EXHIBIT 4
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
DATED AS OF
JULY 12, 2002
BETWEEN
FIRST HORIZON PHARMACEUTICAL CORPORATION
AND
LASALLE BANK NATIONAL ASSOCIATION
TABLE OF CONTENTS
ARTICLE I..................................................................................1
1.1 CERTAIN DEFINITIONS..........................................................2
ARTICLE II.................................................................................8
2.1 SUMMARY OF RIGHTS............................................................8
2.2 LEGEND ON COMMON STOCK CERTIFICATES..........................................8
2.3 EXERCISE OF RIGHTS; SEPARATION OF RIGHTS.....................................9
2.4 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS.............................11
2.5 DATE ON WHICH EXERCISE IS EFFECTIVE.........................................13
2.6 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES.......13
2.7 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.........................14
2.8 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES...................15
2.9 PERSONS DEEMED OWNERS.......................................................16
2.10 DELIVERY AND CANCELLATION OF CERTIFICATES...................................16
2.11 AGREEMENT OF RIGHTS HOLDERS.................................................16
ARTICLE III...............................................................................17
3.1 FLIP-IN.....................................................................17
3.2 FLIP-OVER...................................................................20
ARTICLE IV................................................................................21
4.1 GENERAL.....................................................................21
4.2 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT...................22
4.3 DUTIES OF RIGHTS AGENT......................................................23
4.4 CHANGE OF RIGHTS AGENT......................................................26
ARTICLE V.................................................................................27
5.1 REDEMPTION..................................................................27
5.2 EXPIRATION..................................................................27
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES.........................................27
5.4 SUPPLEMENTS AND AMENDMENTS..................................................28
5.5 FRACTIONAL SHARES...........................................................29
5.6 RIGHTS OF ACTION............................................................29
5.7 HOLDER OF RIGHTS NOT DEEMED A SHAREHOLDER...................................29
5.8 NOTICE OF PROPOSED ACTIONS..................................................30
5.9 NOTICES.....................................................................30
5.10 SUSPENSION OF EXERCISEABILITY...............................................31
5.11 COSTS OF ENFORCEMENT........................................................31
5.12 SUCCESSORS..................................................................31
5.13 BENEFITS OF THIS AGREEMENT..................................................32
5.14 DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC....................32
5.15 DESCRIPTIVE HEADINGS........................................................32
5.16 GOVERNING LAW...............................................................32
5.17 COUNTERPARTS................................................................32
5.18 SEVERABILITY................................................................33
i
FIRST HORIZON PHARMACEUTICAL CORPORATION
SUMMARY OF SHAREHOLDER PROTECTION RIGHTS PLAN
July 12, 2002
DISTRIBUTION AND TRANSFER OF RIGHTS; RIGHTS CERTIFICATES: The Board has declared
a dividend of one Right for each share of Common Stock outstanding on July 26,
2002. Prior to the Separation Time referred to below, the Rights will be
evidenced by and trade with the Common Stock and will not be exercisable. After
the Separation Time, the Company will mail Rights Certificates to shareholders
and the Rights will become transferable apart from the Common Stock.
SEPARATION TIME: Rights will separate from the Common Stock and become
exercisable following the earlier of (i) the date of the Flip-in Trigger
referred to below or (ii) the tenth business day (or such later day as the Board
may decide) after any person commences a tender offer that would result in such
person holding a total of 15% or more of the Common Stock.
EXERCISE OF RIGHTS: After the Separation Time, each Right will entitle the
holder to purchase, for an Exercise Price of $65.00, Participating Preferred
Stock designed to have economic and voting terms similar to those of one share
of Common Stock.
"FLIP-IN" TRIGGER: The Flip-in Trigger occurs on the tenth day (or such earlier
or later day as the Board may decide before such day) after the first day that a
person (the "Acquiring Person") acquires 15% or more of the Common Stock. On the
day the Flip-in Trigger occurs:
(i) Rights owned by the Acquiring Person or transferees thereof will
automatically become void; and
(ii) each other Right will automatically become a right to buy, for
the Exercise Price, that number of shares of Common Stock or
Participating Preferred Stock having a market value of twice the
Exercise Price.
EXCHANGE OPTION: If any person acquires between 15% and 50% of the outstanding
Common Stock, the Board may, in lieu of allowing Rights to be exercised, require
each outstanding Right to be exchanged for one share of Common Stock or
Participating Preferred Stock designed to have economic and voting terms similar
to those of one share of Common Stock.
"FLIP-OVER" TRIGGER: The Company may not consolidate or merge with, or sell 50%
or more of its assets or earning power to, any person (a "Flip-Over Transaction
or Event") if at the time of such merger or sale (or agreement to do any of the
foregoing) such other person controls the Board of Directors and, in the case of
a merger, will receive different treatment than all other shareholders unless
proper provision is made so that each Right would thereafter become a right to
buy, for the Exercise Price, that number of shares of common stock of such other
person having a market value of twice the Exercise Price.
REDEMPTION: The Rights may be redeemed by the Board, at any time, until a
"Flip-in" Trigger has occurred, at a Redemption Price of $.001 per Right.
POWER TO AMEND: The Board may amend the Plan in any respect until a "Flip-in"
Trigger has occurred. Thereafter, the Board may amend the Plan in any respect
not materially adverse to Rights holders generally.
EXPIRATION: The Rights will expire no later than ten years from the date of
their issuance.
1
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
SHAREHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time, this
"Agreement"), dated as of July 12, 2002, between FIRST HORIZON PHARMACEUTICAL
CORPORATION, a Delaware corporation (the "Company"), and LASALLE BANK NATIONAL
ASSOCIATION, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent hereunder).
WITNESSETH:
WHEREAS, the Board of Directors of the Company has (a) authorized and
declared a dividend of one right ("Right") in respect of each share of Common
Stock (as hereinafter defined) held of record as of the close of business on
July 26, 2002 (the "Record Time") and (b) authorized the issuance of one Right
in respect of each share of Common Stock issued after the Record Time and prior
to the Separation Time (as hereinafter defined) and, to the extent provided in
Section 5.3, each share of Common Stock issued after the Separation Time;
WHEREAS, subject to the terms hereof each Right entitles the holder
thereof, after the Separation Time, to purchase securities of the Company (or,
in certain cases, of certain other entities) pursuant to the terms and subject
to the conditions set forth herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act on behalf
of the Company, and the Rights Agent is willing so to act, in connection with
the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein; NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
1
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of 15%
or more of the outstanding shares of Common Stock; provided, however, that the
term "Acquiring Person" shall not include any Person (i) who shall become the
Beneficial Owner of 15% or more of the outstanding shares of Common Stock solely
as a result of an acquisition by the Company of shares of Common Stock, until
such time thereafter as such Person shall become the Beneficial Owner (other
than by means of a stock dividend or stock split) of any additional shares of
Common Stock, (ii) who is the Beneficial Owner of 15% or more of the outstanding
shares of Common Stock but who acquired Beneficial Ownership of shares of Common
Stock without any plan or intention to seek or affect control of the Company, if
such Person promptly enters into an irrevocable commitment promptly to divest,
and thereafter promptly divests (without exercising or retaining any power,
including voting, with respect to such shares), sufficient shares of Common
Stock (or securities convertible into, exchangeable into or exercisable for
Common Stock) so that such Person ceases to be the Beneficial Owner of 15% or
more of the outstanding shares of Common Stock, (iii) who is the Beneficial
Owner of shares of Common Stock consisting solely of shares of Common Stock, the
Beneficial Ownership of which was acquired by such Person pursuant to any action
or transaction or series of related actions or transactions approved by the
Company's Board of Directors before such person otherwise became an Acquiring
Person or (iv) who is the Beneficial Owner of 15% or more of the outstanding
shares of Common Stock on the date hereof and does not thereafter acquire
Beneficial Ownership of additional shares of Common Stock that in the aggregate
exceed 2% of the outstanding shares of Common Stock. In addition, the Company,
any wholly-owned Subsidiary of the Company and any employee stock ownership or
other employee benefit plan of the Company or a wholly-owned Subsidiary of the
Company shall not be an Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Securities Exchange Act of 1934 as amended
(the "Securities Exchange Act"), as such Rule is in effect on the date of this
Agreement.
2
A Person shall be deemed the "Beneficial Owner", and have "Beneficial
Ownership" of, and to "Beneficially Own", any securities as to which such Person
or any of such Person's Affiliates or Associates is or may be deemed to be the
beneficial owner pursuant to Rule 13d-3 and 13d-5 under the Securities Exchange
Act as such Rules are in effect on the date of this Agreement as well as any
securities as to which such Person or any of such Person's Affiliates or
Associates has the right to become the Beneficial Owner (whether such right is
exercisable immediately or only after the passage of time or the occurrence of
conditions) pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner", or to have "Beneficial Ownership" of, or to
"Beneficially Own", any security (i) solely because such security has been
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered security is accepted
for payment or exchange or (ii) solely because such Person or any of such
Person's Affiliates or Associates has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy given in response to a
public proxy or consent solicitation made to more than ten holders of shares of
a class of stock of the Company registered under Section 12 of the Securities
Exchange Act and pursuant to, and in accordance with, the applicable rules and
regulations under the Securities Exchange Act, except if such power (or the
arrangements relating thereto) is then reportable under Schedule 13D under the
Securities Exchange Act (or any similar provision of a comparable or successor
report). For purposes of this Agreement, in determining the percentage of
outstanding shares of Common Stock with respect to which a Person is the
Beneficial Owner, all shares as to which such Person is deemed the Beneficial
Owner shall be deemed outstanding. Notwithstanding anything in this paragraph to
the contrary, a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any security beneficially owned by another Person solely by
reason of an agreement, arrangement or understanding with such other Person for
the purposes of: (x) soliciting the Company's stockholders for the election of
director nominees or any other stockholder resolution, the formation of and
membership on any committee for the purpose of promoting or opposing any
stockholder resolution or for electing a slate of nominees to the Board, service
on such a slate of nominees, or agreement to serve on a slate of director
3
nominees, provided that such other Person retains the right at any time to
withdraw as a nominee or member of any such committee, and to withhold or revoke
any vote or proxy for or against any such stockholder resolution or for such
slate of nominees; (y) entering into revocable voting agreements or the granting
or solicitation of revocable proxies with respect to any of the matters
described in the foregoing clause (x); or (z) the sharing of expenses and the
indemnification against expenses and liabilities by any such other Person with
respect to expenses incurred or conduct occurring during the time such other
Person is a nominee or a member of any such committee described in the foregoing
clause (x). Further, notwithstanding anything in this paragraph to the contrary,
a Person engaged in the business of underwriting securities shall not be deemed
to be the "Beneficial Owner" of, or to "Beneficially Own," any securities
acquired in good faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the State of Georgia or the state in which the
principal office of the Rights Agent is located are generally authorized or
obligated by law or executive order to close.
"Close of business" on any given date shall mean the time on such date (or,
if such date is not a Business Day, the time on the next succeeding Business
Day) at which the office of the transfer agent for the Common Stock (or, after
the Separation Time, the office of the Rights Agent) is closed to the public.
"Common Stock" shall mean the shares of common stock, $.001 par value, of
the Company.
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at which a holder
may purchase the securities issuable upon the exercise of one whole Right. Until
adjustment thereof in accordance with the terms hereof the Exercise Price shall
equal $[_____].
"Expiration Time" shall mean the earliest of (i) the Exchange Time, (ii)
the Redemption Time, (iii) the close of business on the tenth-year anniversary
of the Record Time and (iv) upon the merger of the Company into another
4
corporation pursuant to an agreement entered into when there is no Acquiring
Person unless such transaction constitutes a Flip-over Transaction or Event.
"Flip-in Date" shall mean any Stock Acquisition Date which is not the
result of a Flip-over Transaction or Event.
"Flip-over Entity", for purposes of Section 3.2, shall mean (i) in the case
of a Flip-over Transaction or Event described in clause (i) of the definition
thereof, the Person issuing any securities into which shares of Common Stock are
being converted or exchanged and, if no such securities are being issued, the
other party to such Flip-over Transaction or Event and (ii) in the case of a
Flip-over Transaction or Event referred to in clause (ii) of the definition
thereof, the Person receiving the greatest portion of the assets or earning
power being transferred in such Flip-over Transaction or Event, provided in all
cases that if such Person is a subsidiary of a corporation, the parent
corporation shall be the Flip-over Entity.
"Flip-over Stock" shall mean the capital stock (or similar equity interest)
with the greatest voting power in respect of the election of directors (or other
persons similarly responsible for direction of the business and affairs) of the
Flip-over Entity. "Flip-over Transaction or Event" shall mean a transaction or
series of transactions in which, directly or indirectly, (i) the Company shall
consolidate or merge or participate in a share exchange with any other Person
(other than the Company or one or more of its wholly-owned subsidiaries) if, at
the time of the consolidation, merger or share exchange or at the time the
Company enters into any agreement with respect to any such consolidation, merger
or share exchange, such other Person controls the Board of Directors of the
Company and any term of or arrangement concerning the treatment of shares of
capital stock in such consolidation, merger or share exchange relating to such
other Person is not identical to the terms and arrangements relating to other
holders of the Common Stock or (ii) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer) assets (A)
aggregating more than 50% of the assets (measured by either book value or fair
market value) or (B) generating more than 50% of the operating income or cash
flow of the Company and its Subsidiaries (taken as a whole) to any Person (other
than the Company or one or more of its wholly owned Subsidiaries) or to two or
more such Persons which are Affiliates or Associates or otherwise acting in
5
concert if, at the time of the entry by the Company (or any such Subsidiary)
into an agreement with respect to such sale or transfer or assets, such other
Person controls the Board of Directors of the Company.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on any
date shall be the last reported sale price, regular way, or, in case no such
sale takes place or is quoted on such date, the average of the closing bid and
asked prices, regular way, for each share of such securities, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on The Nasdaq Stock Market or, if
the securities are not listed or admitted to trading on The Nasdaq Stock Market,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange or
quotation system which the securities are listed or admitted to trading or, if
the securities are not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the securities selected by the
Board of Directors of the Company; provided, however, that if on any such date
the securities are not listed or admitted to trading on a national securities
exchange or traded in the over-the-counter market, the closing price per share
of such securities on such date shall mean the fair value per share of
securities on such date as determined in good faith by the Board of Directors of
the Company, after consultation with a nationally recognized investment banking
firm and set forth in a certificate delivered to the Rights Agent. If the
Preferred Stock is not publicly held and listed or traded in a manner set forth
in this paragraph, the "Market Price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such number may be
6
appropriately adjusted for such events as stock splits, stock dividends or
capitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the Market Price per share of Common Stock
determined as provided in this paragraph.
"Person" shall mean any individual, partnership, association, group (as
such term is used in Rule 13d-5 under the Securities Exchange Act, as such Rule
is in effect on the date of this Agreement), corporation or other entity.
"Preferred Stock" shall mean the series of Participating Preferred Stock,
$.001 par value, of the Company created by the Certificate of Designation in
substantially the form set forth in Exhibit B hereto.
"Redemption Price" shall mean an amount equal to 1/10 of one cent ($.001).
"Redemption Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 5.1 hereof.
"Separation Time" shall mean the close of business on the earlier of (i)
the tenth business day (or such later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any Person
commences a tender or exchange offer which, if consummated, would result in such
Person's becoming an Acquiring Person and (ii) the Flip-in Date; provided, that
if the foregoing results in the Separation Time being prior to the Record Time,
the Separation Time shall be the Record Time and provided further, that if any
tender or exchange offer referred to in clause (i) of this paragraph is
canceled, terminated or otherwise withdrawn prior to the Separation Time without
the purchase of any shares of Common Stock pursuant thereto, such offer shall be
deemed, for purposes of this paragraph, never to have been made.
"Stock Acquisition Date" shall mean the close of business on the tenth day
(or such earlier or later date as the Board of Directors of the Company may
establish by resolution adopted prior to such day) after the first date that an
Acquiring Person has become such.
"Subsidiary" of any specified Person shall mean any corporation or other
entity of which a majority of the voting power of the equity securities or a
majority of the equity interest is Beneficially Owned, directly or indirectly,
by such Person.
7
"Trading Day", when used with respect to any securities, shall mean a day
on which The Nasdaq Stock Market is open for the transaction of business or, if
such securities are not listed or admitted to trading on The Nasdaq Stock
Market, a day on which the principal national securities exchange or quotation
system on which such securities are listed or admitted to trading, is open for
the transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange or quotation system, a Business Day.
"Transaction" shall mean any merger, consolidation, share exchange or sale
of assets as a result of which all of the holders of the Common Stock
immediately prior to the transaction do not hold in the same proportion all of
the voting power of the corporation surviving the transaction, or the Company
shall sell, mortgage or otherwise transfer (or one or more of its subsidiaries
shall sell, mortgage or otherwise transfer), in one or more transactions assets
aggregating more than 50% of the assets (measured by either book value or fair
market value) or generating more than 50% of the operating income or cash flow
of the Company and its Subsidiaries (taken as a whole) to any person (other than
the Company or one or more of its wholly-owned subsidiaries).
ARTICLE II
THE RIGHTS
2.1 Summary of Rights. As soon as practicable after the Record Time, the
Company will mail a letter summarizing the terms of the Rights to each holder of
record of Common Stock as of the Record Time, at such holder's address as shown
by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates for the Common Stock
issued after the Record Time but prior to the Separation Time shall evidence one
Right for each share of Common Stock represented thereby and shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement, dated as of July 12,
2002 (as such may be amended from time to time, the "Rights Agreement"),
8
between First Horizon Pharmaceutical Corporation (the "Company") and
LaSalle Bank National Association, as Rights Agent, the terms of which are
hereby incorporated herein by reference and a copy of which is on file at
the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may be exchanged for shares of Common Stock or other securities
or assets of the Company or a Subsidiary of the Company, may expire, may
become void (if they are "Beneficially Owned" by an "Acquiring Person" or
an Affiliate or Associate thereof, as such terms are defined in the Rights
Agreement, or by any transferee of any of the foregoing) or may be
evidenced by separate certificates and may no longer be evidenced by this
certificate. The Company will mail or arrange for the mailing of a copy of
the Rights Agreement to the holder of this certificate without charge
within five days after the receipt of a written request therefor.
Certificates representing shares of Common Stock that are issued and outstanding
at the Record Time shall evidence one Right for each share of Common Stock
evidenced thereby notwithstanding the absence of the foregoing legend.
2.3 Exercise of Rights; Separation of Rights. (a) Subject to Sections 3.1,
5.1 and 5.10 and subject to adjustment as herein set forth, each Right will
entitle the holder thereof, after the Separation Time and prior to the
Expiration Time, to purchase, for the Exercise Price, one one-hundredth (1/100)
of a share of Preferred Stock.
(b) Prior to the Separation Time, (i) no Right may be exercised and
(ii) each Right will be evidenced by the certificate for the associated share of
Common Stock (together, in the case of certificates issued prior to the Record
Time, with the letter mailed to the record holder thereof pursuant to Section
2.1) and will be transferable only together with, and will be transferred by a
transfer (whether with or without such letter) of, such associated share.
(c) Subject to the terms hereof, after the Separation Time and prior
to the Expiration Time, the Rights (i) may be exercised and (ii) may be
transferred independent of shares of Common Stock. Promptly after the Company
has notified the Rights Agent of the occurrence of the Separation Time, the
Rights Agent will mail to each holder of record of Common Stock as of the
Separation Time (other than any Persons with respect to whom the Rights Agent
has been notified that their Rights have become void pursuant to Section
3.1(b)), at such holder's address as shown by the records of the Company (the
Company hereby agreeing to furnish copies of such records to the Rights Agent
for this purpose), (x) a certificate (a "Rights Certificate") in substantially
9
the form of Exhibit A hereto appropriately completed, representing the number of
Rights held by such holder at the Separation Time and having such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any national securities exchange or quotation system on which the
Rights may from time to time be listed or traded, or to conform to usage, and
(y) a disclosure statement describing the Rights.
(d) Subject to the terms hereof, Rights may be exercised on any
Business Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent the Rights Certificate evidencing such Rights
with an Election to Exercise (an "Election to Exercise") substantially in the
form attached to the Rights Certificate duly completed, accompanied by payment
in cash, or by certified or official bank check or money order payable to the
order of the Company, a sum equal to the Exercise Price multiplied by the number
of Rights being exercised and a sum sufficient to cover any transfer tax or
charge which may be payable in respect of any transfer involved in the transfer
or delivery of Rights Certificates or the issuance or delivery of certificates
for shares or depository receipts (or both) in a name other than that of the
holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to Exercise
accompanied by payment as set forth in Section 2.3(d), and subject to the terms
hereof, the Rights Agent will thereupon promptly (i)(A) requisition from a
transfer agent stock certificates evidencing such number of shares or other
securities to be purchased (the Company hereby irrevocably agrees that it will
authorize its transfer agents to comply with all such requisitions) and (B) if
the Company elects pursuant to Section 5.5 not to issue certificates
representing fractional shares, requisition from the depository selected by the
Company depository receipts representing the fractional shares to be purchased
or requisition from the Company the amount of cash to be paid in lieu of
fractional shares in accordance with Section 5.5 and (ii) after receipt of such
certificates, depository receipts and/or cash, deliver the same to or upon the
order of the registered holder of such Rights Certificate, registered (in the
10
case of certificates or depository receipts) in such name or names as may be
designated by such holder.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights Agent
to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all such
action as may be necessary to ensure that all shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Exercise Price), be duly and validly authorized,
executed, issued and delivered and fully paid and nonassessable; (ii) take all
such action as may be necessary to comply with any applicable requirements of
the Securities Act of 1933 and the Securities Exchange Act, and the rules and
regulations thereunder, and any other applicable law, rule or regulation, in
connection with the issuance of any shares upon exercise of Rights; and (iii)
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the original issuance or delivery of
the Rights Certificates or of any shares issued upon the exercise of Rights,
provided that the Company shall not be required to pay any transfer tax or
charge which may be payable in respect of any transfer involved in the transfer
or delivery of Rights Certificates or the issuance or delivery of certificates
for shares in a name other than that of the holder of the Rights being
transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In the event the
Company shall at any time after the Record Time and prior to the Separation Time
(i) declare or pay a dividend on Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock in to a smaller number of shares of Common Stock, (x) the Exercise Price
in effect after such adjustment will be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the number of shares of Common
Stock (the "Expansion Factor") that a holder of one share of Common Stock
immediately prior to such dividend, subdivision or combination would hold
thereafter as a result thereof and (y) each Right held prior to such adjustment
will become that number of Rights equal to the Expansion Factor, and the
adjusted number of Rights will be deemed to be distributed among the shares of
Common Stock with respect to which the original Rights were associated (if they
11
remain outstanding) and the share issued in respect of such dividend,
subdivision or combination, so that each such share of Common Stock will have
exactly one Right associated with it. Each adjustment made pursuant to this
paragraph shall be made as of the payment or effective date for the applicable
dividend, subdivision or combination.
In the event the Company shall at any time after the Record Time and prior
to the Separation Time issue any shares of Common Stock otherwise than in a
transaction referred to in the preceding paragraph, each such share of Common
Stock so issued shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such share. To the
extent provided in Section 5.3, Rights shall be issued by the Company in respect
of shares of Common Stock that are issued or sold by the Company after the
Separation Time.
(b) In the event the Company shall at any time after the Record Time
and prior to the Separation Time issue or distribute any securities or assets in
respect of, in lieu of or in exchange for Common Stock (other than pursuant to a
regular periodic cash dividend or a dividend paid solely in Common Stock)
whether by a dividend, in a reclassification or recapitalization (including any
such transaction involving a merger, consolidation or share exchange), or
otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights and/or securities or other property purchasable upon
exercise of Rights as the Board of Directors of the Company, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the
Company and the Rights Agent shall amend this Agreement as necessary to provide
for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this
Section 2.4 shall be calculated to the nearest cent. Whenever an adjustment to
the Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (ii) promptly file with
the Rights Agent and with each transfer account for the Common Stock a copy of
such certificate and (iii) mail a brief summary thereof to each holder of
Rights. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein and shall not be deemed to have
12
knowledge of any such adjustment unless and until it shall have received such a
certificate.
(d) Irrespective of any adjustment or change in the securities
purchasable upon exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the securities so purchasable which
were expressed in the initial Rights Certificates issued hereunder.
2.5 Date on Which Exercise is Effective. Each person in whose name any
certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price for such Rights (and any applicable taxes and other governmental
charges payable by the exercising holder hereunder) was made; provided, however
that if the date of such surrender and payment is a date upon which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the stock transfer books of the
Company are open.
2.6 Execution, Authentication, Delivery and Dating of Rights Certificates.
(a) The Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President, Chief Executive Officer, Chief Operating
Officer, Vice Chairman of the Board, or Executive Vice President, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such Rights
Certificates.
Promptly after the Company learns of the Separation Time, the Company will
notify the Rights Agent of such Separation Time and will deliver Rights
Certificates executed by the Company to the Rights Agent for countersignature,
and, subject to Section 3.1(b), the Rights Agent shall manually countersign and
13
deliver such Rights Certificates to the holders of the Rights pursuant to
Section 2.3(c) hereof. No Rights Certificate shall be valid for any purpose
unless manually countersigned by the Rights Agent.
2.7 Registration, Registration of Transfer and Exchange. (a) After the
Separation Time, the Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Rights. The Rights
Agent is hereby appointed "Rights Registrar" for the purpose of maintaining the
Rights Register for the Company and registering Rights and transfers of Rights
after the Separation Time as herein provided. In the event that the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate, and subject
to the provisions of Section 2.7(c) and (d), the Company will execute, and the
Rights Agent will countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder's
instructions, one or more new Rights Certificates evidencing the same aggregate
number of Rights as did the Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights issued upon
any registration of transfer or exchange of Rights Certificates shall be the
valid obligations of the Company, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon such registration
of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company or the Rights Agent, as the case
may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
14
(d) The Company shall not be required to register the transfer or exchange
of any Rights after such Rights have become void under Section 3.1(b), been
exchanged under Section 3.1(c) or been redeemed or terminated under Section 5.1.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If any
mutilated Rights Certificate is surrendered to the Rights Agent prior to the
Expiration Time, then, subject to Sections 3.1(b) and 5.1, the Company shall
execute and the Rights Agent shall countersign and deliver in exchange therefor
a new Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights Agent prior
to the Expiration Time (i) evidence to their satisfaction of the destruction,
loss or theft of any Rights Certificate and (ii) such security or indemnity as
may be required by them to save each of them and any of their agents harmless,
then, subject to Sections 3.1(b) and 5.1 and in the absence of notice to the
Company or the Rights Agent that such Rights Certificate has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the Rights
Agent shall countersign and deliver, in lieu of any such destroyed, lost or
stolen Rights Certificate, a new Rights Certificate evidencing the same number
of Rights as did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under this
Section 2.8, the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Rights Agent)
connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.8 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence an
original additional contractual obligation of the Company whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) for
registration or transfer, the Company, the Rights Agent and any agent of the
15
Company or the Rights Agent may deem and treat the person in whose name such
Rights Certificate (or, prior to the Separation Time, such Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, including the payment of the
Redemption Price and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary. As used in this Agreement, unless the context
otherwise requires, the term "holder" of any Rights shall mean the registered
holder of such Rights (or, prior to the Separation Time, the associated shares
of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights Certificates
surrendered upon exercise or for registration of transfer or exchange shall, if
surrendered to any person other than the Rights Agent, be delivered to the
Rights Agent and, in any case, shall be promptly canceled by the Rights Agent.
The Company may at any time deliver to the Rights Agent for cancellation of any
Rights Certificates previously countersigned and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Rights Certificates
so delivered shall be promptly canceled by the Rights Agent. No Rights
Certificates shall be countersigned in lieu of or in exchange for any Rights
Certificates canceled as provided in this Section 2.10, except as expressly
permitted by this Agreement. The Rights Agent shall destroy all canceled Rights
Certificates and deliver a Certificate of destruction to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated share of
Common Stock;
(b) after the Separation Time, the Rights Certificates will be transferable
only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
16
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become void;
(e) this Agreement may be supplemented or amended from time to time
pursuant to Section 2.4(b) or 5.4 hereof; and
(f) nothwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have liability to any holder of a Right
or any other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation, provided, however, the Company must have used
its best efforts to have any such order, decree, or ruling lifted or otherwise
overturned as promptly as practicable.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS
IN THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in. (a) In the event that prior to the Expiration Time a Flip-in
Date shall occur, the Company shall take such action as shall be necessary to
ensure and provide that, except as provided in this Section 3.1, each Right
shall constitute the right to purchase from the Company, upon exercise thereof
in accordance with the terms hereof (but subject to Section 5.10), that number
of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Exercise Price for an amount in cash equal
to the Exercise Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the event that on or
after such Stock Acquisition Date an event of a type analogous to any of the
events described in Section 2.4(a) or (b) shall have occurred with respect to
the Common Stock).
17
(b) Notwithstanding the foregoing, any Rights that are or were Beneficially
Owned on or after the Stock Acquisition Date by an Acquiring Person or an
Affiliate or Associate thereof or by any transferee, direct or indirect, of any
of the foregoing shall become void and any holder of such Rights (including
transferees) shall thereafter have no right to exercise or transfer such Rights
under any provision of this Agreement. If any Rights Certificate is presented
for assignment or exercise and the Person presenting the same will not complete
the certification set forth at the end of the form of assignment or notice of
election to exercise and to provide such additional evidence of the identity of
the Beneficial Owner and its Affiliates and Associates (or former Beneficial
Owners and their Affiliates and Associates) as the Company shall reasonably
request, then the Company shall be entitled conclusively to deem the Beneficial
Owner thereof to be an Acquiring Person or an Affiliate or Associate thereof or
a transferee of any of the foregoing and accordingly will deem the Rights
evidenced thereby to be void and not transferable or exercisable.
(c) The Board of Directors of the Company may, at its option, at any time
after a Flip-in Date and prior to the time that an Acquiring Person becomes the
Beneficial Owner of more than 50% of the outstanding shares of Common Stock,
elect to exchange all (but not less than all) the then outstanding Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 3.1(b)) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted in order to protect the interests
of holders of Rights generally in the event that after the Separation Time an
event of a type analogous to any of the events described in Section 2.4(a) or
(b) shall have occurred with respect to the Common Stock (such exchange ratio,
as adjusted from time to time, being hereinafter referred to as the "Exchange
Ratio").
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right (other
than Rights that have become void pursuant to Section 3.1(b)) will thereafter
represent only the right to receive a number of shares of Common Stock equal to
the Exchange Ratio. Promptly after the action of the Board of Directors electing
to exchange the Rights, the Company shall give notice thereof (specifying the
steps to be taken to receive shares of Common Stock in exchange for Rights) to
the Rights Agent and the holders of the Rights (other than Rights that have
18
become void pursuant to Section 3.1(b)) outstanding immediately prior thereto by
mailing such notice in accordance with Section 5.9.
Each person in whose name any certificate for shares is issued upon the
exchange of Rights pursuant to this Section 3.1(c) shall for all purposes be
deemed to have become the holder of record of the shares represented thereby on,
and such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of any applicable taxes
and other governmental charges payable by the holder was made; provided,
however, that if the date of such surrender and payment is a date upon which the
stock transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the stock transfer books of the
Company are open.
(d) Whenever the Company shall become obligated under Section 3.1(a) or (c)
to issue shares of Common Stock upon exercise of or in exchange for Rights, the
Company, at its option, may substitute therefor shares of Preferred Stock, at a
ratio of one one-hundredth (1/100) of a share of Preferred Stock for each share
of Common Stock so issuable.
(e) In the event that there shall not be sufficient treasury shares or
authorized but unissued shares of Common Stock or Preferred Stock of the Company
to permit the exercise or exchange in full of the Rights in accordance with
Section 3.1(a) or (c), the Company shall either (i) call a meeting of
shareholders seeking approval to cause sufficient additional shares to be
authorized (provided that if such approval is not obtained, the Company will
take the action specified in clause (ii) of this sentence) or (ii) take such
action as shall be necessary to ensure and provide, to the extent permitted by
applicable law and any agreements or instruments in effect on the Stock
Acquisition Date to which it is a party, that each Right shall thereafter
constitute the right to receive, (x) at the Company's option, either (A) in
return for the Exercise Price, debt or equity securities or other assets (or a
combination thereof) having a fair value equal to twice the Exercise Price, or
(B) without payment of consideration (except as otherwise required by applicable
law), debt or equity securities or other assets (or a combination thereof)
having a fair value equal to the Exercise Price, or (y) if the Board of
Directors of the Company elects to exchange the Rights in accordance with
Section 3.1(c), debt or equity securities or other assets (or a combination
19
thereof) having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-in Date times the Exchange Ratio in effect on the
Flip-in Date, where in any case set forth in (x) or (y) above the fair value of
such debt or equity securities or other assets shall be as determined in good
faith by the Board of Directors of the Company, after consultation with a
nationally recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event unless and until it shall have entered into a
supplemental agreement with the Flip-over Entity, for the benefit of the holders
of the Rights, providing that, upon consummation or occurrence of the Flip-over
Transaction or Event (i) each Right shall thereafter constitute the right to
purchase from the Flip-over Entity, upon exercise thereof in accordance with the
terms hereof, that number of shares of Flip-over Stock of the Flip-over Entity
having an aggregate Market Price on the date of consummation or occurrence of
such Flip-over Transaction or Event equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price (such right to be appropriately
adjusted in order to protect the interests of the holders of Rights generally in
the event that after such date of consummation or occurrence an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall have
occurred with respect to the Flip-over Stock) and (ii) the Flip-over Entity
shall thereafter be liable for, and shall assume, by virtue of such Flip-over
Transaction or Event and such supplemental agreement, all the obligations and
duties of the Company pursuant to this Agreement. The provisions of this Section
3.2 shall apply to successive Flip-over Transaction or Events.
(b) Prior to the Expiration Time, unless the Rights will be redeemed
pursuant to Section 5.1 hereof in connection therewith, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event if at the time thereof there are any rights,
warrants or securities outstanding or any other arrangements, agreements or
instruments that would eliminate or otherwise diminish in any material respect
the benefits intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction.
20
ARTICLE IV
THE RIGHTS AGENT
4.1 General. (a) The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent, its officers,
employees, agents and directors for, and to hold each of them harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent for anything done or omitted
to be done by the Rights Agent or such other indemnified party in connection
with the acceptance or administration of this Agreement or the exercise or
performance of its duties hereunder, including the costs and expenses of
defending against any claim of liability. The indemnity provided in this Section
4.1 shall survive the expiration of the Rights and the termination of the
Agreement.
(b) The Rights Agent shall be protected by the Company 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 or the exercise or
performance of its duties hereunder in reliance upon any certificate for
securities purchasable upon exercise of Rights, Rights Certificate, certificate
for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper persons or persons, or otherwise upon the advice of counsel as set
forth in Section 4.3(a).
Anything in this Agreement to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Rights Agent has been advised of the likelihood of such loss or damage
and regardless of the form of the action.
21
4.2 Merger or Consolidation or Change of Name of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, will 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 4.4 hereof. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any
of the Rights Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates have not been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations expressly imposed by this Agreement (and no implied duties or
obligations shall be read into this Agreement against the Rights Agent) upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the written advice or opinion of such counsel will
be full and complete authorization and protection to the Rights Agent as to any
22
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter (including,
without limitation, the identity of any Acquiring Person, Affiliate, Associate,
Beneficial Owner and the determination of Market Price) be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by a person believed by the Rights Agent to be the Chairman
of the Board, the President, the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate will be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent is serving as a ministerial agent and, accordingly,
will not be under any responsibility in respect of the validity of any provision
of this Agreement or the execution and delivery hereof (except the due
authorization, execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any certificate for securities purchasable upon
exercise of Rights or Rights Certificate (except its countersignature thereto);
nor will it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor will it
be responsible for any change in the exerciseability of the Rights (including
the Rights becoming void pursuant to Section 3.1(b) hereof) or any adjustment in
the terms of the Rights required herein or responsible for the manner, method or
23
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
after receipt of the certificate contemplated by Section 2.4 describing any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
securities purchasable upon exercise of Rights or any Rights or as to whether
any securities purchasable upon exercise of Rights will, when issued, be duly
and validly authorized, executed, issued and delivered and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President, the Secretary or the Treasurer of the Company, and to apply to such
persons for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such person.
Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Agreement and the
date on or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
expressly referenced above actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
24
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in Common Stock, Rights or other
securities of the Company or become pecuniary interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided the Rights Agent was not negligent in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not assured to it.
(k) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
4.4 Change of Rights Agent. The Rights Agent may resign and be discharged
from its duties under this Agreement upon 60 days' notice (or such lesser notice
as is acceptable to the Company) in writing mailed to the Company and to each
transfer agent of Common Stock by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.9. The Company may remove the
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent and to
each transfer agent of the Common Stock by registered or certified mail, and to
the holders of the Rights in accordance with Section 5.9. If the Rights Agent
should resign or be removed or otherwise become incapable of acting, the Company
will appoint a successor to the Rights Agent. If the Company fails 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
25
incapacitated Rights Agent or by the holder of any Rights (which holder shall,
with such notice, submit such holder's Rights Certificate for inspection by the
Company), then the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation or association organized and doing business under the laws of the
United States or of the State of New York, Georgia or Illinois, in good
standing, an office in the State of New York, North Carolina, Georgia or
Illinois, which is authorized under such laws to exercise the powers of the
Rights Agent contemplated by this Agreement and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent will 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 delivery
any further assurance, conveyance, act or deed necessary for the purpose. The
Rights Agent shall be paid any outstanding fees and expenses prior to
transferring any property to a successor Rights Agent. Not later than the
effective date of any such appointment, the Company will file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Stock, and mail a notice thereof in writing to the holders of the Rights.
Failure to give any notice provided for in this Section 4.4, 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.
ARTICLE V
MISCELLANEOUS
5.1 Redemption. (a) The Company (upon approval of its Board of Directors)
may, at its option, at any time prior to the Flip-in Date, elect to redeem all
(but not less than all) of the then outstanding Rights at the Redemption Price
and the Company, at its option, may pay the Redemption Price either in cash or
shares of Common Stock or other securities of the Company deemed by the Board of
26
Directors, in the exercise of its sole discretion, to be at least equivalent in
value of the Redemption Price.
(b) Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights (or, if the resolution of the Board of Directors
election to redeem the Rights states that the redemption will not be effective
until the occurrence of a specified future time or event, upon the occurrence of
such future time or event), without any further action and without any notice,
the right to exercise the Rights will terminate and each Right will thereafter
represent only the right to receive the Redemption Price in cash or securities,
as determined by the Board of Directors. Promptly after the Rights are redeemed,
the Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice in accordance with
Section 5.9.
5.2 Expiration. The Rights and this Agreement shall expire at the
Expiration Time and no Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged or
redeemed, as provided in Section 3.1(c), 3.1(d), 3.1(e), 3.2 or 5.1 hereof.
5.3 Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock by the Company
following the Separation Time and prior to the Redemption Time or Expiration
Time pursuant to the terms of securities convertible or redeemable into shares
of Common Stock or to options, in each case issued or granted prior to, and
outstanding at, the Separation Time, the Company shall issue to the holders of
such shares of Common Stock, Rights Certificates representing the appropriate
number of Rights in connection with the issuance or sale of such shares of
Common Stock; provided, however, in each case, (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or to the Person to whom such Rights
Certificates would be issued, (ii) no such Rights Certificates shall be issued
27
if, and to the extent that, appropriate adjustment shall have otherwise been
made in lieu of the issuance thereof, and (iii) the Company shall have no
obligation to distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of an Acquiring Person or any transferee of any of the
foregoing.
5.4 Supplements and Amendments. The Company (upon approval of its Board of
Directors) and the Rights Agent may from time to time supplement or amend this
Agreement without the approval of any holders of Rights (i) prior to the Flip-in
Date, in any respect and (ii) after the close of business on the Flip-in Date,
to make any changes that the Company may deem necessary or desirable and which
shall not materially adversely affect the interests of the holders of Rights
generally or in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be inconsistent with any other provisions
herein or otherwise defective. Upon the delivery of a certificate from an
appropriate officer of the Company stating that the proposed supplement or
amendment is in compliance with the terms of this Section, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment that changes the
rights and duties of the Rights Agent under this Agreement shall be effective
without the consent of the Rights Agent.
5.5 Fractional Shares. If the Company elects not to issue certificates
representing fractional shares upon exercise or redemption of Rights, the
Company shall, in lieu thereof, in the sole discretion of the Board of
Directors, either (a) evidence such fractional shares by depository receipts
issued pursuant to an appropriate agreement between the Company and a depository
selected by it, providing that each holder of a depository receipt shall have
all of the rights, privileges and preferences to which such holder would be
entitled as a beneficial owner of such fractional share, or (b) pay to the
registered holder of such Rights an amount in cash equal to the same fraction of
the Market Price of such share.
5.6 Rights of Action. Subject to the terms of this Agreement (including
Section 3.1(b)), rights of action in respect of this Agreement, other than
rights of action vested solely in the Rights Agent, are vested in the respective
holders of the Rights; and any holder of any Rights, without the consent of the
Rights Agent or of the holder of any other Rights, may, on such holder's own
behalf and for such holder's own benefit and the benefit of other holders of
28
Rights, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise such holder's Rights in the manner provided in such holder's
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Shareholder. No holder, as such, of any
Rights shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of shares or any other securities which may at any time be issuable
on the exercise of such Rights, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 5.8 hereof), or to receive dividends or subscription rights,
or otherwise, until such Rights shall have been exercised or exchanged in
accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company shall propose after the
Separation Time and prior to the Expiration Time (i) to effect or permit (in
cases where the Company's permission is required) occurrence of any Flip-in Date
or Flip-over Transaction or Event or (ii) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 5.9 hereof, a notice of such
proposed action, which shall specify the Flip-in Date or the date on which such
Flip-over Transaction or Event, liquidation, dissolution, or winding up is to
take place, and such notice shall be so given at least 20 Business Days prior to
the date of the taking of such proposed action.
5.9 Notices. Notices or demands authorized or required by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights to or on the
29
Company shall be sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
First Horizon Pharmaceutical Corporation
ββββ ββββββ ββββ
ββββββββββ, βββββββ βββββ
Attention: President
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
LaSalle Bank National Association
βββ βββββ βββββββ ββββββ, βββββ ββββ
βββββββ, ββββββββ βββββ
Attention: ββββββ β. βββββββββ
Notices or demands authorized or required by this Agreement to be given or
made by the Company or the Rights Agent to or on the holder of any Rights shall
be sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, 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.
5.10 Suspension of Exerciseability. To the extent that the Company
determines in good faith that some action will or need be taken pursuant to
Section 3.1(a), (b), (d) or (e) or to comply with federal or state securities
laws, the Company may suspend the exerciseability of the Rights for a period of
up to ninety (90) days following the date of the occurrence of the Separation
Time or the Flip-in Date in order to take such action or comply with such laws.
In the event of any such suspension the Company shall issue as promptly as
practicable a public announcement stating that the exerciseability or
exchangeability of the Rights has been temporarily suspended. Notice thereof
pursuant to Section 5.9 shall not be required.
30
Failure to give a notice pursuant to the provisions of this Agreement shall
not affect the validity of any action taken hereunder.
5.11 Costs of Enforcement. The Company agrees that if the Company or any
other Person, the securities of which are purchasable upon exercise of Rights,
fails to fulfill any of its obligations pursuant to this Agreement, then the
Company or such Person will reimburse the holder of any rights for the costs and
expenses (including legal fees) incurred by such holder in actions to enforce
such holder's rights pursuant to any Rights or this Agreement if such holder
prevails in such actions.
5.12 Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
5.13 Benefits of this Agreement. Nothing in this agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
holders of the 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
Company, the Rights Agent and the holders of the Rights.
5.14 Determination and Actions by the Board of Directors, etc. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of Directors of
the Company to any liability to the holders of the Rights.
5.15 Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
31
5.16 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH
STATE APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY WITHIN SUCH
STATE.
5.17 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.
5.18 Severability. If any term or provision hereof or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability would
invalidate or rendering unenforceable the remaining terms and provisions hereof
or the application of such term or provision to circumstances other than those
as to which it is held invalid or unenforceable.
5.19 Interpretation. In the event of any inconsistency between the terms of
the text of this Agreement and the Summary which precedes such text, the text
shall control the meaning of this Agreement.
[signatures on following page]
32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
FIRST HORIZON PHARMACEUTICAL CORPORATION
By: /s/ ββββββββ β. ββββ, Ph.D.
-------------------------------------
Name: ββββββββ β. ββββ, Ph.D.
Title: Chairman, Chief Executive Officer
and President
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ ββββββ β. βββββββββ
-------------------------------------
Name: ββββββ β. βββββββββ
Title: Assistant Vice President
33
EXHIBIT A
[Form of Rights Certificate]
Certificate No. W- ______ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT THE OPTION
OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY
OF THE FOREGOING WILL BE VOID.
Rights Certificate
FIRST HORIZON PHARMACEUTICAL CORPORATION
This certifies that ______________ or registered assigns, is the registered
holder of the number of Rights set forth above, each of which entitles the
registered holder thereof, subject to the terms, provisions and conditions of
the Shareholder Protection Rights Agreement, dated as of July 12, 2002 (as
amended from time to time, the "Rights Agreement"), between FIRST HORIZON
PHARMACEUTICAL CORPORATION, a Delaware corporation (the "Company"), and LASALLE
BANK NATIONAL ASSOCIATION as Rights Agent (the "Rights Agent", which term shall
include any successor Rights Agent under the Rights Agreement), to purchase from
the Company at any time after the Separation Time (as such term is defined in
the Rights Agreement) and prior to the close of business on July 26, 2012, one
one-hundredth (1/100th) of a fully paid share of Participating Preferred Stock,
no par value (the "Preferred Stock"), of the Company (subject to adjustment as
provided in the Rights Agreement) at the Exercise Price referred to below, upon
presentation and surrender of this Rights Certificate with the Form of Election
to Exercise duly executed at the principal office of the Rights Agent in
Charlotte, North Carolina. The Exercise Price shall initially be $65.00 per
Right and shall be subject to adjustment in certain events as provided in the
Rights Agreement.
34
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Preferred Stock, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
This Rights Certificates, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Rights equal to the aggregate number of Rights
evidenced by the Rights Certificate or Rights Certificates surrendered. If this
Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right evidenced by
this Certificate may be (a) redeemed by the Company under certain circumstances,
at its option, at a redemption price of $.001 per Right, or (b) exchanged by the
Company under certain circumstances, at its option, for one share of Common
Stock or one one-hundredth (1/100th) of a share of Preferred Stock per Right
(or, in certain cases, other securities or assets of the Company), subject in
each case to adjustment in certain events as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of any securities
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereto or to give or withhold consent to any
35
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Rights evidenced by
this Rights Certificate shall have been exercised or exchanged as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
36
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Date:_____________________________
FIRST HORIZON PHARMACEUTICAL CORPORATION
ATTEST:
By:_____________________________________
__________________________________ Name:___________________________________
Secretary Title:__________________________________
Countersigned:
LASALLE BANK NATIONAL ASSOCIATION
By:_______________________________
Authorized Signature
37
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and transfers
unto ______________________________ (Please print name and address of
transferee) this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint _________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:____________, ____
Signature Guaranteed:
_____________________________________
Signature
(Signature must correspond to name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or
any change whatsoever)
Signatures must be guaranteed by a member form of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
38
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
shares of Common Stock that the Rights evidenced by this Rights Certificate are
not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associated thereof (as defined
in the Rights Agreement).
______________________________________
Signature
NOTICE
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
39
[TO BE ATTACHED TO EACH RIGHTS CERTIFICATE]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: FIRST HORIZON PHARMACEUTICAL CORPORATION
The undersigned hereby irrevocably elects to exercise whole Rights
represented by the attached Rights Certificate to purchase the shares of
Participating Preferred Stock issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
_________________________________
Address:_________________________
_________________________________
Social Security or Other Taxpayer
Identification No:_______________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
_________________________________
Address:_________________________
_________________________________
Social Security or Other Taxpayer
Identification No:_______________
Dated:_________________, ____
Signature Guaranteed:
__________________________________________________
Signature (Signature must correspond to name as
written upon the face of this Rights Certificate
in every particular, without alteration or
enlargement or any change whatsoever)
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or corespondent in
the United States
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
shares of Common Stock, that the Rights evidenced by this Rights Certificate are
not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
40
_______________________________________
Signature
NOTICE
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
41
EXHIBIT B
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF
PARTICIPATING PREFERRED STOCK
of
FIRST HORIZON PHARMACEUTICAL CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
First Horizon Pharmaceutical Corporation.
2. The Restated Certificate of Incorporation of the Corporation authorizes
the issuance of shares of Preferred Stock and expressly vests in the Board of
Directors of the Corporation the authority provided therein to issue any or all
of said shares at any time and from time to time, in one or more series, and to
fix or alter the designations, preferences and relative, participating, optional
or other special rights and qualifications, limitations or restrictions, of said
shares of Preferred Stock.
3. Pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation as aforesaid, the Board of Directors on
July 12, 2002, adopted a resolution creating a series of 400,000 shares of
Preferred Stock designated as "Participating Preferred Stock," and no shares of
the Participating Preferred Stock have been issued.
4. Pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation and Section 151(g) of the General
Corporation Law of the State of Delaware, the Board of Directors on July 12,
2002 adopted the following resolutions setting forth the designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions, of the shares of Participating
Preferred Stock:
"RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $.001 per share, of the Corporation and
hereby states the designation and number of shares and fixes the relative
rights, preferences and limitations thereof as follows:
1. The distinctive serial designation of this series shall be
"Participating Preferred Stock" (hereinafter called "this Series"). Each
share of this Series shall be identical in all respects with the other
shares of this Series except as to the dates from and after which dividends
thereon shall be cumulative.
2. The number of shares in this Series shall initially be 400,000
which number may from time to time be increased or decreased (but not below
the number then outstanding) by the Board of Directors. Shares of this
Series purchased by the Corporation shall be canceled and shall revert to
authorized but unissued shares of Preferred Stock undesignated as to
series. Shares of this Series may be issued in fractional shares, which
fractional shares shall entitle the holder, in proportion to such holder's
fractional share, to all rights of a holder of a whole share of this
Series.
42
3. The holders of full or fractional shares of this Series shall be
entitled to receive, when and as declared by the Board of Directors, but
only out of funds legally available therefor, dividends, on each date that
dividends or other distributions (other than dividends or distributions
payable in Common Stock of the Corporation) are payable on or in respect of
Common Stock comprising part of the Reference Package (as defined below),
in an amount per whole share of this Series equal to the aggregate amount
of dividends or other distributions (other than dividends or distributions
payable in Common Stock of the Corporation) that would be payable on such
date to a holder of the Reference Package. Each such dividend shall be paid
to the holders of record of shares of this Series on the date, not
exceeding sixty days preceding such dividend or distribution payment date,
fixed for the purpose by the Board of Directors in advance of payment of
each particular dividend or distribution. Dividends on each full and each
fractional share of this Series shall be cumulative from the date such full
or fractional share is originally issued provided that any such full or
fractional share originally issued after a dividend record date and on or
prior to the dividend payment date to which such record date relates shall
not be entitled to receive the dividend payable on such dividend payment
date or any amount in respect of the period from such original issuance to
such dividend payment date.
The term "Reference Package" shall initially mean 100 shares of Common
Stock of the Corporation. In the event the Corporation shall at any time
after the close of business on July 26, 2002 (A) declare or pay a dividend
on any Common Stock payable in Common Stock, (B) subdivide any Common
Stock, or (C) combine any Common Stock into a smaller number of shares,
then and in each such case the Reference Package after such event shall be
the Common Stock that a holder of the Reference Package immediately prior
to such event would hold thereafter as a result thereof.
Holders of shares of this Series shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided on this Series.
So long as any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior
to this Series as to dividends and upon liquidation) shall be declared or
paid or set aside for payment or other distribution declared or made upon
the Common Stock or upon any other stock ranking junior to this Series as
to dividends or upon liquidation, nor shall any Common Stock nor any other
stock of the Corporation ranking junior to or on a parity with this Series
as to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any monies to be paid to or made
available for a sinking fund for the redemption of any shares of any such
stock) by the Corporation (except by conversion into or exchange for stock
of the Corporation ranking junior to this Series as to dividends and upon
liquidation), unless, in each case, the full cumulative dividends
(including the dividend to be due upon payment of such dividend,
distribution, redemption, purchase or other acquisition), if any, on all
outstanding shares of this Series shall have been, or shall
contemporaneously be, paid.
4. In the event of any merger, consolidation, reclassification or
other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the shares of this Series shall at the same time be
similarly exchanged or changed in an amount per whole share equal to the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, that a holder of the Reference
Package would be entitled to receive as a result of such transaction.
5. In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders
of full and fractional shares of this Series shall be entitled, before any
distribution or payment is made on any date to the holders of the Common
Stock or any other stock of the Corporation ranking junior to this Series
upon liquidation, to be paid in full an amount per whole share of this
43
Series equal to the aggregate amount distributed prior to such date or to
be distributed in connection with such liquidation, dissolution or winding
up to a holder of the Reference Package, together with accrued dividends to
such distribution or payment date, whether or not earned or declared. If
such payment shall have been made in full to all holders of shares of this
Series, the holders of shares of this Series as such shall have no right or
claim to any of the remaining assets of the Corporation.
In the event the assets of the Corporation available for distribution
to the holders of shares of this Series upon any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, shall
be insufficient to pay in full all amounts to which such holders are
entitled pursuant to the first paragraph of this Section 5, no such
distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this
Series upon such liquidation, dissolution or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably in proportion to the full distributable amounts for
which holders of all such parity shares are respectively entitled upon such
liquidation, dissolution or winding up.
Upon the liquidation, dissolution or winding up of the Corporation,
the holders of shares of this Series then outstanding shall be entitled to
be paid out of assets of the Corporation available for distribution to its
shareholders all amounts to which such holders are entitled pursuant to the
first paragraph of this Section 5 before any payment shall be made to the
holders of Common Stock or any other stock of the Corporation ranking
junior upon liquidation to this Series.
For purposes of this Section 5, the consolidation or merger of, or
binding share exchange by, the Corporation with any other corporation shall
not be deemed to constitute a liquidation, dissolution or winding up of the
Corporation.
6. The shares of this Series shall not be redeemable without the
consent of the holder of such shares.
7. In addition to any other vote or consent of shareholders required
by law or by the Articles of Incorporation, as amended, of the Corporation,
each whole share of this Series shall, on any matter, vote as a class with
any other capital stock comprising part of the Reference Package and voting
on such matter and shall have the number of votes thereon that a holder of
the Reference Package would have.
8. The shares of this Series shall rank junior to all other series of
the Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
RESOLVED, that the statements contained in the foregoing resolutions
creating and designating the said series of Participating Preferred Stock and
fixing the designations, preferences and relative, participating, optional or
other special rights and qualifications, limitations or restrictions thereof
shall, upon the effective date of said series, be deemed to be included in and
be a part of the Restated Certificate of Incorporation of the Corporation
pursuant to the provisions of Sections 104 and 151 of the General Corporation
Law of the State of Delaware."
5. The effective time and date of the series herein certified shall be the
filing date of this Certificate of Designation with the Secretary of State of
Delaware.
44
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its _________________________________ and, such authorized officer
hereby declares, under penalty of perjury under the laws of the State of
Delaware, that he signed this Certificate in the official capacity set forth
beneath his signature and that the statements set forth in this Certificate are
true and correct of his own knowledge this ___ day of ___________, 2002.
________________________________________
________________________________________
________________________________________
45
1491453
