Exhibit 4.4
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Execution Copy
INSMED INCORPORATED
and
FIRST UNION NATIONAL BANK
(Rights Agent)
Rights Agreement
Dated as of May 16, 2001
TABLE OF CONTENTS
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Page
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Section 1. Certain Definitions............................................................ 1
Section 2. Appointment of Rights Agent.................................................... 6
Section 3. Issue of Right Certificates.................................................... 6
Section 4. Form of Right Certificates..................................................... 8
Section 5. Countersignature and Registration.............................................. 9
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates....................... 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.................. 10
Section 8. Cancellation and Destruction of Right Certificates............................. 12
Section 9. Reservation and Availability of Capital Stock.................................. 12
Section 10. Preferred Stock Record Date.................................................... 13
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights............. 14
Section 12. Certification of Adjusted Purchase Price or Number of Shares................... 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
Earning Power.................................................................. 21
Section 14. Fractional Rights, and Fractional Shares....................................... 24
Section 15. Rights of Action............................................................... 25
Section 16. Agreement of Right Holders..................................................... 26
Section 17. Right Certificate Holder Not Deemed a Shareholder.............................. 26
Section 18. Concerning the Rights Agent.................................................... 27
Section 19. Merger or Consolidation or Change of Name of Rights Agent...................... 27
Section 20. Duties of Rights Agent......................................................... 28
Section 21. Change of Rights Agent......................................................... 30
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Section 22. Issuance of New Right Certificates............................................. 31
Section 23. Redemption..................................................................... 31
Section 24. Exchange....................................................................... 32
Section 25. Notice of Certain Events....................................................... 33
Section 26. Notices........................................................................ 34
Section 27. Supplements and Amendments..................................................... 35
Section 28. Successors..................................................................... 36
Section 29. Determinations and Actions Taken by the Board of Directors..................... 36
Section 30. Benefits of this Agreement..................................................... 36
Section 31. Severability................................................................... 36
Section 32. Governing Law.................................................................. 37
Section 33. Counterparts................................................................... 37
Section 34. Descriptive Headings........................................................... 37
Exhibit A Form of Articles of Amendment to Articles of Incorporation, as amended........ A-1
Exhibit B Form of Right Certificate..................................................... B-1
Exhibit C Summary of Rights to Purchase Preferred Stock................................. C-1
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RIGHTS AGREEMENT
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This Agreement, dated as of May 16, 2001 between Insmed Incorporated,
a Virginia corporation (the "Company"), and First Union National Bank, a
national banking association (the "Rights Agent"):
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, on May 16, 2001, the Board of Directors of the Company
determined it desirable and in the best interests of the Company and its
shareholders for the Company to adopt a shareholder rights plan;
WHEREAS, on May 16, 2001 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of common
stock, par value $.01 per share, of the Company (the "Common Stock") outstanding
upon the Close of Business (as hereinafter defined) on June 1, 2001 (the "Record
Date"), and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11((n)) hereof)
for each share of Common Stock issued between the Record Date and the
Distribution Date (as hereinafter defined) and in certain other circumstances
provided herein, each Right initially representing the right to purchase one
one-thousandth (1/1000/th/) of a share of Series A Junior Participating
Preferred Stock of the Company having the rights, powers and preferences set
forth in the form of Articles of Amendment to the Articles of Incorporation, as
amended, attached hereto as Exhibit A, upon the terms and subject to the
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conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
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For purposes of this Agreement, the following terms have the
meanings indicated:
(a) "1933 Act" shall have the meaning assigned to it in Section
9(b).
(b) "Acquiring Person" shall mean any Person who or that, together
with all Affiliates and Associates of such Person, is the Beneficial Owner of a
Substantial Block, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan or employee stock plan of the
Company, or of any Subsidiary of the Company, or any Person organized,
appointed, established or holding Voting Stock by, for or pursuant to, the terms
of any such plan, (iv) any Person who becomes the Beneficial Owner of a
Substantial Block solely as a result of a reduction in the number of shares of
Voting Stock outstanding due to the repurchase of shares of Voting Stock by the
Company unless and until such Person, after becoming aware that such Person has
become the Beneficial Owner of a Substantial Block of the then outstanding
shares of Voting Stock, acquires beneficial ownership of additional shares of
Voting Stock representing one percent (1%) or more of the shares of Voting Stock
then
outstanding, or (v) any such Person who has reported or is required to report
such ownership on Schedule 13G under the Securities and Exchange Act of 1934, as
amended and in effect on the date of this Agreement (the "Exchange Act") (or any
comparable or successor report) or on Schedule 13D under the Exchange Act (or
any comparable or successor report) which Schedule 13D does not state any
intention to or reserve the right to control or influence the management or
policies of the Company or engage in any of the actions specified in Item 4 of
such schedule (other than the disposition of the Common Stock) and, within 10
Business Days of being requested by the Company to advise it regarding the same,
certifies to the Company that such Person acquired shares of Common Stock in
excess of 15% inadvertently or without knowledge of the terms of the Rights and
who, together with all Affiliates and Associates, thereafter does not acquire
additional shares of Common Stock while the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding; provided, however, that if the
Person requested to so certify fails to do so within 10 Business Days (unless
extended by the Board of Directors of the Company), then such Person shall
become an Acquiring Person immediately after such 10-Business-Day period (or if
extended by the Board of Directors of the Company, immediately after such
extension).
(c) "Adjustment Shares" shall have the meaning assigned to it in
Section 11()().
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(e) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "Beneficially Own," any securities:
(i) that such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, within the meaning of
Rule 13d-3 of the General Rules and Regulations under the Exchange Act ;
(ii) that such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the
exercise of any conversion, exchange or purchase rights (other than the
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 or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, (II) securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event (as hereinafter defined), 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 (as hereinafter defined) or pursuant to Section 3(a) or Section 22
hereof (the "Original Rights") or pursuant to Section 11(a)(i) hereof in
connection with an adjustment made with respect to any Original Rights; or,
(B) the right to vote pursuant to any agreement, arrangement or
understanding; or
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(iii) that are beneficially owned, directly or indirectly by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any securities of the
Company;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security if the agreement, arrangement or understanding
to vote such security arises solely from a revocable proxy given to such Person
in response to a public proxy solicitation made pursuant to and in accordance
with, the applicable General Rules and Regulations under the Exchange Act, and
provided, further, that nothing in this paragraph ((e)) shall cause a Person
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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 pursuant to an
underwriting agreement with the Company.
(f) "Business Day" shall mean any day other than a Saturday, Sunday
or day on which banking institutions in the Commonwealth of Virginia are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Richmond, Virginia time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Richmond, Virginia time, on the next
succeeding Business Day.
(h) "Common Stock" shall have the meaning assigned to it in the
second recital of this Agreement, and "common stock" (i) when used with
reference to any Person other than the Company shall mean the capital stock with
the greatest voting power of such Person or, if such Person is a Subsidiary of
another Person, the Person that ultimately controls such first-mentioned Person
and (ii) when used with reference to any Person other than the Company that
shall not be organized in corporate form shall mean units of beneficial interest
that (A) shall represent the right to participate generally in the profits and
losses of such Person (including, without limitation, any flow-through tax
benefits resulting from an ownership interest in such Person) and which (B) one
is entitled to exercise the greatest voting power of such Person or, in the case
of a limited partnership, shall have the power to remove the general partner or
partners.
(i) "Common Stock Equivalents" shall have the meaning assigned to it
in Section 11((a))((iii)).
(j) "Company" shall have the meaning assigned to it in the first
paragraph of this Agreement.
(k) "Current Market Price" shall have the meaning assigned to it in
Section 11((c))((i)).
(l) "Current Value" shall have the meaning assigned to it in Section
11((a))((iii)).
(m) "Distribution Date" shall have the meaning assigned to it in
Section 3((a)).
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(n) "Equivalent Preferred Stock" shall have the meaning assigned to
it in Section 11((c)).
(o) "Equivalent Stock" shall have the meaning assigned to it in
Section 7.
(p) "Exchange Act" shall have the meaning assigned to it in Section
1((b)).
(q) "Exchange Ratio" shall have the meaning assigned to it in Section
24.
(r) "Expiration Date" shall have the meaning assigned to it in
Section 7((a)).
(s) "Final Expiration Date" shall have the meaning assigned to it in
Section 7((a)).
(t) "Nasdaq" shall have the meaning assigned to it in Section 9.
(u) "Person" shall mean any individual, corporation, partnership,
limited liability company, or other entity and shall include any successor by
merger or otherwise of such entity, and any particular Person shall include any
"group" acting as described in Section 13(d)(3) of the Exchange Act.
(v) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, without par value, of the Company (including any
authorized fraction of a share of Preferred Stock) and, to the extent that there
are not a sufficient number of shares of Series A Junior Participating Preferred
Stock authorized to permit the full exercise of the Rights, any other series of
preferred stock of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Stock.
(w) "Principal Party" shall have the meaning assigned to it in
Section 13.
(x) "Purchase Price" shall have the meaning assigned to it in Section
4.
(y) "Record Date" shall have the meaning assigned to it in the second
recital of this Agreement.
(z) "Redemption Price" shall have the meaning assigned to it in
Section 23.
(aa) "Right Certificate" shall have the meaning assigned to it in
Section 3.
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(bb) "Rights" shall have the meaning assigned to it in the second
recital to this Agreement.
(cc) "Rights Agent" shall have the meaning assigned to it in the first
paragraph of this Agreement.
(dd) "Rights Dividend Declaration Date" shall have the meaning
assigned to it in the second recital to this Agreement.
(ee) "Section 11(a)(ii) Event" shall have the meaning assigned to it
in Section 7((e)).
(ff) "Section 11(a)(ii) Trigger Date" shall have the meaning assigned
to it in Section 11((a))((iii)).
(gg) "Section 13 Event" shall have the meaning assigned to it in
Section 7((e)).
(hh) "Spread" shall have the meaning assigned to it in Section
11((a))((iii)).
(ii) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(jj) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person and any
Affiliate of such Person.
(kk) "Substantial Block" shall mean either (i) a number of shares of
Voting Stock having in the aggregate 15% or more of the general voting power or
(ii) 15% or more of the Rights.
(ll) "Substitution Period" shall have the meaning assigned to it in
Section 11((a))((iii)).
(mm) "Summary of Rights" shall have the meaning assigned to it in
Section 3((b)).
(nn) "Trading Day" shall have the meaning assigned to it in Section
11((c))((i)).
(oo) "Triggering Event" shall mean a Section 11(a)(ii) Event or
Section 13 Event.
(pp) "Voting Stock" shall mean shares of the Company's capital stock
having general voting power. For the purposes hereof, "voting power," when used
with reference to the
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capital stock of, or units of equity interests in, any Person shall mean the
power under ordinary circumstances (and not merely upon the happening of a
contingency) to vote in the election of directors of such Person (if such Person
is a corporation) or to participate in the management and control of such Person
(if such Person is not a corporation).
Section 2. Appointment of Rights Agent.
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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, shall
prior to the Distribution Date also be the holders of Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such Co-
Rights Agent or Agents as it may deem necessary or desirable. The Rights Agent
shall have no duty to supervise, and shall in no event be liable for, the acts
or omissions of any such Co-Rights Agent. In the event the Company appoints one
or more Co-Rights Agents, the respective duties of the Rights Agents and any Co-
Rights Agents will be as the Company may determine.
Section 3. Issue of Right Certificates.
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(a) The "Distribution Date" shall mean the earlier of (i) the Close
of Business on the tenth Business Day (or such later date as may be determined
by the Board of Directors of the Company) after the date of the commencement of
a tender or exchange offer (as determined by reference to Rule 14d-2(a) (or any
successor rule) under the Exchange Act) by any Person (other than the Company,
any Subsidiary of the Company, or any employee benefit plan or employee stock
plan of the Company or any Subsidiary of the Company) for a number of shares of
the outstanding Voting Stock having 15% or more of the general voting power (or,
if the tenth Business Day after such date occurs before the Record Date, the
Close of Business on the Record Date), or (ii) the Close of Business on the
tenth Business Day after a Stock Acquisition Date (or, if the tenth Business Day
after such date occurs before the Record Date, the Close of Business on the
Record Date). Up to and including the Distribution Date, (x) the Rights shall be
evidenced by the certificates for Common Stock registered in the names of the
holders of Common Stock (which certificates for Common Stock shall be deemed
also to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates shall be transferable only in connection
with the transfer of Common Stock. As soon as practicable after the Distribution
Date, the Rights Agent shall mail, by first-class, insured, postage prepaid
mail, to each holder of Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Company at the Close of
Business on the Distribution Date, at the address of such holder shown on such
records, a Right Certificate (the "Right Certificate"), in substantially the
form of Exhibit B hereto, evidencing one Right for each share of Common Stock so
held. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11((n)) hereof, at the time of
distribution of the Right Certificates, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14((a)) hereof) so
that Right Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights shall be evidenced solely by such Right
Certificates.
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(b) The Company shall make available, as promptly as practicable
following the Record Date, a copy of a Summary of Rights, in substantially the
form attached hereto as Exhibit C (the "Summary of Rights"), to any holder of
Rights who may so request from time to time prior to the Expiration Date. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights shall be evidenced by such certificates
for the Common Stock and the holders of the Common Stock shall also be the
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) Unless the Board of Directors of the Company by resolution
adopted at or before the time of the issuance (including pursuant to the
exercise of rights under the Company's stock option, stock purchase or other
benefit plans) of any shares of Common Stock specifies to the contrary, Rights
shall be issued in respect of all shares of Common Stock that are issued after
the Record Date but prior to the earlier of the Distribution Date, the
Expiration Date or the date, if any, on which the Rights are redeemed.
Certificates representing shares of Common Stock outstanding prior to the Record
Date that are issued upon transfer or exchange of such Common Stock, shall also
be deemed to be certificates for Rights, and these Certificates, as well as
Certificates representing shares of Common Stock to be issued after the Record
Date, shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Insmed
Incorporated and the Rights Agent thereunder (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of Insmed
Incorporated. 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. Insmed Incorporated
will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement) or one of certain transferees
thereof, whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void, as provided in
Section 7((e)) of the Rights Agreement.
With respect to such certificates containing the foregoing legend, until the
Distribution Date or the Expiration Date, the Rights associated with Common
Stock represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Stock
certificate.
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(d) Until the Distribution Date, the surrender for transfer of any
of the certificates for Common Stock outstanding on or after the Close of
Business on June 1, 2001, shall also constitute the transfer of the Rights
associated with Common Stock represented by such certificates. After the
Distribution Date, the Rights shall be evidenced solely by the Right
Certificates.
Section 4. Form of Right Certificates.
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(a) The Right Certificates (and the forms of assignment and of
election to purchase shares to be printed on the reverse thereof) shall be in
substantially the form of 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
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Section 11, Section
13 and Section 22, the Right Certificates, whenever issued, shall be dated as of
the Record Date and on their face shall entitle the holders thereof to purchase
such number of shares of Preferred Stock as shall be set forth therein at the
price per one one-thousandth (1/1000/th/) of a share set forth therein as
prescribed by Section 7((b)) (the "Purchase Price"), but the number and type of
such shares and the Purchase Price shall be subject to adjustment as provided
herein.
(b) Any Right Certificate issued pursuant to Section 3((a)),
Section 11((h)), or Section 22 that represents Rights Beneficially Owned by: (i)
an Acquiring Person or any Associate or Affiliate of such Acquiring Person, (ii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7((e)), and any Right Certificate
issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement
or adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible and reasonably identifiable as such) the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement) or one of certain transferees
thereof. Accordingly, under certain circumstances as provided in the
Rights Agreement, this Right Certificate and the Rights represented
hereby may have become null and void as provided in Section 7((e))
of such Agreement.
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Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board of Directors of the Company, its President
or any Vice President, either manually or by facsimile signature, and have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
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 Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, issued and delivered
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(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 Right Certificates upon exercise or transfer,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each Right
Certificate, the date of each Right Certificate and the number of each Right
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
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Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Section 4((b)), Section 7((e)) and
Section 14, 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 or the day prior
to the day, if any, on which the Rights are to be redeemed pursuant to Section
23, any Right Certificate or Certificates may be transferred, split up, combined
or exchanged for another Right Certificate or Right Certificates, entitling the
holder to purchase such number of shares of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing,
signed by the holder with such signature guaranteed in such manner as is
reasonably satisfactory to the Rights Agent, delivered to the Rights Agent, and
shall surrender the Right Certificate or Right Certificates to be transferred,
split up, combined or exchanged at the principal stock transfer office of the
Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate until the holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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Thereupon the Rights Agent shall, subject to Section 4((b)), Section 7((e)) and
Section 14, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment by the holders of Rights of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Subject to Section 7((e)), upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will execute and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) Subject to Section 7(e), at any time after the Distribution
Date, the holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9, Section 11((a))(ii),
Section 11((a))((iii)), Section 13, Section 23 and Section 24) in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
principal stock transfer office of the Rights Agent, together with payment of
the Purchase Price for each one one-thousandth (1/1000/th/) of a share of
Preferred Stock (or other securities, cash or other assets, as the case may be)
as to which the Rights are exercised, at or prior to the earlier of (i) the
Close of Business on May 16, 2011 or such later date as may be established by
the Board of Directors of the Company prior to the expiration of the Rights
(such date being hereinafter referred to as the "Final Expiration Date") or (ii)
the time at which the Rights are redeemed or exchanged as provided in Section 23
or Section 24 (the earlier of (i) and (ii) being herein referred to as the
"Expiration Date"). If at any time after the Rights become exercisable hereunder
but prior to the Expiration Date the Company is prohibited by its Articles of
Incorporation, as amended, from issuing Preferred Stock upon the exercise of all
of the outstanding Rights, the Company may issue upon the exercise of the Rights
shares of stock or other securities of the Company of equivalent value to the
Preferred Stock ("Equivalent Stock"), as determined by the Board of Directors of
the Company.
(b) The Purchase Price for each one one-thousandth (1/1000/th/) of
a share of Preferred Stock pursuant to the exercise of a Right shall initially
be $35, shall be subject to adjustment from time to time as provided in Sections
11 and 13 and to increase pursuant to Section 27, and shall be payable in
accordance with paragraph ((c)) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax in cash, or by certified check or
money order payable to the order of the Company, the Rights
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Agent shall, subject to this Section 7 and Section 20(l), thereupon promptly (i)
(A) requisition from any transfer agent of Preferred Stock (or any Equivalent
Stock then issuable) a certificate for the number of shares of Preferred Stock
(or any Equivalent Stock then issuable) to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary
agent, requisition from the depositary agent depositary receipts representing
such number of one one-thousandths (1/1000/ths/) of a share of Preferred Stock
as are to be purchased (in which case certificates for the shares of Preferred
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) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of a fractional share in
accordance with Section 14 and (iii) promptly after receipt of such certificate,
cause the same to be delivered to or upon the order of the holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and, when appropriate, after receipt promptly deliver such cash to or
upon the order of the holder of such Right Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made in cash or by certified bank check or bank draft payable
to the order of the Company. In the event that the Company is obligated to issue
other securities (including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.
(d) In case the holder of any Right Certificate shall exercise less
than all the Rights evidenced thereby, a new Right Certificate evidencing a
number of Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to, or upon the order of, the holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14.
(e) Notwithstanding any provision of this Agreement to the contrary,
upon the occurrence of any of the events described in Section 11(a)(ii) (a
"Section 11(a)(ii) Event") or in clauses (a), (b), (c) or (d) of the first
sentence of Section 13 (a "Section 13 Event"), any Rights that are at the time
of the occurrence of such Section 11(a)(ii) Event or Section 13 Event, as the
case may be, Beneficially Owned by (i) an Acquiring Person or any Associate or
Affiliate of such Acquiring Person or (ii) a transferee of an Acquiring Person
or of any Associate or Affiliate of such Acquiring Person (A) who becomes a
transferee after the Acquiring Person becomes such, or (B) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (1) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (2) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall
11
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))
are complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its making or failing to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such 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 Right Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
---------------------------------------------------
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
----------------------------------------------
The Company covenants and agrees that it will (a) cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities), the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights, (b) take all such
action as may be necessary to ensure that all shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable, (c) pay
when due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock (and, following the occurrence
of a Triggering Event, Common Stock and/or other securities) upon the exercise
of Rights and (d) take all such action, from and after the date the Rights
become exercisable hereunder, as may be necessary to permit the exercise of the
Rights for Preferred Stock (and,
12
following the occurrence of a Triggering Event, Common Stock and/or other
securities), including any required registration under the Securities Act of
1933, as amended (the "1933 Act"), and, in connection therewith and if deemed
desirable by the Company, use its reasonable best efforts to list (or continue
the listing of) the Preferred Stock on a national securities exchange or the
Nasdaq Stock Market, Inc. ("Nasdaq"), and to cause all shares of Preferred Stock
reserved for issuance upon exercise of Rights to be listed on such exchange or
Nasdaq upon official notice of issuance upon such exercise. 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) calendar days, the exercisability of the
Rights in order to comply with all applicable Federal and state securities laws.
Upon any such suspension, the Company shall issue a public announcement (and
shall provide written notice to the Rights Agent) 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 in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective. Notwithstanding the provisions of clause (c) of the
first sentence of this Section 9, the Company shall not be required to pay any
transfer tax that may be payable in respect of any transfer involved in the
transfer or delivery of Right Certificates or the issuance or delivery of
certificates for Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) in a name other than that of the
holder of the Right Certificate evidencing Rights surrendered for exercise or to
issue or deliver any certificates for shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities) upon
the exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Preferred Stock Record Date.
----------------------------
Each Person in whose name any certificate for shares of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (and, following the occurrence
of a Triggering Event, Common Stock and/or other securities) transfer books of
the Company are closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate 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
13
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
------------------------------------------------------------------
(a) 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.
(i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of shares
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11((a)) and
Section 7((e)), then and in each such event, the number of shares of
Preferred Stock issuable upon the exercise of a Right and the Purchase
Price payable after such event shall be the number of shares of Preferred
Stock issuable immediately prior to such event multiplied by a fraction the
numerator of which is the number of Rights outstanding immediately prior to
such event and the denominator of which is the number of Rights outstanding
immediately after such event and the Purchase Price after such event shall
be the Purchase Price in effect immediately prior to such event multiplied
by such fraction. If an event occurs that would require an adjustment under
both this Section 11((a))((i)) and Section 11((a))((ii)), the adjustment
provided for in this Section 11((a))((i)) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section
11(a)((ii)).
(ii) In the event that any Person shall, at any time after the
Rights Dividend Declaration Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a transaction
set forth in Section 13(a) hereof, then, and in each such case, proper
provision shall be made so that each holder of a Right, except as provided
below and in Section 7((e)), shall thereafter have the right to receive,
upon exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, in lieu of a number of one one-thousandths
(1/1000/ths/) of a share of Preferred Stock, such number of shares of
Common Stock as shall, equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-thousandths
(1/1000/ths/) of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which, following such first
occurrence, shall thereafter be the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11((c)) hereof) per share of Common Stock
on the date of such first occurrence (such number of shares, the
"Adjustment Shares").
14
(iii) In the event that the number of shares of Common Stock
that are authorized by the Company's Articles of Incorporation, as amended,
but are not outstanding or reserved for issuance for purposes other than
upon exercise of the Rights, are not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph ((ii)) of
this Section 11((a)), and subject to such limitations as are necessary to
prevent a default under any agreement for money borrowed as presently
constituted to which the Company is a party and subject to any limitations
contained in Section 13.1-653 of the Virginia Stock Corporation Act, the
Company shall: (A) determine the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value"), and (B) with respect to
each Right (subject to Section 7((e)) hereof), make adequate provision to
substitute for the Adjustment Shares, upon the exercise of a Right and
payment of the applicable Purchase Price, (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, such as the Preferred Stock, that the Board of Directors of the
Company has deemed to have essentially the same value or economic rights as
shares of Common Stock (such shares of preferred stock being referred to as
"Common Stock Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of
the Company; provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within 30
calendar days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred
to herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall
be obligated to deliver, upon the surrender for exercise of the Right and
without requiring payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term "Spread" shall mean the excess of (i) the
Current Value over (ii) the Purchase Price. If the Board of Directors of
the Company determines in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the 30 calendar day period set forth above
may be extended to the extent necessary, but not more than 90 calendar days
after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek shareholder approval for the authorization of such additional shares
(such 30 calendar day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that action is to be taken pursuant
to the first and/or third sentences of this Section 11((a))((ii)), the
Company (1) shall provide, subject to Section 7((e)) hereof, that such
action shall apply uniformly to all outstanding Rights, and (2) may suspend
the exercisability of the Rights until the expiration of the Substitution
Period in order to seek such shareholder approval for such authorization of
additional shares and/or to decide the appropriate form of distribution to
be made pursuant to such first sentence and to determine the value thereof.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
15
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section
11((a))()(iii), the value of each Adjustment Share shall be the Current
Market Price per share of the Common Stock on the Section 11(a)(ii) 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 Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock (or having a conversion
price per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the Current Market Price per share of Preferred Stock
(as defined in Section 11((c)) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price and the denominator of which shall be the number of
shares of Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
to be offered are initially convertible). In case such subscription price may
be paid in a 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 of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Preferred Stock owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such
a record date is 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 that would
then be in effect if such record date had not been fixed.
(c) In the event the Company shall fix a record date for the making of
a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation, merger or share exchange
in which the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend of the Company
in compliance with Section 13.1-653 of the Virginia Stock Corporation Act), or
other assets (other than a dividend payable in Preferred Stock, but including
any dividend payable in stock other than Preferred Stock) or evidences of
indebtedness, or of subscription rights or warrants (excluding those referred to
in Section 11((c)), 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, of which the numerator shall be the
Current Market Price per share of Preferred Stock (as defined in Section
11((c))((i)) on such record date, less the fair market value (as determined in
good faith by
16
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one share of Preferred Stock, and of which the
denominator shall be such Current Market Price per share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11((a))((iii)), the "current market
price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
30 consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11((a))((iii)) hereof,
the "Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock 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 such stock is determined during a period
following the announcement by the issuer of such stock of (A) a dividend or
distribution on such stock payable in shares of such stock or securities
convertible into shares of such stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification shall not have occurred
prior to the commencement of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, then, and in each such case, the Current Market
Price shall be appropriately 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 New York Stock
Exchange or, if the shares of such stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the shares of such
stock are listed or admitted to trading or, if the shares of such stock are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices as reported on the Nasdaq, or such other system then in use,
or if on any such date the shares of such stock 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 Common Stock selected
by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of such shares
on such date as determined in good faith by the Board of Directors of the
Company shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange or Nasdaq, as the case may be, on
which the shares of such stock are listed or admitted to trading is open
for the transaction of business or, if the shares of such stock are not
listed or admitted to trading on any national securities exchange or
Nasdaq, a Business Day. If such stock is not publicly held or not so listed
or traded, "Current Market Price" per share shall mean the fair value per
share as determined
17
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in clause ((i)) of this
Section 11((c)) (other than the last sentence thereof). If the Current
Market Price per share of Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner provided above, the Current Market Price per
share of Preferred Stock shall be conclusively deemed to be an amount equal
to 1000 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Agreement) multiplied by the
Current Market Price per share of the Common Stock. If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
Current Market Price per share of the Preferred Stock shall mean the fair
value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of one one-thousandth
(1/1000/th/) of a share of Preferred Stock shall be equal to the Current
Market Price of one share of Preferred Stock divided by 1000.
(d) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided, however, that any
adjustments that by reason of this Section 11((d)) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or other share or one-ten-
millionth of a share of Preferred Stock, as the case may be. Notwithstanding the
first sentence of this Section 11((d)), 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.
(e) In the event that at any time, as a result of an adjustment made
pursuant to Section 11((a))((ii)) or Section 13, the holder of any Right
thereafter exercised shall become entitled to receive any shares of capita1
stock of the Company other than shares of Preferred Stock, thereafter the number
of such other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11((a)), (b), ((c)), ((d)), ((f)), ((g)), ((h)), ((i)) and ((k)), and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the shares of
Preferred Stock shall apply on like terms to any such other shares.
(f) 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
(1/1000/ths/) of a share of Preferred Stock
18
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(g) Unless the Company shall have exercised its election as provided
in Section 11((h)), upon each adjustment of the Purchase Price as a result of
the calculations made in Section 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 (1/1000/ths/) of a share of Preferred Stock (calculated to the
nearest one-ten-millionth) obtained by (i) multiplying (x) the number of one
one-thousandths (1/1000/ths/) of a share covered by a Right immediately prior to
such 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.
(h) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for an
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of shares of Preferred
Stock to which a Right related immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Right Certificates have been issued, shall be at
least 10 calendar days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11((h)) the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and 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
Right Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths (1/1000/ths/) of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one one-
thousandth (1/1000/th/) share and the number of shares that were expressed in
the initial Right Certificates issued hereunder.
19
(j) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(k) 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 their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the Current Market Price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to hereinabove
in this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such shareholders.
(l) 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 that complies with Section 11((m))
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11((m)) hereof), (iii)
effect a statutory share exchange with any Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11((m)) hereof) or (iv)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11((m)) hereof), if (x) at the time of or
immediately after such consolidation, merger, statutory share exchange or sale
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect that 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, statutory
share exchange or sale, 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.
(m) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
20
(n) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock 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 outstanding immediately
following the occurrence of such event.
Section 12. Certification of Adjusted Purchase Price or Number of Shares.
-------------------------------------------------------------
Whenever an adjustment is made as provided in Sections 11 or 13,
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
Preferred Stock and Common Stock, a copy of such certificate and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 26. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be obligated or responsible for calculating any
adjustment nor shall it be deemed to have knowledge of any such adjustment
unless and until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
-----------------------------------------------------------------
Earning Power.
-------------
In the event that on or at any time after a Stock Acquisition Date,
directly or indirectly, (a) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (b)
any Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m) hereof) shall consolidate with, 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, (c) the Company shall be a party to a statutory share
exchange with any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) hereof) after which the Company is
a Subsidiary of any other Person, or (d) 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
21
Company or any of its Subsidiaries in one or more transactions each of which
complies with Section 11((m))), then, and in each such case:
(A) proper provision shall be made so that (i) each holder
of a Right (except as provided in Section 7((e))) shall thereafter
have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid, non-
assessable and freely tradeable shares of common stock of the
Principal Party (as hereinafter defined), 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
(1/1000/ths/) of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such
one one-thousandths (1/1000/ths/) of a share for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) 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 (determined pursuant
to Section 11((c))((i)) hereof) per share of the Common Stock of such
Principal Party, on the date of consummation of such Section 13 Event;
(ii) the 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) the 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
such consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be,
in relation to the shares of its Common Stock thereafter deliverable
upon the exercise of the Rights; and (v) the provisions of Section
11((a))((ii)) 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 (a),
(b) or (c) of the first sentence of this Section 13, (i) 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 or exchanged in such statutory share exchange, or,
if there is more than one such issuer, the issuer the common
stock of which has the greatest market value or (ii) if no
securities are so issued, (x) the Person that is the other party
to the merger or consolidation or statutory share exchange and
that survives said merger or consolidation or that is the
acquiring corporation in a statutory
22
share exchange or, if there is more than one such Person, the
Person the common stock of which has the greatest market value or
(y) if the Person that is the other party to the merger or
consolidation or statutory share exchange does not survive the
merger or consolidation or statutory share exchange, the Person
that does survive the merger or consolidation or statutory share
exchange (including the Company if it survives);
(2) in the case of any transaction described in
clause (d) of the first sentence of this Section 13, the Person
that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the
assets or earning power so transferred or the Person receiving
the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons as is the issuer of common
stock having the greatest market value of shares outstanding;
provided, however, that in any such case, (w) if the common stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another corporation the common stock of which
is and has been so registered, "Principal Party" shall refer to such other
corporation, (x) if the common stock of such Person is not and has not been so
registered and such Person is not a direct or indirect Subsidiary of another
corporation the common stock of which is and has been so registered, "Principal
Party" shall refer to the corporation that ultimately controls such Person, (y)
in case such Person is a Subsidiary, directly or indirectly, of more than one
corporation, the common stocks of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such corporations is the issuer of
the common stock having the greatest market value of shares held by the public,
and (z) in case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in (w) - (y) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct or indirect interests in such Person bear
to the total of such interests.
The Company shall not consummate any such consolidation, merger, sale,
statutory share exchange or transfer unless prior thereto the Company and such
issuer shall have executed and delivered to the Rights Agent a supplemental
agreement making valid provision for the results described in subsections ((A))
and ((B)) above and further providing that, as soon as practicable after the
date of any consolidation, merger, statutory share exchange or sale of assets
mentioned in this Section 13, the Principal Party shall:
(i) prepare and file a registration statement
under the 1933 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
23
(B) remain effective (with a prospectus at all times meeting
the requirements of the 1933 Act) until the Expiration Date;
and
(ii) take all such other action as may be
necessary to enable the Principal Party to issue the
securities purchasable upon exercise of the Rights,
including but not limited to the registration or
qualification of such securities under all requisite
securities laws of jurisdictions of the various states and
the listing of such securities on such exchanges and trading
markets as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act;
provided, however, that in no case may the Company consummate any such
consolidation, merger, statutory share exchange, sale or transfer if (i) at the
time of or immediately after such transaction there are any rights, warrants or
other instruments or securities outstanding or agreements in effect that would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (ii) prior to, simultaneously with or immediately
after such transaction, the shareholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13 shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or statutory share exchanges 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)(ii) Event, the Rights that have not
theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).
Section 14. Fractional Rights, and Fractional Shares.
-----------------------------------------
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11((n))
hereof, or to distribute Right Certificates that evidence fractional Rights. If
the Company shall determine not to issue such fractional Rights, in lieu of such
fractional Rights, there shall be paid to the holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14((a)), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, 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 or, if the Rights are not listed or
admitted to trading on the Nasdaq National Market, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal
24
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights, selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral multiples of
the fraction of a share for which a Right is then exercisable) upon exercise of
the Rights or to distribute certificates that evidence fractional shares (other
than fractions that are integra1 multiples of the fraction of a share for which
a Right is exercisable). In lieu of fractional shares that are not integral
multiples of the fraction for which a Right is then exercisable, the Company may
pay to the holders of Right Certificates at the time such Right Certificates are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share of Preferred Stock. For purposes of this Section
14, the current market value of a share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant to the second
sentence of Section 11((c))) for the Trading Day immediately prior to the date
of such exercise.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates that evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the holders of Right Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the current
market value of one (1) share of Common Stock. For purposes of this Section
14((c)), the current market value of one share of Common Stock shall be the
closing price of one share of Common Stock (as determined pursuant to Section
11((c)) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Right or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action.
----------------
All rights of action in respect of this Agreement are vested in the
respective holders of the Right Certificates (and prior to the Distribution
Date, the holders of the Common Stock); and any holder of any Right Certificate
(or, prior to the Distribution Date, any holder of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, any holder of the Common Stock), may, on
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate
25
and in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations hereunder, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Right Holders.
--------------------------
(a) 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:
(i) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(ii) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent and then if
surrendered at the principal stock transfer office of the Rights Agent,
duly endorsed or accompanied by a proper instrument of transfer and with
the appropriate forms and certificates fully executed; and
(iii) subject to Sections 6((a?)) and 7((f)), the Company and
the Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificate 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)), shall be required to be affected by any
notice to the contrary.
(b) 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. Right Certificate Holder Not Deemed a Shareholder.
-------------------------------------------------
No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of Preferred
Stock or any other securities of the Company that may at any time be issuable on
the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any
26
right to vote at the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent, its directors, officers, employees
and agents for, and to hold each of them harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for anything done or omitted by the Rights
Agent or such other indemnified party 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 Right
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, instruction, 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.
(c) The indemnity provided in this Section 18 shall survive the
expiration of the Rights, the resignation or removal of the Rights Agent and the
termination of this Agreement.
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, stock transfer or other shareholder services business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
--------
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned, and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates,
27
either in the name of the predecessor Rights Agent or in the name of the
successor Rights Agent, and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates, either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent.
-----------------------
(a) The Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates by their acceptance
thereof, shall be bound:
(b) 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.
(c) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of Current 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 of Directors of the Company, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate 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.
(d) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(e) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates, or be required to verify the same (except its
countersignature thereof), but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(f) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
28
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Sections 11, 13 or 24 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
Right 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 Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(g) 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.
(h) 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 of Directors of the Company, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and 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 or for any delay in acting while awaiting
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on or after which such action shall be taken or such 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 five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted; provided, such proposal is submitted in good faith and is not
inconsistent with any instructions previously received from any officer of the
Company.
(i) 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.
(j) 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
29
such act, default, neglect or misconduct, provided the Rights Agent was not
grossly negligent in the selection and continued employment thereof.
(k) 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.
(l) 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 or transfer without first consulting with the Company.
(m) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
(n) Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits).
Section 21. Change of Rights Agent.
-----------------------
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 calendar days' notice in
writing mailed to the Company and to each transfer agent of Common Stock and
Preferred Stock by registered or certified mail, and, if such resignation occurs
after the Distribution Date, to the holders of the Right Certificates by first-
class mail. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of Common
Stock and Preferred Stock by registered or certified mail, and, if such removal
occurs after the Distribution Date, to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 calendar days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then any holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a legal
business entity organized and doing business under the laws of the United States
or of a state of the United States in good standing, that is authorized under
such laws to exercise corporate trust or stock transfer or shareholders services
powers and that has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $100,000,000 or (b) an affiliate of a legal
30
business entity 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 Common Stock and Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in writing
to the holders of the Right Certificates. Failure to give any notice provided
for in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors of the Company to reflect any adjustment or change in the Purchase
Price per share and in the number or kind or class of shares of stock or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, 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, granted or
awarded as of the Distribution Date, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate 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.
-----------
The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the Close of Business on the tenth Business Day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth
Business Day following the Record Date), and (ii) the Final Expiration Date, and
as provided herein, elect to redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any combination or subdivision of the
outstanding Common Stock, any dividend payable in Common Stock in respect of the
outstanding Common Stock or any other similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to as the
31
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights, evidence of which shall have been
filed with the Rights Agent, without any further action and without any further
notice, the only right of the holders of Rights shall be to receive the
Redemption Price and such holders shall have no right to exercise the Rights.
Promptly after the action of the Board of Directors of the Company ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent, or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common 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. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11(a)(ii) Event until the expiration of the
Company's right of redemption hereunder. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the Current Market
Price, as defined in Section 11((c))(i) hereof, of the Common Stock at the time
of redemption) or any other form of consideration deemed appropriate by the
Board of Directors of the Company.
Section 24. Exchange.
---------
(a) The Board of Directors of the Company may, at its option, at
any time (including any time after any Person becomes an Acquiring Person),
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7((e)) hereof) for Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection ((a)) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Stock for Rights will
be effected and, in the event of any
32
partial exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights that have become void pursuant to the provisions of Section 7() hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or Equivalent Preferred Stock, as such
term is defined in paragraph ((b)) of Section 11 hereof) for Common Stock
exchangeable for Rights, at the initial rate of one one-thousandth (1/1000/th/)
of a share of Preferred Stock (or Equivalent Preferred Stock) for each share of
Common Stock, as appropriately adjusted to reflect stock splits, stock dividends
and other similar transactions after the date hereof.
(d) In the event that there shall not be sufficient shares of Common
Stock authorized but unissued to permit any exchange of Rights as contemplated
in accordance with this Section 24, the Company shall take all such action as
may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates that evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, there shall be
paid to the holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this subsection ((e)), the current market
value of a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section
11((c))((i)) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
-------------------------
(a) In case the Company, at any time after the Distribution Date,
shall propose to pay any dividend payable in stock of any class to the holders
of Preferred Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend not in excess of 150% of the
rate of the last cash dividend theretofore paid and made in compliance with
Section 13.1-653 of the Virginia Stock Corporation Act), or to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11((m)) hereof), or to effect a statutory
share exchange with any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11((m)) 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 or a series of related transactions, of more than 50%
of the assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than a Subsidiary of
the Company in one or more transactions that complies with Section 11((m))
hereof), or to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to
33
each holder of a Right, to the extent feasible and in accordance with Section
26, 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, statutory share
exchange, sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least twenty days prior to
the record date for determining holders of Preferred Stock for purposes of such
action, and in the case of any such other action, at least twenty days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11((a))((ii)) 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 26 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))((ii)) hereof, and (ii) all references in the preceding paragraph
to Preferred Stock shall be deemed thereafter to refer to Common Stock and/or,
if appropriate, other securities.
Section 26. Notices.
--------
Notices or demands authorized by this Agreement to be given or made
by the Rights Agent or by the holder of any Right Certificate to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, or via facsimile transmission, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Insmed Incorporated
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, or via facsimile
transmission, addressed (until another address is filed in writing with the
Company) as follows:
34
First Union National Bank
0000 Xxxx X. X. Xxxxxx Boulevard
Building 3C3
Charlotte, North Carolina 28288-1153
Attention: Equity Services Group
Phone: (000) 000-0000
Fax: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (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 Rights Agent.
Section 27. Supplements and Amendments.
---------------------------
Prior to the Distribution Date and subject to the last sentence of
this Section 27, the Company may, and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the sentence immediately
prior to the penultimate sentence of this Section 27, the Company may, and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein that 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 that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits, to the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Notwithstanding
the foregoing, no supplement or amendment shall be made that changes the
Redemption Price, the Final Expiration Date, the Purchase Price or the number of
shares of Common Stock for which a Right is exercisable; provided, however, that
at any time prior to the Distribution Date, the Board of Directors of the
Company may amend this Agreement to increase the Purchase Price or extend the
Final Expiration Date. 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. Notwithstanding anything herein to the contrary, this Agreement
may not be amended at a time when the Rights are not redeemable, and no
supplement or amendment that changes the rights or duties of the Rights Agent
under this Agreement shall be effective without the consent of the Rights Agent.
35
Section 28. Successors.
-----------
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 29. Determinations and Actions Taken by the Board of Directors.
-----------------------------------------------------------
For all purposes of this Agreement, any calculation of the number
of shares of Common Stock or of any other class of capital stock outstanding at
any particular time, including for purposes of determining the particular
percentage of the outstanding 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)
(as in effect on the date of this Agreement) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or 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 or to amend this Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board (or, where specifically provided for herein,
the Continuing Directors) in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board of Directors of the Company, or any
of the directors on the Board of Directors of the Company to any liability to
the holders of the Rights.
Section 30. Benefits of this Agreement.
---------------------------
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the holders of the Right
Certificates (and, prior to the Distribution Date, holders of 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 holders of the Right Certificates (and, prior to the Distribution
Date, holders of the Common Stock).
Section 31. Severability.
-------------
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the
36
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 Business Day following the date of such determination by the Board of
Directors of the Company. Without limiting the foregoing, if any provision
requiring a specific group of Directors of the Company to act is held to by any
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the Board of Directors
of the Company in accordance with applicable law and the Company's Articles of
Incorporation, as amended, and Bylaws.
Section 32. Governing Law.
--------------
This Agreement, each Right and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the
Commonwealth of Virginia and for all purposes shall be governed by and construed
in accordance with the laws of such Commonwealth applicable to contracts made
and to be performed entirely within such Commonwealth.
Section 33. Counterparts.
-------------
This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
Section 34. Descriptive Headings.
---------------------
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
INSMED INCORPORATED
By: /s/Xxxxxxxx Xxxxx, Ph.D.
------------------------------------------
Xxxxxxxx Xxxxx, Ph.D.
Chairman of the Board of Directors,
President and Chief Executive Officer
FIRST UNION NATIONAL BANK
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President-Equity Services Group
38
Exhibit A
---------
FORM OF
AMENDMENT TO ARTICLES OF INCORPORATION, AS AMENDED
TO CREATE A NEW SERIES OF PREFERRED STOCK
DESIGNATED AS
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
INSMED INCORPORATED
Pursuant to Section 13.1-639 of the Virginia Stock Corporation Act
------------------------------------------------------------------
I.
The name of the corporation is Insmed Incorporated (the "Company").
II.
Pursuant to Section 13.1-639 of the Virginia Stock Corporation Act and the
authority conferred upon the Board of Directors by the Articles of Incorporation
of the Company, as amended, the Articles of Incorporation are hereby amended to
create a new series of shares of Preferred Stock, designated as "Series A Junior
Participating Preferred Stock" by adding the following additional paragraph
after the last paragraph of that Article III:
9. Series A Junior Participating Preferred Stock
(a) Designation and Amount. The shares of such series shall be designated
----------------------
as "Series A Junior Participating Preferred Stock" and the number of shares
constituting such series shall be five hundred thousand (500,000).
(b) Dividends and Distributions.
---------------------------
1. Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
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 January, April, July and October in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 1000 times the aggregate per share amount of all cash
dividends, and 1000 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
A-1
reclassification or otherwise), declared on the Common Stock, par value $.01 per
share, of the Company (the "Common Stock") since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Junior Participating Preferred Stock. In the event the Company
shall at any time after May 16, 2001 (the "Rights Declaration Date"), (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence 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.
2. The Company shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or distribution
--------
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
3. Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares 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 Junior Participating 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 Junior Participating
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 Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
(c) Voting Rights. The holders of shares of Series A Junior Participating
-------------
Preferred Stock shall have the following voting rights:
1. Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 1000 votes on all
A-2
matters submitted to a vote of the shareholders of the Company. In the event the
Company shall at any time after the Rights Declaration Date (A) declare any
dividend on Common Stock payable in shares of Common Stock, (B) subdivide the
outstanding Common Stock or (C) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of votes per share
to which holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
2. Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of shareholders of the Company.
(A) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six
quarterly dividends thereon, the occurrence of such contingency shall
xxxx the beginning of a period (herein called a "Default Period") that
shall extend until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Series A Junior Participating
Preferred Stock then outstanding shall have been declared and paid or
set apart for payment. During each Default Period, all holders of
Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in an amount
equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two directors.
(B) During any Default Period, such voting right of the holders
of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to Paragraph (c)2.(C)
-----------------
or at any annual meeting of shareholders, and thereafter at annual
meetings of shareholders, provided that neither such voting right nor
--------
the right of the holders of any other series of Preferred Stock, if
any, to increase, in certain cases, the authorized number of directors
shall be exercised unless the holders of ten percent in number of
shares of Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Stock shall
not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock
shall exercise such voting right initially during an existing Default
Period, they shall have the right, voting as a class, to elect
directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two directors or, if such right is exercised at
an annual meeting, to elect two directors. If the number that may be
so elected at any special meeting does not amount to the required
number, the holders of the Preferred Stock shall have the right to
make such increase in the number of directors as shall be necessary to
permit the election by them of the required number. After the holders
of the Preferred Stock shall have exercised their right to elect
directors in any Default Period and during the continuance of such
period, the number of directors shall not be increased or decreased
except by vote of the holders of Preferred Stock as
A-3
herein provided or pursuant to the rights of any equity securities
ranking senior to or pari passu with the Series A Junior Participating
Preferred Stock.
(C) Unless the holders of Preferred Stock shall, during an
existing Default Period, have previously exercised their right to
elect directors, the Board of Directors may order, or any shareholder
or shareholders owning in the aggregate not less than ten percent of
the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting
of the holders of Preferred Stock, which meeting shall thereupon be
called by the President, a Vice President or the Secretary of the
Company. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this
Paragraph (c)2.(C) shall be given to each holder of record of
-----------------
Preferred Stock by mailing a copy of such notice to him at his last
address as the same appears on the books of the Company. Such meeting
shall be called for a time not earlier than 20 days and not later than
60 days after such order or request or in default of the calling of
such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any shareholder or shareholders
owning in the aggregate not less than ten percent of the total number
of shares of Preferred Stock outstanding. Notwithstanding the
provisions of this Paragraph (c)2.(C), no such special meeting shall
-----------------
be called during the period within 60 days immediately preceding the
date fixed for the next annual meeting of the shareholders.
(D) In any Default Period, the holders of Common Stock, and other
classes of stock of the Company if applicable, shall continue to be
entitled to elect the whole number of directors until the holders of
Preferred Stock shall have exercised their right to elect two
directors voting as a class, after the exercise of which right (x) the
directors so elected by the holders of Preferred Stock shall continue
in office until their successors shall have been elected by such
holders or until the expiration of the Default Period, and (y) any
vacancy in the Board of Directors may (except as provided in Paragraph
---------
(c)2.(C) above) be filled by vote of a majority of the remaining
-------
directors theretofore elected by the holders of the class of stock
that elected the director whose office shall have become vacant.
References in this Paragraph (c) to directors elected by the holders
-------------
of a particular class of stock shall include directors elected by such
directors to fill vacancies as provided in clause (y) of the foregoing
sentence.
(E) Immediately upon the expiration of a Default Period, (I) the
right of the holders of Preferred Stock as a class to elect directors
shall cease, (II) the term of any directors elected by the holders of
Preferred Stock as a class shall terminate and (III) the number of
directors shall be such number as may be provided for in the Articles
of Incorporation, as amended or Amended and Restated Bylaws
irrespective of any increase made pursuant to the provisions of
Paragraph (c)2.(A) (such number being subject, however, to change
-----------------
thereafter in any manner provided by law or in the Articles of
Incorporation, as amended or Amended and Restated Bylaws). Any
vacancies in the Board of Directors
A-4
effected by the provisions of clauses (II) and (III) in the preceding
sentence may be filled by a majority of the remaining directors.
2. Except as set forth herein, holders of Series A Junior
Participating 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.
(d) Certain Restrictions.
--------------------
1. Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Paragraph (b) above are in arrears, thereafter and until all accrued and unpaid
------------
dividends and distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been paid in full,
the Company shall not:
(A) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(B) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(C) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the Company may at any
--------
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Company ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock; or
(D) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
A-5
2. The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under Paragraph (d)1., purchase or otherwise
---------------
acquire such shares at such time and in such manner.
(e) Reacquired Shares. Any shares of Series A Junior Participating
-----------------
Preferred Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
(f) Liquidation, Dissolution or Winding Up.
--------------------------------------
1. Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (A) the Series A
Liquidation Preference by (B) 1000 (as appropriately adjusted as set forth in
subparagraph 3. below to reflect such events as stock splits, stock dividends
---------------
and recapitalizations with respect to the Common Stock) (such number in clause
(ii), the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and Common
Stock, respectively, holders of Series A Junior Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to one with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
2. In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any, that
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
3. In the event the Company shall at any time after the Rights
Declaration Date (A) declare any dividend on Common Stock payable in shares of
Common Stock, (B)
A-6
subdivide the outstanding Common Stock or (C) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(g) Consolidation, Merger, etc. In case the Company shall enter into any
---------------------------
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series A Junior
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Company shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the Outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Junior Participating Preferred Stock 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.
(h) No Redemption. The shares of Series A Junior Participating Preferred
-------------
Stock shall not be redeemable.
(i) Ranking. The Series A Junior Participating Preferred Stock shall rank
-------
junior to all other series of the Company's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
(j) Amendment. At any time when any shares of Series A Junior
---------
Participating Preferred Stock are outstanding, the Articles of Incorporation of
the Company, as amended, and as amended hereby, shall not be amended in any
manner that would materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority or more of
the then outstanding shares of Series A Junior Participating Preferred Stock,
voting separately as a class.
(k) Fractional Shares. Series A Junior Participating Preferred Stock may
-----------------
be issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Junior Participating Preferred Stock.
IV.
A-7
The foregoing amendment was duly adopted by the Company's Board of Directors on
May 16, 2001. No shareholder action was required.
INSMED INCORPORATED
Dated: May 16, 2001 By: _____________________________________
Xxxxxxxx Xxxxx, Ph.D.
Chairman of the Board, President and Chief
Executive Officer
A-8
Exhibit B
---------
[Form of Right Certificate]
---------------------------
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER MAY 16, 2011, UNLESS EXTENDED PRIOR
THERETO BY THE BOARD OF DIRECTORS OR EARLIER IF REDEEMED OR
EXCHANGED BY THE COMPANY. THE COMPANY, AT ITS OPTION, MAY REDEEM
THE RIGHTS EVIDENCED BY THIS CERTIFICATE AT A REDEMPTION PRICE
OF $.01 PER RIGHT OR EXCHANGE THE RIGHTS FOR SHARES OF COMMON
STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7((e)) OF SUCH AGREEMENT.]/1/
__________________
/1/ The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
RIGHT CERTIFICATE
-----------------
INSMED INCORPORATED
-------------------
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 May 16, 2001 (the "Rights
Agreement"), between Insmed Incorporated, a Virginia corporation (the
"Company"), and First Union National Bank, a national banking association (the
"Rights Agent"), to purchase from the Company, at any time prior to 5:00 P.M.
(Richmond, Virginia time) on May 16, 2011 (unless such time is extended prior
thereto by the Board of Directors) at the principal stock transfer office of the
Rights Agent, or its successor as Rights Agent, one one-thousandth (1/1000/th/)
of a fully paid and nonassessable share of the Series A Junior Participating
Preferred Stock of the Company ("Preferred Stock"), at a purchase price of $35
per one one-thousandth (1/1000/th/) of a share (the "Purchase Price") upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares that may be
purchased upon exercise thereof) set forth above, and the Purchase Price per one
one-thousandth (1/1000/th/) of a share set forth above, are the number and
Purchase Price as of May 16, 2001, based on the shares of Preferred Stock of the
Company as constituted at such date. The Company reserves the right to require
prior to the occurrence of a Triggering Event (as such term is defined in the
Rights Agreement) that a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued. All capitalized terms not defined herein
shall have the meaning set forth in the Rights Agreement
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities that 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, including
Triggering Events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific
B-2
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement
are on file at the above-mentioned office of the Rights Agent and at the
principal office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase such number of shares of
Preferred Stock 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 its option at a
redemption price of $.01 per Right at any time prior to the earlier of (i) the
Close of Business on the tenth Business Day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to the Record Date,
the Close of Business on the tenth Business Day following the Record Date), and
(ii) the Final Expiration Date (as such terms are defined in the Rights
Agreement). In addition, under certain circumstances, the Rights may be
exchanged, in whole or in part, for shares of the Common Stock, or for one one-
thousandth (1/1000/th/) of a share of Preferred Stock or of a share of a class
of series of preferred stock of the Company having equivalent rights,
preferences and privileges, per Right (subject to adjustment). Immediately upon
the action of the Board of Directors of the Company authorizing any such
exchange, and without any further action or any notice, the Rights (other than
Rights that are not subject to such exchange) will terminate and the Rights will
only enable holders to receive the shares issuable upon such exchange.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of the fraction of a share for which a Right is then
exercisable) will be issued upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof a cash payment shall 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 Preferred Stock or
of any other securities of the Company that 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, or to give
consent to or withhold consent from any corporate action, or, to receive notice
of meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this 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 an authorized signatory of the
Rights Agent.
B-3
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of __________ __, 2001.
Attest: INSMED INCORPORATED
By:____________________________ By: _______________________________
X. XxXxxxxxx Xxxxxxxx, Jr Xxxxxxxx Xxxxx; Ph.D.
Secretary Chairman of the Board,
President and Chief Executive
Officer
Countersigned:
FIRST UNION NATIONAL BANK
By: ____________________________
Name:
Title:
B-4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________________ hereby sells,
assigns and transfers unto ____________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________________ Attorney
to transfer the within Right Certificate on the books of the within-named Rights
Agent, with full power of substitution.
Dated: ___________, ____ ___________________________________
Signature
Signature Guaranteed:
B-5
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right 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 an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[____] did [____] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ___________, ____ _________________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-6
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: INSMED INCORPORATED
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Right Certificate to purchase
the shares of Preferred Stock issuable upon the exercise of such Rights (or such
other securities of the Company or of any other person that may be issuable upon
the exercise of the Rights) and requests that certificates for such shares (or
other securities)be issued in the name of and delivered to:
Please insert social security
or other identifying number
____________________________________________________________________________
(Please print name and address)
____________________________________________________________________________
If such number of rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number
____________________________________________________________________________
(Please print name and address)
____________________________________________________________________________
Dated: _________, ____ ____________________________
Signature
Signature Guaranteed:
B-7
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right 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 an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[____] did [____] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: __________________ ________________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-8
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
---------------------------------------------
On May 16, 2001 (the "Rights Authorization Date"), the Board of Directors
of Insmed Incorporated, a corporation organized under the laws of the
Commonwealth of Virginia (the "Company"), approved a Rights Agreement, dated as
of and to be effective as of May 16, 2001 (the "Rights Agreement"), between the
Company and First Union National Bank, as Rights Agent, having the principal
terms summarized below. In accordance with the Rights Agreement, the Board also
declared a dividend distribution of one right ("Right") for each outstanding
share of common stock of the Company (the "Common Stock") to shareholders of
record at the close of business on June 1, 2001 (the "Record Date").
Each Right entitles the holder to purchase from the Company one one-
thousandth (1/1000/th/) of a share of a series of the Company's preferred stock
designated as Series A Junior Participating Preferred Stock ("Preferred Stock")
at a price of $35 per one one-thousandth (1/1000/th/) of a share, subject to
adjustment (the "Purchase Price"). Each one one-thousandth of a share of
Preferred Stock is structured to be the equivalent of one share of Common Stock
of the Company ("Common Stock"). Shareholders will receive one Right per share
of Common Stock held of record at the close of business on the Record Date.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. Subject to certain exceptions specified in the Rights
Agreement, the Rights will separate from the Common Stock and a distribution of
the Rights Certificates will occur ("Distribution Date") upon the earlier of (i)
the Close of Business on the tenth Business Day following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership
of 15% or more of the outstanding shares of Common Stock (the "Stock Acquisition
Date"), other than as a result of repurchases of stock by the Company or through
inadvertance by certain institutional shareholders or (ii) the Close of Business
on the tenth Business Day (or such later date as the Board shall determine)
following the commencement of a tender offer or exchange offer that would result
in a person or group becoming an Acquiring Person. Until the Distribution Date,
(i) the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Record Date will contain a legend
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. Pursuant to the Rights Agreement, the Company reserves the right
to require prior to the occurrence of a Triggering Event (as defined below)
that, upon any exercise of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will expire
at 5:00 P.M. (Richmond, Virginia time) on May 16, 2011 (the "Expiration Date"),
unless such date is extended or the Rights are earlier redeemed or exchanged by
the Company as described below.
C-1
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Right
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors of the Company or as provided in the Rights Agreement,
only shares of Common Stock issued prior to the Distribution Date will be issued
with Rights.
In the event that a Person becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the purchase price of the Right.
Notwithstanding any of the foregoing, following the occurrence of the event set
forth in this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are no
longer redeemable by the Company as set forth below.
For example, at an exercise price of $35 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following an event set forth
in the preceding paragraph would entitle its holder to purchase $70 worth of
Common Stock (or other consideration, as noted above) for $35. Assuming that
the Common Stock had a per share value of $10 at such time, the holder of each
valid Right would be entitled to purchase seven shares of Common Stock for an
aggregate of $35.
In the event that, on or at any time after a Stock Acquisition Date, the
Company (i) engages in a merger, statutory share exchange, or other business
combination transaction (in which the Company is not the surviving corporation,
(ii) the Company engages in a merger, statutory share exchange, or other
business combination transaction in which the Company is the surviving
corporation and any shares of the Company's Common Stock are changed into or
exchanged for other securities or assets or (iii) 50% or more of the assets,
cash flow or earning power of the Company and its subsidiaries (taken as a
whole) are sold or transferred, each holder of a Right (except as noted below)
shall thereafter have the right to receive, upon the exercise thereof at the
then current purchase price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction would have a
market value (determined as provided in the Rights Agreement) of two times the
purchase price of the Right. The events set forth in this paragraph and in the
second preceding paragraph are referred to as the "Triggering Events."
Upon the occurrence of a Triggering Event that entitles Rights holders to
purchase securities or assets of the Company, Rights that are or were owned by
the Acquiring Person, or any affiliate or associate of such Acquiring Person, on
or after such Acquiring Person's Stock Acquisition Date shall be null and void
and shall not thereafter be exercised by any person (including subsequent
transferees). Upon the occurrence of a Triggering Event that entitles Rights
holders to purchase common stock of a third party, or upon the authorization of
an Exchange (as defined below), Rights that are or were owned by any Acquiring
Person or any affiliate or associate of any Acquiring Person on or after such
Acquiring Person's Stock Acquisition Date shall be null and void and shall not
thereafter be exercised by any person (including subsequent transferees).
C-2
The Purchase Price payable, and the number of shares of Preferred Stock,
Common Stock or other securities or property issuable upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution.
At any time (including a time after any person becomes an Acquiring
Person), the Company may exchange all or part of the Rights (except as set forth
below) for shares of Common Stock (an "Exchange") at an exchange ratio of one
share per Right, as appropriately adjusted to reflect any stock split or similar
transaction.
At any time prior to the earlier of (i) ten days following the Stock
Acquisition Date, and (ii) the Expiration Date, or said later date as the Board
may set, the Company may redeem the Rights in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price"). Immediately upon the action of the
Board ordering redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company or in the event of the redemption of the
Rights, as set forth above.
Other than certain provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, to make certain other changes that do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the Rights Agreement;
provided, however, no amendment to adjust the time period governing redemption
may be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
May __, 2001 and a Current Report on Form 8-K dated May __, 2001. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.
C-3
