Exhibit 4.2
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RIGHTS AGREEMENT
BY AND BETWEEN
DISCOVERY PARTNERS INTERNATIONAL, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
DATED AS OF
FEBRUARY 13, 2003
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TABLE OF CONTENTS
PAGE
Section 1. Definitions and Interpretation...................................1
Section 2. Appointment of Rights Agent......................................6
Section 3. Issue of Rights Certificates.....................................6
Section 4. Form of Rights Certificates......................................8
Section 5. Countersignature and Registration................................9
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates....................................................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights..........................................................10
Section 8. Cancellation and Destruction of Rights Certificates.............12
Section 9. Reservation and Availability of Preferred Stock.................12
Section 10. Preferred Stock Record Date.....................................14
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights..........................................................14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power...................................................22
Section 14. Fractional Rights and Fractional Shares.........................25
Section 15. Rights of Action................................................26
Section 16. Agreement of Rights Holders.....................................27
Section 17. Rights Certificate Holder Not Deemed a Stockholder..............27
Section 18. Concerning the Rights Agent.....................................28
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......28
Section 20. Rights and Duties of Rights Agent...............................29
Section 21. Change of Rights Agent..........................................31
Section 22. Issuance of New Rights Certificates.............................32
Section 23. Redemption and Termination......................................32
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Section 24. Exchange........................................................33
Section 25. Notice of Certain Events........................................34
Section 26. Notices.........................................................35
Section 27. Supplements and Amendments......................................36
Section 28. Successors......................................................36
Section 29. Determinations and Actions by the Board of Directors............36
Section 30. Benefits of This Agreement......................................37
Section 31. Severability....................................................37
Section 32. Governing Law...................................................37
Section 33. Counterparts....................................................37
Section 34. Descriptive Headings............................................37
EXHIBITS
Exhibit A Form of Certificate of Designation of Series A Junior Participating
Preferred Stock
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights to Purchase Shares of Series A Preferred Stock
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 13, 2003 (the "Agreement"),
by and between Discovery Partners International, Inc., a Delaware corporation
(the "Company"), and American Stock Transfer & Trust Company, a limited power
banking trust company licensed by the New York State Banking Authority (the
"Rights Agent").
WHEREAS, effective February 13, 2003 (the "Rights Dividend
Declaration Date"), the board of directors of the Company authorized and
declared a distribution of one Right (each, a "Right") for each share of Common
Stock (as hereinafter defined) of the Company outstanding as of the Close of
Business (as hereinafter defined) on February 24, 2003 (the "Record Date"), each
Right initially representing the right to purchase one one-thousandth of a share
(a "Unit") of Preferred Stock (as hereinafter defined) upon the terms and
subject to the conditions in this Agreement, and has further authorized and
directed the issuance of one Right with respect to each share of Common Stock of
the Company that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereto, intending to be legally bound,
hereby agree as follows:
Section 1. Definitions and Interpretation.
(a) For purposes of this Agreement, the following terms have the meanings
indicated:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the shares of
Common Stock of the Company then outstanding, but shall not include (1) the
Company, any Subsidiary (as such term is hereinafter defined) of the Company,
any employee benefit plan of the Company or any Subsidiary of the Company, or
any entity holding shares of Common Stock of the Company for or pursuant to the
terms of any such plan, or (2) Applera Corporation, a Delaware corporation (the
"Permitted Investor"), or and of its Affiliates or Associates (collectively with
the Permitted Investor, the "Investor Group") to the extent that the members of
the Investor Group shall beneficially own in the aggregate up to, but not
exceeding 31.5% of the shares of Common Stock of the Company then outstanding.
Notwithstanding the foregoing:
(i) no Person shall become an "Acquiring Person" as the result of an
acquisition of shares of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more of the shares of
Common Stock of the Company then outstanding (or, in the case of the
Investor Group, more than 31.5% of the shares of Common Stock of the
Company then outstanding; provided, however, that if a Person shall become
the Beneficial Owner of 15% or more of the shares of Common Stock of the
Company then outstanding (or, in the case of the Investor Group, more than
31.5% of
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the shares of Common Stock of the Company then outstanding as a result of
any such acquisition of shares of Common Stock by the Company and shall,
after such acquisition of shares by the Company, become the Beneficial
Owner of any additional shares of Common Stock of the Company (other than
as a result of a stock dividend, stock split or similar transaction
effected by the Company in which all holders of Common Stock of the
Company are treated equally) (or, in the case of the Investor Group, more
than 31.5% of the shares of Common Stock of the Company then outstanding,
then such Person shall be deemed to be an "Acquiring Person" hereunder;
(ii) no Person who, alone or together with all Affiliates and
Associates of such Person, was, at the time of the public announcement by
the Company of the declaration by its Board of Directors on February 13,
2003 of the dividend distribution of the Rights, the Beneficial Owner of
15% or more of the Common Stock of the Company then outstanding shall be
deemed to have become an Acquiring Person unless and until such time as
such Person or any Affiliate or Associate of such Person (except that the
Investor Group or its Affiliates and Associates may acquire 1% more than
the number of shares held on such date) thereafter becomes the Beneficial
Owner of any additional Common Stock of the Company (other than as a
result of a stock dividend, stock split or similar transaction effected by
the Company in which all holders of Common Stock of the Company are
treated equally); and
(iii) if the board of directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring Person" (as
defined above) pursuant to the provisions of subparagraph (i), has become
such inadvertently, and such Person has divested or divests as promptly as
practicable a sufficient number of shares of Common Stock of the Company
so that such Person would no longer be an "Acquiring Person," then such
Person shall not be deemed to be or to have become an "Acquiring Person"
for any purpose of this Agreement.
"Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii).
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Exchange Act Regulations (as
hereinafter defined) as in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act (as hereinafter defined) and Rule 13d-3
thereunder (or any comparable or successor law or regulation); or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately, contingently 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
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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 or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; provided further, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result
of any agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (x) arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the Exchange Act and the Exchange Act Regulations, and (y)
is not 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 first
mentioned Person (or any of such first mentioned Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing, other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to clause (B) of
subparagraph (ii) above) or disposing of any securities of the Company;
provided, however, that in no case shall any officer or director of the
Company be deemed (A) the Beneficial Owner of any securities beneficially
owned by another officer or director of the Company solely by reason of
actions undertaken by such persons in their capacity as officers or
directors of the Company or (B) the Beneficial Owner of securities held of
record by the trustee of any employee benefit plan of the Company or any
Subsidiary of the Company for the benefit of any employee of the Company
or any Subsidiary of the Company, other than such officer or director, by
reason of any influence that such officer or director may have over the
voting of the securities held in the plan;
Notwithstanding anything in this definition of "Beneficial Owner" and
"beneficially own" to the contrary, the phrase "then outstanding," when used
with reference to a Person who is the Beneficial Owner of securities of the
Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to beneficially own hereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in The City of New York are authorized or
obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m., New York
City time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m., New York City time, on the next succeeding Business
Day.
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"Common Stock" when used with reference to the Company shall mean
the shares of common stock, par value $0.001 per share, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall mean
the capital stock (or other equity interest) with the greatest voting power of
such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
"Company" shall have the meaning set forth in the forepart of this
Agreement.
"Current Per Share Market Price" shall have the meaning set forth in
Section 11(d)(i).
"Current Value" shall have the meaning set forth in Section
11(a)(iii).
"Distribution Date" shall have the meaning set forth in Section
3(a).
"Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute.
"Exchange Act Regulations" shall mean the Rules and Regulations
under the Exchange Act, as amended from time to time (including any successor
rules).
"Expiration Date" shall have the meaning set forth in Section 7(a).
"Final Expiration Date" shall have the meaning set forth in Section
7(a).
"Nasdaq" shall have the meaning set forth in Section 11(d).
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership or trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Preferred Stock" shall mean shares of Series A Junior Participating
Preferred Stock, par value $0.001 per share, of the Company, having the rights
and preferences set forth in the Form of Certificate of Designation attached to
this Agreement as Exhibit A.
"Preferred Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii).
"Principal Party" shall have the meaning set forth in Section 13.
"Purchase Price" shall have the meaning set forth in Section 7(b).
"Record Date" shall have the meaning set forth in the recitals to
this Agreement.
"Redemption Date" shall have the meaning set forth in Section 7(a).
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"Redemption Price" shall have the meaning set forth in Section
23(a).
"Right" shall have the meaning set forth in the recitals to this
Agreement.
"Rights Agent" shall have the meaning set forth in the forepart of
this Agreement and shall include any Person that shall become a successor Rights
Agent pursuant to the terms of this Agreement.
"Rights Certificate" shall have the meaning set forth in Section
3(a).
"Rights Dividend Declaration Date" shall have the meaning set forth
in the recitals to this Agreement.
"Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A), (B) or (C).
"Section 11(a)(iii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii).
"Section 13 Event" shall have the meaning set forth in Section 13.
"Section 24(a) Exchange Ratio" shall have the meaning set forth in
Section 24(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any successor statute.
"Share Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
"Spread" shall have the meaning set forth in Section 11(a)(iii).
"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
"Summary of Rights" shall have the meaning set forth in Section
3(b).
"Trading Day" shall have the meaning set forth in Section 11(d)(i).
"Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
"Unit" shall have the meaning set forth in the recitals to this
Agreement.
(b) Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
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(c) The words "hereof," "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of and to this Agreement unless
otherwise specified.
(d) The plural of any defined term shall have a meaning correlative to
such defined term, and words denoting any gender shall include both genders and
the neuter. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other agreement or
document shall include such party's successors and permitted assigns.
(f) A reference to any legislation or to any provision of any legislation
shall include any modification, amendment or re-enactment thereof, any
legislative provision substituted therefor and all rules, regulations and
statutory instruments issued thereunder or pursuant thereto.
(g) The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
(h) No prior draft nor any course of performance or course of dealing
shall be used in the interpretation or construction of this Agreement.
(i) The descriptive headings in this Agreement are intended for reference
purposes only and shall not be used in the interpretation or construction of
this Agreement.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as rights agent for the Company in accordance with the
terms and conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint co-Rights Agents as it
may deem necessary or desirable upon ten days' prior written notice to the
Rights Agent and any co-Rights Agents. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth day after
the Share Acquisition Date and (ii) the Close of Business on the tenth day (or
such later date as may be determined by action of the Company's board of
directors prior to such time as any Person becomes an Acquiring Person and of
which later date the Company will give the Rights Agent prompt written notice)
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any Person holding shares of Common Stock
for or pursuant to the terms of any such plan) is commenced within the meaning
of Rule 14d-2(a) of the Exchange
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Act Regulations or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan) to
commence a tender or exchange offer, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock of
the Company then outstanding (the earlier of the events described in (i) and
(ii) above being the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b)) by the certificates for shares of
Common Stock of the Company registered in the names of the holders thereof
(which certificates shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates, and (y) the right to receive Rights Certificates
will be transferable only in connection with the transfer of shares of Common
Stock of the Company. As soon as practicable after the Distribution Date, the
Company will notify the Rights Agent of the occurrence of the Distribution Date
and the Company will prepare and execute, the Rights Agent will countersign, and
the Company will send or cause to be sent (and the Rights Agent will, if
requested and provided with all necessary information, send) by first-class,
insured, postage-prepaid mail, to each record holder of shares of Common Stock
of the Company as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Rights
Certificate, in substantially the form of Exhibit B (a "Rights Certificate"),
evidencing one Right for each share of Common Stock so held. From and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates. The Rights Agent shall have no duty or obligation to take any
action under any section of this Agreement which requires the payment by a
Rights holder of applicable taxes and governmental charges unless and until the
Rights Agent is satisfied that all such taxes and/or charges have been paid.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send, or cause to be sent, a copy of a Summary of Rights to Purchase
Preferred Stock, in substantially the form of Exhibit C (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of shares
of Common Stock of the Company as of the Close of Business on the Record Date,
at the address of such holder shown on the records of the Company. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for
transfer of any certificate for shares of Common Stock of the Company shall also
constitute the transfer of the Rights associated with the shares of Common Stock
represented thereby.
(c) Certificates evidencing shares of Common Stock of the Company which
become outstanding (whether originally issued or delivered from the Company's
treasury) or are otherwise transferred after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date shall have impressed
on, printed on, written on or otherwise affixed to them the following legend (or
such other legend as the Company may deem appropriate that is not inconsistent
with the provisions of this Agreement but which does not affect the rights,
duties or indemnities of the Rights Agent):
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN DISCOVERY
PARTNERS INTERNATIONAL, INC., AND AMERICAN STOCK TRANSFER & TRUST
COMPANY, DATED AS OF FEBRUARY 13, 2003 (THE "RIGHTS AGREEMENT"), THE
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TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
DISCOVERY PARTNERS INTERNATIONAL, INC. UNDER CERTAIN CIRCUMSTANCES,
AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED
BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. DISCOVERY PARTNERS INTERNATIONAL, INC. WILL MAIL TO THE
HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT
CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED
TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH
PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
If the Company purchases or acquires any shares of Common Stock of the Company
prior to the Distribution Date, any Rights associated with such shares of Common
Stock of the Company shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with any shares of
Common Stock of the Company which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
Units and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate (but which do not affect the rights, duties,
responsibilities or immunities of the Rights Agent) and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or transaction reporting system on
which the Rights may from time to time be listed or traded, or to conform to
usage. Subject to the provisions of Sections 11 and 22, the Rights Certificates
shall entitle the holders thereof to purchase the number of Units as shall be
set forth therein at the price per Unit set forth therein, but the number of
such Units and the Purchase Price shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to this Agreement that
represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person; (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such; or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of
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equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the board of directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e); shall in
each case contain (to the extent the Rights Agent has notice thereof and to the
extent feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT BY AND BETWEEN DISCOVERY
PARTNERS INTERNATIONAL, INC. AND AMERICAN STOCK TRANSFER & TRUST
COMPANY, AS RIGHTS AGENT, DATED AS OF FEBRUARY 13, 2003 (THE "RIGHTS
AGREEMENT")). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by any officer of the Company, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the 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. Any Rights Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of this Agreement any such person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights Agent
of notice thereof, 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 under this Agreement. 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.
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Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Rights
Certificates (other than Rights Certificates representing Rights that are not
exercisable pursuant to Section 7(e) or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates evidencing exercisable Rights,
entitling the registered holder to purchase a like number of Units (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Rights Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Rights Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred, split
up, combined or exchanged at the office of the Rights Agent designated for such
purpose. The Rights Certificates are transferable only on the registry books of
the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate or Rights Certificates until the registered holder shall have
properly completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate or Rights Certificates
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof, and the Rights evidenced thereby, as the Company or the Rights Agent
shall reasonably request. Thereupon the Rights Agent shall, subject to Sections
4(b), 7(e) and 14, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested
registered in such name or names as may be designated by the surrendering
registered holder. The Company may require payment from holders of Rights
Certificates 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. The Rights Agent shall promptly forward any
such sum collected by it to the Company or to such Person as the Company shall
specify by written notice. The Rights Agent shall have no duty or obligation to
take any action under any section of this Agreement which requires the payment
by a Rights holder of applicable taxes and governmental charges unless and until
the Rights Agent is satisfied that all such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and of indemnity or security satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company will make
and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Rights Certificate evidencing exercisable
Rights may exercise the Rights evidenced thereby (except as otherwise provided
in this Agreement) in whole
10
or in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the related certification
properly completed and duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each Right being exercised (as such amount may be reduced (including
to zero) pursuant to Section 11(a)(iii)) and an amount equal to any applicable
tax or charge required to be paid by the holder of such Rights Certificate in
accordance with Section 9(e) in cash, certified check, cashier's check, wire
transfer, bank draft or money order payable to the order of the Company), at or
prior to the earliest of (i) the Close of Business on the tenth anniversary
hereof (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 (the "Redemption Date"), and (iii) the time
at which such Rights are exchanged as provided in Section 24 (the earliest of
(i), (ii) and (iii) being the "Expiration Date").
(b) The Purchase Price for each Unit pursuant to the exercise of a Right
shall initially be $19.00 and, shall be subject to adjustment from time to time
as provided in Sections 11 and 13 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 evidencing exercisable Rights
(with the form of election to purchase and certification properly completed and
duly executed) accompanied by payment as provided in Section 7(a) and an amount
equal to any applicable tax or charge required to be paid under Section 9(e) in
cash, certified check, cashier's check, wire transfer, bank draft, or money
order payable to the order of the Company, the Rights Agent shall, subject to
Section 20(k), thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock a certificate or certificates for the number of Units to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests or (B) if the Company shall have elected to
deposit the total number of Units issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent of a depositary
receipt or depositary receipts representing such number of Units as are to be
purchased (in which case certificates for the Units represented by such receipt
or receipts shall be deposited by the transfer agent with the depositary agent)
and the Company hereby directs the depositary agent to comply with such
requests; (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14; (iii) 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 thereof, deliver such cash
to or upon the order of the registered holder of such Rights Certificate. If the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a), the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when necessary to
comply with the terms of this Agreement.
(d) If the registered holder of any Rights Certificate shall exercise less
than all the Rights evidenced thereby, a new Rights Certificate evidencing a
number of Rights equivalent to the number of Rights remaining unexercised shall
be issued by the Rights Agent to the registered holder of such Rights
Certificate or to such registered holder's duly authorized assigns, subject to
Section 14.
11
(e) Notwithstanding anything in this Agreement to the contrary and without
any further action, from and after the first occurrence of a Triggering Event,
any Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person; (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate thereof) who becomes a transferee after the
Acquiring Person becomes such; (iii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate thereof) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the board of directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e); or (iv) any subsequent transferee shall not be
exercisable without any further action and no holder of such Rights shall have
any rights whatsoever with respect to such Rights or any Rights Certificate
which formerly evidenced such Rights, and neither the Company nor the Rights
Agent shall have any obligations whatsoever with respect to such Rights or any
Rights Certificate, whether under any provision of this Agreement or otherwise.
The Company shall use all commercially reasonable efforts to ensure that the
provisions of Section 4(b) and this Section 7(e) are complied with, but neither
the Company nor the Rights Agent shall have any liability to any holder of
Rights Certificates or to any other Person as a result of its making or failing
to make any determinations with respect to an Acquiring Person or any of such
Acquiring Person's Affiliates, Associates or transferees or taking or failing to
take any actions with respect any Rights or Rights Certificates of any such
Person.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
properly completed and duly executed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof, and of the Rights evidenced thereby, as the Company or the
Rights Agent shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
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.
Section 9. Reservation and Availability of Preferred Stock.
12
(a) The Company covenants and agrees that it will use its best efforts to
cause to be reserved and kept available out of, and to the extent of, its
authorized and unissued Preferred Stock not reserved for another purpose a
number of shares that will be sufficient to permit the exercise in full of all
outstanding Rights pursuant to this Agreement. Upon the occurrence of any events
resulting in an increase in the aggregate number of shares of Preferred Stock
(or other equity securities of the Company) issuable upon exercise of all
outstanding Rights above the number then reserved, the Company shall make
appropriate increases in the number of shares so reserved.
(b) If the Units to be issued and delivered upon the exercise of the
Rights are at any time listed on a national securities exchange or included for
quotation on any transaction reporting system, the Company shall during the
period from the Distribution Date to the Expiration Date use its best efforts to
cause all shares reserved for such issuance to be listed on such exchange or
included for quotation on any such transaction reporting system upon official
notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section
11(a)(iii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act, with respect
to the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
reasonably practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
of the offering made upon exercise of the Rights in such jurisdiction shall have
been obtained, or an exemption therefrom shall be available and until a
registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Units (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall, at the time of delivery of the certificates for such Units or
other securities subject to payment of the Purchase Price, be duly and validly
authorized and issued and fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Rights Certificates or of any Units
(and, following the occurrence of a Triggering Event, any other securities that
may be delivered upon exercise of Rights) upon the exercise of Rights. The
Company shall not, however, be required to pay any tax or charge which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or issue or deliver certificates or depositary receipts for
Units in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue
13
or to deliver any certificates or depositary receipts for Units (or other
securities that may be delivered upon the exercise of any Rights) until any such
tax or charge shall have been paid (any such tax or charge being payable by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's or the Rights Agent's reasonable satisfaction that
no such tax or charge is due.
Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for Units (or, following the occurrence of a Triggering Event,
other securities that may be delivered upon exercise of Rights) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Units (or, following the occurrence of a Triggering
Event other securities that may be delivered upon the exercise of the Rights)
represented thereby on, and such certificate shall be dated, at the Close of
Business on the date upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes or charges) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or, following
the occurrence of a Triggering Event, other securities that may be delivered
upon the exercise of the Rights) transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such shares at the
Close of Business on, and such certificate shall be dated, the next succeeding
Business Day on which such transfer books are open; provided further, however,
that if delivery of Units (or following the occurrence of a Triggering Event,
other securities that may be delivered upon the exercise of the Rights) is
delayed pursuant to Section 9(c), such Persons shall be deemed to have become
the record holders of such Units (or following the occurrence of a Triggering
Event, other securities that may be delivered upon the exercise of the Rights)
only when such Units first become deliverable. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to
securities 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 expressly provided in this
Agreement.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number and kinds of securities covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding shares of
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares Preferred Stock, 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), the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind
of shares of capital stock for which the Rights shall be exercisable,
shall be proportionately adjusted so that the holder of any Rights
exercised after such time shall be entitled to receive, upon payment of
the Purchase Price then in effect, the aggregate
14
number and kind of shares of capital stock which, if such Rights had been
exercised immediately prior to such date and at a time when the applicable
transfer books were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock issuable upon
exercise of one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition, and
shall be made prior, to any adjustment required pursuant to Section
11(a)(ii).
(i) Subject to Section 24, if:
(A) any Person shall become an Acquiring Person, unless the
event causing the Person to become an Acquiring Person is a
transaction to which the provisions of Section 13(a) apply;
(B) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, shall (1) merge into the Company or
otherwise combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or combination
and shares of Common Stock of the Company shall remain outstanding
and unchanged, (2) in one transaction or a series of transactions,
transfer any assets to the Company or any of its Subsidiaries in
exchange (in whole or in part) for shares of Common Stock of the
Company, for other equity securities of the Company or any of its
Subsidiaries, or for securities exercisable for or convertible into
shares of equity securities of the Company or any of its
Subsidiaries (whether shares of Common Stock of the Company or
otherwise) or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares
of such equity securities or securities exercisable for or
convertible into such equity securities (other than pursuant to a
pro rata distribution to all holders of shares of Common Stock of
the Company), (3) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one transaction or a
series of transactions, to, from or with the Company or any of its
Subsidiaries or any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity, assets (including securities)
on terms and conditions less favorable to the Company or such
Subsidiary, plan, trustee or fiduciary than those that could have
been obtained in arm's-length negotiations with an unaffiliated
third party, other than pursuant to a transaction set forth in
Section 13(a), (4) sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the
Company or any of its Subsidiaries or any employee benefit plan
maintained by the Company or any of its Subsidiaries or any trustee
or fiduciary with respect to such plan acting in such capacity
(other than transactions, if any, consistent with those engaged in,
as of the date hereof, by the Company and such Acquiring Person or
such Associate or Affiliate thereof), assets (including securities
or intangible assets) having an aggregate fair market value of more
than $5,000,000, other than pursuant to a
15
transaction set forth in Section 13(a), (5) receive, or any
designee, agent or representative of such Acquiring Person or any
Affiliate or Associate of such Acquiring Person shall receive, any
compensation from the Company or any of its Subsidiaries other than
compensation for full-time employment as a regular employee at rates
in accordance with the Company's (or its Subsidiaries') past
practices, or (6) receive the benefit, directly or indirectly
(except proportionately as a holder of shares of Common Stock of the
Company or as required by law or governmental regulation), of any
loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the Company
or any of its Subsidiaries or any employee benefit plan maintained
by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity; or
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any
other transaction or series of transactions involving the Company or
any of its Subsidiaries, other than a transaction or transactions to
which the provisions of Section 13(a) apply (whether or not with or
into or otherwise involving an Acquiring Person), which has the
effect, directly or indirectly, of increasing by more than one
percent the proportionate share of the outstanding shares of any
class of equity securities of the Company or any of its Subsidiaries
that is directly or indirectly beneficially owned by any Acquiring
Person or any Person or any Associate or Affiliate of any Acquiring
Person;
then promptly following the occurrence of an event described in
Section 11(a)(ii)(A), (B) or (C) (each being a "Section 11(a)(ii) Event"),
the Company and the Rights Agent shall make proper provision so that each
holder of a Right, except as otherwise provided in Section 7(e), shall
thereafter have the right to receive for each Right, upon exercise thereof
in accordance with the terms of this Agreement and payment of the
then-current Purchase Price, in lieu of the number of Units for which a
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, such number of Units as shall equal the result
obtained by multiplying the then-current Purchase Price by the then number
of Units for which a Right was exercisable (or would have been exercisable
if the Distribution Date had occurred) immediately prior to the first
occurrence of a Triggering Event, and dividing that product by 50% of the
Current Per Share Market Price for shares of Common Stock on the date of
occurrence of the most recent Triggering Event (such number of Units being
hereinafter referred to as the "Adjustment Shares"). Upon the occurrence
of a Section 13 Event, any Rights that shall not have been previously
exercised pursuant to this Section 11(a)(ii) shall thereafter be
exercisable only pursuant to Section 13 and not pursuant to this Section
11(a)(ii). The Company shall notify the Rights Agent when this Section
11(a)(ii) applies and shall use all commercially reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with,
but neither the Company nor the Rights Agent shall have any liability to
any holder of Rights Certificates or other Person as a result of the
Company's failure to make any determinations with respect to any Acquiring
Person or its Affiliates, Associates or transferees hereunder.
16
(ii) In the event that the number of shares of Preferred Stock which
are authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the exercise in full of the
Rights, or if any necessary regulatory approval for such issuance has not
been obtained by the Company, the Company shall, in lieu of issuing Units
in accordance with Section 11(a)(ii): (A) determine the excess of (1) the
value of the Units issuable upon the exercise of a Right, as determined by
the Board of Directors in good faith, which determination shall be
conclusive (the "Current Value") over (2) the Purchase Price (such excess
being referred to as the "Spread") and (B) with respect to each Right,
make adequate provision to substitute for such Units, upon exercise of the
Rights, (1) cash, (2) a reduction in the Purchase Price, (3) other equity
securities of the Company (including, without limitation, Common Stock of
the Company or shares or units of shares of any series of preferred stock
which the board of directors of the Company shall have conclusively deemed
to have the same value as the Units (such shares or units of preferred
stock are herein called "Preferred Stock Equivalents")), except to the
extent that the Company has not obtained any necessary regulatory approval
for such issuance, (4) debt securities of the Company, except to the
extent that the Company has not obtained any necessary regulatory approval
for such issuance, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, as
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 (which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive and binding
on the Rights Agent, the holders of the Rights and all other persons);
provided, however, if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty days following
the later of (x) occurrence of a Section 11(a)(ii) Event, and (y) the date
on which the Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the "Section
11(a)(iii) Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment
of the Purchase Price, Units (to the extent available), except to the
extent that the Company has not obtained any necessary regulatory approval
for such issuance, and then, if necessary, cash, having an aggregate value
equal to the Spread.
(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 forty five calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same 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 Unit of Preferred Stock or Equivalent Preferred Stock (or
having a conversion price per Unit, if a security convertible into Units or
Equivalent Preferred Stock) less than the then Current Per Share Market Price
(as determined pursuant to Section 11(d)) of a Unit 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 sum of the number of Units
outstanding on such record date plus the number of Units which the aggregate
offering price of the total number of Units and/or Equivalent Preferred Stock so
to be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Per Share Market
Price and the
17
denominator of which shall be the sum of the number of Units outstanding on such
record date plus the number of additional Units 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). If such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the board of directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive and
binding on the Rights Agent and the holders of the Rights. Units 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 if such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for a distribution to all
holders of Units (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend), assets (other than a dividend payable in Units or Equivalent
Preferred Stock but including any dividend payable in equity securities other
than Preferred Stock or Equivalent Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(d)), 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 then Current Per Share Market Price (as
determined pursuant to Section 11(d)) of the Preferred Stock on such record
date, less the fair market value (as determined in good faith by the board of
directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive and binding on the Rights
Agent and the holders of the Rights) of the cash, assets or evidences of
indebtedness to be distributed or of such subscription rights or warrants
distributable in respect of a share of Preferred Stock, and the denominator of
which shall be such Current Per Share Market Price of a share of Preferred
Stock. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "Current
Per Share Market Price" of any security on any date shall be deemed to be
the average of the daily closing prices per share of such security for the
thirty consecutive Trading Days (as such term is hereinafter defined)
ending on and including the Trading Day immediately prior to such date;
provided, however, that in the event that the Current Per Share Market
Price of the security is determined during a period following the
announcement by the issuer of such security of (A) a dividend or
distribution on such security payable in shares of such security or
securities convertible into such security, or (B) any subdivision,
combination or reclassification of such security and prior to the
expiration of thirty Trading Days after and not including the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case,
the Current Per Share Market Price shall be appropriately adjusted to
reflect the current market price per share equivalent of such security.
The closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the
18
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the Nasdaq
Stock Market ("Nasdaq") or, if the security is not listed or admitted to
trading on the Nasdaq, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the security is listed or
admitted to trading or, if the security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the Nasdaq or such other system
then in use, or, if on any such date the security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the security
selected by the board of directors of the Company. If on any such date no
market maker is making a market in the security, the Current Per Share
Market Price of such security on such date shall mean the fair value per
share or other trading unit as determined in good faith by the board of
directors of the Company as provided for above (which determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive and binding on the Rights Agent, the holders of the Rights and
all other Persons). The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the security is listed or
admitted to trading is open for the transaction of business or, if the
security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the Current Per
Share Market Price of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Current
Per Share Market Price of the 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
Per Share Market Price of the Preferred Stock shall be conclusively deemed
to be an amount equal to the product of $1,000 (as such amount may be
appropriately adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to shares of Common Stock of the
Company occurring after the date of this Agreement) multiplied by the
Current Per Share Market Price of Common Stock of the Company. If no
shares of the Common Stock of the Company or the Preferred Stock are
publicly held or so listed or traded, "Current Per Share Market Price" of
the Preferred Stock shall mean the fair value per share as determined in
good faith by the board of directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive and binding on the Rights Agent and the holders of the Rights
for all purposes. For all purposes of this Agreement, the Current Per
Share Market Price of a Unit shall be equal to the Current Per Share
Market Price of one share of Preferred Stock divided by 1,000.
(e) No adjustment in the Purchase Price under this Section 11 shall be
required unless such adjustment would require an increase or decrease of at
least one percent in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to the
nearest one-hundred-thousandth (1/100,000) of a share of Preferred Stock or
one-hundredth
19
(1/100) of any other share or security as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii),
the holder of any Rights thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Units, thereafter the
number of such other shares so receivable upon exercise of any Rights and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c), (d), (e),
(g), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7, 9, 10,
13 and 14 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 shall evidence the right to purchase, at
the adjusted Purchase Price, the number of Units purchasable from time to time
upon exercise of the Rights, all subject to further adjustment as provided in
this Agreement.
(h) Unless the Company shall have exercised its election under Section
11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Units (calculated to
the nearest one-millionth of a share of Preferred Stock) obtained by dividing
(i) the product obtained by multiplying (x) the number of Units 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, by (ii) 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 Units purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of Units 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-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. The Company shall give the Rights
Agent a copy of such announcement. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
20
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 to be so distributed shall
be issued, executed and countersigned in the manner provided for herein and
shall be registered in the names of the holders of record of 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 Units issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per Unit and the number of Units 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 of the number of Units 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 number of Units at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer, until the occurrence of such event,
issuing to the holder of any Rights exercised after such record date that number
of Units and other capital stock or securities of the Company, if any, issuable
upon such exercise that is over and above the Units and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) upon the occurrence of the event requiring such
adjustment. The Company shall give the Rights Agent prompt written notice of its
election under this Section 11(l).
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any Unit at less than the Current Per Share Market
Price, (iii) issuance wholly for cash of Preferred Stock or securities which by
their terms are convertible into or exchangeable for Preferred Stock, (iv)
dividends on Preferred Stock payable in Preferred Stock, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of Units of its Preferred Stock, shall not be taxable to
such stockholders.
(n) The Company shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its
21
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)), if (x) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the Person which constitutes, or would
constitute, the Principal Party shall have distributed or otherwise transferred
to its stockholders or other persons holding an equity interest in such Person,
Rights previously owned by such Person or any of its Affiliates and Associates;
provided, however, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 27, take (or permit any of its Subsidiaries
to take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) If, at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on
outstanding shares of Common Stock of the Company payable in shares of Common
Stock of the Company or (ii) effect a subdivision, combination or consolidation
of the Common Stock of the Company (by reclassification or otherwise than by
payment of dividends in shares of Common Stock of the Company) into a greater or
lesser number of shares of Common Stock of the Company, then in any such case
the number of Units purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of Units so purchasable
immediately prior to such event by a fraction, the numerator of which shall be
the number of shares of Common Stock of the Company outstanding immediately
before such event and the denominator of which shall be the number of shares of
Common Stock of the Company outstanding immediately after such event. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the computations and facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
shares of Common Stock of the Company or Units a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 25 hereof. Notwithstanding the foregoing sentence, the
failure by 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. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment or statement contained therein and shall have
no duty or liability with respect to, shall not be deemed to have knowledge of,
and adjustment or any such event unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
22
(a) In the event that, following a Share Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)) shall consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the shares of Common Stock of the Company shall be changed into
or exchanged for stock or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer) to any Person or
Persons (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)), in one or more transactions, directly or indirectly, assets
or earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), (any such event being a
"Section 13 Event"), then, and in each such case, the Company and the Rights
Agent shall make proper provision so that: (i) each holder of a Right, except as
provided in Section 7(e), shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, such number of validly
authorized and issued, fully paid and non-assessable shares of Common Stock of
the Principal Party, which shares shall not be subject to any liens,
encumbrances, rights of first refusal, transfer restrictions or other adverse
claims, as shall be equal to the product obtained by (1) multiplying the then
current Purchase Price by the number of Units for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such Units for which a Right would be
exercisable hereunder but for the occurrence of such Section 11(a)(ii) Event by
the Purchase Price which would be in effect hereunder but for such first
occurrence) and (2) dividing that product (which, following the first occurrence
of a Section 13 Event, shall be the "Purchase Price" for all purposes of this
Agreement) by 50% of the Current Per Share Market Price of the shares of Common
Stock of such Principal Party on the date of consummation of such Section 13
Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall, for all
purposes of this Agreement, thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) shall be of
no further effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer whose outstanding shares of Common
23
Stock have the greatest aggregate Current Per Share Market Price and (B)
if no securities are so issued, the Person that is the other party to such
merger or consolidation, or, if there is more than one such Person, the
Person whose outstanding shares of Common Stock have the greatest
aggregate Current Per Share Market Price; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving
the largest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets
or earning power transferred pursuant to such transaction or transactions
or if the Person receiving the largest portion of the assets or earning
power cannot be determined, whichever Person whose outstanding shares of
Common Stock have the greatest aggregate Current Per Share Market Price;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the
preceding twelve-month period registered under Section 12 of the Exchange
Act ("Registered Common Stock"), or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person; (3) if the Common Stock of such Person is
not Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever of such other Persons is the
issuer of the Registered Common Stock having the highest aggregate Current
Per Share Market Price; and (4) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
none of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever ultimate parent entity is the
corporation having the greatest stockholders' equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement under
the Securities Act with respect to the shares of Common Stock of such
Principal Party that may be acquired upon exercise of the Rights, (B)
cause such registration statement to remain effective (and to
24
include a prospectus complying with the requirements of the Securities
Act) until the Expiration Date, and (C) as soon as practicable following
the execution of such agreement take such action as may be required to
ensure that any acquisition of such shares of Common Stock of such
Principal Party upon the exercise of the Rights complies with any
applicable state securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate of incorporation, bylaws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than in the Current Per Share
Market Price or securities exercisable for, or convertible into, shares of
Common Stock of such Principal Party at less than in the Current Per Share
Market Price (other than to holders of Rights pursuant to this Section 13) or
(ii) providing for any special payment, tax or similar provisions in connection
with the issuance of the shares of Common Stock of such Principal Party pursuant
to the provisions of this Section 13, then, in such event, the Company shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights that have not theretofore been exercised shall
thereafter be exercisable in any manner provided in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights 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 Per Share
Market Price of a whole Right. For purposes of this Section 14(a), the Current
Per Share Market Price of a whole Right shall be the closing price per share of
a whole Right on the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions 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 Preferred Stock
25
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions 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,
however, 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 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 shall pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Current Per Share Market Price of one share of Preferred Stock.
(c) The holder of a Right by the acceptance of the Right expressly waives
such holder's right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
(d) Whenever a payment for fractional Rights or fractional shares is to be
made by the Rights Agent, the Company shall (i) promptly prepare and deliver to
the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Common Stock of the Company); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
a certificate representing shares of Common Stock of the Company), without the
consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of a certificate representing shares of
Common Stock of the Company), 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
or, prior to the Distribution Date, 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 will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
26
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of shares of Common Stock of the Company;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer with all required certificates completed;
(c) subject to Sections 6(a) and 7(f), the Company and the Rights Agent
may deem and treat the Person in whose name the Rights Certificate (or, prior to
the Distribution Date, the associated Common 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;
(d) such holder expressly waives any right to receive any fractional
Rights and any fractional securities upon exercise or exchange of a Right,
except as otherwise provided in Section 14; and
(e) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, judgment, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company shall use
commercially reasonable efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as practicable.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Units or any other
securities of the Company which may at any time be issuable upon the exercise of
the Rights represented thereby, nor shall anything contained in this Agreement
or in any Rights Certificate be construed (a) 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, (b) 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), (c) to receive dividends or
subscription rights, or (d) to confer any other rights as a stockholder
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with this Agreement.
27
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
under this Agreement and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
preparation, negotiation, execution, delivery, amendment and administration 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, damage, judgment, fine, penalty, claim, demand, settlement,
cost, liability or expense (including, without limitation, the reasonable fees
and disbursements of counsel), incurred without gross negligence or willful
misconduct on the part of the Rights Agent, for any action taken, suffered or
omitted by the Rights Agent in connection with the execution, acceptance and
administration of this Agreement and the exercise and performance of its duties,
including, without limitation, the costs and expenses of defending against and
appealing any claim of liability arising therefrom, directly or indirectly. This
indemnity shall survive the termination of this Agreement and the expiration of
the Rights. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.
In the absence of gross negligence or willful misconduct, the Rights
Agent is authorized and 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 and the exercise and performance of its
duties hereunder, in reliance upon any Rights Certificate or certificate for
Units or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
counsel as set forth in Section 20.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the shareholder
services, stock transfer or corporate trust 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 Person must be eligible
for appointment as a successor Rights Agent under the provisions of Section 21.
In case at the time such successor Rights Agent shall succeed to the agency
created by this Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights
28
Agent may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Rights and Duties of Rights Agent. The Rights Agent
undertakes to perform only the duties and obligations expressly imposed by this
Agreement upon the following terms and conditions, all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall be bound,
and no implied duties or obligations shall be read into this Agreement against
the Rights Agent:
(a) Before the Rights Agent acts or refrains from acting, it may consult
with legal counsel of its choice (who may be legal counsel for the Company), and
the advice or opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent, and the Rights Agent shall incur no
liability for or in respect of, as to any action taken, suffered or omitted by
it in good faith and in accordance with such advice or opinion.
(b) Whenever in the administration, exercise and performance of its duties
under this Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to taking,
suffering or omitting to take any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by any
officer of the Company and delivered to the Rights Agent; and such certificate
shall be full and complete authorization and protection to the Rights Agent for
or in respect of any action taken, suffered or omitted in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence 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 its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility or have any
liability in respect of the legality, validity or enforceability of this
Agreement or the execution and delivery hereof (except the due execution by the
Rights Agent) or in respect of the legality, validity or enforceability or the
execution of any Rights Certificate (except its countersignature); nor shall it
be liable or responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming unexercisable pursuant to Section 7(a)(e) or Section 11(a)(ii))
or any change or adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt of the
29
certificate described in Section 12, upon which the Rights Agent may rely); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Units or other securities to be
issued upon the exercise of any Rights or as to whether any such security will,
when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the administration, exercise and performance of its
duties hereunder from any one officer of the Company, and to apply to such
officers for advice or instructions in connection with its duties under this
Agreement, and such instructions shall be full authorization and protection to
the Rights Agent and the Rights Agent shall not be responsible or liable for, or
in respect of, any action taken, suffered or omitted to be taken by it in good
faith in accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. The Rights Agent shall be fully
authorized and protected in relying upon the most recent instructions received
from such officers. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken, suffered or omitted by the Rights Agent under
this Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective. The Rights Agent shall not be liable for any
action taken or suffered by, or omission of, the Rights Agent in accordance with
a proposal included in any such application on or after the date specified in
such application (which date shall not be less than five Business Days after the
date any officer of the Company actually received such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any stockholder, affiliate, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent, or any
such stockholder, affiliate, director, officer or employee from acting in any
other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
vested in it or perform any duty under this Agreement either itself (through its
directors, officers and employees) or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, omission, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
30
(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
the Rights Agent in good faith believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise, transfer, split up, combination or exchange, the
certification on the form of assignment or form of election to purchase, as the
case may be, that has been completed to certify the holder is an Acquiring
Person (or an Affiliate or Associate thereof) has either not been completed or
in any manner indicates any other response thereto, the Rights Agent shall not
take any further action with respect to such requested exercise, transfer, split
up, combination or exchange, without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock of the Company or Preferred Stock (as to
which the Rights Agent has received prior written notice) by registered or
certified mail, and the Company shall mail notice thereof to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty 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 or Preferred Stock (as to which the Rights Agent has
received prior written notice) by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty 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 Person organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, authorized under such laws to exercise corporate trust
or stock transfer powers, and 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 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or 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 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
31
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its board of directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock of the Company following the
Distribution Date and prior to the Expiration Date, the Company (a) shall, with
respect to shares of Common Stock of the Company so issued or sold pursuant to
the exercise of stock options or under any employee benefit plan or arrangement
or upon the exercise, conversion or exchange of securities of the Company
currently outstanding or issued at any time in the future by the Company and (b)
may, in any other case, if deemed necessary or appropriate by the board of
directors of the Company issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued and this sentence shall be
unexercisable ab initio if, and to the extent that, such issuance or this
sentence would create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued or would create a significant risk of or result in such options' or
employee plans' or arrangements' failing to qualify for otherwise available
special tax treatment and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Company may, at its option, upon approval by the board of
directors, at any time on or prior to the Close of Business (or such later date
as may be determined by its board of directors) on the earlier of (i) the
Distribution Date or (ii) 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 of this Agreement (such redemption price
being hereinafter referred to as the "Redemption Price"), and the Company may,
at its option, pay the Redemption Price either in cash, shares of Common Stock
of the Company (based on the Current Per Share Market Price thereof at the time
of redemption), or any other form of consideration deemed appropriate by its
board of directors. The redemption of the Rights by the board of directors of
the Company may be made effective at such time on such basis and with such
conditions as the board of directors of the Company in its sole discretion may
establish. Any such redemption will be effective immediately upon the action of
the board of directors of the Company ordering the same, unless such action of
the board of directors of the Company expressly provides that such redemption
will be effective at a subsequent time or upon the occurrence or nonoccurrence
of one or more specified events (in which case such redemption will be effective
in accordance with the provisions of such action of the board of directors of
the Company).
(b) Immediately upon the effectiveness of the redemption of the Rights
pursuant to Section 23(a), without any further action or notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption (with a copy to the Rights Agent);
provided, however, that the failure to give, or any defect in, any such notice
shall
32
not affect the legality or validity of such redemption. Within 10 days after the
effectiveness of the redemption of the Rights, the Company shall give notice of
such redemption to the Rights Agent and shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Stock. Any
notice which is mailed in such manner shall be deemed given, whether or not the
holder receives the notice. Each notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 or other than in connection with the purchase
of shares of Common Stock prior to the Distribution Date.
(c) Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable pursuant to Section 7(a) at any time when
the Rights are redeemable hereunder.
Section 24. Exchange.
(a) The Company, at its option, upon approval by its board of directors,
at any time after any Person becomes an Acquiring Person, may exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become unexercisable pursuant to the provisions of Section 7(e)
hereof) for Units at an exchange ratio equal to, subject to adjustment to
reflect stock splits, stock dividends and similar transactions occurring after
the date hereof, that number obtained by dividing the Purchase Price by the then
Current Per Share Market Price per Unit on the earlier of (i) the date on which
any Person becomes an Acquiring Person and (ii) the date on which a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity) is commenced within the meaning of Rule 14d-2(a) of the Exchange
Act Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock of
the Company then outstanding (such exchange ratio being hereinafter referred to
as the "Section 24(a) Exchange Ratio"). Notwithstanding the foregoing, the
Company may not effect such exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan maintained
by the Company or any of its Subsidiaries, or any trustee or fiduciary with
respect to such plan acting in such capacity), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
shares of Common Stock of the Company then outstanding.
(b) Immediately upon the action of the board of directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 without any further action or notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Units equal to the number of such Rights held by such
holder multiplied by the Section 24(a) Exchange Ratio. The Company shall
promptly give public notice of any such exchange (with a copy provided to the
Rights Agent); provided, however, that the failure to give, or any defect in,
such notice shall not affect the legality or validity of such exchange. The
Company promptly shall mail a notice of any such
33
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner provided in this Agreement 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 Units 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 unexercisable pursuant to the provisions of
Section 7(e)) held by each holder of Rights.
(c) In the event that the number of shares of Preferred Stock authorized
by the Company's certificate of incorporation but not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Preferred Stock for issuance upon exchange of the
Rights or make adequate provision to substitute (1) cash, (2) Common Stock of
the Company or other equity securities of the Company, (3) debt securities of
the Company, (4) other assets, or (5) any combination of the foregoing, having
an aggregate value equal to the aggregate Current Per Share Market Price of the
Units that would otherwise be issuable in such exchange, all as determined by
the board of directors of the Company (which determination shall be described in
a statement filed with the Rights Agent and shall be conclusive and binding on
the Rights Agent, the holders of the Rights and all other Persons). To the
extent that the Company determines that some action need be taken pursuant to
Section 24(a), the board of directors of the Company may temporarily suspend the
exercisability of the Rights for a period of up to sixty days following the date
on which the event described in Section 24(a) shall have occurred, in order to
seek any authorization of additional shares of Preferred Stock and/or to decide
the appropriate form of distribution to be made pursuant to the above provision
and to determine the value thereof. Upon any such suspension, the Company shall
notify the Rights Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the supervision is no longer in effect (a copy of
which shall be provided to the Rights Agent).
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred Stock
rights or warrants to subscribe for or to purchase any additional Units or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding Preferred Stock),
(iv) to effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)), or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company or (vi) to declare or pay
any dividend on the Common Stock of the Company payable in shares of Common
Stock of the Company or to effect a subdivision, combination or consolidation of
the shares of Common Stock of the
34
Company (by reclassification or otherwise than by payment of dividends in shares
of Common Stock), then, in each such case, the Company shall give to the Rights
Agent and each holder of a Rights Certificate, in accordance with Section 26, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend or other distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock of the
Company and/or 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 (i) or
(ii) above at least ten 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 ten days prior to the earlier of (x) the date of
the taking of such proposed action and (y) the date of participation therein by
the holders of the shares of Common Stock of the Company and/or shares of
Preferred Stock.
(b) In case any of the events set forth in Section 11(a)(ii) shall occur,
then the Company shall as soon as practicable thereafter give to each holder of
a Rights Certificate, in accordance with Section 26, a notice of the occurrence
of such event, which notice shall describe such event and the consequences of
such event to holders of Rights under Section 11(a)(ii). In the event any Person
becomes an Acquiring Person, the Company will promptly notify the Rights Agent
thereof.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid or by telecopier, addressed (until another
address is filed in writing by the Company with the Rights Agent) as follows:
Discovery Partners International, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxx White & McAullife LLP
0000 Xx Xxxxx Xxxxxxx Xxxxx, 0(xx) Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sent by registered or certified
mail and shall be deemed given upon receipt and addressed (until another address
is filed in writing by the Rights Agent with the Company) as follows:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx, 0(xx) Xxxxx
00
Xxxxxxxx, Xxx Xxxx 00000
Attention: Vice President, 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.
Section 27. Supplements and Amendments. Prior to the Distribution
Date, the Company may supplement or amend this Agreement in any respect, without
the approval of any holders of Rights, by action of its board of directors. From
and after the Distribution Date, the Company may from time to time supplement or
amend this Agreement without the approval of any holders of Rights, by action of
its board of directors in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
including, without limitation, to change the Purchase Price, the Redemption
Price, any time periods herein specified, and any other term hereof, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights. Upon
receipt of a certificate from an appropriate officer of the Company that the
proposed supplement or amendment is consistent with this Section 27 and, after
such time as any Person has become an Acquiring Person, that the proposed
supplement or amendment does not adversely affect the interests of the holders
of Rights, the Rights Agent shall execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock of the Company outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of the Company 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
Exchange Act Regulations (or if such Rule is superseded, such provision of the
rule, regulation or statute that replaces such sentence). 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 of directors, or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations or calculations 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
36
(y) below, all omissions with respect to the foregoing), which are done or made
by the board of directors of the Company 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 Persons and (y) not subject the board of
directors of the Company to any liability to the holders of the Rights. The
Rights Agent shall be entitled to assume that the Board of Directors acted in
good faith and shall be fully protected and incur no liability in reliance
thereon.
Section 30. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, shares of Common Stock of the Company) 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, shares
of Common Stock of the Company).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the board of
directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the right of redemption set forth in Section 23
shall have expired, such right shall be reinstated and shall not expire until
the tenth Business Day following the date of such determination by the board of
directors of the Company.
Section 32. Governing Law. This Agreement 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 internal laws of the State of Delaware
applicable to contracts to be made and performed entirely within such state,
without regard to the choice-of-law or conflict-of-laws principles of any
jurisdiction.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Agreement.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
DISCOVERY PARTNERS INTERNATIONAL, INC.
By:/s/ Xxxxxxxx Xxxxxxxxx
----------------------
Xxxxxxxx Xxxxxxxxx
Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx Xxxxxx
Title: Vice President
38
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
DISCOVERY PARTNERS INTERNATIONAL, INC.,
FEBRUARY 13, 2003
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
----------------------------------
Discovery Partners International, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Corporation"), hereby certifies that the following resolution was
adopted by the board of directors of the Corporation as required by Section 151
of the General Corporation Law at a meeting duly called and held on February 13,
2003;
RESOLVED, that pursuant to the authority granted to and vested in
the board of directors of the Corporation (hereinafter the "Board") in
accordance with the provisions of the certificate of incorporation of the
Corporation, as currently in effect, the Board hereby creates a series of
Preferred Stock, par value $0.001 per share (the "Preferred Stock"), of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be ninety nine thousand (99,000). 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 Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
A-1
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, each holder of a share of Series A
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 of any
other junior stock, shall be entitled to receive, when declared by the Board out
of funds legally available for the purpose, dividends in an amount per share
(rounded to the nearest cent) equal to, 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. In the
event the Corporation shall, at any time after February 13, 2003 (the "Rights
Declaration Date"), declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock (and an equivalent dividend is not declared on
the Series A Preferred Stock or the Series A Preferred Stock is not similarly
subdivided or combined), then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under 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 shares
of Series A Preferred Stock as provided in Section 2(a) immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided, however, that, in no event shall a
dividend or distribution be declared by the Board on the Common Stock for which
it does not declare and pay the dividend required to be declared on the
Preferred Stock pursuant to Section 2(a).
(c) Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than sixty
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall, at any time after the Rights Declaration
Date, declare or pay any dividend on the Common Stock payable in shares of
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Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock (and an equivalent dividend is not declared on the
Series A Preferred Stock or the Series A Preferred Stock is not similarly
subdivided or combined), then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in the Certificate of
Incorporation, in any other Certificate of Designation creating a series of
Preferred Stock or any similar stock, or by law, the holders of shares of Series
A Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(c) Except as set forth herein, or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the shares of Series A Preferred Stock and all
such parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided, that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred
A-3
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board) to all holders of such shares upon such
terms as the Board, 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 Section 4(a), purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
certificate of incorporation, or in any other certificate of designation
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received the greater of (x) $1,000 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon to the
date of such payment (the "Series A Liquidation Preference") and (y) an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to the product of 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (ii) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall, at any time after the Rights Declaration Date
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock (and an equivalent dividend is not declared on the
Series A Preferred Stock or the Series A Preferred Stock is not similarly
subdivided or combined), then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (i) 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.
A-4
(b) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of Series A Preferred Stock and such
parity shares in proportion to their respective liquidation preferences.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or converted or changed into other
stock or securities, cash and/or any other property (or into the right to
receive any of the foregoing), then in any such case each share of Series A
Preferred Stock shall at the same time be similarly exchanged, converted or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is converted, changed or
exchanged. In the event the Corporation shall, at any time after the Rights
Declaration Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock (and an equivalent dividend is not declared on
the Series A Preferred Stock or the Series A Preferred Stock is not similarly
subdivided or combined), then in each such case the amount set forth in the
preceding sentence with respect to the conversion, exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The certificate of incorporation of the Corporation
shall not be amended, including any amendment through consolidation, merger,
combination or other transaction, in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least a majority of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
A-5
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation as of the date first written above.
DISCOVERY PARTNERS INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------
Xxxxxxxx Xxxxxxxxx
Chief Executive Officer
A-6
Exhibit B
Form of Rights Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER TEN YEAR ANNIVERSARY OF RECORD DATE OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE
OPTION OF THE COMPANY AT $19.00 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME UNEXERCISABLE IN THE CIRCUMSTANCES SPECIFIED
IN SUCH AGREEMENT]*
Rights Certificate
DISCOVERY PARTNERS INTERNATIONAL, 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 February 13, 2003 (the "Rights Agreement"), between
Discovery Partners International, Inc., a Delaware corporation (the "Company"),
and American Stock Transfer & Trust Company, as Rights Agent (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 p.m., New
York City time, on February 24, 2013 at the office of the Rights Agent
designated for such purpose, or at the office of its successor as Rights Agent,
one one-thousandth (a "Unit") of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, par value $0.001 per share (the "Series A
Preferred Stock") of the Company, at a purchase price of $19.00 per Unit of
Series A Preferred Stock (the "Purchase Price"), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and
certification duly executed and properly completed. The number of Rights
evidenced by this Rights Certificate (and the number of Units of Series A
Preferred Stock which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
February 13, 2003 based on the Series A
-----------------------
* The bracketed language is to be inserted in place of the preceding sentence
where applicable.
B-1
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of Units of Series A Preferred
Stock which may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment upon the happening
of certain events.
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities 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 executive offices of 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 Units of Series A 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 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.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at a redemption
price of $19.00 per Right.
No fractional shares of Series A Preferred Stock will be issued upon
the exercise of any Rights or Rights evidenced hereby (other than fractions
which are integral multiples of one one-thousandth of a share of Series A
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 Units of
Series A 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 Rights or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
B-2
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company and
its corporate seal. Dated as of _____.
DISCOVERY PARTNERS INTERNATIONAL, INC.,
By: _______________________________
Name: __________________________
Title: __________________________
Countersigned:
AMERICAN STOCK TRANSFER & TRUST
COMPANY,as Rights Agent
By: ____________________________
Authorized Signatory
Name: _____________________
Title: ____________________
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 Guaranteed:
Signatures must be guaranteed by a participant in an "eligible
guarantor institution" as defined in Rule 17Ad-5 promulgated under the
Securities Exchange Act of 1934, as amended.
B-4
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (each as defined in the Rights Agreement).
__________________
Signature
--------------------
NOTICE
The signature in the foregoing Form of Assignment must conform to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (each as defined in the
Rights Agreement) and such Assignment will not be honored.
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate.)
To Discovery Partners International, Inc.
The undersigned hereby irrevocably elects to exercise _____ Rights
represented by this Rights Certificate to purchase the Units of Series A
Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such Series A Preferred Stock be issued in the name of:
Please insert social security
or other identifying number_____________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number ____________________________________________________
(Please print name and address)
DATED: _______________ , ___
_______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in an "eligible
guarantor institution" as defined in Rule 17Ad-5 promulgated under the
Securities Exchange Act of 1934, as amended.
B-6
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (each as defined in the Rights Agreement).
_______________________
Signature
--------------------
NOTICE
The signature in the foregoing Form of Election to Purchase must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Election to Purchase, as the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights evidenced by this
Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (each as defined in the Rights Agreement) and such Election to Purchase
will not be honored.
B-7
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On February 13, 2003, the board of directors of Discovery Partners
International, Inc. (the "Company") declared a dividend distribution of one
right (a "Right") for each outstanding share of our common stock to stockholders
of record at the close of business on February 24, 2003. Each Right entitles the
registered holder to purchase from the Company one one-thousandth of a share of
our Series A Junior Participating preferred stock, par value $0.01 per share
(the "Preferred Stock"), at a purchase price of $19.00, subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and American Stock Transfer & Trust
Company, 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 "Distribution Date"). The Distribution
Date will occur on the earlier of (i) ten days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has (subject to certain exceptions) acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of our
common stock (the "Share Acquisition Date"), other than as a result of
repurchases of stock by the Company, or (ii) ten days (or a later date that the
board shall determine) following the commencement of, or public announcement of
an intention to make, a tender offer or exchange offer that would result in a
person or group beneficially owning 15% or more of the outstanding shares of our
common stock. We have separately provided that Applera Corporation's current
holdings (plus an additional 1% of our outstanding stock) will not cause Applera
to be an Acquiring Person nor cause a Share Acquisition Date to occur.
Until the Distribution Date, (i) the Rights will be evidenced by the
common stock certificates and will be transferred with and only with our common
stock certificates, (ii) new common stock certificates issued after the record
date will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for common stock
outstanding will also constitute the transfer of the Rights associated with the
common stock represented by such certificate. Pursuant to the Rights Agreement,
the company reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a number
of Rights be exercised so that only whole shares of preferred stock will be
issued.
The Rights can not be exercised until the Distribution Date and will
expire at the close of business on February 24, 2013, unless earlier redeemed by
the Company as described below.
Shortly after the Distribution Date, Rights certificates would be
mailed to record holders of our common stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights certificates alone will
represent the Rights. Unless our board of directors decides differently, only
shares of our common stock issued before the Distribution Date will be issued
with Rights.
C-1
If an Acquiring Person becomes (subject to certain exceptions) the
beneficial owner of 15% or more of the then outstanding shares of common stock
(other than pursuant to an offer for all the outstanding shares of common stock
that our board of directors determines to be fair to and otherwise in the best
interests of the Company and its stockholders), each holder of a Right will
thereafter have the right to receive, upon exercise, preferred stock (or, in
certain circumstances, cash, property or other securities of the company) having
a value equal to two times the exercise price of the Right. If, at any time
after the Stock Acquisition Date, (i) we are acquired in a merger or other
business combination transaction in which we are not the surviving corporation,
other than a merger that results from an offer for all the outstanding shares of
common stock that our board decides is fair and in the best interests of the
Company and its stockholders, or (ii) 50% or more of our assets, cash flow or
earning power is sold or transferred, each holder of a Right, except Rights
which previously have been voided, will have the right to receive, after
exercise of the Right, common stock of the company that acquires us having a
value equal to two times the exercise price of the Right. The events described
in this paragraph are "Triggering Events."
For example, at an exercise price of $19.00 per Right, each Right
not owned by an Acquiring Person (or by certain related parties) following a
Triggering Event would entitle its holder to purchase $38.00 worth of preferred
stock (or other consideration, as noted above) for $19.00. Assuming that our
common stock had a per share value of $10.00 at such time, the holder of each
valid Right would be entitled to purchase preferred stock that would be
economically equivalent to 3.8 shares of our common stock for $19.00.
All Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will not
be exercisable. At any time after a person becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
common stock, the board may exchange the Rights (other than Rights owned by the
person or group which will not be exercisable), in whole or in part, at an
exchange ratio of one share of common stock, or one one-thousandth of a share of
preferred stock (or of a share of a class or series of our preferred stock
having equivalent rights, preferences and privileges), per Right.
At any time until ten days following the Share Acquisition Date, the
board may redeem the Rights in whole, but not in part, at a price of $0.01 per
Right (payable in cash, common stock or other consideration deemed appropriate
by the board). Immediately upon the action of the board ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $0.01 redemption price.
Until a Right is exercised, the holder of a Right will have no
rights by virtue of ownership as a stockholder of the company, such as the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for preferred stock (or other consideration) of the company or for
common stock of the acquiring company.
Any of the provisions of the Rights Agreement may be amended by the
board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights
C-2
Agreement may be amended by the board in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights, or to
shorten or lengthen any time period under the Rights Agreement, but no amendment
may be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an exhibit to a Current Report on Form 8-K. 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
