EXHIBIT 4.1
RIGHTS AGREEMENT
by and between
NOVEN PHARMACEUTICALS, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
-----------------
Dated as of
November 6, 2001
TABLE OF CONTENTS
Section Page
------- ----
Section 1. Certain Definitions............................................................... 1
Section 2. Appointment of Rights Agent....................................................... 7
Section 3. Issuance of Right Certificates.................................................... 7
Section 4. Form of Right Certificates........................................................ 9
Section 5. Countersignature and Registration................................................. 9
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates...................................... 10
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights; Invalidation of
Certain Rights.................................................................... 11
Section 8. Cancellation and Destruction of Right Certificates................................ 13
Section 9. Reservation and Availability of Shares of Preferred Stock......................... 13
Section 10. Preferred Stock Record Date....................................................... 14
Section 11. Adjustment of Exercise Price or Number of Shares.................................. 15
Section 12. Certification of Adjusted Exercise Price or Number of Shares...................... 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.............. 21
Section 14. Fractional Rights and Fractional Shares........................................... 25
Section 15. Rights of Action.................................................................. 26
Section 16. Agreement of Right Holders........................................................ 26
Section 17. Right Certificate Holder Not Deemed a Stockholder................................. 27
Section 18. Concerning the Rights Agent....................................................... 27
Section 19. Merger or Consolidation of, or Change in Name of, the Rights Agent................ 27
Section 20. Duties of Rights Agent............................................................ 28
Section 21. Change of Rights Agent............................................................ 30
Section 22. Issuance of New Right Certificates................................................ 31
Section 23. Redemption........................................................................ 31
Section 24. Notice of Proposed Actions........................................................ 32
Section 25. Notices........................................................................... 33
Section 26. Supplements and Amendments........................................................ 34
i
TABLE OF CONTENTS
(CONT'D)
Section Page
------- ----
Section 27. Exchange.......................................................................... 34
Section 28. Successors........................................................................ 35
Section 29. Benefits of this Agreement........................................................ 36
Section 30. Delaware Contract................................................................. 36
Section 31. Counterparts...................................................................... 36
Section 32. Descriptive Headings.............................................................. 36
Section 33. Severability...................................................................... 36
Section 34. Determinations and Actions by the Board of Directors.............................. 36
Exhibit A - Summary of Rights
Exhibit B - Form of Right Certificate
Exhibit C - Form of Certificate of Designations of Series A Junior
Participating Preferred Stock
ii
RIGHTS AGREEMENT
Rights Agreement (this "AGREEMENT"), dated as of November 6, 2001, by
and between Noven Pharmaceuticals, Inc., a Delaware corporation (the
"CORPORATION"), and American Stock Transfer & Trust Company, a corporation
organized under the laws of the State of New York (the "RIGHTS AGENT").
WITNESSETH:
WHEREAS, on November 6, 2001, the Board of Directors of the
Corporation, authorized the issuance of, and declared, a dividend payable in one
right (a "RIGHT") for each share of common stock, $0.0001 par value per share
("COMMON STOCK"), of the Corporation outstanding as of close of business on
November 19, 2001 (the "RECORD DATE"), each such Right representing the right to
purchase one one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Corporation ("PREFERRED STOCK") having the rights and
preferences set forth in the form of Certificate of Designations attached hereto
as Exhibit C duly adopted by the Board of Directors of the Corporation on
November 6, 2001, upon the terms and subject to the conditions hereinafter set
forth; and
WHEREAS, on such date, the Board of Directors of the Corporation
further authorized the issuance of one Right (subject to adjustment) with
respect to each share of Common Stock which may be issued between the Record
Date and the earliest to occur of the Distribution Date, the Expiration Date or
the Final Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to shares of Common Stock that
shall become outstanding after the Distribution Date and prior to the Expiration
Date in accordance with Section 22 hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms shall have the meanings provided by this Section 1, any
capitalized term defined in this Section 1 and used in the following definitions
having the meaning provided by this Section 1:
(a) "ACQUIRING PERSON" shall mean any Person who or
which, together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 15% or more of the Voting Stock then
outstanding; provided, however, that an Acquiring Person shall not
include: (i) an Exempt Person; (ii) any Person who or which, together
with all Affiliates and Associates of such Person, would be an
Acquiring Person solely by reason of (A) being the Beneficial Owner of
shares of Voting Stock, the Beneficial Ownership of which was acquired
by such Person (together with all Affiliates and Associates of such
Person) pursuant to any action or transaction or series of related
actions or transactions approved by the
Board of Directors of the Corporation before such Person (together with
all Affiliates and Associates of such Person) otherwise became an
Acquiring Person or (B) a reduction in the number of issued and
outstanding shares of Voting Stock pursuant to a transaction or a
series of related transactions approved by the Board of Directors of
the Corporation; provided, further, that in the event a Person
described in this clause (ii) does not become an Acquiring Person by
reason of subclause (A) or (B) of this clause (ii), such Person
nonetheless shall become an Acquiring Person in the event such Person
(together with all Affiliates and Associates of such Person) thereafter
acquires Beneficial Ownership of an additional 1% or more of the Voting
Stock, unless the acquisition of such additional Voting Stock would not
result in such Person becoming an Acquiring Person by reason of
subclause (A) or (B) of this clause (ii). Notwithstanding the
foregoing, if the Board of Directors of the Corporation determines in
good faith that a Person who would otherwise be an "Acquiring Person"
as defined pursuant to the foregoing provisions of this paragraph (a)
has become such inadvertently, and such Person divests as promptly as
practicable (as determined in good faith by the Board of Directors of
the Corporation) a sufficient number of shares of Voting Stock so that
such Person would no longer be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed an "Acquiring Person" for any purposes of
this Agreement.
(b) "AFFILIATE" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement.
(c) "ASSOCIATE" of a Person shall mean (i) with respect
to a corporation, any officer or director thereof or any Associate of
any Subsidiary thereof, or any Beneficial Owner of 10% or more of any
class of equity security thereof, (ii) with respect to an association,
any officer or director thereof or any Associate of a Subsidiary
thereof, (iii) with respect to a partnership, any general partner
thereof or any limited partner thereof who is, directly or indirectly,
the Beneficial Owner of a 10% or greater ownership interest therein,
and any Associate of any Subsidiary thereof, (iv) with respect to a
limited liability company, any manager or managing member thereof and
any Beneficial Owner of 10% or more or any class of membership interest
therein or other equity security thereof, and any Associate of any
Subsidiary thereof, (v) with respect to a business trust, any officer
or trustee thereof or any Associate of any Subsidiary thereof, (vi)
with respect to any other trust or an estate, any trustee, executor or
similar fiduciary and any Person who has a 15% or greater interest as a
beneficiary in the income from or principal of such trust or estate,
(vii) with respect to a natural person, the parents and children
thereof and
2
any spouse or relative thereof, or any relative of such spouse, who has
the same home as such person, and (viii) any Affiliate of such Person.
(d) A person shall be deemed the "BENEFICIAL OWNER" of,
or to "BENEFICIALLY OWN", any securities (and correlative terms shall
have correlative meanings):
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, for purposes of Section 13(d) of the Exchange Act
and Regulations 13D and 13G thereunder, in each case as in
effect on the date of this Agreement; or
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time or the fulfillment of a condition or both)
pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of
conversion rights, exchange rights, other rights (other than
the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own", securities tendered
pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange or
(B) the right to vote, alone or in concert with others,
pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to
a proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under
the Exchange Act and (2) is not at the time reportable by such
Person on a Schedule 13D report under the Exchange Act (or any
comparable or successor report), other than by reference to a
proxy or consent solicitation being conducted by such Person;
or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except as described
in clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Corporation; provided,
however, that for purposes of determining Beneficial Ownership
of securities under this
3
Agreement, officers and directors of the Corporation
solely by reason of their status as such shall not
constitute a group (notwithstanding that they may be
Associates of one another or may be deemed to
constitute a group for purposes of Section 13(d) the
Exchange Act) and shall not be deemed to own shares
owned by another officer or director of the
Corporation.
Notwithstanding anything in this paragraph (d) to the
contrary, a Person engaged in the business of underwriting
securities shall not be deemed the "Beneficial Owner" of, or
to "Beneficially Own," any securities acquired or otherwise
beneficially owned in good faith in a firm commitment
underwriting until the expiration of forty days after the date
of the sale of securities to the public pursuant to such firm
commitment underwriting.
(e) "BUSINESS DAY" shall mean any day other than
a Saturday, Sunday, or a day on which banking institutions in
the State of New York or the state in which the principal
office of the Rights Agent are authorized or obligated by law
or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall
mean 5:00 P.M., 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.
(g) "COMMON STOCK" when used with reference to
the Corporation shall collectively mean the Common Stock of
the Corporation as defined in the first recital hereof and any
other common stock of the Corporation into or for which it is
changed, converted or exchanged. "COMMON STOCK" when used with
reference to any Person other than the Corporation which shall
be organized in corporate form shall mean the capital shares
or other equity security having of all classes of capital
shares or equity securities of such corporation the greatest
aggregate voting power in the election of directors. "COMMON
STOCK" when used with reference to any Person which shall not
be organized in corporate form shall mean units of beneficial
interest in the profits or losses of such Person or other
equity security of such Person having of all classes of equity
securities of such Person the greatest aggregate voting power
in the election of the directors, trustees, managers or other
Persons performing like governance functions for such Person.
(h) "CORPORATION" shall have the meaning
provided at the beginning hereof; provided, however, that
"Corporation" shall also include any successors to the
Corporation as provided by Section 28 hereof and shall mean a
Principal Party as provided by Section 13(a) and 13(b)hereof.
4
(i) "DISTRIBUTION DATE" shall have the meaning
set forth in Section 3(b) hereof.
(j) "EXCHANGE ACT" shall mean the Securities
Exchange Act of 1934, as amended.
(k) "EXCHANGE RATIO" shall have the meaning set
forth in Section 27 hereof.
(l) "EXEMPT PERSON" shall mean (i) the
Corporation, (ii) any Subsidiary of the Corporation, or (iii)
any employee benefit plan or employee stock plan of the
Corporation or any Subsidiary of the Corporation, or any trust
or other entity organized, appointed, established or holding
Voting Stock for or pursuant to the terms of any such plan.
(m) "EXERCISE PRICE" shall have the meaning set
forth in Section 4 hereof.
(n) "EXPIRATION DATE" shall have the meaning set
forth in Section 7(a) hereof.
(o) "FAIR MARKET VALUE" of any property shall
mean the fair market value of such property as determined in
accordance with Section 11(b) hereof.
(p) "FINAL EXPIRATION DATE" shall have the
meaning set forth in Section 7(a) hereof.
(q) "NASDAQ" shall have the meaning set forth in
Section 11(b) hereof.
(r) "PERSON" shall mean any individual, company,
firm, corporation or other entity.
(s) "PRINCIPAL PARTY" shall have the meaning set
forth in Section 13(b) hereof.
(t) "REDEMPTION PRICE" shall have the meaning
set forth in Section 23(a) hereof.
(u) "RIGHT CERTIFICATE" shall have the meaning
set forth in Section 3(d) hereof.
(v) "SECURITIES ACT" shall mean the Securities
Act of 1933, as amended.
5
(w) "SPREAD" shall mean the excess of (1) the
Fair Market Value of Preferred Stock issuable upon the
exercise of a Right in accordance with Section 11(a)(ii) over
(2) the Exercise Price in effect at the time of determination
of the Spread.
(x) "STOCK ACQUISITION DATE" shall mean the
first date on which there shall be a public announcement by
the Corporation or an Acquiring Person that an Acquiring
Person has become such (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) or such earlier
date as a majority of the Board of Directors of the
Corporation shall become aware of the existence of an
Acquiring Person as confirmed by action of the Board of
Directors of the Corporation taken by the affirmative vote of
a majority of the Board of Directors of the Corporation.
(y) "SUBSIDIARY" of a Person shall mean any
corporation or other entity of which securities or other
ownership interests having ordinary voting power sufficient to
elect a majority of the board of directors of such corporation
or other entity or other persons performing similar functions
are beneficially owned, directly or indirectly, by such Person
or by any corporation or other entity that is otherwise
controlled by such Person.
(z) "SUMMARY OF RIGHTS" shall have the meaning
set forth in Section 3(a) hereof.
(aa) "TRADING DAY" shall have the meaning set
forth in Section 11(b) hereof.
(bb) "TRANSFER TAX" shall mean any tax or charge,
including any documentary stamp tax, imposed or collected by
any governmental or regulatory authority in respect of any
transfer of any security, instrument or right, including the
Rights, shares of the Common Stock and shares of the Preferred
Stock.
(cc) "VOTING STOCK" shall mean (i) the Common
Stock of the Corporation and (ii) any other shares of capital
stock of the Corporation entitled to vote generally in the
election of directors or entitled generally to vote together
with the Common Stock in respect of a merger, consolidation,
sale of all or substantially all of the Corporation's assets,
liquidation, dissolution or winding up. For purposes of this
Agreement, a stated percentage of the Voting Stock shall mean
a number of shares of the Voting Stock as shall equal in
voting power that stated percentage of the total voting power
of the then outstanding shares of Voting Stock in the election
of a majority of the Board of Directors of the Corporation or
in
6
respect of a merger, consolidation, sale of all or substantially all of
the Corporation's assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of the
Corporation for purposes of applying the definitions contained in this
Section 1 shall be made by a majority of the Board of Directors of the
Corporation in its good faith judgment, which determination shall be
binding on the Rights Agent and the holders of the Rights.
Section 2. Appointment of Rights Agent. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date be the holders of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable, upon ten (10) days prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent.
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Corporation or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "SUMMARY OF RIGHTS"),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the Record Date, at the address of such holder shown on the records of the
Corporation.
(b) Until the Close of Business on the day which is the earlier of
(i) the tenth day after the Stock Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the Board of Directors
of the Corporation prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement by any Person (other than an Exempt Person)
of a tender or exchange offer upon the successful consummation of which such
Person, or any Affiliate or Associate of such Person, would be an Acquiring
Person (including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the "DISTRIBUTION DATE"), (x) the Rights shall be evidenced by
the certificates for Common Stock (or in the case of uncertificated shares of
Common Stock, by the book-entry account that evidences record ownership for such
shares) registered in the names of the holders of Common Stock (together with,
in the case of certificates for Common Stock outstanding as of the Record Date,
the Summary of Rights) and not by separate Right certificates and the record
holders of such certificates (or such book-entry accounts) for Common Stock
shall be the record holders of the Rights represented thereby and (y) each Right
shall be transferable only simultaneously and together with the transfer of a
share of Common Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Expiration Date or Final Expiration
Date), the surrender for transfer of any certificate for
7
Common Stock (or the effectuation of a book-entry transfer of shares of Common
Stock) shall constitute the surrender for transfer of the Right or Rights
associated with the Common Stock evidenced thereby, whether or not accompanied
by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common
Stock that become outstanding after the Record Date but prior to the earliest of
the Distribution Date, the Expiration Date or the Final Expiration Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Corporation's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date, or the Final Expiration
Date shall have impressed, printed, written or stamped thereon or otherwise
affixed thereto the following legend:
This certificate also evidences and entitles the
holder hereof to the same number of Rights (subject to
adjustment) as the number of shares of Common Stock
represented by this certificate, such Rights being on the
terms provided under the Rights Agreement by and between
Noven Pharmaceuticals, Inc. and American Stock Transfer &
Trust Company (the "Rights Agent"), dated as of November 6,
2001, as it may be amended from time to time (the
"Agreement"), the terms of which are incorporated herein by
reference and a copy of which is on file at the principal
executive offices of Noven Pharmaceuticals, Inc. Under
certain circumstances, as set forth in the Agreement, such
Rights shall be evidenced by separate certificates and shall
no longer be evidenced by this certificate. Noven
Pharmaceuticals, Inc. shall mail to the registered holder of
this certificate a copy of the Agreement without charge
within five days after receipt of a written request therefor.
As provided in Section 7(e) of the Agreement, Rights issued
to or Beneficially Owned by Acquiring Persons or their
Affiliates or Associates (as such terms are defined in the
Agreement) or any subsequent holder of such Rights shall be
null and void and may not be exercised by or transferred to
any Person.
With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Corporation purchases or
otherwise acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
canceled and retired so that the Corporation shall not be entitled to exercise
any Rights associated with the Common Stock which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall not affect
the enforceability of any part of this Agreement or the rights of any holder of
the Rights.
8
(d) As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will countersign, and the
Corporation will send or cause to be sent (and the Rights Agent will, if
requested, send), by first class mail, postage prepaid, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date, as shown
by the records of the Corporation, at the address of such holder shown on such
records, a certificate in the form provided by Section 4 hereof (a "RIGHT
CERTIFICATE"), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. As of and after the Distribution Date,
the Rights shall be evidenced solely by Right Certificates and may be
transferred by the transfer of the Right Certificate as permitted hereby,
separately and apart from any transfer of one or more shares of Common Stock.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Stock or the Rights may from time to time be listed
or as the Corporation may deem appropriate to conform to usage or otherwise and
as are not inconsistent with the provisions of this Agreement. Subject to the
provisions of Section 22 hereof, Right Certificates evidencing Rights whenever
issued, (i) shall be dated as of the date of issuance of the Rights they
represent and (ii) subject to adjustment from time to time as provided herein,
on their face shall entitle the holders thereof to purchase such number of one
one-thousandths of a share (including fractional shares which are integral
multiples of one-thousandth of a share) of Preferred Stock as shall be set forth
thereon at the price per one one-thousandth of a share of Preferred Stock
payable upon exercise of a Right provided by Section 7(b) hereof, as the same
may from time to time be adjusted as provided herein (the "EXERCISE PRICE").
Section 5. Countersignature and Registration.
(a) Each Right Certificate shall be executed on behalf of the
Corporation by its Chairman of the Board, President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Corporation's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either manually or by
facsimile signature. Each Right Certificate shall be countersigned by the Rights
Agent either manually or by facsimile signature and shall not be valid for any
purpose unless so countersigned. In case any officer of the Corporation who
shall have signed any Right Certificate shall cease to be such officer of the
Corporation before countersignature by the Rights Agent and issuance and
delivery of the certificate by the Corporation, such Right Certificate,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Corporation. Any Right
Certificate may be signed on behalf of the Corporation by any person who, on the
date of the execution of such Right Certificate, shall be a proper officer of
the
9
Corporation to sign such Right Certificate, although at the date of the
execution of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f) and 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Right Certificate, may be (i) transferred or (ii)
split up, combined or exchanged for one or more other Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a share of Preferred Stock as the Right Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
surrender the Right Certificate at the office of the Rights Agent designated for
the surrender of Right Certificates with the form of certificate and assignment
on the reverse side thereof duly endorsed (or enclose with such Right
Certificate a written instrument of transfer in form satisfactory to the
Corporation and the Rights Agent), duly executed by the registered holder
thereof or his attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or exchange any
Right Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate to be split up, combined or
exchanged at the office of the Rights Agent designated therefor. Thereupon, the
Rights Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Corporation may require payment of a sum sufficient to cover any Transfer
Tax that may be imposed in connection with any transfer, split up, combination
or exchange of any Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14
hereof, at any time after the Distribution Date and prior to the Expiration
Date, upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Corporation,
reimbursement to the Corporation and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Corporation shall cause a new Right
Certificate of like tenor to be issued and delivered to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
10
Section 7. Exercise of Rights; Exercise Price; Expiration Date
of Rights; Invalidation of Certain Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e), 23(a) and 27(b) hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the designated office
of the Rights Agent in New York, together with payment of the Exercise Price for
each Right exercised (as the same may have been adjusted as hereinafter
provided), at or prior to the Close of Business on the earlier of (i) November
6, 2011 (the "FINAL EXPIRATION DATE") or (ii) the date on which the Rights are
redeemed as provided in Section 23 hereof or the date on which the Rights are
exchanged as provided in Section 27 hereof (such earlier date being herein
referred to as the "EXPIRATION DATE").
(b) The Exercise Price shall initially be $110.00 for each one
one-thousandth (1/1000) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of one one-thousandths of
a share of Preferred Stock or other securities or property to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof. The Exercise Price shall be payable in lawful
money of the United States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase and certificate duly executed, accompanied by payment by certified
check, cashier's check, bank draft or money order payable to the Corporation or
the Rights Agent of the Exercise Price for the shares of Preferred Stock to be
purchased and an amount equal to any applicable Transfer Tax required to be paid
by the holder of the Right Certificate in accordance with Section 9(e) hereof,
the Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Preferred Stock of the Corporation one or more certificates
representing the number of shares of Preferred Stock to be so purchased, and the
Corporation hereby authorizes and directs such transfer agent to comply with all
such requests, (ii) as provided in Section 14(b) hereof, at the election of the
Corporation, cause depositary receipts to be issued in lieu of fractional shares
of Preferred Stock, (iii) if the election provided for in the immediately
preceding clause (ii) has not been made, requisition from the Corporation the
amount of cash to be paid in lieu of the issuance of fractional shares (other
than fractions that are integral multiples of one one-thousandth of a share) in
accordance with Section 14(b) hereof, (iv) after receipt of such Preferred Stock
certificates and, if applicable, depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (v) when appropriate, after receipt, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate; provided,
however, that in the case of a purchase of securities other
11
than Preferred Stock, pursuant to Section 13 hereof, the Rights Agent shall
promptly take the appropriate actions corresponding in such case to that
referred to in the foregoing clauses (i) through (v) of this Section 7(c).
Notwithstanding the foregoing provisions of this Section 7(c), the Corporation
may suspend the issuance of shares of Preferred Stock and other securities upon
exercise of a Right for a reasonable period, not in excess of 90 days, during
which the Corporation seeks to register under the Securities Act, and any
applicable securities law of any other jurisdiction, the shares of Preferred
Stock or other securities to be issued pursuant to the Rights; provided,
however, that nothing contained in this Section 7(c) shall relieve the
Corporation of its obligations under Section 9(d) hereof. Upon any such
suspension, the Corporation shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or his
assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Agreement to the
contrary, from and after the time (the "INVALIDATION TIME") when any Person
first becomes an Acquiring Person, any Rights that are Beneficially Owned by (x)
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person),
(y) a transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person (or any such Associate or Affiliate) to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors of the Corporation has
determined is part of a plan, arrangement or understanding which has the purpose
or effect of avoiding the provisions of this Section 7(e), and subsequent
transferees of such Persons referred to in clause (y) and (z) above, shall be
null and void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
Section 3 hereof that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof whose Rights would be null and void
pursuant to the provisions of this Section 7(e); no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person (or an
Affiliate or Associate of such Acquiring Person) whose Rights would be null and
void pursuant to the provisions of this Section 7(e) or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person (or an Associate or Affiliate of such Acquiring Person)
whose Rights would be void pursuant to the provisions of this Section 7(e) shall
be cancelled. The Corporation shall use all reasonable efforts to ensure that
the provisions
12
of this Section 7(e) are complied with, but it shall have no liability to any
holder of Right Certificates or any other Person as a result of its failure to
make any determination with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof and such other information as the Corporation or the Rights Agent shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Corporation or to any
of its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Corporation shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall cancel
and retire, any Right Certificate purchased or acquired by the Corporation
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Corporation, or shall, at the written
request of the Corporation, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the Corporation.
Section 9. Reservation and Availability of Shares of
Preferred Stock.
(a) The Corporation covenants and agrees that it will cause to be
reserved and kept available out of the authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock held
in its treasury, such number of shares of Preferred Stock as will from time to
time be sufficient to permit the exercise in full of all outstanding Rights.
(b) The Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance in accordance with this Agreement to be listed,
upon official notice of issuance, upon the principal national securities
exchange, if any, upon which the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation in the National Association of Securities Dealers'
Automated Quotation System or any successor thereto or other comparable
quotation system.
(c) The Corporation covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
delivered upon exercise
13
of Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Exercise Price in respect thereof), be duly and
validly authorized and issued and fully paid and nonassessable shares.
(d) The Corporation shall use its best efforts to (i) file, as
soon as practicable following the occurrence of the event described in Section
11(a)(ii), 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 shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (a) the date as of
which the Rights are no longer exercisable for Preferred Stock and (b) the
earlier of the Expiration Date and the Final Expiration Date. The Corporation
may temporarily suspend, for a period of time not to exceed ninety days, the
issuance of shares of Preferred Stock upon exercise of a Right in order to
prepare and file a registration statement under the Securities Act and permit it
to become effective. The Corporation 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
in such jurisdiction shall have been obtained and until a registration statement
under the Securities Act (if required) shall have been declared effective.
(e) The Corporation covenants and agrees that it will pay when due
and payable any and all United States federal and state Transfer Taxes which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock issued or delivered upon the exercise of
Rights. The Corporation shall not, however, be required to pay any Transfer Tax
which may be payable in respect of any transfer or delivery of a Right
Certificate to a Person other than, or the issuance or delivery of certificates
for Preferred Stock upon exercise of Rights in a name other than that of, the
registered holder of the Right Certificate, and the Corporation shall not be
required to issue or deliver a Right Certificate or certificate for Preferred
Stock to a Person other than such registered holder until any such Transfer Tax
shall have been paid (any such Transfer Tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Corporation's satisfaction that no such Transfer Tax is due.
(f) The requirements of this Section 9 shall apply to shares of
Common Stock of the Corporation if the Corporation has elected in accordance
with Section 11(a)(iii) hereof to substitute shares of Common Stock for shares
of Preferred Stock that otherwise may be purchased upon the exercise of Rights.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Stock
14
represented thereby on, and such certificate shall be dated as of, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable Transfer Taxes) was made;
provided, however, that, if the date of such surrender and payment is a date
upon which the Preferred Stock transfer books of the Corporation are closed,
such Person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated as of, the next succeeding Business Day on
which the Preferred Stock transfer books of the Corporation are open.
Section 11. Adjustment of Exercise Price or Number of Shares. The
Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after
the date of this Agreement (A) declare or pay any dividend on Common
Stock payable in shares of Common Stock, (B) subdivide or split the
outstanding shares of Common Stock into a greater number of shares or
(C) combine or consolidate the outstanding shares of Common Stock into
a smaller number of shares or effect a reverse split of the outstanding
shares of Common Stock, then and in each such event the number of one
one-thousandths of a share of Preferred Stock issuable upon the
exercise of a Right after the record date for such event (if one shall
have been established or, if not, after the date of such event) shall
be the number of one one-thousandths of a share of Preferred Stock
issuable immediately prior to such event multiplied by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such
event, and the Exercise Price to be in effect after the record date for
such event (if one shall have been established or, if not, after the
date of such event) shall be determined by multiplying the Exercise
Price in effect immediately prior to such event by such fraction. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 27 hereof, in the event that any
Person shall become an Acquiring Person, then, subject to the last
sentence of Section 23(a) hereof and except as otherwise provided in
this Section 11, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive upon
exercise of such Right in accordance with the terms of this Agreement
and payment of the Exercise Price, such number of one one-thousandths
of a share of Preferred Stock as shall equal the result obtained by
(1) multiplying the then current Exercise Price by the number of one
one-thousandths of a share of
15
Preferred Stock for which a Right would, absent adjustment pursuant to
this Section 11(a)(ii), be then exercisable and dividing the product by
(2) 50% of the proportionate Fair Market Value of one one-thousandth of
a share of the Preferred Stock (determined pursuant to Section 11(b)
hereof) on the Stock Acquisition Date in respect of such event;
provided, however, if the transaction that would otherwise give rise to
the foregoing adjustment is also subject to the provisions of Section
13 hereof, then only the provisions of Section 13 hereof shall apply
and no adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the Corporation does not have
available sufficient authorized but unissued Preferred Stock to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Corporation shall take all such action as may be
necessary to authorize and reserve for issuance such number of
additional shares of Preferred Stock as may from time to time be
required to be issued upon the exercise in full of all Rights from time
to time outstanding and, if necessary, shall use its best efforts to
obtain stockholder approval thereof. In lieu of issuing shares of
Preferred Stock in accordance with the foregoing subparagraph (ii), the
Corporation may, if the Board of Directors of the Corporation
determines that such action is necessary or appropriate, elect to issue
or pay, upon the exercise of the Rights, cash, property, shares of
Preferred Stock or Common Stock, or any combination thereof, having an
aggregate Fair Market Value equal to the Fair Market Value of the
shares of Preferred Stock which otherwise would have been issuable
pursuant to Section 11(a)(ii) hereof as of the date the Board of
Directors of the Corporation makes such election (which Fair Market
Value shall be determined as provided by Section 11(b) hereof). Subject
to Section 23 hereof, any such election by the Board of Directors of
the Corporation must be made and publicly announced within thirty (30)
days after the date on which the event described in Section 11(a)(ii)
occurs and shall be applicable with respect to all Rights exercised
after such public announcement. Notice of such election shall promptly
be given to the Rights Agent.
(b) For the purpose of this Agreement, the "FAIR MARKET VALUE" of
any share of Preferred Stock, Common Stock or any other stock or any Right or
other security or any other property on any date shall be determined as provided
in this Section 11(b). In the case of a publicly traded (as such term is
hereinafter defined) stock or other security, the Fair Market Value thereof on
any date shall be deemed to be the average of the daily closing prices per share
of such stock or per unit of such other security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to but not
including such date; provided, however, that in the event that the Fair Market
Value of any share of Common Stock is to be determined as of a date that is
within 30 Trading Days after (i) the ex-dividend date for a dividend or
distribution on the Common
16
Stock payable in shares of Common Stock or securities convertible into shares of
Common Stock or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of the Common Stock,
then, and in each such case, the Fair Market Value shall be appropriately
adjusted by the Board of Directors of the Corporation to take into account such
dividend, distribution, subdivision, split, combination, consolidation, reverse
stock split or reclassification. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or, if
the securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange
(which, if approved by the Board of Directors of the Corporation, may be a
securities exchange of a country other than the United States of America) on
which such security is listed or admitted to trading; or, if not listed or
admitted to trading on any such national securities exchange, the last quoted
price (or, if not so quoted, the average of the high bid and low asked prices)
in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
quotation reporting system then in use in the United States of America; or, if
no bids for such security are so quoted, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in such
security selected by the Board of Directors of the Corporation. The term
"TRADING DAY" shall mean a day on which the principal national securities
exchange on which such security is listed or admitted to trading is open for the
transaction of business or, if such security is not listed or admitted to
trading on any national securities exchange, a Business Day. For purposes of
this Section 11(b), a stock or other security shall be considered "PUBLICLY
TRADED" only (i) if registered under Section 12 of the Exchange Act or exempt
from such registration pursuant to Section 12(g)(2)(B), (C) or (G) of the
Exchange Act or (ii) if traded on a national securities exchange of a country
other than the United States of America approved by the Board of Directors of
the Corporation or (iii) if, in the judgment of the Board of Directors of the
Corporation, there is sufficient active trading in such stock or other security
that reported trading transactions therein fairly reflect the fair market value
thereof. If a security is not publicly traded, "Fair Market Value" shall mean
the fair value per share of stock or per other unit of such other security, as
determined by an independent investment banking firm experienced in the
valuation of securities selected in good faith by the Board of Directors of the
Corporation, or, if no such investment banking firm is, in the good faith
judgment of the Board of Directors of the Corporation, available to make such
determination, as determined in good faith by the Board of Directors of the
Corporation; provided, however, that for purposes of making the adjustment
provided for by Section 11(a)(ii) hereof, the Fair Market Value of a share of
Preferred Stock, unless the Preferred Stock shall at the time be publicly traded
(in which case its Fair Market Value shall be determined pursuant to the
foregoing provisions of this Section 11(b)), shall be 100% of the product of the
Fair Market Value of a share of Common Stock multiplied by the higher of the
then Dividend Multiple or Vote Multiple applicable to the Preferred Stock
17
(as defined in the certificate of designations of the Corporation relating to
the Preferred Stock); provided, however, that the Board of Directors of the
Corporation may, by resolution, determine that the Fair Market Value of a share
of Preferred Stock shall be more than such amount but not more than 110% of the
product of the then Fair Market Value of a share of Common Stock multiplied by
the higher of the then Dividend Multiple or Vote Multiple applicable to the
Preferred Stock. In the case of property other than securities, the "Fair Market
Value" thereof shall be determined in good faith by the Board of Directors of
the Corporation based upon such appraisals or valuation reports of such
independent experts as the Board of Directors of the Corporation shall in good
faith determine to be appropriate in accordance with good business practices and
fair to the interests of the holders of Rights. Any determination made by the
Board of Directors of the Corporation as provided for by this Section 11(b)
shall be described in a statement filed by the Corporation with the Rights
Agent, shall be effective thereupon and only thereupon and shall be binding upon
the Rights Agent and, as provided by Section 34 hereof, all holders of Rights.
(c) In case the Corporation shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock entitling
them (for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Stock or securities convertible into Common
Stock at a price per share (or having a conversion price per share, if a
security convertible into Common Stock) less than the then current per share
Fair Market Value of the Common Stock on such record date, the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common 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 Fair Market Value
and the denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights Agent.
Shares of Common Stock owned by or held for the account of the Corporation shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed and
in the event that such rights, options or warrants are not so issued, the
Exercise Price shall be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
(d) In case the Corporation shall fix a record date for the making
of a distribution to all holders of the Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or
18
surviving corporation) of evidences of indebtedness of the Corporation or any of
its Subsidiaries, cash (other than a regular quarterly cash dividend not in
excess of 150% of the previous regular quarterly cash dividend), other assets
(other than a dividend payable in shares of Common Stock) or options, rights or
warrants to subscribe for shares of the Corporation or any Subsidiary (excluding
those referred to in Section 11(c) hereof), the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the Fair Market Value of the shares of Common Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Corporation, whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness or options, rights or warrants so to be distributed in
respect of one share of Common Stock, and the denominator of which shall be such
current Fair Market Value of the shares of Common Stock. Such adjustment shall
be made successively whenever such a record date is fixed, and, in the event
that such distribution is not so made notwithstanding the setting of a record
date therefor, the Exercise Price shall again be adjusted to be the Exercise
Price which would then be in effect if such record date had not been fixed.
(e) Unless the Corporation shall have exercised its election as
provided in Section 11(f), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 11(c) or (d), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of one
one-thousandths of a share of Preferred Stock obtained by (i) multiplying (x)
the number of one one-thousandths of a share of Preferred Stock that could be
purchased upon exercise of a Right immediately prior to the adjustment pursuant
to this Section 11(e) by (y) the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price and (ii) dividing the product so obtained
by the Exercise Price in effect immediately after such adjustment of the
Exercise Price.
(f) The Corporation may elect, on or after the date of any
adjustment of the Exercise Price pursuant to Section 11(c) or 11(d), to adjust
the number of Rights in substitution for any adjustment pursuant to Section
11(e) in the number of one one-thousandths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If the Right Certificates have been issued, upon each adjustment
of the number of Rights
19
pursuant to this Section 11(f), the Corporation shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section 14 hereof,
the additional Rights, if any, to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Corporation, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Corporation, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(g) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-thousandth of a share, as the case may
be.
(h) Irrespective of any adjustment or change in the Exercise Price
or the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price and the number of shares to be issued upon exercise
of the Rights as in the initial Right Certificates issued hereunder but,
nevertheless, shall represent the Rights as so adjusted.
(i) Before taking any action that would cause an adjustment
reducing the purchase price per whole share of Preferred Stock upon exercise of
the Rights below the then par value, if any, of the shares of Preferred Stock,
the Corporation shall use its best efforts to take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and non-assessable shares of such
Preferred Stock at such adjusted purchase price per share.
(j) Anything in this Section 11 to the contrary notwithstanding,
in the event of any reclassification of stock of the Corporation or any
recapitalization, reorganization or partial liquidation of the Corporation or
similar transaction, the Corporation shall be entitled to make such further
adjustments in the number of shares of Preferred Stock which may be acquired
upon exercise of the Rights, and such adjustments in the Exercise Price
therefor, in addition to those adjustments expressly required by the other
paragraphs of this Section 11, as the Board of Directors of the Corporation
shall determine to be necessary or appropriate in order for the holders of the
Rights in such event to be treated equitably and in accordance with the purpose
and intent of this Agreement or in order that any such event shall not, but for
such adjustment, in the opinion of counsel to the Corporation, result in the
stockholders of the Corporation being subject to any United States federal
income tax liability by reason thereof.
(k) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Corporation other than the Preferred
Stock, thereafter the Exercise Price and the number of such other shares so
receivable upon exercise of a Right shall be
20
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), 11(c), 11(e), 11(f) and 11(j) hereof, as
applicable, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
Section 12. Certification of Adjusted Exercise Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11, 13, 23(c)
or 27 hereof, the Corporation shall (a) promptly prepare a certificate setting
forth such adjustment, and a brief statement of the facts giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Corporation 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. Any adjustment to be
made pursuant to Section 11, 13, 23(c) or 27 hereof shall be effective as of the
date of the event giving rise to such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any adjustment unless and
until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, at any time after the time that any Person
becomes an Acquiring Person, (x) the Corporation shall, directly or indirectly,
consolidate with, or merge with and into, any other Person or Persons (other
than an Exempt Person) and the Corporation shall not be the surviving or
continuing corporation of such consolidation or merger, or (y) any Person or
Persons (other than an Exempt Person) shall, directly or indirectly, consolidate
with, or merge with and into, the Corporation, and the Corporation shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed or converted into or exchanged for stock
or other securities of any other Person (other than an Exempt Person) or of the
Corporation or cash or any other property, or (z) the Corporation or one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer to
any other Person (other than an Exempt Person) in one or more transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Corporation and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that: (i) each
holder of record of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Exercise Price multiplied by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of shares of validly issued, fully paid,
non-assessable and freely tradeable Common Stock of the Principal Party (as
defined in Section 13(b) hereof), not subject to any liens, encumbrances, rights
of first refusal or other adverse claims, as shall equal the result obtained by
21
(1) multiplying the then current Exercise Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (2) 50% of the then per share Fair
Market Value of the Common Stock of the Principal Party on the date of the
consummation of such consolidation, merger, sale or transfer; provided, however,
that the Exercise Price (as adjusted) and the number of shares of Common Stock
of such Principal Party so receivable upon exercise of a Right shall be subject
to further adjustment as appropriate in accordance with Section 11 hereof to
reflect any events occurring in respect of the Common Stock of such Principal
Party after the occurrence of such consolidation, merger, sale or transfer; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and duties
of the Corporation pursuant to this Agreement; (iii) the term "Corporation" for
all purposes of this Agreement shall thereafter be deemed to refer to such
Principal Party; (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with the provisions of Section 9 hereof applicable to the
reservation of Preferred Stock) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; provided, however, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
(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) hereof: (A) the
Person that is the issuer of the securities into which shares of Common
Stock of the Corporation are changed or otherwise exchanged or
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of the Common Stock of which has the
greatest market value or (B) if no securities are so issued, (I) the
Person that is the other party to the merger or consolidation and that
survives such merger or consolidation, or, if there is more than one
such Person, the Person the Common Stock of which has the greatest
market value or (II) if the Person that is the other party to the
merger or consolidation does not survive the merger or consolidation,
the Person that does survive the merger or
22
consolidation (including the Corporation if it survives); and
(ii) in the case of any transaction described in clause
(z) of the first sentence in Section 13(a), the Person that is the
party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power so transferred or if the
Person receiving the greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as is the issuer of
Common Stock having the greatest market value of shares outstanding;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, then (1) if such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
(c) The Corporation shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section 13(a)
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Corporation and the Principal Party involved therein shall
have executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Agreement in accordance with
Section 13(a) hereof and that all rights of first refusal or preemptive rights
in respect of the issuance of shares of Common Stock of the Principal Party upon
exercise of outstanding Rights have been waived and that such transaction shall
not result in a default by the Principal Party under this Agreement, and further
providing that, as soon as practicable after the date of any consolidation,
merger or sale or transfer of assets or earning power referred to in Section
13(a) hereof, the Principal Party will:
23
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective
as soon as practicable after such filing and use its best efforts to
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the date of expiration of the Rights, and similarly comply with
applicable state securities laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act. In the event that any of the transactions
described in Section 13(a) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof, the
Rights which have not theretofore been exercised shall, subject to the
provisions of Section 7(e) hereof, thereafter be exercisable in the
manner described in Section 13(a); and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(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 or By-laws or other
instrument governing its 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 the then Fair Market Value per
share (determined pursuant to Section 11(b) hereof) or securities exercisable
for, or convertible into, Common Stock of such Principal Party at less than such
then Fair Market Value (other than to holders of Rights pursuant to this Section
13) or (ii) providing for any special tax or similar payment in connection with
the issuance to any holder of a Right of Common Stock of such Principal Party
pursuant to the provisions of this Section 13, then, in such event, the
Corporation shall not consummate any such transaction unless prior thereto the
Corporation 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 canceled, 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.
24
(e) The Corporation covenants and agrees that it shall not, at any
time after any Person becomes an Acquiring Person, enter into any transaction of
the type described in clauses (x) through (z) of the first sentence of Section
13(a) hereof if (i) at the time of or immediately after such consolidation,
merger, sale, transfer or other transaction there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (ii) prior to, simultaneously with or immediately after
such consolidation, merger, sale, transfer or other transaction, the
stockholders of the Person who constitutes, or would constitute, the Principal
Party for purposes of Section 13(a) hereof shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates or Associates or
(iii) the form or nature of organization of the Principal Party would preclude
or limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-thousandth of a share of Preferred
Stock), unless such fractional Rights result from a transaction referred to in
Section 11(a)(i) or 11(f) hereof. If the Corporation shall determine not to
issue such fractional Rights, then, in lieu of such fractional Rights, there
shall be paid to the holders of record of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the Fair Market Value of a whole Right.
(b) The Corporation shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral multiples of
one one-thousandth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions that are
integral multiples of one one-thousandth of a share). In lieu of issuing
fractions of shares of Preferred Stock, the Corporation may, at its election,
issue depositary receipts evidencing fractions of shares pursuant to an
appropriate agreement between the Corporation and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all of the rights, privileges and preferences to which they
would be entitled as owners of the Preferred Stock. With respect to fractional
shares that are not integral multiples of one one-thousandth of a share, if the
Corporation does not issue such fractional shares or depositary receipts in lieu
thereof, there shall be paid to the holders of record of Right Certificates at
the time such Right Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the Fair Market Value of a share of Preferred
Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share) upon exercise of a Right.
25
Section 15. Rights of Action. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock), and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate 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 under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right,
by accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced
by the certificates for Common Stock (or in the case of uncertificated shares of
Common Stock, by the book-entry account that evidences record ownership of such
shares) registered in the name of the holders of Common Stock (together, as
applicable, with the Summary of Rights), which certificates for Common Stock (or
book-entry account) shall also constitute certificates for Rights, and not by
separate Right Certificates, and each Right shall be transferable only
simultaneously and together with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right 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; and
(c) the Corporation and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate or, in the case of uncertificated shares
of Common Stock, the book-entry account evidencing record ownership of such
shares) is registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Stock certificate made by anyone other
than the Corporation or the Rights Agent) for all purposes whatsoever, and
neither
26
the Corporation nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder or other securityholder of the
Corporation or of a securityholder of any other Person 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
securityholder action, or to receive notice of meetings or other actions
affecting stockholders or securityholders (except as provided in Section 24
hereof), or to receive dividends or subscription rights, or otherwise, except in
any such case the rights, if any, in respect thereof provided by this Agreement,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof for such stock or other
security.
Section 18. Concerning the Rights Agent.
(a) The Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Corporation also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights Agent, for anything
done or omitted to be done by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this
Agreement.
(b) The Rights Agent shall be protected against, and shall incur
no liability for or in respect of, any action taken, suffered or omitted by it
in connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Preferred Stock or for other securities of
the Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 19. Merger or Consolidation of, or Change in Name of,
the Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting
27
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; in case at
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name; in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Corporation and the holders of Right
Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be an
employee of or outside legal counsel for the Corporation or the Rights Agent),
and the opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President
or any Vice President and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Corporation and delivered to the
Rights Agent. Any such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
28
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right 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 Corporation only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Corporation of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock or other security to be delivered pursuant to the exercise of
any Right or as to whether any shares of Preferred Stock or other security will,
when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Corporation 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 the Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary or
the Treasurer of the Corporation, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Corporation may, at the option of the Rights Agent, set forth in
writing any action proposed to be taken or omitted by the Rights Agent under
this Agreement and the date on 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 by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than three Business Days after the
date any officer of the Corporation actually receives such application unless
any such officer shall have consented in writing to an earlier date)
29
unless, prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not the Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Corporation or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), a Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Corporation.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Corporation and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Corporation may remove the Rights Agent or any successor
Rights Agent (with or without cause) upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Corporation shall appoint a successor
to the Rights Agent. If the Corporation shall fail to make such appointment
within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Corporation), then
the incumbent Rights Agent or the holder of record of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Corporation or by
such a court, shall be (a) a corporation organized and doing business under the
laws of the United States or of any state thereof, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination in the conduct of its corporate
trust or stock
30
transfer business by federal or state authorities and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate controlled by or under common control with one
or more corporations described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed, but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Corporation shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be. Notwithstanding the foregoing
provisions, in the event of resignation, removal or incapacity of the Rights
Agent, the Corporation shall have the authority to act as the Rights Agent until
a successor Rights Agent shall have assumed the duties of the Rights Agent
hereunder.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Exercise Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Voting Stock following the
Distribution Date and prior to the Expiration Date, the Corporation may with
respect to shares of Voting Stock so issued or sold pursuant to (i) the exercise
of stock options, (ii) under any employee plan or arrangement, (iii) upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Corporation or (iv) a contractual obligation of the Corporation, in each
case existing prior to the Distribution Date, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale.
Section 23. Redemption.
(a) The Corporation may, at its option, but only by the vote of a
majority of its Board of Directors, redeem all but not less than all of the then
outstanding Rights at any time prior to the Close of Business on the tenth day
following the Stock Acquisition Date (subject to extension by the Corporation as
provided in Section 26 hereof) at a redemption price of $0.01 per Right, subject
to adjustment as provided in Section 23(c) hereof (the "REDEMPTION Price"). The
redemption of the Rights by the Board of Directors of the Corporation may be
made effective at such time after the Board's action to redeem the Rights on
such basis and subject to such conditions, as the Board of Directors of the
Corporation in its sole and absolute discretion may establish. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall
31
not be exercisable prior to the expiration of the Corporation's right of
redemption hereunder.
(b) Without any further action and without any notice, the right
to exercise the Rights will terminate effective at the time so designated by
action of the Board of Directors of the Corporation ordering the redemption of
the Rights and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within 10 days after the effective time of the
action of the Board of Directors of the Corporation ordering the redemption of
the Rights, the Corporation shall give notice of such redemption to the holders
of the then outstanding Rights by mailing such notice to all such holders at
their last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
notice of redemption will state the method by which the payment of the
Redemption Price will be made. At the option of the Board of Directors of the
Corporation, the Redemption Price may be paid in cash to each Rights holder or
by the issuance of shares (and, at the Corporation's election pursuant to
Section 14(b) hereof, cash or depositary receipts in lieu of fractions of shares
other than fractions which are integral multiples of one one-thousandth of a
share) of Preferred Stock or Common Stock having a Fair Market Value equal to
such cash payment.
(c) In the event the Corporation shall at any time after the date
of this Agreement but before the Distribution Date (A) pay any dividend on
Common Stock in shares of Common Stock, (B) subdivide or split the outstanding
shares of Common Stock into a greater number of shares or (C) combine or
consolidate the outstanding shares of Common Stock into a smaller number of
shares or effect a reverse split of the outstanding shares of Common Stock and
as a consequence thereof the number of Rights outstanding shall change, then,
and in each such event, the Redemption Price may, by action of the Board of
Directors of the Corporation in its discretion, be appropriately adjusted in
respect of such transaction so as to maintain the aggregate Redemption Price of
all Rights after such transaction at the same amount, insofar as practicable, as
before the transaction.
Section 24. Notice of Proposed Actions.
(a) In case the Corporation, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i)
hereof or to pay any dividend to the holders of record of its shares of Common
Stock payable in shares of capital stock of any class or to make any other
distribution to the holders of record of its Common Stock (other than a regular
periodic cash dividend at a rate not in excess of 150% of the rate of the last
cash dividend theretofore paid), or (ii) to offer to the holders of record of
its Common Stock options, warrants, or other rights to subscribe for or to
purchase shares of Common Stock (including any security convertible into or
exchangeable for Common Stock) or shares of stock of any class or any other
securities, options, warrants, convertible or exchangeable securities or other
rights, or (iii) to effect any reclassification
32
of its Preferred Stock or Common Stock or any recapitalization or reorganization
of the Corporation, or (iv) to effect any consolidation or merger with or into,
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Corporation, then, in
each such case, the Corporation shall give to each holder of record of a Right
Certificate, in accordance with Section 25 hereof, notice of such proposed
action, which shall specify the record date for the purposes of such transaction
referred to in Section 11(a)(i) or such dividend or distribution, or the date on
which such reclassification, recapitalization, reorganization, consolidation,
merger, sale or transfer of assets, liquidation, dissolution, or winding up is
to take place and the record date for determining participation therein by the
holders of record of Common Stock or 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 10 days prior to the record date for
determining holders of record of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of record of Common Stock or Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Corporation or the vote upon any such action.
(b) In case the event referred to in Section 11(a)(ii) hereof
shall occur, then the Corporation shall as soon as practicable thereafter, in
accordance with Section 25 hereof, give to each holder of a Right notice of the
occurrence of such event, which notice shall describe the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right to or on the Corporation shall be in writing and
shall be considered given upon receipt or seven Business Days after being sent
by first-class mail, postage prepaid, in any case addressed (until another
address is filed in writing with the Rights Agent) as follows:
Noven Pharmaceuticals, Inc.
00000 X.X. 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Corporation or by the holder of record of
any Right Certificate or Right to or on the Rights Agent shall be in writing and
shall be considered given upon receipt or seven Business Days after being sent
by first-class mail, postage prepaid, in any case addressed (until another
address is filed in writing with the Corporation) as follows:
33
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of record of any Right Certificate
or Right shall be in writing and shall be considered given upon receipt or seven
Business Days after being 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 Corporation.
Section 26. Supplements and Amendments. For as long as the Rights
are then redeemable and except as provided in the last sentence of this
Section 26, the Corporation may, in its sole and absolute discretion, and the
Rights Agent shall if the Corporation so directs, supplement or amend any
provision of this Agreement without the approval of any holders of the Rights.
At any time when the Rights are not then redeemable and except as provided in
the last sentence of this Section 26, the Corporation may, and the Rights Agent
shall if the Corporation so directs, supplement or amend this Agreement without
the approval of any holders of Right Certificates (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 or (iii) to change or
supplement the provisions hereunder in any manner which the Corporation may deem
necessary or desirable, provided that no such supplement or amendment pursuant
to this clause (iii) shall materially adversely affect the interest of the
holders of Right Certificates (other than an Acquiring Person or any other
Person in whose hands Rights are null and void under the provisions of Section
7(e) hereof). Upon the delivery of a certificate from an appropriate officer of
the Corporation which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price; it being understood that an adjustment of the
Redemption Price in accordance with Section 23 shall not be considered a
supplement or amendment of this Agreement.
Section 27. Exchange.
(a) The Board of Directors of the Corporation may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e)
hereof) by exchanging for each such Right a number of shares of Common Stock
having an aggregate Fair Market Value on the date such Person became an
Acquiring Person equal to the Spread, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such number of shares of Common Stock per Right being hereinafter
referred to as the "EXCHANGE RATIO"). Notwithstanding the foregoing, the Board
of Directors of the Corporation shall not be empowered to effect such exchange
at any time
34
after any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Voting Stock then outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been
exchanged pursuant to this Section 27(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
27(a).
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 27 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Corporation shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Corporation promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become null and void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 27, the
Corporation shall substitute to the extent of such insufficiency, for each share
of Common Stock that would otherwise be issuable upon exchange of a Right, a
number of shares of Preferred Stock or fractions thereof having an aggregate
Fair Market Value equal to the Fair Market Value of one share of Common Stock as
of the date any Person becomes an Acquiring Person.
(d) The Corporation shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares. In lieu of such fractional shares, the Corporation shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock for the Trading Day immediately prior to the date of exchange pursuant to
this Section 27.
Section 28. Successors. All of the covenants and provisions of
this Agreement by or for the benefit of the Corporation or the Rights Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
35
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Corporation, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the holders of Common Stock in their capacity as holders of
the Rights) any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the
Corporation, the Rights Agent and the holders of record of the Right
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights).
Section 30. Delaware Contract. This Agreement and each Right
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 and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 31. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 33. 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.
Section 34. Determinations and Actions by the Board of Directors.
The Board of Directors of the Corporation shall have the exclusive power and
authority to administer, interpret and apply this Agreement and to exercise the
rights and powers specifically granted to the Board of Directors of the
Corporation or to the Corporation by this Agreement or by law and may take such
action as may be necessary or advisable in the administration of this Agreement
or to amend or supplement this Agreement in accordance with its terms,
including, without limitation, the right and power (i) to make all
determinations deemed necessary or advisable for the administration of this
Agreement, (ii) to decide to redeem the Rights and (iii) to decide to amend or
supplement this Agreement. All such actions, calculations, interpretations and
determinations (including any decision not to take any action) done or made by
the Board of Directors of the Corporation in good faith shall (x) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of the
Rights, as such, and all other Persons and (y) not subject any member of the
Board of Directors of the Corporation to any liability to the holders of Rights.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
NOVEN PHARMACEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxx
President, Chief Executive Officer
and Chairman of the Board
AMERICAN STOCK TRANSFER &
TRUST COMPANY, as Rights Agent
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
Vice President, General Counsel
37
EXHIBIT A
-------------------------------------------------------------------
AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED
TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED
BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT
BE EXERCISED OR TRANSFERRED TO ANY PERSON.
-------------------------------------------------------------------
NOVEN PHARMACEUTICALS, INC.
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On November 6, 2001, the Board of Directors of Noven Pharmaceuticals,
Inc., a Delaware corporation (the "Corporation"), declared a dividend
distribution of one Preferred Stock Purchase Right for each outstanding share of
common stock, par value $0.0001 per share (the "Common Stock"), of the
Corporation. The distribution was made payable as of November 19, 2001 to
stockholders of record on that date (the "Record Date"). Each Right, once
exercisable, entitles the registered holder to purchase from the Corporation one
one-thousandth (1/1000) of a share of preferred stock of the Corporation,
designated as Series A Junior Participating Preferred Stock (the "Preferred
Stock"), at a price of $110.00 per one one-thousandth (1/1000) of a share
("Exercise Price"), subject to certain adjustments. The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights Agreement") by and
between the Corporation and American Stock Transfer & Trust Company, as Rights
Agent (the "Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth day following a public announcement that a
person or group of affiliated or associated persons, with certain exceptions set
forth below, has acquired beneficial ownership of 15% or more of the outstanding
voting stock of the Corporation (an "Acquiring Person") and (ii) the tenth
business day (or such later date as may be determined by the Board of Directors
prior to such time as any person or group of affiliated or associated persons
becomes an Acquiring Person) after the date of the commencement by any person of
a tender or exchange offer, the consummation of which would result in such
person or group of affiliated or associated persons becoming an Acquiring
Person.
An Acquiring Person does not include (A) the Corporation, (B) any
subsidiary of the Corporation, (C) any employee benefit plan or employee stock
plan of the Corporation or of any subsidiary of the Corporation, or any trust or
other entity organized, appointed, established or holding voting stock for or
pursuant to the terms of any such plan or (D) any person or group of affiliated
or associated persons whose ownership of 15% or more of the shares of voting
stock of the Corporation then outstanding results solely from (i) any action or
transaction or transactions approved by the Board of Directors before such
person or group became an Acquiring Person or (ii) a reduction in the number of
issued and outstanding shares of voting stock of the Corporation pursuant to a
transaction or transactions approved by the Board of Directors (provided that
any person or group that does not become an Acquiring Person by reason of clause
(i) or (ii) above shall become an Acquiring Person upon acquisition of an
additional 1% or more of the Corporation's voting stock unless such acquisition
of additional voting stock would not result in such person becoming an Acquiring
Person by reason of clause (i) or (ii) above).
Prior to the Distribution Date, the Rights will not be exercisable,
will not be represented by a separate certificate, and will not be transferable
apart from the Corporation's Common Stock, but will instead be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate with a copy of this Summary of Rights
attached thereto. Until the Distribution Date (or earlier redemption, exchange
or expiration of the Rights), new Common Stock certificates issued after the
Record Date will contain a legend incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the surrender for transfer of any of the Common Stock
certificates outstanding as of the Record Date, with or without a copy of this
Summary of Rights attached thereto, will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate. As soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date, and such
separate certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on November 6, 2011, unless earlier
redeemed or exchanged by the Corporation as described below.
Shares of Preferred Stock purchasable upon exercise of the Rights will
be non-redeemable and, unless otherwise provided in connection with the creation
of a subsequent series of preferred stock, will be subordinate to any other
series of the Corporation's preferred stock. The Preferred Stock may not be
issued except upon exercise of Rights. Each share of Preferred Stock will be
entitled to receive when, as and if declared, a quarterly dividend in an amount
equal to the greater of $1.00 per share or 1000 times the cash dividends
declared on the Corporation's Common Stock. In addition, the holders of the
Preferred Stock are entitled to receive 1000 times any non-cash dividends (other
than dividends payable in equity securities) declared on the Common Stock, in
like kind. In the event of the liquidation of the Corporation, the holders of
Preferred Stock will be entitled to receive, for each share of Preferred Stock,
a payment in an amount equal to the greater of $110,000.00 or 1000 times the
payment made per share of Common Stock. Each share of Preferred Stock will
have 1000 votes, voting together with the
2
Common Stock. In the event of any merger, consolidation or other transaction in
which Common Stock is exchanged, each share of Preferred Stock will be entitled
to receive 1000 times the amount received per share of Common Stock. The rights
of Preferred Stock as to dividends, liquidation and voting are protected by
anti-dilution provisions.
The Exercise Price of the Rights and the number of shares of Preferred
Stock issuable upon exercise of the Rights are subject to certain adjustments
from time to time in the event of a stock dividend on, or a subdivision or
combination of, the Common Stock. The Exercise Price for the Rights also is
subject to adjustment in the event of extraordinary distributions of cash or
other property to holders of Common Stock.
Unless the Rights are earlier redeemed, in the event that a person or
group becomes an Acquiring Person, the Rights Agreement provides that proper
provisions will be made so that each holder of record of a Right (other than
Rights beneficially owned by an Acquiring Person and certain affiliates,
associates and transferees thereof, whose Rights will thereupon become null and
void), will thereafter have the right to receive, upon payment of the Exercise
Price, that number of shares of the Preferred Stock having a fair market value
determined in accordance with the Rights Agreement at the time of the
transaction equal to approximately two times the Exercise Price (such value to
be determined with reference to the fair market value of the Corporation's
Common Stock as provided in the Rights Agreement).
In addition, unless the Rights are earlier redeemed or exchanged, in
the event that, after the time that a person or group becomes an Acquiring
Person, the Corporation were to be acquired in a merger or other business
combination (in which any shares of Common Stock are changed into or exchanged
for other securities or assets) or more than 50% of the assets or earning power
of the Corporation and its subsidiaries (taken as a whole) were to be sold or
transferred in one or a series of related transactions, the Rights Agreement
provides that proper provision will be made so that each holder of record of a
Right (other than Rights beneficially owned by an Acquiring Person and certain
affiliates, associates and transferees thereof, whose Rights will thereupon
become null and void) will from and after such date have the right to receive,
upon payment of the Exercise Price, that number of shares of common stock of the
acquiring company having a fair market value at the time of such transaction
determined in accordance with the Rights Agreement equal to approximately two
times the Exercise Price.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding voting stock, the Board of Directors of the Corporation may exchange
the Rights (other than Rights owned by such person or group which will have
become null and void), in whole or in part, for that number of shares of the
Corporation's Common Stock having a fair market value on the date such person or
group became an Acquiring Person equal to the excess of (i) the fair market
value of Preferred Stock issuable upon the exercise of the Rights over (ii) the
Exercise Price of the Rights, in each case subject to anti-dilution adjustments.
Fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share) may, at the election of the
Corporation, be evidenced by depositary receipts. The Corporation may also issue
cash in lieu of fractional shares which are not integral multiples of one
one-thousandth of a share.
3
At any time prior to the close of business on the tenth day after there
has been a public announcement that a person has become an Acquiring Person, the
Corporation may redeem the Rights in whole, but not in part, at a price of $0.01
per Right (the "Redemption Price"). Immediately upon the effective time of the
action of the Board of Directors of the Corporation authorizing redemption of
the Rights, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Corporation may,
except with respect to the Redemption Price, amend the Rights in any manner,
including an amendment to extend the time period in which the Rights may be
redeemed. At any time when the Rights are not then redeemable, the Corporation
may amend the Rights in any manner that does not materially adversely affect the
interests of holders of the Rights as such.
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Corporation, including, without limitation, the right to
vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission on November 9, 2001, as an Exhibit to the Corporation's
Current Report on Form 8-K. A copy of the Rights Agreement is available free of
charge from the Corporation. 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 in this summary description herein by
reference.
4
EXHIBIT B
[Form of Right Certificate]
Certificate No. W- ______ Rights
NOT EXERCISABLE AFTER NOVEMBER 6, 2011 OR EARLIER IF EXCHANGED OR
REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
CORPORATION AND UNDER CERTAIN OTHER CIRCUMSTANCES, AT $0.01 PER RIGHT
(SUBJECT TO ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO IN THE
RIGHTS AGREEMENT. AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO
BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
THEIR AFFILIATES OR ASSOCIATES OR TRANSFEREES THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE EXERCISED OR TRANSFERRED
TO ANY PERSON.
Right Certificate
This certifies that , or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of November 6, 2001 (the "Rights Agreement") by and between
Noven Pharmaceuticals, Inc., a Delaware corporation (the "Corporation"), and
American Stock Transfer & Trust Company, a corporation organized under the laws
of the State of New York, as Rights Agent, or its successor in interest as
Rights Agent (the "Rights Agent"), to purchase from the Corporation at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (Eastern time) on November 6, 2011 at the office of the
Rights Agent designated in the Rights Agreement for such purpose, one
one-thousandth (1/1000) of a fully paid and nonassessable share of the Series A
Junior Participating Preferred Stock (the "Preferred Stock") of the
Corporation, or other securities or property in lieu thereof as provided by the
Rights Agreement, at a purchase price of $110.00, as the same may from time to
time be adjusted in accordance with the Rights Agreement (the "Exercise
Price"), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the
Rights Agent, the Corporation and the holders of record of Right Certificates.
Copies of the Rights Agreement are on file at the principal executive office of
the Corporation.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Corporation at its option
or under certain other circumstances at a redemption price of $0.01 per Right.
No fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-thousandth (1/1000) of a share) are required
to be issued upon the exercise of any Right or Rights evidenced hereby, and in
lieu thereof the Corporation may cause depositary receipts to be issued and/or
a cash payment may be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities of the Corporation 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 Corporation or any right to vote for the
election of directors or upon any matter submitted to stockholders at meeting
thereof, or to give or withhold consent to any corporate action or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
2
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of __________ ___, _____.
ATTEST: NOVEN PHARMACEUTICALS, INC.
By
---------------------------------------- -------------------------------
[Assistant] Secretary Title:
Countersigned:
----------------------------------------
By
--------------------------------------
Authorized Signature
3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED
---------------------------------------------------
hereby sells, assigns and transfers unto
--------------------------------------
-------------------------------------------------------------------------------
(Please print name and address of transferee)
-------------------------------------------------------------------------------
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
________________________ Attorney to transfer the within Right Certificate on
the books of the within-named Corporation, with full power of substitution.
Dated: ____________ ___, _____
-------------------------
Signature
Signature Guaranteed:
4
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Dated: ____________ ___, _____
-------------------------
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
5
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO _____________________:
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such share(s) be issued in the following name:
Please insert social security
or other identifying number:
---------------------------------------------------
-------------------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance 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 must conform
in all respects to name
of holder as specified on
the face of this Right
Certificate)
Signature Guaranteed:
6
EXHIBIT C
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
NOVEN PHARMACEUTICALS, INC.
PURSUANT TO SECTION 151 OF THE DELAWARE
GENERAL CORPORATION LAW
I, Xxxxxxx X. Xxxxxxxxx, the Corporate Secretary of Noven
Pharmaceuticals, Inc., a corporation organized and existing under the Delaware
General Corporation Law (the "CORPORATION"), in accordance with the provisions
of Section 151 of such law, DO HEREBY CERTIFY that pursuant to the authority
conferred upon the Board of Directors of the Corporation by the Restated
Certificate of Incorporation of the Corporation, the Board of Directors on
November 6, 2001 adopted the following resolution which creates a series of
30,000 shares of Preferred Stock designated as Series A Junior Participating
Preferred Stock as follows:
RESOLVED, that pursuant to Section 151(g) of the Delaware General
Corporation Law and the authority vested in the Board of Directors of the
Corporation in accordance with the provisions of ARTICLE FOURTH of the Restated
Certificate of Incorporation of the Corporation, a series of Preferred Stock of
the Corporation be, and hereby is, created and the powers, designations,
preferences and relative, participating, optional or other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof, be, and hereby are, as follows:
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 such series
shall be 30,000.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, and subject to the rights of the holders of any shares of any series of
Preferred Stock of the Corporation ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors of the Corporation out of funds legally available for the
purpose, (i) cash dividends in an amount per share (rounded to the nearest
cent) equal to 1000 times the aggregate per share amount of all cash dividends
declared or paid on the Common Stock, $0.0001 par value per share, of the
Corporation (the "COMMON STOCK") and (ii) a preferential cash dividend (the
"PREFERENTIAL DIVIDENDS"), if any, in preference to the holders of Common
Stock, on the first business day of April, July, October and January, of each
year (each a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, payable in an amount (except in the
case of the first Quarterly Dividend Payment Date if the date of the first
issuance of Series A Preferred Stock is a date other than a Quarterly Dividend
Payment Date, in which case such payment shall be a prorated portion of such
amount) equal to $1.00 per share of Series A Preferred Stock less the per share
amount of all cash dividends declared on the Series A Preferred Stock pursuant
to clause (i) of this sentence since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall, at any time after the
issuance of any share or fraction of a share of Series A Preferred Stock, make
any distribution on the shares of Common Stock, whether by way of a dividend or
a reclassification of stock, a recapitalization, reorganization or partial
liquidation of the Corporation or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence, a
distribution of shares of Common Stock or other capital stock of the
Corporation or a distribution of options, rights or warrants to acquire any
such share, including any debt security convertible into or exchangeable for
any such share, at a price less than the Fair Market Value (as hereinafter
defined) of such share of Common Stock), then, and in each such event, the
Corporation shall simultaneously pay on each then outstanding share of Series A
Preferred Stock a distribution, in like kind, of 1000 times such distribution
paid on a share of Common Stock (subject to the provisions for adjustment
hereinafter set forth). The dividends and distributions on the Series A
Preferred Stock to which holders thereof are entitled pursuant to clause (i) of
the first sentence of this paragraph and pursuant to the second sentence of
this paragraph are hereinafter referred to as "DIVIDENDS" and the multiple of
such cash and non-cash dividends on the Common Stock applicable to the
determination of the Dividends, which shall be 1000 initially but shall be
adjusted from time to time as hereinafter provided, is hereinafter referred to
as the "DIVIDEND MULTIPLE". In the event the Corporation shall at any time
after November 19, 2001 (the "EFFECTIVE DATE") declare or pay any dividend or
2
make any distribution on Common Stock payable in shares of Common Stock, or
effect a subdivision or split or a combination, consolidation or reverse split
of the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, then in each such case the Dividend Multiple thereafter
applicable to the determination of the amount of Dividends which holders of
shares of Series A Preferred Stock shall be entitled to receive shall be the
Dividend Multiple applicable immediately prior to such event multiplied 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 each Dividend at the same time
it declares any cash or non-cash dividend or distribution on the Common Stock
in respect of which a Dividend is required to be paid. No cash or non-cash
dividend or distribution on the Common Stock in respect of which a Dividend is
required to be paid shall be paid or set aside for payment on the Common Stock
unless a Dividend in respect of such dividend or distribution on the Common
Stock shall be simultaneously paid or set aside for payment (as the case may
be), on the Series A Preferred Stock.
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issuance of any shares of Series A Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential 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.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1000 votes on all matters submitted to a vote of the holders of the Common
Stock. The number of votes which a holder of Series A Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "VOTE MULTIPLE". In the event the
Corporation shall at any time after the Effective Date declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then in each such case the Vote Multiple thereafter applicable to
the determination of the number of votes per share to which holders of shares
of Series A Preferred Stock shall be entitled after such event shall be the
Vote Multiple immediately prior to such event multiplied 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.
3
(B) Except as otherwise provided herein, in the Restated
Certificate of Incorporation or by law, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) In the event that the Preferential Dividends accrued on the
Series A Preferred Stock for four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or irrevocably set
aside for payment, the holders of record of Preferred Stock of the Corporation
of all series (including the Series A Preferred Stock), other than any series
in respect of which such right is expressly withheld by the Restated
Certificate of Incorporation or the authorizing resolutions included in any
certificate of designations therefor, shall have the right, at the next meeting
of stockholders called for the election of directors, to elect two members to
the Board of Directors of the Corporation, which directors shall be in addition
to the number required prior to such event, to serve until the next annual
meeting and until their successors are elected and qualified or their earlier
resignation, removal or incapacity or until such earlier time as all accrued
and unpaid Preferential Dividends upon the outstanding shares of Series A
Preferred Stock shall have been paid (or irrevocably set aside for payment) in
full. The holders of shares of Series A Preferred Stock shall continue to have
the right to elect directors as provided by the immediately preceding sentence
until all accrued and unpaid Preferential Dividends upon the outstanding shares
of Series A Preferred Stock shall have been paid (or set aside for payment) in
full. Such directors may be removed and replaced by such stockholders, and
vacancies in such directorships may be filled only by such stockholders (or by
the remaining director elected by such stockholders, if there be one) in the
manner permitted by law; provided, however, that any such action by
stockholders shall be taken at a meeting of stockholders and shall not be taken
by written consent thereto.
(D) Except as otherwise required by the Restated Certificate of
Incorporation or by law or set forth herein, holders of Series A Preferred
Stock shall have no other 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 the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in arrears
or the Corporation shall be in default of payment thereof, thereafter and until
all accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been
paid or set irrevocably aside for payment in full, and in addition to any and
all other rights which any holder of shares of Series A Preferred Stock may
have in such circumstances, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
4
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series A Preferred Stock, unless dividends are paid
ratably on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled if
the full dividends accrued thereon were to be paid;
(iii) except as permitted by subparagraph (iv) of this
Section 4(A), redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking
junior (both as to dividends and upon liquidation, dissolution or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding up), except in accordance
with a purchase offer made to all holders of such shares upon such
terms as the Board of Directors of the Corporation, 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 (as
hereinafter defined) of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner. A "SUBSIDIARY" of the Corporation
shall mean any corporation or other entity of which securities or other
ownership interests having ordinary voting power sufficient to elect a majority
of the board of directors of such corporation or other entity or other persons
performing similar functions are beneficially owned, directly or indirectly, by
the Corporation or by any corporation or other entity that is otherwise
controlled by the Corporation.
(C) The Corporation shall not issue any shares of Series A
Preferred Stock except upon exercise of Rights issued pursuant to that certain
Rights Agreement dated as of November 6, 2001, by and between the Corporation
and American Stock Transfer & Trust Company, as Rights Agent, as it may be
amended from time to time, a copy of which is on file with the Secretary of the
Corporation at its principal executive office and shall be made available to
stockholders of record without charge upon written request therefor addressed
to said Secretary. Notwithstanding the foregoing sentence, nothing contained in
the provisions of this Certificate of Designations shall prohibit or restrict
the Corporation from issuing for any purpose any series of Preferred Stock with
rights and
5
privileges similar to, different from, or greater than, those of the Series A
Preferred Stock.
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 upon their retirement and cancellation shall become
authorized but unissued shares of Preferred Stock, without designation as to
series, and such shares may be reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the Board of Directors of
the Corporation.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary 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 the holders of shares of
Series A Preferred Stock shall have received for each share of Series A
Preferred Stock, subject to adjustment as hereinafter provided, (A) $110,000.00
plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment or, (B) if greater than
the amount specified in clause (i)(A) of this sentence, an amount equal to 1000
times the aggregate amount to be distributed per share to holders of Common
Stock, as the same may be adjusted as hereinafter provided and (ii) to the
holders of stock ranking on a parity upon liquidation, dissolution or winding
up with the Series A Preferred Stock, unless simultaneously therewith
distributions are made ratably on the Series A Preferred Stock and all other
shares of such parity stock in proportion to the total amounts to which the
holders of shares of Series A Preferred Stock are entitled under clause (i)(A)
of this sentence and to which the holders of such parity shares are entitled,
in each case upon such liquidation, dissolution or winding up. The amount to
which holders of Series A Preferred Stock may be entitled upon liquidation,
dissolution or winding up of the Corporation pursuant to clause (i)(B) of the
foregoing sentence is hereinafter referred to as the "PARTICIPATING LIQUIDATION
AMOUNT" and the multiple of the amount to be distributed to holders of shares
of Common Stock upon the liquidation, dissolution or winding up of the
Corporation applicable pursuant to said clause to the determination of the
Participating Liquidation Amount, as said multiple may be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the "LIQUIDATION
MULTIPLE". In the event the Corporation shall at any time after the Effective
Date declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then, in each such case, the
Liquidation Multiple thereafter applicable to the determination of the
Participating Liquidation Amount to which holders of Series A Preferred Stock
shall be entitled after such event shall be the Liquidation Multiple applicable
immediately prior to such event multiplied 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.
6
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock receive
after the Effective Date in respect of their shares of Common Stock any share
of capital stock of the Corporation (other than any share of Common Stock),
whether by way of reclassification, recapitalization, reorganization, dividend
or other distribution or otherwise (a "TRANSACTION"), then, and in each such
event, the dividend rights, voting rights and rights upon the liquidation,
dissolution or winding up of the Corporation of the shares of Series A
Preferred Stock shall be adjusted so that after such event the holders of
Series A Preferred Stock shall be entitled, in respect of each share of Series
A Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such Transaction multiplied by the additional dividends which the holder of
a share of Common Stock shall be entitled to receive by virtue of the receipt
in the Transaction of such capital stock, (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such Transaction
multiplied by the additional voting rights which the holder of a share of
Common Stock shall be entitled to receive by virtue of the receipt in the
Transaction of such capital stock and (iii) such additional distributions upon
liquidation, dissolution or winding up of the Corporation as equal the
Liquidation Multiple in effect immediately prior to such Transaction multiplied
by the additional amount which the holder of a share of Common Stock shall be
entitled to receive upon liquidation, dissolution or winding up of the
Corporation by virtue of the receipt in the Transaction of such capital stock,
as the case may be, all as provided by the terms of such capital stock.
(B) In the event that holders of shares of Common Stock receive
after the Effective Date in respect of their shares of Common Stock any right
or warrant to purchase Common Stock (including as such a right, for all
purposes of this paragraph, any security convertible into or exchangeable for
Common Stock) at a purchase price per share less than the Fair Market Value of
a share of Common Stock on the date of issuance of such right or warrant, then
and in each such event the dividend rights, voting rights and rights upon the
liquidation, dissolution or winding up of the Corporation of the shares of
Series A Preferred Stock shall each be adjusted so that after such event the
Dividend Multiple, the Vote Multiple and the Liquidation Multiple shall each be
the product of the Dividend Multiple, the Vote Multiple and the Liquidation
Multiple, as the case may be, in effect immediately prior to such event
multiplied by a fraction the numerator of which shall be the number of shares
of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of
shares of Common Stock which could be purchased, at the Fair Market Value of
the Common Stock at the time of such issuance, by the maximum aggregate
consideration payable upon exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock receive
after the Effective Date in respect of their shares of Common Stock any right
or warrant to
7
purchase capital stock of the Corporation (other than shares of Common Stock),
including as such a right, for all purposes of this paragraph, any security
convertible into or exchangeable for capital stock of the Corporation (other
than Common Stock), at a purchase price per share less than the Fair Market
Value of such shares of capital stock on the date of issuance of such right or
warrant, then and in each such event the dividend rights, voting rights and
rights upon liquidation, dissolution or winding up of the Corporation of the
shares of Series A Preferred Stock shall each be adjusted so that after such
event each holder of a share of Series A Preferred Stock shall be entitled, in
respect of each share of Series A Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior
to such event, to receive (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such event multiplied, first, by the
additional dividends to which the holder of a share of Common Stock shall be
entitled upon exercise of such right or warrant by virtue of the capital stock
which could be acquired upon such exercise and multiplied again by the Discount
Fraction (as hereinafter defined) and (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such event multiplied,
first, by the additional voting rights to which the holder of a share of Common
Stock shall be entitled upon exercise of such right or warrant by virtue of the
capital stock which could be acquired upon such exercise and multiplied again
by the Discount Fraction and (iii) such additional distributions upon
liquidation, dissolution or winding up of the Corporation as equal the
Liquidation Multiple in effect immediately prior to such event multiplied,
first, by the additional amount which the holder of a share of Common Stock
shall be entitled to receive upon liquidation, dissolution or winding up of the
Corporation upon exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise and multiplied again by the
Discount Fraction. For purposes of this paragraph, the "DISCOUNT FRACTION"
shall be a fraction the numerator of which shall be the difference between the
Fair Market Value of a share of the capital stock subject to a right or warrant
distributed to holders of shares of Common Stock as contemplated by this
paragraph immediately after the distribution thereof and the purchase price per
share for such share of capital stock pursuant to such right or warrant and the
denominator of which shall be the Fair Market Value of a share of such capital
stock immediately after the distribution of such right or warrant.
(D) For purposes of this Certificate of Designations, the "FAIR
MARKET VALUE" of a share of capital stock of the Corporation (including a share
of Common Stock) on any date shall be deemed to be the average of the daily
closing prices per share thereof of such stock over the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that, in the event that the Fair Market Value of any such
share of capital stock is to be determined as of a date that is within 30
Trading Days after (i) the ex-dividend date for a dividend or distribution on
stock payable in shares of such stock or securities convertible into shares of
such stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Corporation to take into account such dividend,
distribution, subdivision, split, combination, consolidation, reverse stock
split or reclassification. The closing price for any day shall be the last sale
price, regular way, or, in case, no such sale takes place on such day, the
average of the
8
closing bid and asked prices, regular way (in either case, as reported in the
applicable transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange); or, if the shares are not
listed or admitted to trading on the New York Stock Exchange, as reported in
the applicable transaction reporting system with respect to securities listed
on the principal national securities exchange on which the shares are listed or
admitted to trading; or, if the shares are not listed or admitted to trading on
any national securities exchange, the last quoted price (or, if not so quoted,
the average of the high bid and low asked prices) in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other quotation reporting system
then in use; or if no bids for such shares are so quoted, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the shares selected by the Board of Directors of the Corporation.
The term "TRADING DAY" shall mean a day on which the principal national
securities exchange on which the shares are listed or admitted to trading is
open for the transaction of business or, if the shares are not listed or
admitted to trading on any national securities exchange, on which the New York
Stock Exchange or such other national securities exchange as may be selected by
the Board of Directors of the Corporation is open. If the shares are not
publicly held or not so listed or traded on any day within the period of 30
Trading Days applicable to the determination of Fair Market Value thereof as
aforesaid, "FAIR MARKET VALUE" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Corporation.
In either case referred to in the foregoing sentence, the determination of Fair
Market Value shall be described in a statement filed with the Secretary of the
Corporation.
Section 8. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Corporation shall give prompt written notice to each
holder of a share of Series A Preferred Stock of the effect of any adjustment
to the voting rights, dividend rights or rights upon liquidation, dissolution
or winding up of the Corporation of such shares required by the provisions of
this Certificate of Designations. Notwithstanding the foregoing sentence, the
failure of the Corporation to give such notice
9
shall not affect the validity of or the force or effect of or the requirement
for such adjustment.
Section 10. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable at the option of the Corporation or any holder
thereof. Notwithstanding the foregoing sentence of this Section, the
Corporation may acquire shares of Series A Preferred Stock in any other manner
permitted by law and the provisions hereof and the Restated Certificate of
Incorporation of the Corporation.
Section 11. Ranking. Unless otherwise provided in the Restated
Certificate of Incorporation of the Corporation, or a certificate of
designations relating to a subsequent series of preferred stock of the
Corporation, the Series A Preferred Stock shall rank junior to all other series
of the Corporation's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and senior to
the Common Stock.
Section 12. Amendment. The provisions hereof and the Restated
Certificate of Incorporation of the Corporation shall not be amended in any
manner which would adversely affect the rights, privileges or powers of the
Series A Preferred Stock without, in addition to any other vote of stockholders
required by law, the affirmative vote of the holders of two-thirds or more of
the outstanding shares of Series A Preferred Stock, voting together as a single
class.
Section 13. Fractional Shares. Shares representing Series A
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and have the benefit of
all other rights of holders of shares of Series A Preferred Stock. Any
reference in this Certificate of Designations to shares of Series A Preferred
Stock shall be deemed also to refer to fractions of shares of Series A
Preferred Stock.
10
IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Designations and do affirm the foregoing as true under the penalties of perjury
this ____ day of November, 2001.
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Corporate Secretary
ATTEST:
--------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Legal Specialist
11
