EXHIBIT 4.1
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NANOGEN, INC.
and
BANKBOSTON, N.A.
Rights Agent
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RIGHTS AGREEMENT
Dated as of November 17, 1998
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TABLE OF CONTENTS
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Page
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1. Certain Definitions.......................................................1
2. Appointment of Rights Agent...............................................3
3. Issue of Rights Certificates..............................................4
4. Form of Rights Certificates...............................................5
5. Countersignature and Registration.........................................5
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates..................6
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............6
8. Cancellation and Destruction of Rights Certificates.......................8
9. Reservation and Availability of Preferred Stock...........................8
10. Preferred Stock Record Date...............................................9
11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights.................................................................9
12. Certificate of Adjusted Purchase Price or Number of Shares.............. 16
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.... 16
14. Additional Covenants.................................................... 18
15. Fractional Rights and Fractional Shares................................. 18
16. Rights of Action........................................................ 19
17. Agreement of Rights Holders............................................. 20
18. Rights Certificate Holder Not Deemed a Stockholder...................... 20
19. Concerning the Rights Agent............................................. 20
20. Merger or Consolidation or Change of Name of Rights Agent............... 21
21. Duties of Rights Agent.................................................. 21
22. Change of Rights Agent.................................................. 23
23. Issuance of New Rights Certificates..................................... 00
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00. Xxxxxxxxxx, Xxxxxxxxxxx and Exchange.................................... 24
25. Notice of Certain Events................................................ 26
26. Notices................................................................. 27
27. Supplements and Amendments.............................................. 27
28. Determination and Actions by the Board of Directors, etc................ 28
29. Successors.............................................................. 28
30. Benefits of This Agreement.............................................. 28
31. Severability............................................................ 28
32. Governing Law........................................................... 28
33. Counterparts............................................................ 29
34. Descriptive Headings.................................................... 29
Exhibit A Certificate of Designation, Rights and Preferences of
Series A Participating Preferred Stock ................ A-1
Exhibit B Form of Rights Certificate ............................ B-1
Exhibit C Form of Summary of Rights ............................. C-1
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RIGHTS AGREEMENT
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THIS AGREEMENT is dated as of November 17, 1998 between NANOGEN, INC., a
Delaware corporation (the "Company"), and BANKBOSTON, N.A., a national banking
association (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on November 17, 1998, 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, $0.001 par value per share, of the
Company (the "Common Stock") outstanding as of the close of business on November
30, 1998 (the "Record Date"), and contemplates the issuance of one Right
(subject to adjustment as provided herein) for each share of Common Stock of the
Company issued between the Record Date and the earlier of the Distribution Date
and the Expiration Date, as such terms are hereinafter defined (with Rights also
to be issued in connection with certain issuances of Common Stock after the
Distribution Date, as provided more fully herein), each Right representing the
right to purchase one one-thousandth of a share of Series A Participating
Preferred Stock of the Company having the rights, powers and preferences set
forth in the form of Certificate of Designation, Rights and Preferences attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights"):
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following terms
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have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of securities representing 15% or
more of the shares of Common Stock then outstanding or who was such a
Beneficial Owner at any time on or after the date hereof, whether or
not such Person continues to be the Beneficial Owner of securities
representing 15% or more of the outstanding shares of Common Stock.
Notwithstanding the foregoing, (i) in no event shall a Person who or
which, together with all Affiliates and Associates of such Person, is
the Beneficial Owner of less than 15% of the Company's outstanding
shares of Common Stock become an Acquiring Person solely as a result of
a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding shares of Common Stock by the
Company, which reduction increases the percentage of outstanding shares
of Common Stock beneficially owned by such Person (provided that any
subsequent increase in the amount of Common Stock beneficially owned by
such Person, together with all Affiliates and Associates of such
Person, without the prior approval of the Board of Directors of the
Company shall cause such Person to be an Acquiring Person); (ii) the
term Acquiring Person shall not mean (A) the Company, (B) any
subsidiary of the Company (as such term is hereinafter defined), (C)
any employee benefit plan of the Company or any of its subsidiaries, or
(D) any entity holding securities of the Company organized, appointed
or established by the Company or any of its subsidiaries for or
pursuant to the terms of any such plan; and (iii) no
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Person shall be deemed to be an Acquiring Person if (A) within five
business days after such Person would otherwise have become an
Acquiring Person (but for the operation of this clause (iii)), such
Person notifies the Board of Directors that such Person did so
inadvertently and within two business days after such notification,
such Person is the Beneficial Owner of less than 15% of the outstanding
shares of Common Stock, (B) by reason of such Person's Beneficial
Ownership of 15% or more of the outstanding shares of Common Stock on
the date hereof if prior to the Record Date, such Person notifies the
Board of Directors that such Person is no longer the Beneficial Owner
of 15% or more of the then outstanding shares of Common Stock or (C) if
the Board of Directors determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a
sufficient number of Common Stock so that such Person would no longer
be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a).
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right or obligation to
acquire (whether such right or obligation is exercisable or
effective immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(whether or not in writing) (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) or upon
the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," securities
tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for payment or exchange;
or (B) the right to vote pursuant to any agreement,
arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this clause (B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2)
is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
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understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities), or with which such Person or any of such Person's
Affiliates or Associates have otherwise formed a group, for
the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy as described in clause (B) of subparagraph
(ii) of this paragraph (c)) or disposing of any securities of
the Company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to
close.
(e) "Close of business" on any given date shall mean 5:00
P.M., Massachusetts time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Massachusetts time,
on the next succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, $0.001 par
value, of the Company, except that "Common Stock" when used with
reference to stock issued by any Person other than the Company shall
mean the capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or direct
the management, of such Person or, if such Person is a subsidiary of
another Person, of the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding such
capital stock, equity securities or equity interests.
(g) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, joint venture, association,
trust or other entity.
(h) "Preferred Stock" shall mean the Series A
Participating Preferred Stock, $0.001 par value, of the Company.
(i) "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.
(j) A "subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or voting interests is owned, directly or indirectly,
by such Person, or which is otherwise controlled by such Person.
(k) "Voting power" shall mean the voting power of all
securities of the Company then outstanding and generally entitled to
vote for the election of directors of the Company.
2. Appointment of Rights Agent. The Company hereby appoints the Rights
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Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such
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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 shall be as
the Company shall determine.
3. Issue of Rights Certificates.
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(a) Until the earlier of (i) the Stock Acquisition Date or (ii) the tenth
day after the date of the commencement of, or first public announcement of the
intent of any Person (other than the Company, any subsidiary of the Company, or
any employee benefit plan of the Company or any of its subsidiaries, or any
entity organized, appointed or established by the Company or any of its
subsidiaries for or pursuant to the terms of any such plan) to commence (which
intention to commence remains in effect for five Business Days after such
announcement), a tender or exchange offer which would result in such Person
becoming an Acquiring Person, unless such date is extended by the Board of
Directors of the Company (including any such date which is on or after the date
of this Agreement and prior to the issuance of the Rights; the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the Rights shall
be evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
(and the right to receive certificates therefor) shall be transferable only in
connection with the transfer of the underlying shares of Common Stock. As soon
as practicable after the Distribution Date, the Rights Agent shall send by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a certificate for Rights, in
substantially the form of Exhibit B hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so held. As of and after the
Distribution Date, the Rights shall be evidenced solely by such Rights
Certificates.
As soon as practicable following the Record Date, the Company shall send a
copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the close of business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date (or earlier redemption, expiration or termination of
the Rights), the Rights shall be evidenced by such certificates for the Common
Stock together with the Summary of Rights and the registered holders of the
Common Stock shall also be the registered holders of the associated Rights.
Until the Distribution Date (or earlier redemption, expiration or termination of
the Rights), the surrender for transfer of any of the certificates for the
Common Stock outstanding on the Record Date, even without a copy of the Summary
of Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(b) Certificates issued for Common Stock (including, without limitation,
certificates issued upon transfer or exchange of Common Stock) after the Record
Date, but prior to the earlier of the Distribution Date or the Expiration Date
(as such term is hereinafter defined), shall be deemed also to be certificates
for Rights, and shall have impressed, printed, stamped, written or otherwise
affixed onto them the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between Nanogen,
Inc. (the "Company") and BankBoston, N.A. (the "Rights Agent") dated as
of November 17, 1998 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circum-
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stances, as set forth in the Rights Agreement, such Rights may be
redeemed, may expire, or may be evidenced by separate Certificates and
will no longer be evidenced by this Certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement
without charge within five days after receipt of a written request
therefor. Under certain circumstances, Rights issued to Acquiring
Persons (as defined in the Rights Agreement) or certain related Persons
and any subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
4. Form of Rights Certificates.
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(a) The Rights Certificates (and the forms of election to purchase shares
and of assignment and certificates to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or interdealer
quotation system on which the Rights may from time to time be listed or traded,
or to conform to usage. Subject to the provisions of Section 11 and Section 23
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date, and on their face shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share set forth therein
(the "Purchase Price"), but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) hereof that
represents Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Rights Certificate issued at any time upon the
transfer of any Rights to such an Acquiring Person or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate, and
any Rights Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain the following legend:
The Rights represented by this Rights Certificate were issued to a
Person who was an Acquiring Person or an Affiliate or an Associate of
an Acquiring Person, as such terms are defined in the Rights Agreement.
This Rights Certificate and the Rights represented hereby may become
void under the circumstances specified in Section 7(e) of the Rights
Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights Certificate.
5. Countersignature and Registration. The Rights Certificates shall be
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executed on behalf of the Company by its Chairman of the Board, any Vice
Chairman of the Board, its Chief Executive Officer, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an
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Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights 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 Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the Person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any Person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such Person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
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Mutilated, Destroyed, Lost or Stolen Rights Certificates. Subject to the
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provisions of Sections 7(e), 7(f) and 15 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock as the Rights Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Rights Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Thereupon the
Rights Agent shall countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
Subject to the provisions of Sections 7(e), 7(f) and 15 hereof, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate
and 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, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company shall execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) The registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon presentation of the Rights
Certificate, with the appropriate form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal office of the
Rights Agent,
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together with payment of the Purchase Price for each one one-thousandth of a
share of Preferred Stock (or such other number of shares or other securities) as
to which the Rights are exercised, at or prior to the earliest of (i) the close
of business on November 17, 2008 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 24 hereof, (iii) the
consummation of a transaction contemplated by Section 13(d) hereof or (iv) the
time at which the Rights are exchanged as provided in Section 24(c) hereof (such
earliest time being herein referred to as the "Expiration Date").
Notwithstanding any other provision of this Agreement, any Person who prior to
the Distribution Date becomes a record holder of shares of Common Stock may
exercise all of the rights of a registered holder of a Rights Certificate with
respect to the Rights associated with such shares of Common Stock in accordance
with and subject to the provisions of this Agreement, including the provisions
of Section 7(e) hereof, as of the date such Person becomes a record holder of
shares of Common Stock.
(b) The Purchase Price for each one one-thousandth share of Preferred Stock
pursuant to the exercise of a Right shall initially be $50.00, shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the appropriate form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares (or other securities or property)
to be purchased and an amount equal to any applicable transfer tax (as
determined by the Rights Agent) in the form of certified check or bank draft
payable to the order of the Company, the Rights Agent shall, subject to Section
21(k), thereupon promptly (i)(A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths 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 shall direct the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash, if any, to be paid
in lieu of issuance of fractional shares in accordance with Section 15, (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Rights Certificate. In the
event that the Company is obligated to issue other securities of the Company,
and/or distribute other property pursuant to Section 11(a), the Company shall
make all arrangements necessary so that such other securities and/or property
are available for distribution by the Rights Agent, if and when appropriate. In
addition, in the case of an exercise of the Rights by a holder pursuant to
Section 11(a)(ii), the Rights Agent shall return such Rights Certificate to the
registered holder thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Rights Certificate no longer include
the rights provided by Section 11(a)(ii) of the Rights Agreement and if less
than all the Rights represented by such Rights Certificate were so exercised,
the Rights Agent shall indicate on the Rights Certificate the number of Rights
represented thereby which continue to include the rights provided by Section
11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall exercise
(except pursuant to Section 11(a)(ii)) less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to the
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registered holder of such Rights Certificate or to such holder's duly authorized
assigns, subject to the provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, if there
occurs any of the events set forth in Section 11(a)(ii) or Section 13(a) then
any Rights that are or were on or after the Distribution Date beneficially owned
by an Acquiring Person or any Associate or Affiliate of an Acquiring Person
shall become null and void, without any further action, and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the appropriate
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise shall have been properly completed and
duly executed by the registered holder thereof and the Company shall have been
provided with 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.
8. Cancellation and Destruction of Rights Certificates. All Rights
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Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Preferred Stock. The Company covenants
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and agrees that it shall cause to be reserved and kept available out of its
authorized and unissued shares of Preferred Stock, or any authorized and issued
shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights and, after the occurrence of an event specified in Sections
11(a)(ii) and 13(a), shall so reserve and keep available a sufficient number of
shares of Common Stock (and/or other securities) which may be required to permit
the exercise in full of the Rights pursuant to this Agreement.
So long as the shares of Preferred Stock (and, after the occurrence of an
event specified in Section 11(a)(ii) or Section 13(a), any other securities)
issuable upon the exercise of the Rights may be listed on any national
securities exchange or national quotation system, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares (or other securities) reserved for such issuance to be listed on such
exchange or system upon official notice of issuance upon such exercise.
The Company covenants and agrees that it shall take all such action as may
be necessary to ensure that all shares of Preferred Stock and/or other
securities delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares or securities.
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The Company further covenants and agrees that it shall pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any certificates for shares of Preferred Stock and/or other securities upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or in respect of the issuance or
delivery of the shares of Preferred Stock and/or other securities in a name
other than that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or to issue or deliver any certificates for
shares of Preferred Stock, and/or other securities in a name other than that of
the registered holder upon the exercise of any Rights until such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, if required by law, as
soon as practicable following the Distribution Date, a registration statement
under the Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act
and the rules and regulations thereunder) until the Expiration Date (unless and
until the Company shall have received an opinion of counsel to the effect that
the maintenance of such registration statement in effect is no longer
necessary). The Company will also take such action as may be appropriate under
the blue sky laws of the various states.
10. Preferred Stock Record Date. Each Person in whose name any certificate
----------------------------
for shares of Preferred Stock (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 shares of Preferred Stock (or other securities) represented thereby on,
and such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly presented and payment of the Purchase Price (and
any applicable transfer taxes) was made; provided, however, that if the date of
such presentation and payment is a date upon which the Preferred Stock (or other
securities) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
(or other securities) transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate, as
such, shall not be entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
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Rights. The Purchase Price, the number of shares covered by each Right and the
-------
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (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 in Section 7(e), the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the
-9-
number and kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock and other securities which, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment
under both Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 24(c) of this Agreement, in the event
any Person, alone or together with its Affiliates and Associates, shall
become an Acquiring Person (except pursuant to a tender or exchange
offer for all outstanding shares of Common Stock at a price and on
terms determined prior to the date of the first acceptance of payment
for any of such shares by at least a majority of the members of the
Board of Directors who are not officers of the Company and are not
Acquiring Persons or Affiliates or Associates thereof to be in the best
interests of the Company and its stockholders (other than the Person or
an Affiliate or Associate thereof on whose behalf the offer is being
made) (a "Permitted Offer")), then, promptly following the first
occurrence of an event described in this Section 11(a)(ii), proper
provision shall be made so that each holder of a Right, except as
provided in Section 7(e) hereof, shall, for a period of 60 days after
the later of the occurrence of any such event and the effective date of
an appropriate registration statement pursuant to Section 9, have a
right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of shares
of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-thousandths of a
share of Preferred Stock for which a Right is then exercisable and (y)
dividing that product by 50% of the current market price per one share
of Common Stock (determined pursuant to Section 11(d)) on the date of
the occurrence of the event set forth in this subparagraph (ii) (such
number of shares being referred to as the "number of Adjustment
Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii); and provided, further, that such 60-day period shall
not be deemed to run during any period in which the exercise of the
Rights or the fulfillment by the Company or the Rights Agent of its or
their obligations under this Agreement shall be enjoined or otherwise
prohibited in full or in part by any court or other governmental agency
or body.
(iii) In lieu of issuing shares of Common Stock in accordance
with Section 11(a)(ii) hereof, the Company may, if a majority of the
Board of Directors then in office determines that such action is
necessary or appropriate and not contrary to the interests of holders
of Rights, elect to (and, in the event that the Board of Directors has
not exercised the exchange right contained in Section 24(c) hereof and
there are not sufficient treasury shares and authorized but unissued
shares of Common Stock to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company shall)
take all such action as may be necessary to authorize, issue or pay,
upon the exercise of the Rights, cash (including by way of a reduction
of the Purchase Price),
-10-
property, shares of Common Stock, other securities or any combination
thereof having an aggregate value equal to the value of the shares of
Common Stock which otherwise would have been issuable pursuant to
Section 11(a)(ii), which aggregate value shall be determined by a
nationally recognized investment banking firm selected by a majority of
the Board of Directors. For purposes of the preceding sentence, the
value of the Common Stock shall be determined pursuant to Section 11(d)
hereof and the value of any preferred stock or preference stock which a
majority of the Board of Directors determines to be a "common stock
equivalent" shall be deemed to have the same value as the Common Stock.
Any such election by the Board of Directors must be made and publicly
announced within 60 days following the date on which the event
described in Section 11(a)(ii) shall have occurred. Following the
occurrence of the event described in Section 11(a)(ii) hereof, a
majority of the Board of Directors then in office may suspend the
exercisability of the Rights for a period of up to 60 days following
the date on which the event described in Section 11(a)(ii) shall have
occurred to the extent that such directors have not determined whether
to exercise their rights of election under this Section 11(a)(iii). In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended.
(b) If 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 or more favorable rights, privileges and preferences as the
Preferred Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or equivalent preferred stock at a
price per share of Preferred Stock or per share of equivalent 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 (as defined in Section 11(d)) per share
of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of
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 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 so to be offered are initially
convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be determined reasonably and with
good faith to the holders of Rights 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
conclusive for all purposes. 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 which would then be in
effect if such record date had not been fixed.
-11-
(c) If 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 or merger in which
the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of
the earnings or retained earnings of the Company), assets (other than a
dividend payable in Preferred Stock, but including any dividend payable
in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to
be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
defined in Section 11(d)) per share of Preferred Stock on such record
date, less the fair market value (as determined reasonably and with
good faith to the holders of Rights 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
conclusive for all purposes) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants distributable in respect of one share of Preferred
Stock and the denominator of which shall be the current market price
(as defined in Section 11(d)) per share of the 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 be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than as provided in 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 (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event
that the current per share market price of the Common Stock is
determined during a period following the announcement by the issuer of
such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible
into shares of such Common Stock or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of
30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market
price" shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the shares of Common 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 Common Stock are listed or admitted to
trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange but are listed or quoted on
The Nasdaq Stock Market, the last reported sale price, or, in case no
such sale takes place on such day, the average of the closing bid and
asked prices as reported by Nasdaq or, if the shares of Common Stock
are not listed or quoted on The Nasdaq Stock Market, the last quoted
price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the Nasdaq
Bulletin Board or such other system then in use, or, if on any
-12-
such date the shares of Common 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 reasonably and with
good faith by the Board of Directors of the Company shall be used and
shall be binding on the Rights Agent. The term "Trading Day" shall mean
a day on which the national securities exchange or The Nasdaq Stock
Market, as the case may be, on which the shares of Common Stock are
principally listed or admitted to trading or quoted is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading or quoted on any national securities
exchange or The Nasdaq Stock Market, a Business Day. If the Common
Stock is not publicly held or not so listed or traded, "current market
price" per share shall mean the fair value per share determined
reasonably and with good faith to the holders of Rights 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.
(ii) For the purpose of any computation hereunder, the
"current market price" per share (or one one-thousandth of a share) of
Preferred Stock shall be determined in the same manner as set forth
above for the Common Stock in Section 11(d)(i) (other than the last
sentence thereof). If the current market price per share (or one
one-thousandth of a 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 described in Section 11(d)(i), the
"current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 1,000 (as such number may
be appropriately adjusted for such events as stock splits, stock
dividends and recapitalization 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 and the "current market
price" per one one-thousandth of a share of Preferred Stock shall be
equal to the current market price per share of the Common Stock (as
appropriately adjusted). If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, "current market price"
per share 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.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest thousandth of a share of Common Stock or other share or
one millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which
mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a), the
holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred
Stock, thereafter the number of such other shares so
-13-
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 shares contained in
Section 11(a) through (c), inclusive, and the provisions of Sections 7,
9, 10, 13 and 15 hereof with respect to the Preferred Stock shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of shares
of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a share of
Preferred Stock (calculated to the nearest one millionth) obtained by
(i) multiplying (x) the number of one one-thousandths of a share of
Preferred Stock covered by a Right immediately prior to this adjustment
by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to
the nearest one millionth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten days later than the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 15 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the
-14-
names of the holders of record of Rights Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share
and the number of shares which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
shares of Preferred Stock, Common Stock or other securities issuable
upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and
nonassessable shares of Preferred Stock, Common Stock or other
securities at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and common
stock equivalents, a portion of the consideration paid upon such
exercise, equal to at least the then par value of a share of Common
Stock of the Company, shall be allocated as the payment for each share
of Common Stock of the Company so received.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date 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 upon the occurrence of
the event requiring such adjustment.
(m) Anything to the contrary in this Section 11
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Stock, issuance wholly
for cash of any shares of Preferred Stock at less than the current
market price, 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, stock dividends or 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 stockholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the date of this Agreement 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 Common Stock,
(iii) combine the outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a
reclassification of the outstanding Common Stock, the number of Rights
associated with each share of Common Stock then
-15-
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.
(o) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the
Rights under this Rights Agreement, including the rights represented by
Section 13.
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
-----------------------------------------------------------
adjustment is made as provided in Section 11 or 13 hereof, the Company shall (a)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the Preferred Stock and the
Common Stock a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Rights Certificate in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
Notwithstanding the foregoing provisions of this Section 12, the failure of the
Company to make such certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
---------------------------------------------------------------------
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person, (y) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger (other than, in the case of either transaction
described in (x) or (y), a merger or consolidation which would result in all of
the voting power represented by the securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity) all
of the voting power represented by the securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation and
the holders of such securities not having changed as a result of such merger or
consolidation), or (z) the Company shall sell, mortgage or otherwise transfer
(or one or more of its subsidiaries shall sell, mortgage or otherwise transfer),
in one or more transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its subsidiaries (taken as a
whole) to any other Person, then, and in each such case, proper provision shall
be made so that (i) following the Distribution Date, each holder of a Right
(other than as provided in Section 7(e) hereof) shall 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 shares of freely tradable Common
Stock of the Principal Party (as hereinafter defined), free and clear of liens,
rights of call or first refusal, encumbrances or other adverse claims, as shall
be equal to the result obtained by (x) multiplying the then current Purchase
Price by the number of one one-thousandths of a share of Preferred Stock for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) hereof) and (y) dividing that
product by 50% of the current market price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter
-16-
be liable for, and shall assume, by virtue of such consolidation, merger, sale
or transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply to such Principal Party; and (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with Section 9
hereof) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of
the first sentence of this Section 13, the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to the merger or
consolidation (including, if applicable, the Company, if it is the
surviving corporation); and
(ii) in the case of any transaction described in (z) of the
first sentence in 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;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect subsidiary or Affiliate of
another Person, "Principal Party" shall refer to such other Person; (2)
in case such Person is a subsidiary, directly or indirectly, or
Affiliate of more than one Person, the Common Stock of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and
the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and each Principal Party and
each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal Party at its
own expense shall:
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate
-17-
form, will use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and will use
its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date;
(ii) use its best efforts to (x) qualify or register the
Rights and the securities purchasable upon exercise of the Rights under
the blue sky laws of such jurisdictions as may be necessary or
appropriate and (y) cause the Rights and the securities purchasable
upon exercise of the Rights to be listed on any national securities
exchange or national quotation system upon which its Common Stock is
listed, traded or quoted; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all material respects with the requirements for registration
on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. The rights under this Section 13
shall be in addition to the rights to exercise Rights and adjustments under
Section 11(a)(ii) and shall survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a Permitted Offer (or a wholly
owned subsidiary of any such Person or Persons), (ii) the price per share of
Common Stock offered in such transaction is not less than the price per share of
Common Stock paid to all holders of Common Stock whose shares were purchased
pursuant to such Permitted Offer and (iii) the form of consideration being
offered to the remaining holders of Common Stock pursuant to such transaction is
the same as the form of consideration paid pursuant to such Permitted Offer.
Upon consummation of any such transaction contemplated by this subsection (d),
all Rights hereunder shall expire.
14. Additional Covenants.
---------------------
(a) The Company covenants and agrees that after the Stock Acquisition Date
it shall not (i) consolidate with, (ii) merge with or into, or (iii) sell or
transfer to any other Person, in one or more transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its subsidiaries taken as a whole, if at the time of or after such
consolidation, merger or sale there are any charter or bylaw provisions or any
rights, warrants or other instruments outstanding or any other action taken
which would diminish or otherwise eliminate the benefits intended to be afforded
by the Rights. The Company shall not consummate any such consolidation, merger
or sale unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a supplemental agreement evidencing
compliance with this subsection.
(b) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Section 24 hereof, take any action the
purpose or effect of which is to diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
-18-
15. 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), or to distribute
Rights Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 15(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by The
Nasdaq Stock Market 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 reasonably and with good faith to the holders
of Rights by the Board of Directors of the Company shall be used and shall be
binding on the Rights Agent.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 15(b), the current market value of
one one-thousandth of a share of Preferred Stock shall be one one-thousandth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of one of the transactions or events specified
in Section 11 or Section 13 giving rise to the right to receive common stock
equivalents (other than Preferred Stock) or other securities upon the exercise
of a Right, the Company shall not be required to issue fractions of shares or
units of such common stock equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence fractional shares of such
common stock equivalents or other securities. In lieu of fractional shares or
units of such common stock equivalents or other securities, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share or unit of such common stock equivalent or other
securities. For purposes of this Section 15(c), the current market value shall
be determined in the manner set forth in Section 11(d) hereof for the Trading
Day immediately prior to the date of such exercise and, if such common stock
equivalent is not traded, each such common stock equivalent shall have the value
of one one-thousandth of a share of Preferred Stock.
-19-
(d) Except as otherwise expressly provided herein, the holder of a Right by
the acceptance of the Rights expressly waives such holder's right to receive any
fractional Rights or any fractional shares (other than, in the case of Preferred
Stock, fractions which are integral multiples of one one-thousandth of a share
of Preferred Stock) upon exercise of a Right.
16. Rights of Action. All rights of action in respect of this Agreement,
-----------------
except those rights of action vested in the Rights Agent pursuant to Section 21,
are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
the Common Stock), may, in such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
17. Agreement of Rights Holders. Every holder of a Right by accepting the
----------------------------
same consents and agrees with the Company and the Rights Agent and with every
other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
18. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
---------------------------------------------------
of any Rights Certificate shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of the shares of Preferred Stock, Common Stock
or any other securities of the Company which may at any time be issuable upon
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions thereof.
-20-
19. Concerning the Rights Agent. The Company agrees to pay to the Rights
----------------------------
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability arising therefrom,
directly or indirectly.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
20. Merger or Consolidation or Change of Name of Rights Agent. Any
----------------------------------------------------------
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust or
stockholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 22 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
21. Duties of Rights Agent. The Rights Agent undertakes the duties and
-----------------------
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected
by it (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good faith
and in accordance with such opinion.
-21-
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current 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 shall be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, any Vice Chairman of the Board, the Chief
Executive Officer, 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.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates (except as to the fact that it has
countersigned the Rights Certificates) or be required to verify the
same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11 or 13 hereof
or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a certificate
pursuant to Section 12 describing any such adjustment); nor shall it be
responsible for any determination by the Board of Directors of the
Company of the current market value of the Rights or Preferred Stock or
Common Stock pursuant to the provisions of Section 15 hereof; 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
Preferred Stock or other securities to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock or other securities will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder and certificates delivered pursuant to any provision hereof
from the Chairman of the Board, any Vice
-22-
Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer
or any Assistant Treasurer of the Company, and is authorized to apply
to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any
such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the
Rights Agent with respect to its duties or obligations under this
Rights Agreement and the date on and/or after which such action shall
be taken or omitted and the Rights Agent shall not be liable for any
action taken or omitted in accordance with a proposal included in any
such application on or after the date specified therein (which date
shall not be less than three Business Days after the date any such
officer actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to
taking or omitting any such action, the Rights Agent has received
written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not the Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company or to the holders of the Rights resulting from
any such act, omission, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any 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 l and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise of transfer
without first consulting with the Company.
22. Change of Rights Agent. The Rights Agent or any successor Rights Agent
-----------------------
may resign and be discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to the Company and to each transfer agent of the Common
Stock and Preferred Stock by registered or certified mail, and to holders of the
Rights Certificates by first-class mail. The Company may remove the Rights
-23-
Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit such
holder's Rights Certificate for inspection by the Company), then the registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
of the State of New York or the State of California (or of any other state of
the United States so long as such corporation is authorized to do business as a
banking institution in the State of New York or the State of California), in
good standing, having a principal office in the State of New York or the State
of California, which is authorized under such laws to exercise corporate trust
or stockholder services powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall mail notice thereof in writing to the predecessor
Rights Agent and each transfer agent of the Common Stock and Preferred Stock,
and mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 22,
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.
23. Issuance of New Rights Certificates. Notwithstanding any of the
------------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the 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 otherwise under any employee plan or arrangement,
which plan or arrangement is existing as of the Distribution Date, or upon the
exercise, conversion or exchange of any other securities issued by the Company
on or prior to the Distribution Date, 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 Certificates
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 Certificates
would be issued, and (ii) no such Rights Certificates shall be issued if, and to
the extent that appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
-24-
24. Redemption, Termination and Exchange.
-------------------------------------
(a) (i) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (x) the Stock Acquisition Date or (y) 5:00 P.M.,
San Diego time, on the Final Expiration Date, redeem all but not less than all
of the then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price").
(ii) In addition, and notwithstanding the provisions of Section 24(a)(i),
the Board of Directors of the Company may redeem all but not less than all of
the then outstanding Rights at the Redemption Price following the Stock
Acquisition Date but prior to any event described in Section 13(a) either (x) in
connection with any event specified in Section 13(a) in which all holders of
Common Stock are treated alike and not involving (other than as a holder of
Common Stock being treated like all other such holders) an Acquiring Person or
an Affiliate or Associate thereof or any other Person in which such Acquiring
Person or Affiliate or Associate thereof has any interest, or any other Person
acting directly or indirectly on behalf of or in association with any such
Acquiring Person or Affiliate or Associate thereof, or (y) following the
occurrence of an event set forth in, and the expiration of any period during
which the holder of Rights may exercise the rights under, Section 11(a)(ii) if
and for as long as any Acquiring Person having triggered such event is not
thereafter the Beneficial Owner of securities representing 15% or more of the
outstanding shares of Common Stock, and at the time of redemption there are no
other Persons who are Acquiring Persons.
(b) In the case of a redemption permitted under Section 24(a)(i),
immediately upon the action of the Board of Directors of the Company ordering
the redemption of the Rights, evidence of which shall have been filed with the
Rights Agent and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. In the case of a redemption
permitted only under Section 24(a)(ii), evidence of which shall have been filed
with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price only after ten Business
Days following the giving of notice of such redemption to the holders of such
Rights if no event set forth in Section 11(a)(ii) shall have occurred, and, if
such event shall have occurred, upon the later of ten Business Days following
the giving of such notice or the expiration of any period during which the
rights under Section 11(a)(ii) may be exercised. Within ten days after the
action of the Board of Directors ordering any such redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to the Rights Agent and 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.
In the case of a redemption permitted under Section 24(a)(i) or (ii), the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent of the Common Stock, and upon such action, all
outstanding Rights Certificates shall be null and void without any further
action by the Company.
-25-
(c) (i) Subject to the limitations of applicable law, the Board of
Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for (A) shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (the "Exchange Shares") or (B) Substitute
Consideration (as that term is defined below). The Board of Directors may
determine, in its sole discretion, whether to deliver Exchange Shares or
Substitute Consideration. Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any subsidiary of the Company, any employee benefit
plan of the Company or any such subsidiary, or any entity holding Common 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.
(ii) In the event the Board of Directors shall determine to deliver
Substitute Consideration in exchange for Rights, the Company shall (1) determine
the value of the Exchange Shares (the "Exchange Value"), and (2) with respect to
each Right to be exchanged, make adequate provision to substitute for Exchange
Shares the following (the "Substitute Consideration"): (v) cash, (w) Common
Stock or common stock equivalents (as that term is defined in Section 11(a)(iii)
hereof) or Preferred Stock or equivalent preferred stock (as that term is
defined in Section 11(b) hereof), (x) debt securities of the Company, (y) other
assets, or (z) any combination of the foregoing, having an aggregate value equal
to the Exchange Value, 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. For purposes of this Section 24(c), the value of a share of Common
Stock shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the day that is the later of (x) the first
occurrence of an event described in Section 11(a)(ii) hereof and (y) the date on
which the Company's right of redemption pursuant to Section 24(a) expires; and
the value of any common stock equivalent shall be deemed to have the same value
as the Common Stock on such date.
(iii) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to this Section 24(c), 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 Exchange Shares or Substitute Consideration for each Right
exchanged by such holder. The Company shall promptly give public notice of any
such exchange; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last address as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(iv) In the event that there shall not be sufficient shares of Common Stock
or Preferred Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
24(c), the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock or Preferred Stock for issuance upon exchange
of the Rights.
-26-
(v) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Rights 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 Section 24(c)(v), 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 Section 11(d) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24(c).
25. Notice of Certain Events. In case the Company shall propose (a) 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 out of earnings or retained earnings of the
Company) or (b) 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 (c) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (d) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) to, any other Person, or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, in accordance
with Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution of rights
or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the shares of 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 (a) or (b) above at least 20 days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock whichever
shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) or 13(a) of this
Agreement shall occur, then, in any such case, the Company or the Principal
Party, as the case may be, shall as soon as practicable thereafter give to each
holder of a Rights Certificate, 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) or 13(a)
hereof, as the case may be.
The failure to give notice required by this Section 25 or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the vote upon any such action.
26. Notices. Notices or demands authorized by this Agreement to be given or
--------
made by the Rights Agent or by the holder of any Rights Certificate to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Nanogen, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Chief Executive Officer
-27-
Subject to the provisions of Section 22, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
BankBoston, N.A.
c/o Boston Equiserve Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
27. Supplements and Amendments. The Company and the Rights Agent may from
---------------------------
time to time supplement or amend this Agreement without approval of any holders
of Rights or Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) prior to the Distribution
Date, to change or supplement any provision hereunder in any manner which the
Company may deem necessary or desirable or (iv) on or following the Distribution
Date, to change or supplement any provision hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment unless the
Rights Agent shall have determined in good faith that such supplement or
amendment would adversely affect its interests under this Agreement. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
28. Determination and Actions by the Board of Directors, etc. For all
---------------------------------------------------------
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock or any
other securities of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. Except as otherwise provided herein, the Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board, or the Company, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights Certificates and all other parties, and (y) not subject the Board to
any liability to the holders of the Rights Certificates.
-28-
29. Successors. All the covenants and provisions of this Agreement by or
-----------
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
30. Benefits of This Agreement. Nothing in this Agreement shall be
---------------------------
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the Common Stock).
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.
32. Governing Law. This Agreement, each Right and each Rights Certificate
--------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and to
be performed entirely within such state.
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.
-29-
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
NANOGEN, INC.
By /s/ XXXXX X. XXXXXXXXX
--------------------------------------
Name Xxxxx X. Xxxxxxxxx
------------------------------------
Title Vice President, General Counsel &
Secretary
-----------------------------------
BANKBOSTON, N.A., as Rights Agent
By /s/ XXXXXXXX X. XXXXXXXX
--------------------------------------
Name Xxxxxxxx X. Xxxxxxxx
-------------------------------------
Title Director
------------------------------------
-30-
EXHIBIT A
---------
CERTIFICATE OF DESIGNATION
--------------------------
OF SERIES A PARTICIPATING PREFERRED STOCK
-----------------------------------------
OF
--
NANOGEN, INC.
-------------
I, Xxxxx X. Xxxxxxxxx, Secretary, of Nanogen, Inc., a corporation organized
and existing under the General Corporation Law of the State of Delaware, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the said Board of Directors on
November 17, 1998 adopted the following resolution creating a series of 100,000
shares of Preferred Stock designated as Series A Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it hereby
is created, and that the designation and amount thereof and the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
1. Designation and Amount. The shares of such series shall be designated as
-----------------------
"Series A Participating Preferred Stock," $0.001 par value per share, and the
number of shares constituting such series shall be 100,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series A
Participating Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the Corporation.
2. Dividends and Distributions.
----------------------------
(A) 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 Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Participating Preferred Stock in preference to the holders of
shares of Common Stock, par value $0.001 per share (the "Common Stock"), of the
Corporation and any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Participating Preferred Stock in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $100.00, or (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock,
A-1
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 Participating Preferred Stock.
In the event the Corporation shall at any time after the close of business on
November 17, 1998 (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, by reclassification or otherwise, then in each such case the
amount to which holders of shares of Series A 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.
(B) The Corporation shall declare a dividend or distribution on the Series
A Participating Preferred Stock as provided in paragraph (A) above 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 $100 per share on the Series A
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Participating Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Series A 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
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 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 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.
3. Voting Rights. The holders of shares of Series A Participating Preferred
--------------
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Participating Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters submitted to a
vote of the stockholders of the Corporation. In the event the
Corporation 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 into a greater number of
shares, or (iii) combine the outstanding Common Stock into a smaller
number of shares, by reclassification or otherwise, then in each such
case the number of votes per share to which holders of shares of Series
A 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
A-2
event and the denominator of which is the number of shares of Common
Stock outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Participating Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A 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") which 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 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 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.
(ii) During any default period, such voting right of the
holders of Series A Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of
this Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, 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 (10%) 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 which 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 herein
provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Participating Preferred
Stock.
(iii) 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 stockholder or
stockholders owning in the aggregate not less than ten percent (10%) 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 Corporation. Notice
of such meeting and of any annual meeting at
A-3
which holders of Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to such holder at such holder's
last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than ten 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 stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of
the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), 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
stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation, 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)(ii) of this Section 3) be filled by vote of a majority of
the remaining directors theretofore elected by the holders of the class
of stock which 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.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect
directors shall cease, (y) the term of any directors elected by the
holders of Preferred Stock as a class shall terminate, and (z) the
number of directors shall be such number as may be provided for in, or
pursuant to, the Certificate of Incorporation or Bylaws irrespective of
any increase made pursuant to the provisions of paragraph (C)(ii) of
this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the Certificate of
Incorporation or Bylaws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining directors, even
though less than a quorum.
(D) Except as set forth herein, holders of Series A
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.
4. Certain Restrictions.
---------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not
(i) 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
A-4
as to dividends or upon liquidation, dissolution or winding up) to the
Series A Participating Preferred Stock;
(ii) 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 Participating Preferred Stock except dividends paid ratably on
the Series A 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;
(iii) 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 Participating Preferred Stock provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Participating Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A 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.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Participating Preferred Stock
------------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series 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.
6. Liquidation, Dissolution or Winding Up.
---------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, 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 Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Participating Preferred Stock shall have
received per share, the greater of 1,000 times $1.00 or 1,000 times the payment
made per share of Common Stock, 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 Participating
Preferred Stock unless, prior thereto, the holders of shares
A-5
of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits, stock dividends
and recapitalization 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 Participating Preferred Stock and Common Stock,
respectively, holders of Series A 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
1 with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event 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, which rank on a
parity with the Series A 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 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.
(C) In the event the Corporation 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, by reclassification or
otherwise, 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.
7. Consolidation, Merger, etc. In case the Corporation shall enter into any
---------------------------
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series A
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 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time 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 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 are outstanding immediately prior to
such event.
8. Redemption. The shares of Series A Participating Preferred Stock shall
-----------
not be redeemable.
9. Ranking. The Series A Participating Preferred Stock shall rank junior to
--------
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
A-6
10. Amendment. The Certificate of Incorporation and the Bylaws of the
----------
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least 66-2/3% of the outstanding shares of
Series A Participating Preferred Stock voting separately as a class.
11. Fractional Shares. Series A 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 Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 17th day of
November, 1998.
----------------------------------------
Xxxxx X. Xxxxxxxxx,
Secretary
A-7
EXHIBIT B
---------
[Form of Rights Certificate]
Certificate No. R-______________ _____________ Rights
NOT EXERCISABLE AFTER NOVEMBER 17, 2008 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING
PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
NANOGEN, INC.
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of November 17, 1998 (the "Rights Agreement") between
Nanogen, Inc., a Delaware corporation (the "Company"), and BankBoston, N.A, a
national banking association (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Massachusetts time) on November 17, 2008, at
the office of the Rights Agent designated for such purpose, one one-thousandth
of a fully paid, nonassessable share of Series A Participating Preferred Stock,
par value $0.001 per share (the "Preferred Stock") of the Company, at a purchase
price of $50.00 per one one-thousandth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the appropriate Form
of Election to Purchase and Certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the number
of shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of the
close of business on November 17, 2008, based on the Preferred Stock as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of shares of Preferred Stock or other securities which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and
--------
* The portion of the legend in brackets shall be inserted only if applicable.
B-1
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
Rights Certificates. Copies of the Rights Agreement are on file at the principal
office of the Company and are also available upon written request to the
Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised (other than pursuant
to Section 11(a)(ii) of the Rights Agreement) in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised. If this Rights
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this Rights
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in part
for shares of the Company's Common Stock par value $0.001 or substitute
consideration. Subject to the provisions of the Rights Agreement, the Company,
at its option, may elect to mail payment of the redemption price to the
registered holder of the Right at the time of redemption, in which event this
certificate may become void without any further action by the Company.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated: ____________, ____.
Attest: NANOGEN, INC.
By By
----------------------------- ---------------------------------
Name Name
--------------------------- ------------------------------
Title Title
-------------------------- -----------------------------
Countersigned:
BANKBOSTON, N.A.,
as Rights Agent
By _________________________
B-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, _______________________________ hereby sells, assigns
and transfers unto
------------------------------------------------------------
-------------------------------------------------------------------------------
(please print name and address of transferee)
_______________________________________________________________ this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _______________ Attorney, to transfer
the within Rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ____________, ____.
---------------------------------------
Signature
---------------------------------------
Signature
Signature(s) Guaranteed:
------------------------------
B-4
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate |_| are |_| are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it |_|
did |_| did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, ____.
----------------------------------
Signature
NOTICE
------
The signature to the foregoing Assignment must correspond to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
B-5
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To NANOGEN, INC.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
(or such other securities of the Company) issuable upon the exercise of the
Rights and requests that certificates for such shares be issued in the name of:
-------------------------------------------------------------------------------
(Please insert social security or other identifying number)
-------------------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------------------
The Rights Certificate indicating the balance, if any, of such Rights which
may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement
shall be returned to the undersigned unless such Person requests that the Rights
Certificate be registered in the name of and delivered to:
-------------------------------------------------------------------------------
Please insert social security or other identifying number (complete only if
Rights Certificate is to be registered in a name other than the undersigned)
-------------------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------------------
Dated: ____________, ____.
------------------------------------- -------------------------------------
Signature Signature
Signature(s) Guaranteed:
------------------------------
B-6
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate |_| are |_| are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) this Rights Certificate |_| is |_| is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement); and
(3) after due inquiry and to the best knowledge of the undersigned, it |_|
did |_| did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, ____.
----------------------------------
Signature
NOTICE
------
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-7
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
the Rights Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To NANOGEN, INC.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
(or such other securities of the Company or any other Person) issuable upon the
exercise of the Rights and requests that certificates for such shares be issued
in the name of:
-------------------------------------------------------------------------------
(Please insert social security or other identifying number)
-------------------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------------------
The Rights Certificate indicating the balance, if any, of such Rights which
may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement
shall be returned to the undersigned unless such Person requests that the Rights
Certificate be registered in the name of and delivered to:
-------------------------------------------------------------------------------
Please insert social security or other identifying number (complete only if
Rights Certificate is to be registered in a name other than the undersigned)
-------------------------------------------------------------------------------
(Please print name and address)
Dated: ____________, ____.
---------------------------- -----------------------------
Signature Signature
Signature(s) Guaranteed:
------------------------------
B-8
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate |_| are |_| are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it |_|
did |_| did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, ____.
----------------------------------
Signature
NOTICE
------
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the fact of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-9
EXHIBIT C
---------
SUMMARY OF RIGHTS
-----------------
On November 17, 1998 the Board of Directors of Nanogen, Inc. (the
"Company") declared a dividend distribution of one "Right" for each outstanding
share of common stock, $0.001 par value (the "Common Stock"), of the Company to
stockholders of record at the close of business on November 30, 1998 the "Record
Date"). Except as set forth below, each Right, when exercisable, entitles the
registered holder to purchase from the Company one one-thousandth of a share of
a new series of preferred stock, designated as Series A Participating Preferred
Stock, $0.001 par value (the "Preferred Stock"), at a price of $50.00 (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and BankBoston, N.A., as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights certificates will
be distributed. The Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earliest of (i) a public announcement
that a person, entity or group of affiliated or associated persons and/or
entities (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of Common Stock,
other than as a result of repurchases of stock by the Company or certain
inadvertent actions by certain stockholders, or (ii) ten days (unless such date
is extended by the Board of Directors) following the commencement of (or a
public announcement of an intention to make) a tender offer or exchange offer
which would result in any person, entity or group of affiliated or associated
persons and/or entities becoming an Acquiring Person.
Until the Distribution Date the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate together with this Summary of Rights. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with Common Stock certificates. From as soon as
practicable after the Record Date and until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuance of the Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date (with or without this Summary of Rights attached) will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date, and the separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on the earliest of (i) November 17, 2008, (ii) consummation of a merger
transaction with a Person or group who acquired Common Stock pursuant to a
Permitted Offer (as defined below), and is offering in the merger the same price
per share and form of consideration paid in the Permitted Offer, or (iii)
redemption or exchange of the Rights by the Company as described below.
The number of Rights associated with each share of Common Stock shall be
proportionately adjusted to prevent dilution in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the Common Stock. The
Purchase Price payable, and the number of shares of
C-1
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for Preferred Stock,
certain convertible securities or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock at less than the
current market price of the Preferred Stock, or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends out of earnings or retained earnings) or of
subscription rights or warrants (other than those referred to above). With
certain exceptions, no adjustments in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price.
In the event that, after the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such, the
Company is involved in a merger or other business combination transaction
(whether or not the Company is the surviving corporation) or 50% or more of the
Company's assets or earning power are sold (in one transaction or a series of
transactions), proper provision shall be made so that each holder of a Right
(other than an Acquiring Person) shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price, that number of
shares of common stock of either the Company, in the event that it is the
surviving corporation of a merger or consolidation, or the acquiring company
(or, in the event there is more than one acquiring company, the acquiring
company receiving the greatest portion of the assets or earning power
transferred) which at the time of such transaction would have a market value of
two times the Purchase Price (such right being called the "Merger Right"). In
the event that a Person becomes the beneficial owner of 15% or more of the
outstanding shares of Common Stock (unless pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock at a price and on
terms determined prior to the date of the first acceptance of payment for any of
such shares by at least a majority of the members of the Board of Directors who
are not officers of the Company and are not Acquiring Persons or Affiliates or
Associates thereof to be both adequate and otherwise in the best interests of
the Company and its stockholders (a "Permitted Offer")), then proper provision
shall be made so that each holder of a Right will for a 60-day period (subject
to extension under certain circumstances) thereafter have the right to receive
upon exercise that number of shares of Common Stock (or, at the election of the
Company, which election may be obligatory if sufficient authorized shares of
Common Stock are not available, a combination of Common Stock, property, other
securities (e.g., Preferred Stock) and/or a reduction in the exercise price of
the Right) having a market value of two times the Purchase Price (such right
being called the "Subscription Right"). The holder of a Right will continue to
have the Merger Right whether or not such holder exercises the Subscription
Right. Notwithstanding the foregoing, upon the occurrence of any of the events
giving rise to the exercisability of the Merger Right or the Subscription Right,
any Rights that are or were at any time after the Distribution Date owned by an
Acquiring Person shall immediately become null and void.
At any time prior to the earlier to occur of (i) a Person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $0.01 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. Additionally, the Company may thereafter redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price (i) if
such redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not involving an
Acquiring Person or certain related Persons or (ii) following an event giving
rise to, and the expiration of the exercise period for, the Subscription Right
if and for as long as the Acquiring Person triggering the Subscription Right
beneficially owns securities representing less than 15% of the outstanding
shares of Common Stock and at the time of the redemption there are no other
Acquiring Persons. The
C-2
redemption of Rights described in the preceding sentence shall be effective only
as of such time when the Subscription Right is not exercisable, and in any
event, only after ten business days' prior notice. Upon the effective date of
the redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
Subject to applicable law, the Board of Directors, at its option, may at
any time after a Person becomes an Acquiring Person (but not after the
acquisition by such Person of 50% or more of the outstanding Common Stock),
exchange all or part of the then outstanding and exercisable Rights (except for
Rights which have become void) for shares of Common Stock at a rate of one share
of Common Stock per Right or, alternatively, for substitute consideration
consisting of cash, securities of the Company or other assets (or any
combination thereof).
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company may
issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential quarterly dividend in an amount equal
to 1,000 times the dividend declared on each share of Common Stock, but in no
event less than $100.00. In the event of liquidation, the holders of shares of
Preferred Stock will receive a preferred liquidation payment equal to the
greater of $1,000.00 or 1,000 times the payment made per each share of Common
Stock. Each share of Preferred Stock will have 1,000 votes, voting together with
the shares of Common Stock. In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount and type of
consideration received per share of Common Stock. The rights of the Preferred
Stock as to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions. Fractional
shares of Preferred Stock will be issuable; however, (i) the Company may elect
to distribute depositary receipts in lieu of such fractional shares and (ii) in
lieu of fractional shares other than fractions that are multiples of one
one-thousandth of a share, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. The Company and the Rights Agent retain broad
authority to amend the Rights Agreement; however, following any Distribution
Date any amendment may not adversely affect the interests of holders of Rights.
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. 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
incorporated herein by reference.
C-3
