EXHIBIT 1
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 27, 2002, between DUSA Pharmaceuticals,
Inc., a New Jersey corporation (the "Company"), and American Stock Transfer &
Trust Co., a New York corporation (the "Rights Agent").
PRELIMINARY STATEMENTS
WHEREAS, the Board of Directors of the Company (the "Board") authorized and
declared a dividend distribution of one preferred share purchase right (a
"Right") for each share Common Stock (as defined below) of the Company
outstanding at the Close of Business (as defined below) on October 10, 2002,
(the "Record Date"), each Right representing the right to purchase one
one-thousandth of a Preferred Share (as defined below) upon the terms and
subject to the conditions hereinafter set forth; and
WHEREAS, the Board has further authorized and directed the issuance of one Right
with respect to each share of Common Stock that shall become outstanding between
the Record Date and the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date (as those terms are defined below); provided
however, that a Right may be issued with respect to a share of Common Stock that
becomes outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date in accordance with Section 23
hereof.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the Common Stock then outstanding (determined without taking
into account any securities exercisable or exchangeable for, or convertible
into, Common Stock, other than any such securities beneficially owned by the
Acquiring Person and Affiliates and Associates of such Person). "Acquiring
Person" shall not include any Exempt Person or Grandfathered Holder. No person
shall become an "Acquiring Person" solely as the result of an acquisition of
Common Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person to 15% or more of the
Common Stock of the Company then outstanding as determined above; provided,
however, that if a Person becomes and remains the Beneficial Owner of 15% or
more of the Common Stock of the Company then outstanding (as determined above)
solely by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional shares
of Common Stock by any means whatsoever, then such Person shall be deemed to be
an "Acquiring Person. Notwithstanding the foregoing, if the Board determines in
good faith that a Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph (a), has become
such inadvertently, and such Person divests as promptly as practicable a
sufficient number of Common Stock so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an "Acquiring Person"
for any purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended, and in
effect on the date of this Agreement.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(2) hereof.
(d) "Adverse Person" shall mean any Person declared to be an Adverse
Person by the Independent Directors upon a determination that the criteria set
forth in Section 11(a)(2)(ii) hereof apply to such Person.
(e) "Adverse Person Event" shall mean the determination by the
Independent Directors pursuant to Section 11(a)(2)(ii) hereof that a Person is
an Adverse Person.
(f) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
Exchange Act.
(g) "Agreement" shall mean this rights agreement as it from time to
time be supplemented or amended pursuant to the applicable provisions hereof.
(h) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" any securities:
(1) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(2) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (i) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase or
exchange, or (ii) securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (iii) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section
22 hereof (the "Original Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any Original Rights;
(3) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement of understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own" any security under this subparagraph (3) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (i) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act and the requirements of any national securities exchange
on which the Common Stock is listed, and (ii) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
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(4) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to subparagraph (3) of this Section 1(h) or disposing of any voting
securities of the Company; provided, however, that nothing in this Section 1(h)
shall cause a Person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty (40) days after the date of such
acquisition.
(i) "Board" shall have the meaning set forth in the preliminary
statements hereof.
(j) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(k) "Close of Business" on any given date shall mean 5:00 p.m., New
York time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.
(l) "Common Stock" shall mean the no par value common stock of the
Company; except that "Common Stock" when used with reference to any Person other
than the Company shall mean the capital stock of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
(m) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(3) hereof.
(n) "Company" shall mean the Person named as the "Company" in the
first paragraph of this Agreement until a successor corporation shall have
become such or until a Principal Party shall assume, and thereafter be liable
for, all obligations and duties of the Company hereunder, pursuant to the
applicable provisions of this Agreement, and thereafter "Company" shall mean
such successor corporation or Principal Party.
(o) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(p) "Current Value" shall have the meaning set forth in Section
11(a)(3) hereof.
(q) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(r) "Equivalent Common Stock" shall have the meaning set forth in
Section 11(b) hereof.
(s) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and in effect on the date of this Agreement.
(t) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary
of the Company, (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, (iv) any Person organized, appointed or established
by the Company for or pursuant to the terms of any such plan, or (v) any Person
who or which together with all Affiliates or Associates of such Person becomes
Beneficial Owner of 15% or more of the then outstanding shares of Common Stock
as a result of the acquisition of shares of Common Stock directly from the
Company.
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(u) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(v) "Final Expiration Date" shall mean the Close of Business on
October 10, 2012.
(w) "Grandfathered Holder" shall mean any Person: (i) who, on the
date of this Agreement, is the Beneficial Owner of 15% or more of the Company's
outstanding Common Stock and (ii) any Affiliate or Associate of any Person who
is the Beneficial Owner of 15% or more the Company's outstanding Common Stock on
the date of this Agreement; provided, however, that such Person (and that
Person's Affiliates and Associates) shall no longer be a Grandfathered Holder
and shall then be an Acquiring Person, if such Person (or such Person's
Affiliates or Associates) makes an acquisition of shares of the Company's Common
Stock such that such Person becomes the Beneficial Owner of 20% or more of the
Company's outstanding Common Stock.
(x) "Independent Director" shall mean any member of the Board, while
such Person is a member of the Board, who (i) is not an employee of the Company,
and (ii) does not receive compensation from the Company for services, other than
services as a director or member of a Board committee.
(y) "Nasdaq" shall have the meaning set forth in Section 11(d)
hereof.
(z) "Original Rights" shall have the meaning set forth in Section
1(h)(2) hereof.
(aa) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization or other entity, and shall include any "group" as that term is used
in Rule 13d-5(b) under the Exchange Act.
(bb) "Preferred Shares" shall mean shares of Series A Preferred
Stock, with a par value of $1.00 per share, of the Company having the relative
rights, preferences and limitations set forth in the Amended Certificate of
Incorporation annexed hereto as Exhibit A.
(cc) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(dd) "Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(ee) "Record Date" shall have the meaning set forth in the
preliminary statements to this Agreement.
(ff) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(gg) "Right" or "Rights" shall have the meaning set forth in the
preliminary statements to this Agreement.
(hh) "Rights Agent" shall mean the Person named as the "Rights
Agent" in the first paragraph of this Agreement until a successor Rights Agent
shall have become such pursuant to the applicable provisions hereof, and
thereafter "Rights Agent" shall mean such successor Rights Agent. If at any time
there is more than one Person appointed by the Company as Rights Agent pursuant
to the applicable provisions hereof, "Rights Agent" shall mean and include each
such Person.
(ii) "Rights Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(jj) "Section 11(a)(2) Event" shall mean any event described in
Section 11(a)(2) (i) or (ii).
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(kk) "Section 11(a)(2) Trigger Date" shall have the meaning set
forth in Section 11(a)(3) hereof.
(ll) "Section 13 Event" shall mean any event described in clauses
(x), (y), or (z) of Section 13(a) hereof.
(mm) "Security" shall have the meaning set forth in Section 11(d)(1)
hereof.
(nn) "Spread" shall have the meaning set forth in Section 11(a)(3)
hereof.
(oo) "Stock Acquisition Date" shall mean the first date (including,
without limitation, any such date which is on or after the date of this
Agreement and prior to the issuance of the Rights) of a public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) under the Exchange Act) by the Company or
Acquiring Person that an Acquiring Person has become such.
(pp) "Subsidiary" shall have the meaning given to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(qq) "Substitute Consideration" shall have the meaning set forth in
Section 11(a)(3) hereof.
(rr) "Substitute Period" shall have the meaning set forth in Section
11(a)(3) hereof.
(ss) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(tt) "Triggering Event" shall mean any Section 11(a)(2) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
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. In the event the Company appoints one or more co-Rights
Agents, the respective duties of the Rights Agent and any co-Rights Agent shall
be as the Company shall determine.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of the Close of Business on (i) the tenth
(10th) day after the Stock Acquisition Date, (ii) the tenth (10th) Business Day,
or such specified or unspecified later date as may be determined by a majority
of the Independent Directors, after the date that a tender or exchange offer by
any Person (other than an Exempt Person) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
or (iii) immediately after the occurrence of an Adverse Person Event (the
earliest of (i), (ii) and (iii) being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of Section
3(b)) by the certificates for the Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock shall be deemed
also to be certificates for Rights) and not by separate certificates, and (y)
the Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As soon
as practicable after the
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Distribution Date, the Rights Agent will send by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates in substantially the
form of Exhibit B hereto (the "Rights Certificates"), evidencing one Right for
each share of Common Stock so held, subject to adjustment as provided herein. As
of and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates. In the event that an adjustment in the number of Rights per
share of the Common Stock has been made pursuant to Section 11(p) of this
Agreement, at the time of distribution of the Rights Certificates, the Company
may 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.
(b) As soon as practicable after the Record Date, the Company will
send, or cause to be sent, a copy of a summary of rights, in substantially the
form as attached to this Agreement as Exhibit C, by first-class, postage prepaid
mail, to each record holder of the Common Stock as of the Close of Business on
the Record Date, at the address of such holder then shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of the
Record Date, until the Distribution Date (or earlier Expiration Date), the
Rights will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date. Rights shall also be issued to the extent provided in Section
22 hereof in respect of all shares of Common Stock which are issued (whether
originally issued or from the Company's treasury) after the Distribution Date
and prior to the Expiration Date. Certificates representing shares of Common
Stock in respect of which Rights are issued pursuant to the first sentence of
this Section 3(c) shall also be deemed to be certificates for Rights and,
commencing as soon as reasonably practical following the date of this Agreement,
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between DUSA
Pharmaceuticals, Inc. (the "Company") and American Stock Transfer &
Trust Company (the "Rights Agent") dated as of September 27, 2002 (the
"Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or held by, any Person who is,
was, or becomes an Acquiring Person, an Adverse Person or any Affiliate
or Associate of an Acquiring Person or an Adverse Person (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. The Rights shall not be exercisable, and shall be void so long as
held, by a holder in any jurisdiction where the requisite qualification
to the issuance to such holder, or the exercise by such holder, of the
Rights in such jurisdiction shall not have been obtained or be
obtainable.
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With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Stock shall also be the registered holders
of the associated Rights, and the transfer of any of such certificates
shall also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates.
Notwithstanding this Section 3(c), the omission of a legend shall not affect the
enforceability of this Agreement or the rights of any holder of the Rights.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any securities exchange on which the Rights may from time
to time be listed, or to conform to usage. Subject to the provisions of Section
11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall
be dated as of the Distribution Date and on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a Preferred Share as
shall be set forth therein at the price per one one-thousandth of a Preferred
Share set forth therein (the "Purchase Price"), but the number of one
one-thousandths of a Preferred Share and the Purchase Price thereof shall be
subject to adjustment as provided herein.
(b) Notwithstanding any other provision in this Agreement, any
Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person, an Adverse
Person or any Associate of Affiliate of an Acquiring Person or an Adverse
Person, (ii) a direct or indirect transferee of an Acquiring Person or an
Adverse Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or the Adverse Person becomes such, or (iii) a direct
or indirect transferee of an Acquiring Person or an Adverse Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person or the Adverse Person becoming such and receives such
Rights pursuant to either (A) a direct or indirect transfer (whether or not for
consideration) from the Acquiring Person or the Adverse Person to holders of
equity interests in such Acquiring Person or Adverse Person or to any Person
with whom such Acquiring Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a direct or
indirect transfer which a majority of the Independent Directors have determined
is part of a plan, arrangement or understanding which has as a primary purpose
or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend (modified to apply
to an Acquiring Person or an Adverse Person, as applicable):
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an [Acquiring]
[Adverse] Person or an Affiliate or Associate of an [Acquiring]
[Adverse] Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby
may become null and void in the circumstances specified in Section 7(e)
of the Rights Agreement.
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The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificates.
Section 5. Execution, Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary of the
Company, either manually or by facsimile signature. The Rights Certificates
shall be countersigned, either manually or by facsimile signature by the Rights
Agent and shall not be valid for any purpose unless so 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 individual who
signed such Rights Certificates had not ceased to be such officer of the
Company; and any Rights Certificates may be signed on behalf of the Company by
any individual 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 individual was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books 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.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e), and
Section 14 hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the Expiration Date, any
Rights Certificate or 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 one-thousandths of a
Preferred Share (or, following the occurrence of 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 (or former holder
in the case of a transfer) 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, divided, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate or Rights Certificates until
the registered holder shall have completed and signed the certificate contained
in the form of assignment set forth on the reverse side of each such Rights
Certificate or Rights Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e), and
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
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(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(3) and Section 23(a)
hereof) in whole or in part, at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase set
forth on the reverse side thereof and the certificate contained therein duly
executed, to the Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one one-thousandths of a
Preferred Share (or, following the occurrence of a Triggering Event, other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earliest of (i) the
Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof, or (iii) the time which the Rights expire
pursuant to Section 13(d) hereof (being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each one one-thousandth of a Preferred
Share pursuant to the exercise of a Right shall initially be $37.00, and shall
be subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in accordance with Section 7(c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase set forth on the reverse side
thereof and the certificate contained therein duly executed, accompanied by
payment of the aggregate Purchase Price for the total number of one
one-thousandths of a Preferred Share (or, following the occurrence of a
Triggering Event, other securities, cash or other assets, as the case may be) to
be purchased and an amount equal to any applicable transfer tax in cash or by
certified or cashiers check or money order made payable to the order of the
Company, the Rights Agent shall, subject to Section 20(k) hereof, 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)
certificates for the total number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the Preferred
Shares issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number one one-thousandths of a Preferred Share as are to be purchased (in which
case certificates for the shares of Common Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request, (ii) where
appropriate, requisition from the Company the amount of cash, if any, to be paid
in lieu of issuance of fractional shares of Common in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts for
shares of Common Stock, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt thereof,
deliver such cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(3) hereof) shall be made in cash or by
certified check, cashier's check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue
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other securities (including shares of Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.
(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 and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 6 and Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date or the Stock Acquisition Date by (i) an Acquiring Person,
an Adverse Person or an Associate or Affiliate of an Acquiring Person or an
Adverse Person, (ii) a direct or indirect transferee of any such Acquiring
Person or Adverse Person (or of any such Associate or Affiliate) who becomes a
transferee after such Acquiring Person or Adverse Person becomes such, or (iii)
a direct or indirect transferee of any such Acquiring Person or Adverse Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person or the Adverse Person becoming such and
receives such Rights pursuant to either (A) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person or Adverse Person
to holders of equity interests in such Acquiring Person or Adverse Person or to
any Person with whom such Acquiring Person or Adverse Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a direct or indirect transfer which a majority of the Independent Directors have
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or an Adverse Person or any of their respective
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the 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 shall reasonably request.
(g) Notwithstanding any statement to the contrary contained in this
Agreement or in any Rights Certificate, if the Distribution Date or the Stock
Acquisition Date shall occur prior to the Record Date, the provisions of this
Agreement, including without limitation Section 3 and 11(a)(ii), shall be
applicable to the Rights upon their issuance to the same extent such provisions
would have been applicable if the Record Date were the date of this Agreement.
Section 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 any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled 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
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Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that at all times prior to a
Triggering Event, it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any authorized and issued Preferred
Shares held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding Rights and, after
the occurrence of a Triggering Event, shall, to the extent reasonably
practicable, so reserve and keep available a sufficient number of shares of
Common Stock (and/or other securities) which may be required to permit the
exercise in full of all outstanding Rights under this Agreement.
(b) So long as the Preferred Shares (and, following the occurrence
of a Triggering Event, Common Stock or any other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange 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 on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, a
registration statement under the 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 Act) until the earlier of (A) the date as
of which the Rights are no longer exercisable for such securities, or (B) the
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. In addition, if the
Company shall determine that a registration statement is required following the
Distribution Date, the Company may temporarily suspend the exercisability of the
Rights until the earlier such time as such registration statement has been
declared effective. Upon any suspension of exercisability of the Rights referred
to in this Section 9(c), the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable, and shall be void so long as held, by a holder in any
jurisdiction where the requisite qualification to the issuance to such holder,
or the exercise by such holder, of the Rights in such jurisdiction shall not
have been obtained or be obtainable.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (and, following
the occurrence of a Triggering Event, Common Stock or any other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares or such other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and that all shares
shall be fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all United States federal and state transfer taxes and
charges which may be payable
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in respect of the issuance or delivery of the Rights Certificates, or any
Preferred Shares (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of
certificates or depository receipts for the Preferred Shares (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise, or to issue or deliver any certificates or depository
receipts for Preferred Shares (or Common Stock and/or other securities, as the
case may be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been paid (any such tax being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares (or Common Stock and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such Preferred Shares (or Common
Stock and/or other securities, as the case may be) 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
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (and/or other securities, as the case may be) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends, or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (1) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that if a holder of Rights after such time were to
exercise that number of Rights (or fraction thereof) which would result in the
aggregate amount of the Purchase Price payable upon such exercise (at the
Purchase Price then in effect) being equal to the amount of the Purchase Price
that was payable prior to such time upon exercise of a Right, the holder would
be entitled to receive the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to such date and at a
time when the Preferred Shares transfer books of the Company were open, such a
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section 11(a)(1)
and Section 11(a)(2) hereof, the adjustment provided for in this Section
11(a)(1) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(2) hereof.
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(2) In the event:
(i) any Person, alone or together with its Affiliates and
Associates, shall have become an Acquiring Person and the time period in which
the Board of Directors may redeem the rights pursuant to Section 23(a) shall
have expired; or
(ii) a majority of the Independent Directors shall declare any
Person to be an Adverse Person upon a determination that such Person, alone or
together with its Affiliates and Associates, has, at any time after the Record
Date, become the Beneficial Owner of an amount of Common Stock which the
Independent Directors determine to be substantial (which amount shall in no
event be less than 10% of the shares of Common Stock then outstanding) and a
determination by a majority of the Independent Directors, after reasonable
inquiry and investigation, including consultation with such persons as such
directors shall deem appropriate, that (a) such Beneficial Ownership is
detrimental to the maintenance, renewal, or acquisition of the Company's
governmental or regulatory approvals, agreements, permits, licenses or
registrations, or (b) such Persons were convicted in criminal proceedings or are
named defendants of pending criminal proceedings (excluding minor offenses)
relating to the pharmaceutical industry or any other business regulated by any
Federal, state or local governmental agency, or (c) such Persons are subject to
any order, judgment, decree or debarment, not subsequently reversed, suspended,
or vacated, of any court of competent jurisdiction or governmental or regulatory
authority permanently or temporarily enjoining them from, or otherwise limiting
such Person from engaging in, any type of business practice relating to the
pharmaceutical industry or any other business regulated by any state or local
governmental agency;
proper provision shall be made so that promptly upon the occurrence of any event
described in Section 11(a)(2)(i) or (ii) hereof, each holder of a Right (except
as provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement such number of shares of Common Stock (or, in
the discretion of the Board, one one-thousandths of a Preferred Share), as shall
equal the result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-thousandths of a Preferred Share for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(a)(2)
Event, whether or not such Right was then exercisable, and (y) dividing that
product (which, following such first occurrence, shall thereafter be referred to
as the "Purchase Price" for each Right and for all purposes of this Agreement)
by 50% of the Current Market Price per share of Common Stock on the date of such
first occurrence (such number of shares being referred to as the "Adjustment
Shares").
(3) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(2) hereof, the Company may, if a majority of the Independent
Directors, in their sole discretion, determine that the action described
immediately below in this Section 11(a)(3) is necessary or appropriate and not
contrary to the interests of the holders of Rights other than any Acquiring
Person, any Adverse Person and any Affiliate or Associate of any such Person
(and, in the event that the number of shares of Common Stock which are
authorized by the Company's certificate of incorporation but not outstanding or
reserved for issuance for purpose other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights in accordance with the
foregoing Section 11(a)(2)), the Company shall: (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (2) the Purchase Price (such excess being referred to as
the "Spread"), and (B) with respect to each Right (subject to Section 7(e)
hereof), make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which, by virtue of having dividend, voting and liquidation rights substantially
comparable to those of the Common Stock, the Board has deemed to have the same
value as shares of Common Stock (such shares, or fractional shares, of preferred
stock being referred to as
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"Common Stock Equivalents"), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing (whichever substituted, the
"Substitute Consideration"), having an aggregate value equal to the Current
Value, as adjusted (less the amount of any reduction in the Purchase Price where
such aggregate value has been determined by the Board based upon the advice of a
nationally recognized investment banking firm selected by the Board; provided,
however, 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 Section 11(a)(2) Event, or (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)(2) 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, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If, after the
occurrence of a Section 11(a)(2) Event, the number of shares of Common Stock
that are authorized by the Company's certificate of incorporation, as amended,
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(2) hereof and the Board shall determine
in good faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent necessary,
but not more than ninety (90) days after the Section 11(a)(2) Trigger Date, in
order that the Company may seek shareholder approval for the authorization of
such additional shares (such period, as it may be extended, being referred to
herein as the "Substitution Period"). To the extent that the Company determines
that action is to be taken pursuant to the preceding provisions of this Section
11(a)(3), the Company (x) shall provide, subject to Section 7(e) hereof, 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 and/or to decide the
appropriate form of distribution to be made pursuant to such provisions and to
determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11(a)(3),
the value of the Common Stock shall be the Current Market Price per share of the
Common Stock on the Section 11(a)(2) Trigger Date and the per share or per unit
value of any Common Stock Equivalent shall be deemed to equal the Current Market
Price per share of the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("Equivalent Preferred
Shares") or securities convertible into Preferred Shares or Equivalent Preferred
Shares at a price per Preferred Share or per share of Equivalent Preferred
Shares (or having a conversion or exercise price per share, if a security
convertible into, or exercisable for, Preferred Shares or Equivalent Preferred
Shares) less than the Current Market Price per share of Preferred Shares on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date, plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or Equivalent Preferred Shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be the
number of Preferred Shares outstanding on such record date, plus the number of
additional Preferred Shares and/or Equivalent Preferred Shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights.
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Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution
to all holders of Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of securities (other than Common Stock and rights,
options or warrants referred to in Section 11(b)), evidences of indebtedness,
cash (other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Common Stock, but including any dividend payable in stock other than Common
Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
Current Market Price per Preferred Share on such record date, less the fair
market value (as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent) of the portion of
the securities, cash, assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants applicable to one Preferred Share and
the denominator of which shall be such Current Market Price per Preferred Share.
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) (1) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(3) hereof, the Current Market Price
of any security (a "Security" for purposes of this Section 11(d)(1) 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 immediately prior to such
date, and for purposes of computations made pursuant to Section 11(a)(3) hereof,
the Current Market Price of 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 following such date; provided, however,
that in the event that the Current Market Price per share 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 shares of such Security (other than
the Rights), 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, as set forth above, 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 Market
Price shall be properly adjusted to take into account ex-dividend trading. 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 Nasdaq National Market (the "Nasdaq") or, if the
shares of the Security are not listed or admitted to trading on Nasdaq 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 quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. through 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. If, on any such date no
market maker is making a market in the Security, the fair value of such Security
on such date as determined in good faith by the Board shall be used. The
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term "Trading Day" shall mean a day on which the principal national securities
exchange (or Nasdaq) 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
Security is not publicly held or not so listed or traded, Current Market Price
for such Security shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes, and shall be
binding on the Rights Agent.
(2) For the purpose of any computation hereunder, the "Current
Market Price" of the Preferred Shares shall be determined in accordance with the
method set forth in Section 11(d)(1). If the Preferred Shares are not publicly
traded, the "Current Market Price" of the Preferred Shares shall be conclusively
deemed to be the "Current Market Price" of the Common Stock as determined
pursuant to Section 11(d)(1) (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof),
multiplied by 1,000. If neither the Common Stock nor the Preferred Shares are
publicly held or so listed or traded, "Current Market Price" shall mean the fair
value per share as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one one-thousandth of a Preferred Share or
one ten-thousandth of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e) any adjustment required
by this Section 11 shall be made no later than the earlier of (i) three years
from the date of the transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(2) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and 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 Preferred Shares
contained in Sections 11(a) through (c) inclusive, 11(e), 11(h), 11(i), 11(m)
and the provisions of Sections 7, 9, 10, 12, 13 and 14 hereof with respect to
the Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-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 Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a Preferred Share obtained by (i) multiplying (x) the number of 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 to adjust the number of Rights, in lieu of any adjustment in
the number of one one-thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each Right outstanding after the
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adjustment in the number of Rights shall be exercisable for the number of one
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 one hundred thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the 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 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the 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 countersigned in the manner provided
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 one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
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 then par value, if any, of the number of one
one-thousandths of a Preferred Share, or other securities, 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 such number of fully-paid and nonassessable one
one-thousandths of a Preferred Share or shares of Common Stock, or other
securities, at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the Preferred Shares and other capital stock or other securities of the
Company, if any, issuable upon such exercise over and above the Preferred Shares
and other capital stock or other 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 or other securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment, the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the
Current Market Price, (iii) issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred
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Shares, or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Shares
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(n) and Section 11(o) hereof), (ii) merge with or into any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(n) and Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, asset or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons (other than the Company or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(n) and Section
11(o) hereof), if (x) at the time of or immediately after such consolidation,
merger, sale or transaction there are any rights, warrants or other instruments
or securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger, sale, or transaction the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 26
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time prior to the
Distribution Date (i) pay a dividend or distribution on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, the number of one one-thousandths of a Preferred Share
purchasable after such event upon proper exercise of each Rights shall be
determined by multiplying the number of one one-thousandths of a Preferred Share
so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately before
such event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event, and each share of Common Stock
outstanding immediately after such event shall have issued with respect to it
that number of Rights which each share of Common Stock outstanding immediately
prior to such event had issued with respect to it. The adjustments provided for
in this Section 11(p) shall be made successively whenever such a dividend is
declared or paid or such subdivision, combination or consolidation is effected.
(q) The failure by the Independent Directors to declare a
Person to be an Adverse Person following such Person becoming the Beneficial
Owner of 10% or more of the outstanding Common Stock of the Company shall not
imply that such Person is not an Adverse Person or limit such directors' rights
at any time in the future to declare such Person to be an Adverse Person.
(r) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time prior to the
Distribution Date consolidate with, or merge with or into, any other Person for
the primary purpose of a change of domicile of the Company, and, in connection
with such consolidation or merger, all of the outstanding shares of Common Stock
of the Company shall be changed into or exchanged for shares of Common Stock of
the surviving corporation of such consolidation or merger (the "Surviving
Corporation"), then proper provision shall be made so that Rights shall be
associated with each share of Common Stock of the Surviving Corporation, except
as provided in Section 7(e) hereof, such that the number of one one-thousandths
of a Preferred Share purchasable after such event upon proper exercise of each
Right associated with each share of
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Common Stock of the Surviving Corporation following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock of the Surviving
Corporation which the shares of Common Stock were changed into or exchanged for
pursuant to the consolidation or merger. Following such a consolidation or
merger, this Agreement shall remain in effect and all references to the Company
shall be deemed to be references to the Surviving Corporation.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing shares of Common Stock) in
accordance with Section 25 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
(x) the Company shall, directly or indirectly, consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n) and Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(n) and Section 11(o) hereof)
shall consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other Person or cash or any other property, or (z)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(n) and Section
11(o) hereof), then, and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that: (i) each holder
of a Right (except as otherwise provided in this Agreement), shall thereafter
have the right to receive, upon the exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable in accordance with the
terms of this Agreement, and in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party, not subject to 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
one-thousandths of a Preferred Share for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(2) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of one one-thousandths of a Preferred Share for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(2) Event by the Purchase Price in effect immediately prior to such
first occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by (2) 50% of the Current
Market Price per share of the Common Stock of such Principal Party on the date
of
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consummation of such Section 13 Event; (ii) 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; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(2) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
(b) "Principal Party" shall mean:
(1) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) hereof, the Person that is the
issuer of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation; and
(2) in the case of any transaction described in clause (z)
of the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any such case, (1) if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value; or (3) if none of the
Common Stock of such other Persons has been so registered, "Principal Party"
shall refer to whichever of such other Persons (other than an individual) is the
Person having the equity securities with the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date of
any consolidation, merger of sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will, at its own expense:
(1) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(2) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act;
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(3) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate;
(4) use its best efforts to list the Rights and the
securities purchasable upon exercise of the Rights on a national securities
exchange;
(5) the Company and the Principal Party shall have furnished
to the Rights Agent an opinion of independent counsel stating that such
supplemental agreement is a legal, valid and binding agreement of the Principal
Party enforceable against the Principal Party in accordance with its terms; and
(6) the Company and the Principal Party shall have filed
with the Rights Agent a certificate of a nationally recognized firm of
independent accountants setting forth the number of shares of Common Stock of
the Principal Party which may be purchased upon the exercise of each Right after
the occurrence of a Section 13 Event. The provisions of this Section 13 shall
similarly apply to successive mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall occur at any time after
the occurrence of a Section 11(a)(2) Event, the Rights which have not
theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a) hereof.
(d) After the occurrence of a Section 13 Event (i) Principal
Party shall be liable for, and shall assume, by virtue of such occurrence of a
Section 13 Event and without the necessity of any further act, all the
obligations and duties of the Company pursuant to this Agreement, (ii) the term
"Company" as used in this Agreement shall thereafter be deemed to refer to such
Principal Party, and (iii) such Principal Party shall take all steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock in accordance with Section 9) in connection with such occurrence of
a Section 13 Event as necessary to ensure that the provisions of this Agreement
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon the exercise of the
Rights.
Section 14. Fractional Rights and Fraction Shares.
(a) The Company shall not be required to issue fractions of
Rights, or to distribute Rights Certificates which evidence fractional Rights
(except prior to the Distribution Date pursuant to Section 11(i) hereof). If the
Company decides not to issue fractional Rights, there shall be paid in lieu
thereof to the registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on Nasdaq or, if the Rights are not listed or
admitted to trading on Nasdaq, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading, or if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board shall be used.
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(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which 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 which are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depository receipts, pursuant to an appropriate agreement between
the Company and a depository selected by it; provided, that such agreement shall
provide that the holders of such depository receipts shall have the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares. In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth of a Preferred Share, the Company shall
pay to each registered holder of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share as the fraction of one Preferred
Share that such holder would otherwise receive upon the exercise of the
aggregate number of rights exercised by such holder. For the purpose of this
Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(1) hereof) 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 right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under Section
18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations hereunder, of any Person subject to this
Agreement.
Section 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the forms of assignment set forth on the reverse thereof and the
certificates contained herein duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing
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on the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent 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, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. 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 shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividend
or other distributions or to exercise any pre-emptive or subscription rights or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of, any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the
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execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent 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 a 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 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.
(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.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of 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), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person or
Adverse Person and the determination of Current Market Price) be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board, the President, any Vice
President, or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any 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 adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by
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Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of the Preferred Shares to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of the Preferred Shares will, when so issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, or Secretary of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer. Any application by the Rights Agent for written instructions from
the Company may, at the Rights Agent's option, set forth in writing any action
proposed to be taken by, or omission of, the Rights Agent under this Agreement
and the date on and/or after which such action shall be taken or omission shall
be effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than three (3) Business Days after the date the Company actually
receives such application, unless the Company 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
or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any 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 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 of transfer without first consulting with the Company.
-25-
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and the Preferred Shares, 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 Common Stock
and the Preferred 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 Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of the State of New Jersey or
the State of New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of New Jersey or the State of New York), in good standing, having a
principal office in the State of New Jersey or the State of New York, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $10,000,000 or (b) an Affiliate of a corporation described in clause (a)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred 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.
Section 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 the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
earlier of the Redemption Date or the Final Expiration Date, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, 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, 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 if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, 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.
Section 23. Redemption and Termination.
-26-
(a) The Board may, at its option, at any time prior to the
earlier of (i) the Close of Business on the tenth day following the Stock
Acquisition Date or such later date as may be approved by the Board of Directors
of the Company with the concurrence of a majority of the Independent Directors,
or (ii) the Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.001 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); provided, however, that the
Board may not redeem any Rights following an Adverse Person Event; and provided
further, that, if the Board authorizes redemption of the Rights in either of the
circumstances set forth in clauses (i) and (ii) below, then such authorization
shall require the concurrence of a majority of the Independent Directors: (i)
such authorization occurs on or after the time a Person becomes an Acquiring
Person, or (ii) such authorization occurs on or after the date of a change
(resulting from a proxy or consent solicitation effected in compliance with
applicable law and the requirements of any national securities exchange on which
the Common Stock is listed) in a majority of the directors in office at the
commencement of such solicitation if any Person who is a participant in such
solicitation has stated (or, if upon the commencement of such solicitation, a
majority of the Board has determined in good faith) that such Person (or any of
its Affiliates or Associates) intends to take, or may consider taking, any
action which would result in such Person becoming an Acquiring Person or which
would cause the occurrence of a Triggering Event unless, concurrent with such
solicitation, such Person (or one or more of its Affiliates or Associates) is
making a cash tender offer pursuant to a Schedule 14D-1 (or any successor form)
filed with the Securities and Exchange Commission for all outstanding shares of
Common Stock not beneficially owned by such Person (or by its Affiliates or
Associates). Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(2) Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the Current Market Price of the Common
Stock at the time of redemption) or any other form of consideration deemed
appropriate by the Board.
(b) Immediately upon the action of the Board 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 for each Right so held.
Promptly after the action of the Board 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 each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock. Any notice which is mailed in the
manner herein provided 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.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular quarterly cash dividend out of earnings
or retained earnings of the Company), or (ii) to offer to the holders of
Preferred Shares rights or warrants to subscribe for or to purchase any
additional shares of Preferred Shares or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), or (iv) to effect any direct or
indirect consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(n) and
Section 11(o) hereof), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related
-27-
transactions, of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(n) and Section 11(o) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock and/or Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty (20) days prior
to the record date for determining holders of the Preferred Shares for purposes
of such action, and in the case of any such other action, at least twenty (20)
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock and/or
Preferred Shares, whichever shall be the earlier. Notwithstanding anything in
this Agreement to the contrary, prior to the Distribution Date a filing by the
Company with the Securities and Exchange Commission shall constitute sufficient
notice to the holders of securities of the Company, including the Rights, for
purposes of this Agreement and no other notice need be given. The failure to
give notice as required by this Section 24 or any defect therein shall not
affect the legality or validity of this action taken by the Company or the vote
upon any such action.
(b) In case any Section 11(a)(2) Event shall occur, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 25 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(2) hereof.
Section 25. 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 sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
DUSA Pharmaceuticals, Inc.
00 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: D. Xxxxxxxx Xxxxxxx, President
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
American Stock Transfer & Trust Co.
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Corporate Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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.
-28-
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, at any time and from time to time if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary to desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person,
an Adverse Person or an Affiliate or Associate of an Acquiring Person or an
Adverse Person); provided, this Agreement may not be supplemented or amended (A)
whether before or after the Distribution Date, to lengthen a time period
relating to when the Rights may be redeemed or to modify the ability (or
inability) of the Board to redeem the Rights, in either case at such time as the
Rights are not then redeemable, or (B) after the Distribution Date to lengthen,
pursuant to clause (iii) of this sentence, any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, or the benefits to, the holders of Rights (other than an Acquiring Person,
an Adverse Person or an Affiliate or Associate of an Acquiring Person or an
Adverse Person). Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price, the Final Expiration Date, the Purchase Price or
the number of one one-thousandths of a Preferred Share for which a Right is
exercisable, or which affects any right vested in the Rights Agent. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, 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 (with, where specifically provided for herein,
the concurrence of the Independent Directors) or the Independent Directors, as
the case may be, shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board (with, where specifically provided for herein, the concurrence of the
Independent Directors) the Independent Directors, as the case may be, or to 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, to declare that a Person is an
Adverse Person, to amend the Agreement or to limit the Substitute Consideration
or Spread payable). 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 (with, where
specifically provided for herein, the concurrence of the Independent Directors)
or the Independent Directors, as the case may be, in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board or the
Independent Directors to any liability to the holders of the Rights.
-29-
Section 29. 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, registered holders of the Common Stock) 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, registered holders of Common Stock).
Section 30. 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 a majority of the
Independent Directors, in their good faith judgment, determine that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the Close of Business on the
tenth day following the date of the later of such determination by the
Independent Directors.
Without limiting the foregoing, if any provision of this Agreement
requiring that a determination be made by less than the entire Board is held by
a court of competent jurisdiction of other authority to be invalid, void or
unenforceable, such determination shall then be made by the entire Board in
accordance with applicable law and the Company's certificate of incorporation
and bylaws.
Section 31. 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 New Jersey and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts, any one of which need not contain the signature of more than
one Party, and each and every one of which shall be deemed an original,
notwithstanding variations in format or file designation which may result from
the electronic transmission, storage and printing of copies of this Agreement
from separate computers or printers. Facsimile signatures shall be treated as
original signatures.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the date first above written.
Attest: DUSA PHARMACEUTICALS, INC.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ D. Xxxxxxxx Xxxxxxx
----------------------------- ------------------------------
Xxxxxxx X. Xxxxxxx, Secretary D. Xxxxxxxx Xxxxxxx, President
Attest: AMERICAN STOCK TRANSFER & TRUST CO.
/s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
----------------------------- ------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: Assistant Secretary Title: Vice President
----------------------------- ------------------------------
-31-
EXHIBIT A
[FORM OF
CERTIFICATE OF AMENDMENT
Of
CERTIFICATE OF INCORPORATION
Of
DUSA PHARMACEUTICALS, INC.]
(Pursuant to Title 14A:7-2(2) of the New Jersey Business Corporation Act)
It is hereby certified that:
1. The name of the corporation is DUSA Pharmaceuticals, Inc. (hereinafter called
the "Corporation"); and
2. The Certificate of Incorporation of the Corporation, as amended (the
"Certificate of Incorporation") is hereby amended so that the designation and
number of shares of the class and series acted upon in the following
resolutions, and the relative rights, preferences and limitations of such class
and series, are as stated in such resolutions.
3. The following resolutions were duly adopted by the Board of Directors of the
Corporation as required by Subsection 14A:7-2(3) of the New Jersey Business
Corporation Act at a meeting duly called and held on September 27, 2002, at
which a quorum was present and acting throughout:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation in accordance with the provisions of
Article Third of its Certificate of Incorporation, the Board of Directors hereby
establishes the number of shares of the Corporation designated as Series A
Junior Participating Preferred Stock as 40,000 shares.
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation in accordance with the provisions of
Article Third of its Certificate of Incorporation, the Board of Directors hereby
states the designation and number, and the relative rights, preferences and
limitation of the Series A Junior Participating Preferred Stock of the
Corporation, no shares of which have been issued, as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 40,000 and such number may be increased or decreased by
resolution of the Board of Directors.
Section 2. Dividends and Distributions.
A. Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, no par value (the "Common Stock"), of the
Corporation, and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount (if any) per share (rounded
to the nearest cent), subject to the provision for adjustment hereinafter set
forth, equal to 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
B. Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
A. Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation and each holder of a fractional share of Series A Preferred Stock
shall be entitled to a pro rata fractional vote. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
-2-
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
B. Except as otherwise provided herein, in any other
Certificate of Amendment creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
C. Except as set forth herein, or as otherwise provided by law
or the Certificate of Incorporation, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
A. Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
1. declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
2. declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
3. redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
4. redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
B. The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section IV, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued
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shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set forth
herein, in the Certificate of Incorporation, or in any other Certificate of
Amendment creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
of any other class of the Corporation's Preferred Stock.
Section 10. Modification. The Board of Directors shall have full
authority to change the designation and relative rights, preferences and
limitations of the Series A Preferred Stock so long as no Series A Preferred
Stock has been issued.
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IN WITNESS WHEREOF, this Certificate of Amendment is executed on behalf
of the Corporation by its President and attested by its Secretary this ___ day
of ____________ 2002.
DUSA Pharmaceuticals, Inc.
By:
----------------------------
D. Xxxxxxxx Xxxxxxx,
President, Chief Executive
Officer and Chief Financial
Officer
Attest:
------------------------
Xxxxxxx X. Xxxxxxx, Esq.
Secretary
-5-
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- _________________ _________ Rights
NOT EXERCISABLE AFTER THE CLOSE OF BUSINESS ON OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ADVERSE
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR ADVERSE 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) (ADVERSE) PERSON OR AN AFFILIATE OR ASSOCIATE OF AN (ACQUIRING)
(ADVERSE) PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.
Rights Certificate
DUSA PHARMACEUTICALS, INC.
This certifies that _______________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of September 27, 2002 (the "Rights Agreement") between DUSA
Pharmaceuticals, Inc., a New Jersey corporation (the "Company"), and American
Stock Transfer & Trust Co., a New York corporation (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (New York City time)
on _________________ at the principal office of the Rights Agent, or its
successors as Rights Agent, in New York, New York, one one-thousandth of a fully
paid nonassessable share of Series A Preferred Stock, without par value, (a
"Preferred Share") of the Company, at a purchase price of $37.00 per one
one-thousandth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
_________________, based on the Preferred Shares as constituted on the Close of
Business on such date.
As provided in the Rights Agreement, the Purchase Price and the number of one
one-thousandths of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and conditions
of the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which reference
is hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates. Copies of the Rights Agreement are on
file at the above-mentioned office of the Rights Agent. This Right Certificate,
with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent in New
York, New York, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a Preferred Share as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised. Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at a redemption
price of $.001 per Right, payable, at the election of the Company, in cash,
Common Shares of the Company or such other consideration as may be determined by
the Directors of the Company.
No fractional Preferred Share will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are one one-thousandth or
integral multiples of one one-thousandth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, to give or
withhold consent to any corporate action, to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal.
Dated as of .
------------
Attest DUSA PHARMACEUTICALS, INC.
By: By:
----------------------------- -------------------------
Name: Name:
--------------------------- -----------------------
Title: Title:
-------------------------- ----------------------
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificates.)
FOR VALUE RECEIVED,______________ hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.
Dated: _____________ _______________________________________________
Signature
Signature Guaranteed(1):
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) This Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________ _______________________________________________
Signature
Signature Guaranteed(1):
NOTICE The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To: DUSA PHARMACEUTICALS, INC.
The undersigned hereby irrevocably elects to exercise__________ Rights
represented by this Rights Certificate to purchase the Preferred Shares, Common
Shares or other securities issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
________________________________________________________________________________
(Please print name and address)
_____________________________________________
(Social Security or other identifying number)
________
1 Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act
of 1934, as amended.
-3-
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
---------------------------------------------
(Social Security or other identifying number)
Dated:
------------- -----------------------------------------------
Signature
Signature Guaranteed(1):
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 Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, it [ ] did [
] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:
------------- -----------------------------------------------
Signature
Signature Guaranteed(1):
NOTICE The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
-4-
EXHIBIT C
[Form of Summary of Rights]
DUSA PHARMACEUTICALS, INC.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On September 27, 2002, the Board of Directors of DUSA Pharmaceuticals,
Inc., a New Jersey corporation (the "Company"), declared a dividend of
distribution of one preferred stock purchase right (a "Right") for each
outstanding share of Common Stock (the "Rights Dividend"). The Rights Dividend
is payable on October 10, 2002 (the "Record Date") to shareholders of record at
the close of business on the Record Date, and with respect to all shares of
Common Stock that become outstanding after the Record Date and prior to the
earliest of the Distribution Date (as defined below), the redemption of the
Rights or the expiration of the Rights. As of September 27, 2002, the number of
shares of Common Stock outstanding was 13,887,612.
Except as set forth below and subject to adjustment as provided in the
Rights Agreement (as defined below), each Right entitles the registered holder
to purchase from the Company one one-thousandth (1/1,000th) of a share of Series
A Junior Participating Preferred Stock (the "Series A Preferred Stock"), at an
exercise price of $37.00 per Right (the "Purchase Price"). The description and
terms of the Rights are set forth in a Rights Agreement dated as of September
27, 2002 (the "Rights Agreement"), between the Company and American Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent"). The Rights are
issuable under, and subject to the terms and conditions of, Rights Agreement
between the Company and the Rights Agent.
The Rights will be evidenced by the Common Stock certificates and not
by separate certificates until the tenth day following the earliest of (i) the
date of public disclosure that a person or group (an "Acquiring Person"),
together with persons affiliated or associated with it, has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more (or in the
case of one pre-determined shareholder group on the Record Date, 20% or more) of
the outstanding Common Stock (the "Stock Acquisition Date") and (ii) the
commencement, or disclosure of an intention to commence, a tender offer or
exchange offer by a person other than the Company and certain related entities
if upon consummation of the offer, such person or group together with persons
affiliated or associated with it, could acquire beneficial ownership of 15% or
more (or in the case of one pre-determined shareholder group on the Record Date,
20% or more) of the outstanding Common Stock, (the earlier of such dates being
called the "Distribution Date"), and (iii) the date a majority of the
independent directors, as defined in the Rights Agreement (the "Independent
Directors") declare a person an "Adverse Person" upon a determination that such
person, alone or together with its affiliates or associates, has become the
beneficial owner of an amount of Common Stock which the Independent Directors
determine to be substantial (which amount shall in no event be less than 10% of
the shares of Common Stock then outstanding) and a determination by a majority
of the Independent Directors, after reasonable inquiry and investigation,
including consultations with such persons as such directors shall deem
appropriate that (a) such ownership is detrimental to the maintenance, renewal,
or acquisition of the Company's governmental or regulatory approvals,
agreements, permits, licenses or registrations, or (b) such persons were
convicted in criminal proceedings or are named defendants of pending criminal
proceedings (excluding minor offenses) relating to the pharmaceutical industry
or any other business regulated by any federal, state or local governmental
agency, or (c) such persons are currently subject to any order, judgment, decree
or debarment of any court of competent jurisdiction or governmental or
regulatory authority permanently or temporarily enjoining them from any type of
business practice relating to the
pharmaceutical industry or any other business regulated by any state or local
governmental agency.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), the Rights will be transferable with and only with the Common Stock
(except in connection with redemption of the Rights). Until the Distribution
Date (or earlier redemption of the Rights), new Common Stock certificates issued
after the Record Date upon transfer, replacement or new issuance of Common Stock
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date. From and after the Distribution Date, such separate Rights
Certificates alone will evidence the Rights.
The Rights will first become exercisable on the Distribution Date
(unless sooner redeemed). The Rights will expire at the close of business on
October 10, 2012 (the "Expiration Date"), unless earlier redeemed by the Company
as described below.
The Purchase Price is subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend or distribution on, or a
subdivision, combination or reclassification of, the Common Stock, (ii) upon the
grant to holders of the Common Stock of certain rights, options, or warrants to
subscribe for Common Stock or securities convertible into Common Stock at less
than the current market price of the Common Stock, or (iii) upon the
distribution to holders of the Common Stock or other securities, cash, property,
evidences of indebtedness, or assets.
In the event that a majority of the Independent Directors declare that
a person is an Adverse Person (an "Adverse Person Event"), or a person acquires
beneficial ownership of 15% or more (or in the case of one pre-determined
shareholder group as of the Record Date, 20% or more), of the Common Stock (and
the Independent Directors do not thereafter redeem the Rights in the time and
manner permitted, such event referred to herein as a "Triggering Event"), then
the Rights will "flip-in" and entitle such holder of a Right, except as provided
below, to purchase, upon exercise at the then-current Purchase Price, that
number of shares of Series A Preferred Stock having a market value of two times
such Purchase Price.
Any Rights beneficially owned at any time on or after the earlier of
the Distribution Date and the Stock Acquisition Date by an Acquiring Person or
Adverse Person, or an affiliate or associate of an Acquiring Person or Adverse
Person (whether or not such ownership is subsequently transferred) will become
null and void upon the occurrence of a Triggering Event or an Adverse Person
Event, and any holder of such Rights will have no right to exercise such Rights.
In the event that, following the Stock Acquisition Date, the Company is
acquired in a merger or other business combination in which the Common Stock
does not remain outstanding or is changed or 50% or more of its consolidated
assets or earning power is sold, leased, exchanged, mortgaged, pledged or
otherwise transferred or disposed of (in one transaction or a series of related
transactions) the Rights will "flip-over" and entitle each holder of a Right
(except those Rights which have been voided as set forth above) to purchase,
upon the exercise of the Right at the then-current Purchase Price, that number
of shares of common stock of the acquiring company (or, in certain
circumstances, one of its affiliates) which at the time of such transaction
would have a market value of two times such Purchase Price.
-2-
With certain exceptions, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Purchase Price; provided, however, that any
adjustments not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations with respect to this
adjustment shall be made to the nearest cent or to the nearest one
one-thousandth of a Series A Preferred Share or one ten-thousandth of any other
share or security, as the case may be. Notwithstanding the first sentence of
these adjustment conditions, any adjustment required shall be made no later than
the earlier of (i) three years from the date of the transaction which mandates
such adjustment, or (ii) the Expiration Date.
At any time prior to the earlier of (i) ten days following the Stock
Acquisition Date, or (ii) the Expiration Date, the Company may redeem the Rights
in whole, but not in part, at a price of $.001 per Right, subject to adjustment.
Under certain circumstances the decision to redeem shall require the concurrence
of a majority of the Independent Directors. The Company may not redeem the
Rights if the Independent Directors have declared a person an Adverse Person.
Immediately upon the action of the Company's Board of Directors electing to
redeem the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights thereafter will be to receive the applicable
redemption price. The term "Independent Directors" includes any member of the
Board, while such Person is a member of the Board, who (i) is not an employee of
the Company or (ii) does not receive compensation from the Company for services,
other than services as a director or as a member of a committee of the Board of
Directors.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends or distributions of payments of principal or
interest.
At any time prior to ten days following the Stock Acquisition Date, the
Company may, without the approval of any holder of the Rights, supplement or
amend certain provisions of the Rights Agreement (including the date on which
the Distribution Date will occur). Thereafter, the Rights Agreement may be
amended only to cure ambiguities, to correct inconsistent provisions, or in ways
that do not adversely affect the Rights holders. The Rights Agreement may not be
amended to change the Purchase Price, the number of shares of Common Stock,
other securities, cash or other property obtainable upon exercise of a Right,
the redemption price (other than as may be adjusted by operation of the Rights
Agreement), or the Expiration Date, except that, prior to ten days following the
Triggering Event, the Rights Agreement may be amended to substitute other
securities for the Series A Preferred Stock otherwise obtainable upon exercise
of a Right, provided the value of such securities is equal to the then current
market price of one one-thousandth (1/1,000th) of a share of Series A Preferred
Stock.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the
Company's Board of Directors prior to the time a person or group has acquired
beneficial ownership of 15% or more (or in the case of one pre-determined
shareholder group as of the Record Date, 20% or more) of the Common Stock,
because until such time the Rights may be redeemed by the Company.
The foregoing summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement.
Copies of the Rights Agreement will be available to shareholders free of charge
from the Company.
Also on September 27, 2002, the Board of Directors approved certain
amendments to its Certificate of Incorporation. The Board approved an amendment
to Article Third of its Certificate of Incorporation to designate 40,000 shares
of its preferred stock as Series A Junior
-3-
Participating Preferred Stock. The Board also further provided that it shall
have the right to further change the designation and relative rights,
preferences and limitations of the Series A Preferred Stock so long as no Series
A Preferred Stock is issued.
-4-
