hereunder with a depository agent, requisition from the depository agent of depository
receipts representing such number of one-thousandths of a Preferred Share as are to be purchased
(in which case certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depository agent) and the Company hereby directs the
depository agent to comply with such request, (ii) if and when necessary to comply with this
Agreement, requisition from the Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14 of this Agreement, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names as may be designated
by such holder and (iv) if and when necessary to comply with this Agreement, after receipt thereof,
deliver such cash to or upon the order of the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be reduced (including to zero) pursuant to
Section 11(a)(iii) of this Agreement) may be made in cash or by certified check or cashier’s check
payable to the order of the Company. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to Section 11(a) of
this Agreement, the Company will make all arrangements necessary so that such other securities,
cash and/or other property are available for distribution by the Rights Agent, if and when
necessary to comply with this Agreement.
(d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or to his or her duly authorized assigns, subject to the provisions of Section 14 of
this Agreement.
(e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Triggering Event or a Section 13 Event, any Rights beneficially owned by (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such (a “Post Transferee”), (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has
any continuing agreement, arrangement or understanding regarding the transferred Rights or
(B) a transfer which the Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this Section 7(e) (a
“Prior Transferee”) or (iv) any subsequent transferee receiving transferred Rights from a
Post Transferee or a Prior Transferee, either directly or through one or more intermediate
transferees, shall become null and void without any further action and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, and neither the Company nor the
Rights Agent shall have any obligation whatsoever with respect to such Rights or any Rights
Certificate whether under any provision of this Agreement or otherwise. The Company shall use all
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reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) of this
Agreement are complied with, but neither the Company nor the Rights Agent shall have any liability
to any holder of Rights Certificates or to any other Person as a result of the Company’s failure to
make any determinations with respect to an Acquiring Person or any of such Acquiring Person’s
Affiliates, Associates or transferees hereunder. The Company shall give the Rights Agent written
notice of the identity of any such Acquiring Person, Associate or Affiliate, or the nominee of any
of the foregoing, and the Rights Agent may rely on such notice in carrying out its duties under
this Agreement and shall be deemed not to have knowledge of the identity of any such Acquiring
Person, Associate or Affiliate, or the nominee of any of the foregoing unless and until it shall
have received such notice.
(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) properly completed and duly signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise
and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights 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 Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of
the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use its best efforts to cause to be reserved
and kept available out of and to the extent of its authorized and unissued shares of preferred
stock not reserved for another purpose (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Shares and/or other securities), the number of
Preferred Shares (and, following the occurrence of the Triggering Event, Common Shares and/or other
securities) that will be sufficient to permit the exercise in full of all outstanding Rights;
provided, however, that the Company shall be required to reserve and keep available
Preferred Shares or other securities sufficient to permit the exercise in full of all outstanding
Rights pursuant to the adjustments set forth in Section 11 or Section 13 hereof only if, and to the
extent that, the Rights become exercisable pursuant to such adjustments.
(b) If the Company shall hereafter list any of its Preferred Shares on a national securities
exchange, then so long as the Preferred Shares (and, following the occurrence of a
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Xxxxxxxxxx
Xxxxx, Xxxxxx Shares and/or other securities) issuable and deliverable upon exercise of the Rights
may be listed on a national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable (but only to the extent that it is
reasonably likely that the Rights will be exercised), all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a
Triggering Event in which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in accordance with
Sections 11(a)(ii) or 11(a)(iii) of this Agreement, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the Securities Act of 1933,
as amended (the “Securities Act”), with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such registration statement to become effective
as soon as practicable after such filing and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable for such securities and
(B) the date of expiration of the Rights. The Company may temporarily suspend, for a period not to
exceed ninety (90) days, the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such suspension, the Company
shall issue a public announcement (with written notice to the Rights Agent) stating that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement (with
written notification to the Rights Agent) at such time as the suspension is no longer in effect.
The Company will also use its best efforts to take such action as may be appropriate under, or to
ensure compliance with, the securities or “blue sky” laws of the various states in connection with
the exercisability of the Rights. Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction, unless the requisite qualification in such
jurisdiction shall have been obtained, or an exemption therefrom shall be available, and until a
registration statement under the Securities Act shall have been declared effective.
(d) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such Preferred Shares (subject to payment of the Purchase Price in respect
thereof), be duly and validly authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due and payable any and all
taxes and charges which may be payable in respect of the original issuance or delivery of the
Rights Certificates or of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any tax or charge which may be payable in respect of any transfer or
delivery of Rights Certificates to a person other than, or the issuance or delivery of certificates
or depository receipts for the Preferred Shares in a name other than that of, the registered holder
of the Rights Certificate evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depository receipts for Preferred Shares upon the exercise of any Rights until any
such tax or charge shall have been paid (any such tax or charge being payable by the holder of such
Rights Certificate at the time of surrender) or until it has
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been established to the Company’s and
the Rights Agent’s satisfaction that no such tax or charge is due.
10. Preferred Shares Record Date. Each person in whose name any certificate for a
number of one-thousandths of a Preferred Share is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of Preferred Shares represented thereby on,
and such certificate shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price multiplied by the number of
one-thousandths of a Preferred Share with respect to which the Rights have been exercised (and any
applicable taxes and charges) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Shares transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the Preferred Shares transfer
books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a holder of Preferred Shares for
which the Rights shall be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase
Price, the number and kind of shares or other property covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Common Shares payable in Common Shares, (B) subdivide the outstanding
Common Shares, (C) combine the outstanding Common Shares (by reverse stock split or otherwise)
into a smaller number of Common Shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Shares (including without
limitation any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11(a) and Section 7(e) of this Agreement: (1) each of the Rights
outstanding at the time of the record date for such dividend or the effective date of such
subdivision, combination, consolidation or reclassification shall be proportionately adjusted to
that number of Rights (calculated to the nearest one ten-thousandth (1/10,000) of a Right) equal to
a fraction (the “Exchange Ratio”), the numerator of which shall be the total number of
Common Shares or shares of capital stock issued in such dividend, subdivision, combination or
reclassification of the Common Shares outstanding immediately following such dividend, subdivision,
combination, consolidation or reclassification and the denominator of which shall be the total
number of Common Shares outstanding immediately prior to such time, and the number of Rights that
shall thereafter be issued with respect to each Common Share or share of such other capital stock
that shall become outstanding thereafter prior to the Distribution Date shall be equal to the total
number of outstanding Rights immediately after such event (as adjusted pursuant to this clause (1))
divided by the total number of outstanding Common Shares or shares of such other capital stock
immediately after such event (subject to further adjustment pursuant to the provisions of this
Agreement); (2) the Purchase Price in effect at the time of the
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record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be adjusted so that
the Purchase Price thereafter shall equal the result obtained by dividing the Purchase Price in
effect immediately prior to such time by the Exchange Ratio; provided, however,
that in no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon exercise of such
Right; and (3) the number of Preferred Shares or shares of such other capital stock issuable upon
the exercise of each Right shall remain unchanged immediately after such event, but, in the event
of a reclassification, the kind of shares issuable upon the exercise of each Right immediately
after such reclassification shall be adjusted to be the kind of shares of such other capital stock
issued in such reclassification, rather than Preferred Shares. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) of this Agreement, 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) of this Agreement.
(ii) Subject to Section 24 of this Agreement, in the event a Triggering Event shall have
occurred, then promptly following such Triggering Event, proper provision shall be made so that
each holder of a Right, except as provided in Section 7(e) of this Agreement, shall thereafter have
the right to receive for each Right, upon exercise thereof in accordance with the terms of this
Agreement and payment of the then-current Total Exercise Price, in lieu of a number of
one-thousandths of a Preferred Share, such number of Common Shares of the Company as shall equal
the result obtained by multiplying the then-current Purchase Price by the then number of
one-thousandths of a Preferred Share for which a Right was exercisable (or would have been
exercisable if the Distribution Date had occurred) immediately prior to the first occurrence of a
Triggering Event, and dividing that product by 50% of the current per share market price
(determined pursuant to Section 11(d) of this Agreement) for Common Shares on
the date of occurrence of the Triggering Event (such number of shares being hereinafter
referred to as the “Adjustment Shares”).
(iii) In lieu of issuing Common Shares in accordance with Section 11(a)(ii) of this Agreement,
the Company may, if the Board of Directors determines that such action is necessary or appropriate
and not contrary to the interest of holders of Rights (and, in the event that the number of Common
Shares which are authorized by the Company’s Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are not sufficient to
permit the exercise in full of the Rights, or if any necessary regulatory approval for such
issuance has not been obtained by the Company, the Company shall): (A) determine the excess of
(1) the value of the Common Shares issuable upon the exercise of a Right (the “Current
Value”) over (2) the Purchase Price (such excess, the “Spread”) and (B) with respect to
each Right, make adequate provision to substitute for such Common Shares, upon exercise of the
Rights, (1) cash, (2) a reduction in the Purchase Price, (3) other equity securities of the Company
(including, without limitation, shares or units of shares of any series of Preferred Stock which
the Board of Directors has deemed to have the same value as Common Shares (such shares or units of
shares of Preferred Stock are herein called “common stock equivalents”)), except to the
extent that the Company has not obtained any necessary stockholder or regulatory
-16-
approval for such
issuance, (4) debt securities of the Company, except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance, (5) other assets or
(6) any combination of the foregoing, having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board of Directors based upon the advice of a
nationally recognized investment banking firm selected by the Board of Directors (whose
determination shall be described in a statement filed with the Rights Agent and shall be conclusive
and binding on the Rights Agent and the holders of the Rights); provided, however,
if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first occurrence of a Triggering Event and
(y) the date on which the Company’s right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares (to the extent available), except to
the extent that the Company has not obtained any necessary stockholder or regulatory approval for
such issuance, and then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Board of Directors shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon exercise in full of the
Rights or that any necessary regulatory approval for such issuance will be obtained, the thirty
(30) day period set forth above may be extended to the extent necessary (with prompt written notice
of such extension to the Rights Agent), but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares or take action to obtain such regulatory approval (such
period, as it may be extended, the “Substitution Period”). To the extent that the Company
determines that some action need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) of this Agreement, that
such action shall apply uniformly to all outstanding Rights and (y) may suspend the exercisability
of the Rights until the
expiration of the Substitution Period in order to seek any authorization of additional shares,
to take any action to obtain any required regulatory approval and/or to decide the appropriate form
of distribution to be made pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public announcement (with prompt
written notice to the Rights Agent) stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement and prompt written notification to the
Rights Agent at such time as the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Shares shall be the current per share market price (as
determined pursuant to Section 11(d) of this Agreement) of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any “common stock equivalent” shall be deemed to
have the same value as the Common Shares on such date.
(b) In case the Company shall, at any time after the date of this Agreement, fix a record date
for the issuance of rights, options or warrants to all holders of Common Shares or of any class or
series of Equivalent Shares entitling such holders (for a period expiring within forty-five (45)
calendar days after such record date) to subscribe for or purchase Common Shares or Equivalent
Shares or securities convertible into Common Shares or Equivalent Shares at a price per share (or
having a conversion price per share, if a security convertible into Common Shares or Equivalent
Shares) less than the then current per share market price of the Common Shares or Equivalent Shares
(as defined in Section 11(d)) on such record date, then, in each such case, the Purchase Price to
be in effect after such record date shall be determined by multiplying
-17-
the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which shall be the number of
Common Shares and Equivalent Shares (if any) outstanding on such record date, plus the number of
Common Shares or Equivalent Shares, as the case may be, which the aggregate offering price of the
total number of Common Shares or Equivalent Shares, as the case may be, so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the number of Common
Shares and Equivalent Shares (if any) outstanding on such record date, plus the number of
additional Common Shares or Equivalent Shares, as the case may be, to be offered for subscription
or purchase (or into which the convertible securities so to be offered are initially convertible).
In case such subscription price may be paid in a consideration part or all of which shall be in a
form other than cash, the value of such consideration shall be as determined in good faith by the
Board of Directors, whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive and binding on the Rights Agent and the holders of the Rights.
Common Shares and Equivalent Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such rights, options or
warrants 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, at any time after the date of this Agreement, fix a record date
for the making of a distribution to all holders of the Common Shares or of any class or series of
Equivalent Shares (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, if any, or a
dividend payable in Common Shares) or subscription rights, options or warrants (excluding
those referred to in Section 11(b)), then, in each such case, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in effect immediately
prior to but not including such record date by a fraction, the numerator of which shall be the
current market price (as determined pursuant to Section 11(d) of this Agreement) of a Common Share
or an Equivalent Share on such record date, less the fair market value (as determined in good faith
by the Board of Directors, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants applicable to a Common Share or Equivalent Share, as the
case may be, and the denominator of which shall be such current market price (as determined
pursuant to Section 11(d) of this Agreement) of a Common Share or Equivalent Share on such record
date. Such adjustments shall be made successively whenever such a record date is fixed, and in the
event that such distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than computations made pursuant to
Section 11(a)(iii) of this Agreement, the “current per share market price” of any security
(a “Security” for the purpose of this Section 11(d)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to but not
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including such
date, and for purposes of computations made pursuant to Section 11(a)(iii) of this Agreement, the
“current per share market price” of any Security on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the ten (10) consecutive Trading
Days immediately prior to but not including such date; provided, however, that in
the event that the current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (i) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such shares or (ii) any
subdivision, combination or reclassification of such Security, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per share equivalent of such Security.
The closing price for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national securities exchange, the last sale
price or, if such last sale price is not reported, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System (“Nasdaq”) or such other system then in use, or, if on any such
date the Security is not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Security selected by
the Board of Directors. If on any such date no market maker is making a market in the Common
Shares, the fair value of such shares on such date shall be as determined in good faith by the
Board of Directors, whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive and binding for all purposes. The term “Trading Day” shall
mean a day on which the principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day. If the Common Shares are
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, whose determination
shall be described in a statement filed with the Rights Agent and shall be conclusive and binding
for all purposes.
(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 ten-thousandth of a Common Share or other share or one hundred-thousandth of a
Preferred Share, as the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
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of (i) three (3)
years from the date of the transaction which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Sections 11(a) or 13(a) of this
Agreement, the holder of any Right thereafter exercised shall become entitled to receive any shares
of capital stock other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and if required, the Purchase Price thereof, 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 Shares contained in Sections 11(a), (b), (c), (e), (h), (i),
(j), (k), (1) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one-thousandths of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in Section 11(b), each
Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of Preferred Shares (calculated to
the nearest one hundred-thousandth of a share) obtained by (i) multiplying (x) the number of
Preferred Shares covered by a Right immediately prior to this adjustment, by (y) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) to adjust the number of Rights, in substitution
for any adjustment in the number of Preferred Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the adjustment to be
made, and shall promptly give the Rights Agent a copy of such announcement. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 of this Agreement, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the
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option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued,
executed and delivered by the Company, and countersigned and delivered by the Rights Agent, in the
manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the number of Preferred
Shares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-thousandth of a Preferred Share and
the number of one-thousandths of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the par or stated value, if any, of the number of one-thousandths of a Preferred Share 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 as fully paid
and nonassessable shares such number of one-thousandths of a Preferred Share at such adjusted
Purchase Price.
(1) 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 (with prompt written notice thereof to the Rights Agent) until the occurrence
of such event the issuing to the holder of any Right exercised after such record date of the number
of one-thousandths of a Preferred Share and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the number of one-thousandths of a Preferred Share
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 (fractional or otherwise) upon the occurrence
of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, prior to the Distribution
Date, the Company shall be entitled to make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred or Common Shares, (ii) issuance wholly for cash of any Preferred or Common Shares at
less than the current market price, (iii) issuance wholly for cash of Preferred or Common Shares or
securities which by their terms are convertible into or exchangeable for Preferred or Common
Shares, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred or Common Shares shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, effect or permit to occur any Triggering Event or Section 13 Event, if (i) at the
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time or immediately after such Triggering Event or Section 13 Event there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (ii) prior to,
simultaneously with or immediately after such Section 13 Event, the stockholders of the Person who
constitutes, or would constitute, the “Principal Party” for purposes of Section 13(b) of
this Agreement shall have received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Sections 23, 24 or 27 of this Agreement, take (or permit to be taken) any action if at
the time such action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the event the Company shall
at any time after the date of this Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number of Preferred Shares,
or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11 and Section 7(e) of this Agreement: (1) each of the Rights outstanding
at the time of the record date for such dividend or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted to that
number of Rights (calculated to the nearest one ten-thousandth (1/10,000) of a Right) equal to
a fraction (the “Exchange Fraction”), the numerator of which shall be the total number of
Preferred Shares or shares of capital stock issued in such reclassification of the Preferred Shares
outstanding immediately following such time and the denominator of which shall be the total number
of Preferred Shares outstanding immediately prior to such time, and the number of Rights that shall
thereafter be issued with respect to each Common Share or share of other capital stock that shall
be issued in a reclassification of the Common Shares prior to the Distribution Date shall be equal
to the total number of outstanding Rights immediately after such event (as adjusted pursuant to
this clause (1)) divided by the total number of outstanding Common Shares or shares of such other
capital stock immediately after such event (subject to further adjustment pursuant to the
provisions of this Agreement); (2) the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or reclassification shall
be adjusted so that the Purchase Price thereafter shall equal the result obtained by dividing the
Purchase Price in effect immediately prior to such time by the Exchange Fraction; provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the Company issuable upon
exercise of such Right; and (3) the number of one-thousandths of a Preferred Share or share of such
other capital stock issuable upon the exercise of each Right shall remain unchanged immediately
after such event, but, in the event of a reclassification, the kind of shares issuable upon the
exercise of each Right immediately after such reclassification shall be adjusted to be the kind of
shares of such other capital stock issued in such reclassification, rather than Preferred Shares.
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12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made or any event affecting the Rights or their exercisability (including without
limitation an event which causes the Rights to become null and void) as provided in Sections 11 and
13 of this Agreement, the Company shall promptly (a) prepare a certificate setting forth such
adjustment or describing such event and a brief reasonably detailed statement of the facts,
computations and methodology accounting for such adjustment, (b) file with the Rights Agent and
with each transfer agent for the Preferred Shares a copy of such certificate and (c) if such
adjustment occurs following the Distribution Date, mail a brief summary thereof to each holder of a
Rights Certificate in accordance with Section 26 of this Agreement. Notwithstanding the foregoing
sentence, the failure of the Company to make such certification or give such notice shall not
affect the validity of such adjustment or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment or statement contained therein and shall have no duty or liability with respect to,
and shall not be deemed to have knowledge of, any such adjustment or any such event unless and
until it shall have received such certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following the Shares Acquisition Date, directly or indirectly:
(i) the Company shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction the principal purpose of which is to change the state of
incorporation of the Company or that complies with Section 11(o) of this Agreement);
(ii) any Person (other than a Subsidiary of the Company in a transaction that complies with
Section 11(o) of this Agreement) shall consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving corporation of such consolidation or
merger; or
(iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or one or more of its wholly owned Subsidiaries
in one or more transactions, each of which complies with Section 11(o) of this Agreement),
then, and in each such case, proper provision shall be made so that
(A) each holder of a Right (except as otherwise provided herein) shall thereafter have the
right to receive, upon the exercise thereof in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid and nonassessable Common Shares of the
Principal Party (as hereinafter defined), free of any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Triggering
Event has occurred prior to the first occurrence of
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a Section 13 Event, multiplying the number of
such one-thousandths of a Preferred Share for which a Right was exercisable immediately prior to
the first occurrence of a Triggering Event by the Purchase Price in effect immediately prior to
such first occurrence) and (2) dividing that product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the “Total Exercise Price” for each Right and for
all purposes of this Agreement) by 50% of the current per share market price (determined pursuant
to Section 11(d) of this Agreement) of the Common Shares of such Principal Party on the date of
consummation of such Section 13 Event;
(B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement;
(C) the term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 of this Agreement shall apply only to
such Principal Party following the first occurrence of a Section 13 Event;
(D) such Principal Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of its Common Shares) in connection with
the consummation of any such transaction as may be necessary to assure that the provisions of
this Agreement shall thereafter be applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the Rights.
(b) “Principal Party” shall mean, in the case of any transaction described in
clause (i), (ii) or (iii) of Section 13(a), the Person referred to therein or such Person’s
successor, including, if applicable, the Company, if it is the surviving corporation),
provided, however, that in any such case, (i) if such Person is a direct or
indirect Subsidiary of another Person, “Principal Party” shall refer to such other Person
and (ii) in case such Person is a Subsidiary, directly or indirectly, of more than one Person,
“Principal Party” shall refer to whichever of such Persons is the issuer of the Common
Shares having the greatest aggregate value, and provided, further, that for
purposes of transactions described in clause (iii) of this Section 13(a), “Principal Party”
shall refer to that Person receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions.
(c) If, for any reason, the Rights cannot be exercised for Common Shares of such Principal
Party as provided in Section 13(a), then each holder of Rights shall have the right to exchange its
Rights for cash from such Principal Party in an amount equal to the number of Common Shares that it
would otherwise be entitled to purchase times 50% of the current per share market price, as
determined pursuant to Section 11(d) of this Agreement, of such Common Shares of such Principal
Party. If, for any reason, the foregoing formulation cannot be applied to determine the cash
amount into which the Rights are exchangeable, then the Board of Directors, based upon the advice
of one or more nationally recognized investment banking firms, and based upon the total value of
the Company, shall determine such amount reasonably and with good faith to the holders of Rights.
Any such determination shall be described in a statement filed with the Rights Agent and shall be
conclusive and binding for all purposes.
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(d) The Company shall not consummate any Section 13 Event unless the Principal Party shall
have a sufficient number of authorized Common Shares that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that such Principal Party shall, upon consummation of such
Section 13 Event, assume this Agreement in accordance with Sections 13(a) and (b) of this
Agreement, that all rights of first refusal or preemptive rights in respect of the issuance of
Common Shares of such Principal Party upon exercise of outstanding Rights have been waived, that
there are no rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights and that such transaction
shall not result in a default by such Principal Party under this Agreement, and further providing
that, as soon as practicable after the date of such Section 13 Event, such Principal Party will:
(i) prepare and file a registration statement under the Securities Act with respect to the
Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as soon as practicable after
such filing and use its best efforts to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the Securities
Act) until the Expiration Date, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on a national securities exchange or to meet the
eligibility requirements for quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical financial statements for such Principal
Party which comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
In the event that at any time after the occurrence of a Triggering Event some or all of the
Rights shall not have been exercised at the time of a transaction described in this Section 13, the
Rights which have not theretofore been exercised shall thereafter be exercisable in the manner
described in Section 13(a) (without taking into account any prior adjustment required by Section
11(a)(ii)).
(e) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to distribute Rights
Certificates that evidence fractional Rights. In lieu of such fractional Rights, the Company shall
pay to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading Day
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immediately prior to the
date on which such fractional Rights would have been otherwise issuable, as determined pursuant to
the second sentence of Section 11(d) of this Agreement.
(b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred Share). In lieu of
fractional Preferred Shares that are not integral multiples of one one-thousandth of a Preferred
Share, the Company shall pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same fraction of the current
market value of a Common Share. For purposes of this Section 14(b), the current market value of a
Common Share shall be the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d) of this Agreement) for the Trading Day immediately prior to the date of
such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives his or her right to
receive any fractional Rights or any fractional shares upon exercise of a Right.
(d) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payment and the prices and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in
the form of fully collected funds to make such payment. The Rights Agent shall be fully protected
in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed
to have knowledge of any payment for fractional Rights or fractional shares under any Section of
this Agreement relating to the payment of fractional Rights or fractional shares unless and until
the Rights Agent shall have received such a certificate and sufficient monies.
15. Rights of Action. All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent under Section 18 of this Agreement, are vested in
the respective registered holders of the Rights Certificates (and, prior to the Distribution Date,
the registered holders of the Common Shares); and any registered holder of any Rights Certificate
(or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his or her own behalf and for his or her 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 or her right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach by the Company of this
Agreement and will be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations by the Company of, the obligations of any Person
subject to this Agreement.
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16. Agreement of Rights Holders. Every holder of a Right, by accepting the same,
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office or offices of the Rights Agent designated
for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates properly completed and duly executed;
(c) subject to Sections 6(a) and 7(f) of this Agreement, the Company and the Rights Agent may
deem and treat the person in whose name the Rights Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Shares certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary;
(d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final)
issued by a court or by a governmental, regulatory, self-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.
17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or
in any Rights Certificate be construed to confer upon the holder of any Rights 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 of this Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions of this Agreement.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation, delivery, amendment,
administration and execution of this Agreement and the exercise and
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performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense (including, without limitation, the reasonable fees and expenses of counsel), incurred
without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (which
gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable
judgment of a court of competent jurisdiction) for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance, administration, exercise and performance of its
duties under this Agreement, including, without limitation, the costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly. The provisions of this
Section 18 and Section 20 below shall survive the termination of this Agreement, the exercise or
expiration of the Rights and the resignation, replacement or removal of the Rights Agent. The
costs and expenses incurred in enforcing this right of indemnification shall be paid by the
Company.
(b) The Rights Agent shall be authorized and protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its acceptance and
administration of this Agreement and the exercise and performance of its duties hereunder, in
reliance upon any Rights Certificate or certificate for the Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper
or document believed by it to be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 of this Agreement. The Rights Agent shall not be deemed to have knowledge of
any event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall
be fully protected and shall incur no liability with failing to take action in connection therewith
unless and until it has received such notice in writing.
19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the
stockholder services business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement; provided,
however, that such Person would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 of this Agreement. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights 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 Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights 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 Rights Certificates shall have the full force provided in the Rights Certificates and in
this Agreement.
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(b) In case at any time the name of the Rights Agent shall be changed and at such time any of
the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes to perform only the duties
and obligations expressly imposed by this Agreement (and no implied duties) upon the following
terms and conditions, by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company
or an employee of the Rights Agent), and the opinion or advice of such counsel shall be full and
complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect to any action taken, suffered or
omitted by it in accordance with such opinion or advice.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of “current per share market price”) be proved
or established by the Company prior to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full and complete authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or
willful misconduct must be determined by a final, non-appealable judgment of a court of competent
jurisdiction). Anything to the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised
of the likelihood of such loss or damage. Any liability of the Rights Agent under this Agreement
will be limited to the amount of annual fees paid by the Company to the Rights Agent.
(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
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(e) The Rights Agent shall not have any liability for or be under any responsibility in
respect of the validity of this Agreement or the execution and delivery of this Agreement (except
the due execution of this Agreement by the Rights Agent) or in respect of the validity or execution
of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to this Agreement) or any change or
adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for
in Sections 3, 11, 13, 23 or 24, 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 Rights
Certificates after receipt by the Rights Agent of a certificate furnished pursuant to Section 12
describing such change or adjustment upon which the Rights Agent may rely); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the authorization or reservation
of any Preferred Shares to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any Preferred Shares will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary or
any Assistant Secretary of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and such instructions shall be full authorization and protection to the
Rights Agent and the Rights Agent shall not be liable for or in respect of any action taken,
suffered or omitted by it in accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. The Rights Agent shall be entitled to rely upon the
most recent instructions received by such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken, suffered or omitted by the Rights Agent under this Rights Agreement
and the date on and/or after which such action shall be taken or suffered or such omission shall be
effective. The Rights Agent shall not be liable for any action taken or suffered by, or omission
of, the Rights Agent in accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five (5) Business Days after
the date any officer of the Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken, suffered or
omitted.
(h) The Rights Agent and any member, stockholder, affiliate, 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
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interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though the
Rights Agent were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent or any such member, stockholder, affiliate, director, officer or employee from acting in any
other capacity for the Company or for any other Person.
(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 (through its directors, officers and employees) or by
or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the
Company or any other Person resulting from any such act, default, neglect or misconduct, absent
gross negligence, bad faith or willful misconduct in the continued employment thereof (which gross
negligence, bad faith or willful misconduct must be determined by a final, non-appealable judgment
of a court of competent jurisdiction).
(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been properly completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon thirty (30) days’ notice in writing
mailed to the Company and to each transfer agent of the Preferred Shares and the Common Shares
known to the Rights Agent by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights
Agent upon thirty (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 Preferred Shares and the Common Shares
by registered or certified mail, and to the holders of the Rights 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 thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his or her
Rights Certificate for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall
either (a) be a Person 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 stockholder services powers and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million or (b) an affiliate of such a
Person. After appointment, the successor Rights Agent shall
-31-
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 Preferred Shares and the Common Shares, and mail a notice
thereof in writing to the registered holders of the Rights Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, 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.
22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Shares following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect
to Common Shares so issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement or upon the exercise, conversion or exchange of securities hereinafter issued
by the Company and (b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued and this sentence shall be null and void ab initio if, and to the extent
that, such issuance or this sentence would create a significant risk of or result in material
adverse tax consequences to the Company or the Person to whom such Rights Certificate would be
issued or would create a significant risk of or result in such options’ or employee plans’ or
arrangements’ failing to qualify for otherwise available special tax treatment and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
23. Redemption.
(a) The Company may, at its option and upon the order and approval of the Board of Directors,
at any time prior to the time that a person becomes an Acquiring Person, redeem all but not less
than all the then outstanding Rights at a redemption price of $0.00001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date
of this Agreement (such redemption price being herein referred to as the “Redemption
Price”) and the Company may, at its option, pay the Redemption Price either in Common Shares
(based on the current per share market price thereof (as determined pursuant to Section 11(d) of
this Agreement) at the time of redemption) or cash. Such redemption by the Company 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.
-32-
(b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights, evidence of which shall have been filed with the Rights Agent, and without any further
action and without any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption (with prompt written notice to the Rights
Agent), provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such redemption. Within ten (10) days after the action of the
Board of Directors ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. 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 of this Agreement, and other than in connection with the purchase of Common Shares prior
to the Distribution Date. The failure to give notice required by this Section 23(b) or any defect
therein shall not affect the legality or validity of the action taken by the Company.
(c) In the case of a redemption permitted under Section 23(a) hereof, the Company may, at its
option, discharge all of its obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights (with prompt written notice thereof to the Rights
Agent) and (ii) mailing payment of the Redemption Price to the registered holders of the Rights at
their last addresses as they appear on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent of the Common Shares, and upon such
action, all outstanding Right Certificates shall be null and void without any further action by the
Company.
24. Exchange.
(a) Subject to applicable laws, rules and regulations, and subject to subsection (c) below,
the Company may, at its option, by majority vote of the Board of Directors, at any time after the
occurrence of a Triggering Event, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become null and void pursuant to the provisions of
Section 7(e) of this Agreement) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement (such exchange ratio being hereinafter referred to as
the “Ratio of Exchange”). Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any
entity holding Common Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding.
-33-
(b) Immediately upon the action of the Board of Directors 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 Common Shares equal to the number of such Rights
held by such holder multiplied by the Ratio of Exchange. The Company shall promptly give public
notice of any such exchange (with prompt written notice to the Rights Agent); provided,
however, that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the method by which
the exchange of the Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have
become null and void pursuant to the provisions of Section 7(e) of this Agreement) held by
each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in accordance with
Section 24(a), the Company shall either take such action as may be necessary to authorize
additional Common Shares for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash in an amount equal
to the Current Value (as hereinafter defined), in lieu of issuing Common Shares in exchange
therefor, or (ii) issue debt or equity securities or a combination thereof, having a value equal to
the Current Value, in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors by majority vote of the Board of Directors, or (iii) deliver any
combination of cash, property, Common Shares and/or other securities having a value equal to the
Current Value in exchange for each Right. For purposes of this Section 24(c) only, the Current
Value shall mean the product of the current per share market price of Common Shares (determined
pursuant to Section 11(d) on the date of the occurrence of the event described above in
subparagraph (a)) multiplied by the number of Common Shares for which the Right otherwise would be
exchangeable if there were sufficient shares available. To the extent that the Company determines
that some action need be taken pursuant to clauses (i), (ii) or (iii) of this Section 24(c), the
Board of Directors may temporarily suspend the exercisability of the Rights for a period of up to
sixty (60) days following the date on which the event described in Section 24(a) shall have
occurred, in order to seek any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and to determine the
value thereof. In the event of any such suspension, the Company shall issue a public announcement
(with prompt written notice to the Rights Agent) stating that the exercisability of the Rights has
been temporarily suspended.
(d) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates that evidence fractional Common Shares. In lieu of such fractional Common Shares,
there shall be paid to the registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash
-34-
equal to the same fraction of the current per share market value of a whole Common Share (as determined pursuant to the second
sentence of Section 11(d) of this Agreement).
(e) The Company may, at its option, by majority vote of the Board of Directors, at any time
before any Person has become an Acquiring Person, exchange all or part of the then outstanding
Rights for rights of substantially equivalent value, as determined reasonably and with good faith
by the Board of Directors, based upon the advice of one or more nationally recognized investment
banking firms.
(f) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection (e) 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 rights in exchange therefor as has been
determined by the Board of Directors in accordance with subsection (e) above. The
Company shall give public notice of any such exchange (with prompt written notice thereof to
the Rights Agent); provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as they appear upon the
registry books of the transfer agent for the Common Shares of the Company. 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 Rights
will be effected.
25. Notice of Certain Events.
(a) In case the Company shall propose to effect or permit to occur any Section 13 Event, the
Company shall give notice thereof to the Rights Agent and each holder of Rights in accordance with
Section 26 of this Agreement at least twenty (20) days prior to occurrence of such Section 13
Event.
(b) In case any Triggering Event or Section 13 Event shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to the Rights Agent and to each holder of a
Rights Certificate, in accordance with Section 26 of this Agreement, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event in reasonable detail to
holders of Rights under Sections 11(a)(ii) and 13 of this Agreement.
26. Notices. Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if in writing and sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as follows:
Artes Medical, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: President
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: President
Subject to the provisions of Section 21 of this Agreement, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights Certificate to
-35-
or on
the Rights Agent shall be sufficiently given or made if in writing and sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the Company) as follows:
Mellon Investor Services LLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Relationship Manager
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Relationship Manager
with a copy to:
Mellon Investor Services LLC
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate 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.
27. Supplements and Amendments. Subject to the last sentence of this Section 27,
prior to the Distribution Date, the Company may supplement or amend this Agreement in any respect
without the approval of any holders of Rights and the Rights Agent shall, if the Company so
directs, execute such supplement or amendment. From and after the Distribution Date, the Company
may and the Rights Agent shall, if the Company so directs, from time to time supplement or amend
this Agreement without the approval of any holders of Rights in order to (i) cure any ambiguity,
(ii) correct or supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) shorten or lengthen any time period hereunder or
(iv) change or supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the holders of Rights
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders of Common Shares. Upon the
delivery of a certificate from an appropriate officer of the Company that 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. The Rights Agent may, but shall not be obligated to, enter
into any supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or
immunities under this Agreement and it shall not be bound by any such supplement or amendment not
executed by it.
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28. Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
29. Determinations and Actions by the Board of Directors, etc. For all purposes of
this Agreement, any calculation of the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of such outstanding Common Shares
of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of
Directors shall have the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board of Directors, or
the Company, or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made
by the Board of Directors in good faith, shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights Certificates and all other parties and (y) not subject
the Board of Directors to any liability to the holders of the Rights. The Rights Agent shall
always be entitled to assume that the Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.
30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the Common Shares).
31. Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors determines in its good faith judgment
that severing the invalid language from this Agreement would adversely affect the purpose or effect
of this Agreement, the right of redemption set forth in Section 23 of this Agreement shall be
reinstated and shall not expire until the Close of Business on the tenth day following the date of
such determination by the Board of Directors.
32. Three Year Independent Director Evaluation . A committee of the Board of
Directors shall review this Agreement in order to consider whether the maintenance of this
Agreement continues to be in the best interests of the Company and its stockholders. Such
committee shall conduct such review periodically when, as and in such manner as the committee
-37-
deems
appropriate, after giving due regard to all relevant circumstances; provided, however, that the
committee shall take such action at least every three years following the date hereof. Following
each such review, such committee will report its conclusions to the full Board of Directors,
including any recommendation in light thereof as to whether this Agreement should be modified or
the Rights should be redeemed. Such committee shall be comprised only of directors of the Company
who shall have been determined by the Company’s Board of Directors to be independent under NASDAQ
listing standards, or, if the Common Shares are listed on a national exchange, such national
exchange’s listing standards. Such committee is authorized to retain such legal counsel, financial
advisors and other advisors as the committee
deems appropriate in order to assist the
committee in carrying out its foregoing responsibilities under this Rights Agreement. Such
committee shall initially be the Nominating/Corporate Governance Committee of the Board of
Directors, provided that the Board of Directors may, at its discretion, delegate this review to
another committee of independent directors pursuant to this provision.
33. Governing Law. This Agreement, each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such State applicable to
contracts made solely by residents of such state and performed entirely within such State,
provided, however, that the rights, duties and obligations of the Rights Agent hereunder shall be
governed and construed in accordance with the laws of the State of New York.
34. Counterparts. This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
35. Descriptive Headings. Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
36. Force Majeure. Notwithstanding anything to the contrary contained herein, the
Rights Agent shall not be liable for any delays or failures in performance resulting from acts
beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage
of supply, breakdowns or malfunctions, interruptions or malfunctions of computer facilities, or
loss of data due to power failures or mechanical difficulties with information storage or retrieval
systems, labor difficulties, war or civil unrest.
-38-
The parties have caused this Agreement to be duly executed as of the date first written above.
| ARTES MEDICAL, INC. | ||||||
| By: | /s/ Xxxxxxxxxxx X. Xxxxxxxx
|
|||||
| Name: | Xxxxxxxxxxx X. Xxxxxxxx | |||||
| Title: | Executive Chairman | |||||
| MELLON INVESTOR SERVICES, LLC, as Rights Agent | ||||||
| By: | /s/ Xxxxxxx Xxxx
|
|||||
| Name: | Xxxxxxx Xxxx | |||||
| Title: | Manager Investor Services | |||||
-39-
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATIONS
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
| Certificate No. R- | Rights |
NOT EXERCISABLE AFTER JUNE 12, 2018, OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY OR OTHERWISE TERMINATED IN ACCORDANCE WITH THE RIGHTS AGREEMENT. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.00001 PER RIGHT OR
MAY BE EXCHANGED FOR COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
RIGHTS CERTIFICATE
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 Preferred Shares Rights Agreement, dated as of June 13,
2008 (the “Rights Agreement”), between Artes Medical, Inc., a Delaware corporation (the
“Company”), and the Mellon Investor Services LLC, a New Jersey limited liability 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 the earliest of (i) 5:00 P.M.,
California time, on June 12, 2018, (ii) the date of redemption of the Rights evidenced by this
Rights Certificate in accordance with the Rights Agreement, (iii) the time at which the board of
directors of the Company orders the exchange of the Rights provided in Section 24 of the Rights
Agreement and (iv) the consummation of a transaction contemplated by Section 13(d) of the Rights
Agreement, at the office of the Rights Agent designated for such purpose, or at the office of its
successor as Rights Agent, one one-thousandth (1/1,000) of a fully paid non-assessable share of
Series A Participating Preferred Stock (the “Preferred Shares”), of the Company, at a
purchase price of $50.00 per one-thousandth of a Preferred Share (the “Purchase Price”),
upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. The number of Rights evidenced by this Rights Certificate
(and the number of one-thousandths of a Preferred Share which may be purchased upon exercise
| * | The portion of the legend in bracket shall be inserted only if applicable and shall replace the preceding sentence. |
hereof) and the Purchase Price set forth above, are the number and Purchase Price as of June 23,
2008 (the record date for the dividend of the Rights represented by this Rights Certificate), based
on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number and kind of Preferred Shares or other securities which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under the specific circumstances set
forth in the Rights Agreement. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office of the Rights Agent.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate (i) may be redeemed by the Company, at its option, at a redemption price of $0.00001
per Right or (ii) may be exchanged by the Company in whole or in part for Common Shares,
substantially equivalent rights or other consideration as determined by the Company.
This Rights Certificate, with or without other Rights Certificates, upon surrender at the
office of the Rights Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate amount of securities as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
No fractional portion less than integral multiples of one one-thousandth of a Preferred Share
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 Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by an authorized signatory of the Rights Agent.
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WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of , .
| ATTEST: | ARTES MEDICAL, INC. | |||||||
| By: | ||||||||
Secretary
|
Chief Executive Officer | |||||||
| COUNTERSIGNED: | ||||||||
| MELLON INVESTOR SERVICES LLC | ||||||||
| as Rights Agent | ||||||||
By: |
||||||||
| Date of countersignature: | ||||||||
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FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the Rights represented
by this Rights Certificate)
by this Rights Certificate)
FOR VALUE
RECEIVED hereby sells, assigns
and transfers unto
(Please print name and address of transferee)
the Rights represented by this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
as attorney, to transfer the
Rights 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., a commercial bank or trust company
having an office or correspondent in the United States or any other member of a medallion signature
guarantee program approved by the Securities Transfer Association.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the rights evidenced by this Rights Certificate [ ] are [ ] are not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person, or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of any such Person or any transferee of
such Persons.
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., a commercial bank or trust company
having an office or correspondent in the United States or any other member of a medallion signature
guarantee program approved by the Securities Transfer Association.
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Form of Reverse Side of Rights Certificate — continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate)
To:
The
undersigned hereby irrevocably elects to exercise
Rights represented by this Rights Certificate to purchase the number of one-thousandths of a
Preferred Share issuable upon the exercise of such Rights and requests that certificates for such
number of one-thousandths of a Preferred Share be issued in the name of:
Please insert social security or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new
Rights Certificate for the balance shall be registered in the name of and delivered to:
Please insert social security or other identifying number
(Please print name and address)
Dated:
,
Signature
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., a commercial bank or trust company
having an office or correspondent in the United States or any other member of a medallion signature
guarantee program approved by the Securities Transfer Association.
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by
or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of any such Person or any transferee of any
such Person.
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., a commercial bank or trust company
having an office or correspondent in the United States or any other member of a medallion signature
guarantee program approved by the Securities Transfer Association.
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Form of Reverse Side of Rights Certificate — continued
NOTICE
The signature in the foregoing Forms of Assignment and Election must conform to the name as
written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change w
written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change w
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EXHIBIT C
SUMMARY OF RIGHTS
ARTES MEDICAL, INC.
and
MELLON INVESTOR SERVICES, LLC,
As Rights Agent
Dated as of June 13, 2008
TABLE OF CONTENTS
| Page | ||||
1. Certain Definitions |
1 | |||
2. Appointment of Rights Agent |
7 | |||
3. Issuance of Rights Certificates |
7 | |||
4. Form of Rights Certificates |
8 | |||
5. Countersignature and Registration |
10 | |||
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates |
10 | |||
7. Exercise of Rights; Purchase Price; Expiration Date of Rights |
11 | |||
8. Cancellation and Destruction of Rights Certificates |
13 | |||
9. Reservation and Availability of Preferred Shares |
13 | |||
10. Preferred Shares Record Date |
15 | |||
11. Adjustment of Purchase Price, Number of Shares or Number of Rights |
15 | |||
12. Certificate of Adjusted Purchase Price or Number of Shares |
23 | |||
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power |
23 | |||
14. Fractional Rights and Fractional Shares |
25 | |||
15. Rights of Action |
26 | |||
16. Agreement of Rights Holders |
27 | |||
17. Rights Certificate Holder Not Deemed a Xxxxxxxxxxx |
00 | |||
00. Concerning the Rights Agent |
27 | |||
19. Merger or Consolidation or Change of Name of Rights Agent |
28 | |||
20. Duties of Rights Agent |
29 | |||
21. Change of Rights Agent |
31 | |||
22. Issuance of New Rights Certificates |
32 | |||
23. Redemption |
32 | |||
24. Exchange |
33 | |||
25. Notice of Certain Events |
35 | |||
26. Notices |
35 | |||
27. Supplements and Amendments |
36 | |||
28. Successors |
37 | |||
29. Determinations and Actions by the Board of Directors, etc |
37 | |||
30. Benefits of this Agreement |
37 | |||
31. Severability |
37 | |||
32. Three Year Independent Director Evaluation |
37 | |||
33. Governing Law |
38 | |||
34. Counterparts |
38 | |||
35. Descriptive Headings |
38 | |||
36. Force Majeure |
38 | |||
EXHIBITS
Exhibit A Form of Certificate of Designations
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights
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