SCICLONE PHARMACEUTICALS, INC. AND MELLON INVESTOR SERVICES LLC as Rights Agent RIGHTS AGREEMENT Dated as of December 19, 2006
SCICLONE
PHARMACEUTICALS, INC.
AND
MELLON
INVESTOR SERVICES LLC
as
Rights
Agent
Dated
as
of December 19, 2006
This
Rights Agreement (the “Rights Agreement”) is dated as of December 19, 2006,
between SciClone Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
and Mellon Investor Services LLC, a New Jersey limited liability company
as
rights agent (the “Rights Agent”).
W I T N E S S E T H:
WHEREAS,
the Board of Directors of the Company effective on December 18, 2006
(i) authorized the issuance and declared a dividend of one right (“Right”)
for each share of the common stock, par value $0.001 per share, of the Company
outstanding as of the Close of Business (as such term is hereinafter defined)
on
January 2, 2007 (the “Record Date”), each Right representing the right to
purchase one one-thousandth of a share of Series D Preferred Stock of the
Company having the rights, powers and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A upon the terms and
subject to the conditions hereinafter set forth, and (ii) further
authorized and directed the issuance of one Right with respect to each share
of
Common Stock of the Company that shall become outstanding between the Record
Date, and the Distribution Date (as such term is hereinafter
defined);
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set
forth, the parties agree as follows:
1. Certain
Definitions.
For
purposes of this Rights Agreement the following terms shall have the meanings
indicated:
(a) “Acquiring
Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates (as such term is hereinafter defined)
and
Associates (as such term is hereinafter defined) of such Person shall be
the
Beneficial Owner (as such term is hereinafter defined) of fifteen percent
(15%)
or more of the outstanding Common Stock of the Company, without the prior
approval of the Board of Directors; provided, however, that in no event shall
a
Person who or which, together with all Affiliates and Associates of such
Person,
is the Beneficial Owner of less than 15% of
the
Company’s outstanding Common Stock, become an Acquiring Person solely as a
result of a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding shares of Common Stock by the Company,
which reduction increases the percentage of outstanding shares of Common
Stock
beneficially owned by such Person, provided,
further,
that if
a Person shall become the Beneficial Owner of 15% or more of the Company’s
outstanding Common Stock then outstanding solely by reason of a reduction
of the
number of shares of outstanding Common Stock, and shall thereafter become
the
Beneficial Owner of any additional shares of Common Stock of the Company,
then
such Person shall be deemed to be an Acquiring Person unless upon the
consummation of the acquisition of such additional shares of Common Stock
such
person does not own 15% or
more
of the shares of Common Stock then outstanding. An Acquiring Person shall
not
include an Exempt Person (as such term is hereinafter defined) or a
Grandfathered Person (as such term is hereinafter defined); provided further
that a Grandfathered Person shall become an Acquiring Person if, without
the
prior approval of the Board of Directors, the Grandfathered Person becomes
the
Beneficial Owner of an additional number of shares, in addition to shares
of
Common Stock beneficially owned by the Grandfathered Person, together with
all
Affiliates and Associates of such Grandfathered Person, on the date of the
Company's first public announcement of this Agreement, but a Grandfathered
Person shall not become an Acquiring Person solely by reason of a reduction
of
the number of shares of outstanding Common Stock. Notwithstanding the foregoing,
if (i) either (X) the Board of Directors determines in good faith that
a Person who would otherwise be an Acquiring Person, as defined pursuant
to the
foregoing provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of Common Stock that would otherwise cause
such
Person to be an Acquiring Person or (B) such Person was aware of the extent
of its beneficial ownership but had no actual knowledge of the consequences
of
such beneficial ownership under this Rights Agreement) and without any intention
of changing or influencing control of the Company, or (Y) within two
Business Days of being requested by the Company to advise the Company regarding
same, such Person certifies in writing that such Person acquired beneficial
ownership of 15% or
more
of the Company’s outstanding Common Stock inadvertently or without knowledge of
the terms of the Rights, and (ii) such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to
be or to have become an “Acquiring Person” for any purposes of this Rights
Agreement.
(b) “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act as
in effect on the date of this Rights Agreement.
(c) A
Person
shall be deemed the “Beneficial Owner” of any securities
(i)
which
such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly;
(ii)
which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), whether or not in writing, or upon the exercise
of
conversion rights, exchange rights, rights (other than the Rights), warrants
or
options, or otherwise; provided, however, that a Person shall not be deemed
the
Beneficial Owner of, or to “beneficially own,” securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person’s Affiliates
or Associates until such tendered securities are accepted for purchase or
exchange; or (B) the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Exchange Act, or any comparable or successor rule),
including pursuant to any agreement, arrangement or understanding (whether
or
not in writing); provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to “beneficially own”, any securities if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules
and
regulations of the Exchange Act and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
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(iii)
which
are
beneficially owned, directly or indirectly, by any other Person with which
such
Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the purpose
of
acquiring, holding, voting except as described in the proviso to clause (B)
of subparagraph (ii) of this Section 1(c) or disposing of any
securities of the Company; provided,
however,
that no
Person who is an officer, director or employee of an Exempt Person shall
be
deemed, solely by reason of such Person’s status or authority as such, to be the
Beneficial Owner of, to have “beneficial ownership” of or to “beneficially own”
any securities that are “beneficially owned” (as defined in this
Section 1(c)), including, without limitation, in a fiduciary capacity, by
an Exempt Person or by any other such officer, director or employee of an
Exempt
Person.
For
all
purposes of this Rights Agreement, any calculation of the number of shares
of
Common Stock outstanding at any particular time, including any calculation
for
purposes of determining the particular percentage of such outstanding shares
of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act as in effect on the date
hereof.
(d) “Board
of
Directors” shall mean the Company’s Board of Directors.
(e) “Business
Day” shall mean any day other than a Saturday, Sunday, or a day on which the
NASDAQ or banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) “Close
of
Business” on any given date shall mean 5:00 P.M., New York time,
on
such date; provided, however, that if such date is not a Business Day it
shall
mean 5:00 P.M., New York time, on the next succeeding Business
Day.
(g) “Common
Stock” when used with reference to the Company shall mean the common stock, par
value $0.001 per share, of the Company. “Common Stock” when used with reference
to any Person other than the Company which shall be organized in corporate
form
shall mean the capital stock or other equity security with the greatest per
share voting power of such Person or, if such Person is a Subsidiary of or
is
controlled by another Person, the Person which ultimately controls such
first-mentioned Person. “Common Stock” when used with reference to any Person
other than the Company which shall not be organized in corporate form shall
mean
units of beneficial interest which shall represent the right to participate
in
profits, losses, deductions and credits of such Person and which shall be
entitled to exercise the greatest voting power per unit of such
Person.
(h) “Common
Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(i) “Company”
shall have the meaning set forth in the preamble hereto.
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(j) “Current
Market Price” shall have the meaning set forth in Section 11(d)
hereof.
(k) “Current
Value” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(l) “Distribution
Date” shall have the meaning set forth in Section 3(a) hereof.
(m) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.
(n) “Exempt
Person” shall mean the Company or any Subsidiary of the Company, including,
without limitation, in its fiduciary capacity, any employee benefit plan
or
employee or director stock plan of the Company or of any Subsidiary of the
Company, or any Person, organized, appointed, established or holding Common
Stock for or pursuant to the terms of any such plan or any Person funding
other
employee benefits for employees of the Company or any Subsidiary of the
Company.
(o) “Expiration
Date” shall have the meaning set forth in Section 7(a) hereof.
(p) “Final
Expiration Date” shall have the meaning set forth in Section 7(a)
hereof.
(q) “Flip-In
Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B)
or 11(a)(ii)(C) hereof.
(r)
“Flip-In
Exercise Payment” shall have the meaning set forth in Section 11(a)(ii)
hereof.
(s) “Flip-In
Trigger Date” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(t)
“Flip-Over
Event” shall mean any event described in clause (x), (y) or (z) of
Section 13(a) hereof.
(u) “Flip-Over
Exercise Payment” shall have the meaning set forth in Section 13(a)
hereof.
(v) “Grandfathered
Person” shall mean Sigma Tau Finanziaria S.p.A., together with its
Affiliates and
Associates, provided that such Person shall cease to be a Grandfathered Person
at such time as such Person ceases to beneficially own in excess of 15% of
the Company’s Common Stock.
(w) “NASDAQ”
shall have the meaning set forth in Section 9(b) hereof.
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(x) “Person”
shall mean any individual, firm, corporation, partnership, trust, limited
liability company or other entity, and shall include any successor (by merger
or
otherwise) thereof or thereto.
(y) “Preferred
Stock” shall mean the Series D Preferred Stock, $0.001 par value per share,
of the Company having the rights, powers and preferences set forth in
Exhibit A
hereto,
and, to the extent that there is not a sufficient number of shares of
Series D Preferred Stock authorized to permit the full exercise of the
Rights, any other series of Preferred Stock, $0.001 par value per share,
of the
Company designated for such purpose containing terms substantially similar
to
the terms of the Series D Preferred Stock.
(z) “Preferred
Stock Equivalent” shall have the meaning set forth in Section 11(b)
hereof.
(aa) “Principal
Party” shall have the meaning set forth in Section 13(b)
hereof.
(bb) “Purchase
Price” shall have the meaning set forth in Section 4(a)
hereof.
(cc) “Record
Date” shall have the meaning set forth in the Recitals within this Rights
Agreement.
(dd) “Redemption
Date” shall have the meaning set forth in Section 7(a) hereof.
(ee) “Redemption
Price” shall have the meaning set forth in Section 23(a)
hereof.
(ff) “Right
Certificate” shall have the meaning set forth in Section 3(a)
hereof.
(gg) “Securities
Act” shall mean the Securities Act of 1933, as amended.
(hh) “Spread”
shall have the meaning set forth in Section 11(a)(iii) hereof.
(ii) “Stock
Acquisition Date” shall mean the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such or
such
earlier date as a majority of the directors shall become aware of the existence
of an Acquiring Person.
(jj)
“Substitution
Period” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(kk) “Subsidiary”
of a Person shall mean any corporation or other entity of which securities
or
other ownership interests having ordinary voting power sufficient to elect
a
majority of the board of directors or other persons performing similar functions
are beneficially owned, directly or indirectly, by such Person and any
corporation or other entity that is otherwise controlled by such
Person.
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(ll) “Summary
of Rights” shall have the meaning set forth in Section 3(b)
hereof.
(mm)
“Trading
Day” shall mean a day on which the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading is open
for
the transaction of business or, if the shares of Common Stock are not listed
or
admitted to trading on any national securities exchange , a Business
Day.
(nn) “Triggering
Event” shall mean any event described in Section 11(a)(ii)(A), 11(a)(ii)(B)
or 11(a)(ii)(C) or Section 13 hereof.
(oo) “Voting
Power” shall mean the voting power of all securities of the Company then
outstanding and generally entitled to vote for the election of directors
of the
Company.
Any
determination required by the definitions contained in this Section 1 shall
be made by the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights.
2. Appointment
of Rights Agent.
The
Company hereby appoints the Rights Agent to act as rights agent for the Company
in accordance with the terms and conditions hereof, and the Rights Agent
hereby
accepts such appointment. The Company may from time to time appoint a co-rights
agent as it may deem necessary or desirable. The Rights Agent shall have
no duty
to supervise, and in no event shall be liable for, the acts or omissions
of any
such co-rights agent.
3. Issuance
of Right Certificates.
(a) Until
the
earlier of (i) the Stock Acquisition Date (or, if the Stock Acquisition
Date occurs before the Record Date, the Close of Business on the Record Date)
or
(ii) the tenth Business Day (or such later date as may be determined by
action of the Board of Directors prior to such time as any Person becomes
an
Acquiring Person) after the date of the commencement by any Person (other
than
an Exempt Person) of, or of the first public announcement of the intent of
any
Person (other than an Exempt Person) to commence (which intention to commence
remains in effect for five business days after such announcement), a tender
or
exchange offer upon the successful consummation of which such Person, together
with its Affiliates and Associates, would be the Beneficial Owner of
15% or
more
of the outstanding Common Stock (irrespective of whether any shares are actually
purchased pursuant to any such offer) (including any such date which is after
the date of this Rights Agreement and prior to the issuance of the Rights;
the
earlier of such dates being herein referred to as the “Distribution Date”),
(x) the Rights will be evidenced (subject to the provisions of
Section 3(c) hereof) by the certificates for the Common Stock registered in
the names of the holders of the Common Stock and not by separate Right
Certificates, and (y) each Right will be transferable only in connection
with the transfer of a share (subject to adjustment as hereinafter provided)
of
Common Stock. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested and
provided with all necessary information, send) by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, as shown by the records of the Company,
to
the address of such holder shown on such records, a Right certificate in
substantially the form of Exhibit B
hereto
(a “Right Certificate”) evidencing one Right for each share of Common Stock so
held. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Sections 11 or 13 hereof, at the time
of
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof),
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and
after
the Distribution Date the Rights will be evidenced solely by such Right
Certificates. The Company shall promptly notify the Rights Agent in writing
upon
the occurrence of the Distribution Date and, if such notification is given
orally, the Company shall confirm the same in writing on or prior to the
Business Day next following. Until such notice is received by the Rights
Agent,
the Rights Agent may presume conclusively for all purposes that the Distribution
Date has not occurred.
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(b) On
the
Record Date, or as soon as practicable thereafter, the Company will send
a copy
of a Summary of Rights to Purchase Preferred Stock, substantially in the
form
attached hereto as Exhibit C
(a
“Summary of Rights”), by first-class, postage prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Record Date, at
the
address of such holder shown on the records of the Company.
(c) Rights
shall be issued in respect of all shares of Common Stock that are issued
(either
as an original issuance or from the Company’s treasury) after the Record Date
prior to the earlier of the Distribution Date or the Expiration Date. With
respect to certificates representing such shares of Common Stock, the Rights
will be evidenced by such certificates for Common Stock registered in the
names
of the holders thereof together with the Summary of Rights. Until the
Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any certificate for Common Stock outstanding on the Record Date
(with or without a copy of the Summary of Rights attached thereto), shall
also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby.
(d) Certificates
issued for Common Stock (including, without limitation, certificates issued
upon
transfer or exchange of Common Stock) after the Record Date but prior to
the
earlier of the Distribution Date or the Expiration Date shall have impressed
on,
printed on, written on or otherwise affixed to them a legend in substantially
the following form:
This
certificate also evidences and entitles the holder hereof to certain Rights
as
set forth in the Rights Agreement between SciClone Pharmaceuticals, Inc.
and
Mellon Investor Services LLC, as Rights Agent, dated as of December 19, 2006,
as
the same may be amended or supplemented from time to time (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive office of SciClone
Pharmaceuticals, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights (as such term is defined in the Rights Agreement)
will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. SciClone Pharmaceuticals, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt by
it of
a written request therefor. Under
certain circumstances as provided in the Rights Agreement, Rights issued
to,
beneficially owned by or transferred to any Person who is or becomes an
Acquiring Person (as such terms are defined in the Rights Agreement) or an
Associate or Affiliate (as such terms are defined in the Rights Agreement)
thereof and certain transferees thereof will be null and void and will no
longer
be transferable.
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With
respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall,
until
the Distribution Date, be evidenced by such certificates alone, and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby. In the event that the Company purchases or acquires
any shares of Common Stock after the Record Date but prior to the earlier
of the
Distribution Date, the Redemption Date or the Expiration Date, any Rights
associated with such shares of Common Stock shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the shares of Common Stock no longer outstanding.
Notwithstanding
this subsection (d), the omission of a legend shall not affect the
enforceability of any part of this Rights Agreement or the rights of any
holder
of the Rights.
4. Form
of Right Certificates.
(a) The
Right
Certificates (and the forms of election to purchase shares and of assignment
to
be printed on the reverse thereof), when, as and if issued, shall be
substantially in the form set forth in Exhibit B
hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
(but which do not affect the rights, duties or responsibilities of the Rights
Agent) and as are not inconsistent with the provisions of this Rights Agreement,
or as may be required to comply with any law or with any rule or regulation
made
pursuant thereto or with any rule or regulation of any stock exchange on
which
the Rights may from time to time be listed, or to conform to usage. Subject
to
the provisions of Sections 11, 13 and 22 hereof, the Right Certificates
evidencing the Rights issued on the Record Date whenever such certificates
are
issued, shall be dated as of the Record Date and the Right Certificates
evidencing Rights to holders of record of Common Stock issued after the Record
Date shall be dated as of the Record Date but shall also be dated to reflect
the
date of issuance of such Right Certificate. On their face, Right Certificates
shall entitle the holders thereof to purchase, for each Right, one
one-thousandth of a share of Preferred Stock, or other securities or property
as
provided herein, as the same may from time to time be adjusted as provided
herein, at the price per one one-thousandth of a share of Preferred Stock
of
$25.00, as the same may from time to time be adjusted as provided herein
(the
“Purchase Price”).
(b) Notwithstanding
any other provision of this Rights Agreement, any Right Certificate that
represents Rights that are or were at any time on or after the earlier of
the
Stock Acquisition Date or the Distribution Date beneficially owned by an
Acquiring Person or any Affiliate or Associate thereof (or any transferee
of
such Rights) shall have impressed on, printed on, written on or otherwise
affixed to it (if the Company has knowledge that such Person is an Acquiring
Person or an Associate or Affiliate thereof or transferee of such Persons
or a
nominee of any of the foregoing) a legend in substantially the following
form:
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The
Beneficial Owner of the Rights represented by this Right Certificate is an
Acquiring Person or an Affiliate or Associate (as such terms are defined
in the
Rights Agreement) of an Acquiring Person or a subsequent holder of such Right
Certificates beneficially owned by such Persons. Accordingly, this Right
Certificate and the Rights represented hereby are null and void and will
no
longer be transferable as provided in the Rights Agreement.
The
provisions of Section 11(a)(ii) and Section 24 of this Rights
Agreement shall be operative whether or not the foregoing legend is contained
on
any such Right Certificates.
5. Countersignature
and Registration.
(a) The
Right
Certificates shall be executed on behalf of the Company by its Chief Executive
Officer, its President or any Vice President, either manually or by facsimile
signature, and have affixed thereto the Company’s seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right Certificates
shall
be manually countersigned by the Rights Agent and shall not be valid for
any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer
of the
Company before countersignature by the Rights Agent and issuance and delivery
by
the Company, such Right Certificates, nevertheless, may be countersigned
by the
Rights Agent and issued and delivered by the Company with the same force
and
effect as though the person who signed such Right Certificates had not ceased
to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution
of
such Right Certificate, shall be a proper officer of the Company to sign
such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following
the Distribution Date and receipt by the Rights Agent of notice to that effect
and all other relevant information referred to in Section 3(a), the Rights
Agent
will keep or cause to be kept, at its office designated for such purpose,
books
for registration and transfer of the Right Certificates issued hereunder.
Such
books shall show the names and addresses of the respective holders of the
Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates, the date of each of the Right Certificates and the certificate
numbers for each of the Right Certificates.
6. Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates.
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(a) Subject
to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any time
after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the Expiration Date, and following receipt in writing
by
the Rights Agent of notice to that effect, any Right Certificate or Certificates
(other than Right Certificates representing Rights that have become null
and
void pursuant to Section 11(a)(ii) hereof or that have been exchanged
pursuant to Section 24 hereof) may be (i) transferred or
(ii) split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock or other securities as the Right Certificate or
Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer any Right Certificate shall surrender the Right
Certificate at the office of the Rights Agent designated for such purposes
with
the form of assignment on the reverse side thereof duly endorsed (or enclose
with such Right Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and
with
such signature guaranteed by a member of a securities approved medallion
program. Any registered holder desiring to split up, combine or exchange
any
Right Certificate or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate
or
Right Certificates to be split up, combined or exchanged at the office of
the
Rights Agent designated for such purpose. The Right Certificates are
transferable only on the registry books of the Rights Agent. Neither the
Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate or Right
Certificates until the registered holder thereof shall have (i) completed
and
signed the certificate contained in the form of assignment set forth on the
reverse side of each such Right Certificate, (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof and of the Rights evidenced thereby and the Affiliates and Associates
of
such Beneficial Owner (or former Beneficial Owner) as the Company or the
Rights
Agent shall reasonably request, and (iii) paid a sum sufficient to cover
any tax
or charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates as required by Section 9(d)
hereof. Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e),
11 and 14 hereof, manually countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as
so
requested, registered in such name or names as may be designated by the
surrendering registered holder. The Company may require payment from the
holder
of a Right Certificate of a sum sufficient to cover any tax or charge that
may
be imposed in connection with any transfer, split up, combination or exchange
of
Right Certificates. The Rights Agent shall have no duty or obligation to
take
any action under this Section or any other section of this Rights Agreement
which requires the payment by a Rights holder of applicable taxes or charges
unless and until the Rights Agent is satisfied that all such taxes and/or
charges have been paid.
(b) Subject
to the provisions of Section 11(a)(ii) hereof, upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of
loss,
theft or destruction, of indemnity or security satisfactory to them, and,
if
requested by the Company, reimbursement to the Company and the Rights Agent
of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate if mutilated, the Company
will
make, execute and deliver a new Right Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of
the
Right Certificate so lost, stolen, destroyed or mutilated.
10
7. Exercise
of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject
to Section 11(a)(ii) hereof, the Rights shall become exercisable, and may
be exercised to purchase Preferred Stock, except as otherwise provided herein,
in whole or in part at any time after the Distribution Date upon surrender
of
the Right Certificate, with the form of election to purchase on the reverse
side
thereof duly executed (with such signature duly guaranteed), to the Rights
Agent
at the office of the Rights Agent designated for such purpose, together with
payment of the Purchase Price with respect to each Right exercised, subject
to
adjustment as hereinafter provided, at or prior to the Close of Business
on the
earlier of (i) December 19, 2016 (the “Final Expiration Date”), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof
(such date being herein referred to as the “Redemption Date”) or (iii) the
time at which all such Rights are exchanged as provided in Section 24
hereof (the earliest of (i), (ii) and (iii) being herein referred to as the
“Expiration Date”). Except for those provisions herein which expressly survive
the termination of this Rights Agreement, this Rights Agreement shall terminate
at such time as the Rights are no longer exercisable hereunder.
(b) The
Purchase Price and the number of shares of Preferred Stock or other securities
or consideration to be acquired upon exercise of a Right shall be subject
to
adjustment from time to time as provided in Sections 11 and 13 hereof. The
Purchase Price shall be payable in lawful money of the United States of America,
in accordance with Section 7(c) hereof.
(c) Except
as
provided in Section 11(a)(ii) hereof, upon receipt of a Right Certificate
with the form of election to purchase duly executed, accompanied by payment
of
the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) or so much thereof as is necessary for the
shares to be purchased and an amount equal to any applicable tax or charge,
by
cash, certified check or official bank check payable to the order of the
Company
or the Rights Agent, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i) requisition from any transfer agent of the
Preferred Stock certificates for the number of shares of Preferred Stock
so
elected to be purchased and the Company will comply and hereby authorizes
and
directs such transfer agent to comply with all such requests,
(ii) requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14(b) hereof, and
(iii) promptly after receipt of such Preferred Stock certificates cause the
same to be delivered to or upon the order of the registered holder of such
Right
Certificate, registered in such name or names as may be designated by such
holder, and, when appropriate, after receipt of the cash requisitioned from
the
Company promptly deliver such cash to or upon the order of the registered
holder
of such Right Certificate. In the event of a purchase of securities, other
than
Preferred Stock, pursuant to Section 11(a) or Section 13 hereof, the
Company shall promptly provide written notice to the Rights Agent and the
Rights
Agent, relying on such notice, shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iii). In the event that
the Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities,
cash
and/or other property are available for distribution by the Rights Agent,
if and
when appropriate.
(d) Except
as
otherwise provided herein, in case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a
new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder
of such
Right Certificate or to his duly authorized assigns, subject to the provisions
of Sections 6 and 14 hereof.
11
(e) Notwithstanding
anything in this Rights Agreement to the contrary, neither the Rights Agent
nor
the Company shall be obligated to undertake any action with respect to a
registered holder upon the occurrence of any purported exercise as set forth
in
this Section 7 unless such registered holder shall have (i) properly
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered
for
such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably
request.
8. Cancellation
and Destruction of Right Certificates.
All
Right Certificates surrendered for the purpose of exercise. transfer, split
up,
combination or exchange shall, if surrendered to the Company or to any of
its
agents, be delivered to the Rights Agent for cancellation or in cancelled
form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right
Certificates shall be issued in lieu thereof except as expressly permitted
by
any of the provisions of this Rights Agreement. The Company shall deliver
to the
Rights Agent for cancellation and retirement, and the Rights Agent shall
so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver
all
cancelled Right Certificates to the Company, or shall, at the written request
of
the Company, destroy such cancelled Right Certificates, and in such case
shall
deliver a certificate of destruction thereof to the Company.
9. Reservation
and Availability of Shares of Preferred Stock.
(a) The
Company covenants and agrees that at all times it will cause to be reserved
and
kept available, out of and to the extent of its authorized and unissued shares
of Preferred Stock not reserved for another purpose (and, following the
occurrence of a Triggering Event, other securities) or held in its treasury,
the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, other securities) that, as provided in this Rights Agreement,
including Section 11(a)(iii) hereof, will be sufficient to permit the
exercise in full of all outstanding Rights; provided,
however,
that
the Company shall be required to reserve and keep available shares of Preferred
Stock or other securities sufficient to permit the exercise in full of all
outstanding Rights pursuant to the adjustments set forth in
Section 11(a)(ii), Section 11(a)(iii) or Section 13 hereof only
if, and to the extent that, the Rights become exercisable pursuant to such
adjustments.
(b) The
Company shall (i) use its best efforts to cause, from and after such time
as the Rights become exercisable, the Rights and all shares of Preferred
Stock
(and following the occurrence of a Triggering Event, other securities) issued
or
reserved for issuance upon exercise thereof to be reported by the National
Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”)
or such other system then in use, and if the Preferred Stock shall become
listed
on any national securities exchange, to cause, from and after such time as
the
Rights become exercisable, the Rights and all shares of Preferred Stock (and,
following the occurrence of a Triggering Event, other securities) issued
or
reserved for issuance upon exercise thereof to be listed on such exchange
upon
official notice of issuance upon such exercise and (ii) if then necessary,
to permit the offer and issuance of such shares of Preferred Stock (and,
following the occurrence of a Triggering Event, other securities), register
and
qualify such share of Preferred Stock (and, following the occurrence of a
Triggering Event, other securities) under the Securities Act and any applicable
state securities or “blue sky” laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration
and
qualifications effective until the Expiration Date of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days,
the exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon
any
such suspension, the Company shall issue a public announcement stating that
the
exercisability of the Rights has been temporarily suspended, as well as a
public
announcement at such time as the suspension is no longer in effect. The Company
shall notify the Rights Agent whenever it makes a public announcement pursuant
to this Section 9(b) and give the Rights Agent a copy of such announcement.
Notwithstanding any provision of this Rights Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have
been
declared effective.
12
(c) The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all shares of Preferred Stock (and following the
occurrence of a Triggering Event, other securities) delivered upon exercise
of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price in respect thereof), be duly and
validly authorized and issued and fully paid and nonassessable shares in
accordance with applicable law.
(d) The
Company further covenants and agrees that it will pay when due and payable
any
and all taxes and charges which may be payable in respect of the issuance
or
delivery of the Right Certificates or of any shares of Preferred Stock (or
other
securities, as the case may be) upon the exercise of Rights. The Company
shall
not, however, be required to pay any tax or charge which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates for Preferred Stock (or
other
securities, as the case may be) upon exercise of Rights in a name other than
that of, the registered holder of the Right Certificate, and the Company
shall
not be required to issue or deliver a Right Certificate or certificate for
Preferred Stock (or other securities, as the case may be) to a Person other
than
such registered holder until any such tax and charge shall have been paid
(any
such tax or charge being payable by the holder of such Right Certificate
at the
time of surrender) or until it has been established to the Company’s
satisfaction that no such tax or charge is due.
10. Preferred
Stock Record Date.
Each
Person in whose name any certificate for shares of Preferred Stock (or other
securities, as the case may be) is issued upon the exercise of Rights shall
for
all purposes be deemed to have become the holder of record of the shares
of
Preferred Stock (or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable taxes or charges) was made. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate,
as
such, shall not be entitled to any rights of a stockholder of the Company
with
respect to the shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, if any, and shall not
be
entitled to receive any notice of any proceedings of the Company, except
as
provided herein.
13
11. Adjustments
to Number and Kind of Shares, Number of Rights or Purchase Price.
The
number and kind of shares subject to purchase upon the exercise of each Right,
the number of Rights outstanding and the Purchase Price are subject to
adjustment from time to time as follows:
(a) (i) In
the
event the Company shall at any time after the date of this Rights Agreement
(A) declare or pay any dividend on Preferred Stock payable in shares of
Preferred Stock, (B) subdivide or split the outstanding shares of Preferred
Stock into a greater number of shares, (C) combine or consolidate the
outstanding shares of Preferred Stock into a smaller number of shares or
effect
a reverse split of the outstanding shares of Preferred Stock, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
except
as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date
of
such subdivision, combination or reclassification, and the number and kind
of
shares of Preferred Stock or capital stock, as the case may be, issuable
on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
capital stock or other securities, which, if such Right had been exercised
immediately prior to such date, the holder thereof would have owned upon
such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant
to
Section 11(a)(ii).
(ii) Subject
to Section 24, in the event any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date of this Rights
Agreement, directly or indirectly, (1) shall consolidate with or merge with
and into the Company or any of its Subsidiaries or otherwise combine with
the
Company or any of its Subsidiaries and the Company or such Subsidiary shall
be
the continuing or surviving corporation of such consolidation, merger or
combination and the Common Stock of the Company shall remain outstanding
and no
shares thereof shall be changed into or exchanged for stock or other securities
of the Company or of any other Person or cash or any other property, or
(2) shall, in one or more transactions, other than in connection with the
exercise of a Right or Rights and other than in connection with the exercise
or
conversion of securities exercisable for or convertible into securities of
the
Company or of any Subsidiary of the Company, transfer any assets or property
to
the Company or any of its Subsidiaries in exchange (in whole or in part)
for any
shares of any class of capital stock of the Company or any of its Subsidiaries
or any securities exercisable for or convertible into shares of any class
of
capital stock of the Company or any of its Subsidiaries, or otherwise obtain
from the Company or any of its Subsidiaries, with or without consideration,
any
additional shares of any class of capital stock of the Company or any of
its
Subsidiaries or any securities exercisable for or convertible into shares
of any
class of capital stock of the Company or any of its Subsidiaries (other than
as
part of a pro rata offer or distribution by the Company or such Subsidiary
to
all holders of such shares), or (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire (other than as a pro rata
dividend) or dispose of, to, from or with, as the case may be (in one
transaction or a series of transactions), the Company or any of its
Subsidiaries, any assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary than the Company or such Subsidiary
would be able to obtain in arm’s-length negotiation with an unaffiliated third
party, or (4) shall receive any compensation from the Company or any of its
Subsidiaries for services other than compensation for employment as a regular
or
part-time employee, or fees for serving as a director, at rates in accordance
with the Company’s (or its Subsidiary’s) past practices, or (5) shall
receive the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or tax advantage provided by the Company or
any of
its Subsidiaries, or (6) shall engage in any transaction with the Company
(or any of its Subsidiaries) involving the sale, license, transfer or grant
of
any right in, or disclosure of, any patents, copyrights, trade secrets,
trademarks, know-how or any other intellectual or industrial property rights
recognized under any country’s intellectual property laws which the Company
(including its Subsidiaries) owns or has the right to use on terms and
conditions not approved by the Board of Directors; or
14
(B) any
Person, alone or together with its Affiliates and Associates, shall become
an
Acquiring Person; or
(C) during
such time as there is an Acquiring Person, there shall be any reclassification
of securities (including any reverse stock split), or any recapitalization
of
the Company, or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions involving
the
Company or any of its Subsidiaries (whether or not with or into or otherwise
involving an Acquiring Person or any Affiliate or Associate of such Acquiring
Person) which has the effect, directly or indirectly, of increasing by more
than
1% the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries, or securities exercisable
for or convertible into equity securities of the Company or any of its
Subsidiaries, which is directly or indirectly beneficially owned by any
Acquiring Person or any Affiliate or Associate of any Acquiring Person (any
of
(A), (B) or (C) being referred to herein as a “Flip-In Event”);
then
upon
the first occurrence of such Flip-In Event (i) the Purchase Price shall be
adjusted to be the Purchase Price in effect immediately prior to the Flip-In
Event multiplied by the number of one
one-thousandth of a share of Preferred Stock for which a Right was exercisable
immediately prior to such Flip-In Event, whether or not such Right was then
exercisable, and (ii) each holder of a Right, except as otherwise provided
in this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall
thereafter have the right to receive, upon exercise thereof at a price equal
to
the Purchase Price (as so adjusted), in accordance with the terms of this
Rights
Agreement and in lieu of shares of Preferred Stock, such number of shares
of
Common Stock as shall equal the result obtained by dividing the Purchase
Price
(as so adjusted) by 50% of the Current Market Price per share of the Common
Stock (determined pursuant to Section 11(d) hereof) on the date of such
Flip-In Event; provided,
however,
that
the Purchase Price (as so adjusted) and the number of shares of Common Stock
so
receivable upon the exercise of a Right shall, following the Flip-In Event,
be
subject to further adjustment as appropriate in accordance with
Section 11(f) hereof. Notwithstanding anything in this Rights Agreement to
the contrary, however, from and after the Flip-In Event, any Rights that
are
beneficially owned by (x) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee after
the
Flip-In Event or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently
with
the Flip-In Event pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any Person with whom it
has any
continuing agreement, arrangement or understanding, whether written or
otherwise, regarding the transferred Rights or (II) a transfer which the
Board of Directors has determined is part of a plan, agreement, arrangement
or
understanding, whether written or otherwise, which has the purpose or effect
of
avoiding the provisions of this paragraph, and subsequent transferees of
such
Persons, shall be null and void without any further action and any holder
of
such Rights shall thereafter have no rights whatsoever with respect to such
Rights under any provision of this Rights Agreement. The Company shall use
all
reasonable efforts to ensure that the provisions of this Section 11(a)(ii)
are complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. From and after the Flip-In Event, no Right Certificate
shall be issued pursuant to Section 3 or Section 6 hereof that
represents Rights that are or have become null and void pursuant to the
provisions of this paragraph, and any Right Certificate delivered to the
Rights
Agent that represents Rights that are or have become null and void pursuant
to
the provisions of this paragraph shall be cancelled. The Company shall give
the
Rights Agent written notice of the identity of any such Acquiring Person,
Associate or Affiliate, or the nominee of any of the foregoing, and the Rights
Agent may rely on such notice in carrying out its duties under this Rights
Agreement and shall be deemed not to have any knowledge of the identity of
any
such Acquiring Person, Associate or Affiliate, or the nominee of any of the
foregoing unless and until it shall have received such notice.
15
(iii) The
Company may at its option substitute for a share of Common Stock issuable
upon
the exercise of Rights in accordance with the foregoing subparagraph (ii)
such number or fractions of shares of Preferred Stock having an aggregate
current market value equal to the Current Market Price of a share of Common
Stock. In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit the exercise
in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Board of Directors shall, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party
(A) determine the excess (such excess, the “Spread”) of (1) the value
of the shares of Common Stock issuable upon the exercise of a Right in
accordance with the foregoing subparagraph (ii) (the “Current Value”) over
(2) the Purchase Price (as adjusted in accordance with the foregoing
subparagraph (ii)), and (B) with respect to each Right (other than
Rights which have become null and void pursuant to the foregoing
subparagraph (ii)), make adequate provision to substitute for the shares of
Common Stock issuable in accordance with the foregoing paragraph (ii) upon
exercise of the Right and payment of the Purchase Price (as adjusted in
accordance therewith), (1) cash, (2) a reduction in such Purchase
Price, (3) shares of Preferred Stock or other equity securities of the
Company (including, without limitation, shares or fractions of shares of
preferred stock which, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the shares of Common Stock, are
deemed in good faith by the Board of Directors to have substantially the
same
value as the shares of Common Stock (such shares of Preferred Stock and shares
or fractions of shares of preferred stock being hereinafter referred to as
“Common Stock Equivalents”), (4) debt securities of the Company,
(5) other assets, or (6) any combination of the foregoing, having a
value which, when added to the value of the shares of Common Stock actually
issued upon exercise of such Right, shall have an aggregate value equal to
the
Current Value (less the amount of any reduction in such Purchase Price),
where
such aggregate value has been determined by the Board of Directors upon the
advice of a nationally recognized investment banking firm selected in good
faith
by the Board of Directors; provided,
however,
that if
the Company shall not make adequate provision to deliver value pursuant to
clause (B) above within 30 days following the date of the Flip-In Event
(the “Flip-in Trigger Date”), then the Company shall be obligated to deliver, to
the extent permitted by applicable law and any material agreements then in
effect to which the Company is a party, upon the surrender for exercise of
a
Right and without requiring payment of such Purchase Price, shares of Common
Stock (to the extent available), and then, if necessary, such number or
fractions of shares of Preferred Stock (to the extent available) and then,
if
necessary, cash, which shares and/or cash have an aggregate value equal to
the
Spread. If the Board of Directors shall determine in good faith that it is
likely that sufficient additional shares of Common Stock and/or Common Stock
Equivalents could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the extent
necessary, but not more than 90 days after the Flip-In Trigger Date, in order
that the Company may seek stockholder approval for the authorization of such
additional shares of Common Stock or Common Stock Equivalents (such 30-day
period, as it may be extended being hereinafter referred to as the “Substitution
Period”). To the extent that the Company determines that some action need be
taken pursuant to the second and/or third sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject to the last
sentence of Section 11(a)(ii) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period in order to
seek
any authorization of additional shares and/or to decide the appropriate form
of
distribution to be made pursuant to the first sentence of
Section 11(a)(iii) and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that
the
exercisability of the Rights has been temporarily suspended, as well as a
public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the
Current Market Price per share of the Common Stock on the Flip-In Trigger
Date
and the per share or per unit value of any Common Stock Equivalent shall
be
deemed to equal the Current Market Price per share of the Common Stock on
such
date. The Board of Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Stock upon the exercise
of
the Rights among holders of Rights pursuant to this
Section 11(a)(iii).
16
(b) In
case
the Company shall fix a record date for the issuance of rights (other than
the
Rights), options or warrants to all holders of Preferred Stock entitling
them to
subscribe for or purchase Preferred Stock (for a period expiring within 45
calendar days after such record date), shares having the same rights, privileges
and preferences as the Preferred Stock (a “Preferred Stock Equivalent”) or
securities convertible into Preferred Stock or Preferred Stock Equivalent
at a
price per share of Preferred Stock or Preferred Stock Equivalent (or having
a
conversion price per share, if a security is convertible into Preferred Stock
or
Preferred Stock Equivalent) less than the Current Market Price per share
of
Preferred Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate offering
price of the total number of shares of Preferred Stock and/or Preferred Stock
Equivalent (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price,
and
the denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or Preferred Stock Equivalent to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by delivery
of consideration part or all of which is in a form other than cash, the value
of
such non-cash consideration shall be as determined in good faith by the Board
of
Directors, whose determination shall be described in a statement filed with
the
Rights Agent. Shares of Preferred Stock owned by or held for the account
of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is
fixed,
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
17
(c) In
case
the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with
a
consolidation or merger in which the Company is the continuing corporation)
of
evidences of indebtedness, cash, assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those referred
to
in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by the Board
of
Directors, whose determination shall be described in a statement filed with
the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness
to
be distributed or of such subscription rights or warrants applicable to a
share
of Preferred Stock and the denominator of which shall be such Current Market
Price per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution
is
not so made, the Purchase Price shall be adjusted to be the Purchase Price
which
would have been in effect if such record date had not been fixed.
(d) (i) For
the
purpose of any computation hereunder, other than computations made pursuant
to
Section 11(a)(iii) hereof, the “Current Market Price” per share of Common
Stock on any date shall be deemed to be the average of the daily closing
prices
per share of the Common Stock for the 30 consecutive Trading Days immediately
prior to, but not including, such date, and for purpose of computations made
pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per share
of the Common Stock on any date shall be deemed to be the average of the
daily
closing prices per share of the Common Stock for the 10 consecutive Trading
Days
immediately following, but not including, such date; provided,
however, that in the event that the Current Market Price per share of the
Common
Stock is determined during a period following the announcement by the issuer
of
the Common Stock of (i) any dividend or distribution on the Common Stock
(other than a regular quarterly cash dividend and other than the Rights),
(ii) any subdivision, combination or reclassification of the Common Stock,
and prior to the expiration of the requisite 30 Trading Day or 10 Trading
Day
period, as set forth above, after the ex-dividend date for such dividend
or
distribution, or the record date for such subdivision, combination or
reclassification occurs, then, and in each such case, the Current Market
Price
shall be properly adjusted to take into account ex-dividend trading. The
closing
price for each day shall be the last sale price, regular way, or, in case
no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to
trading on the NASDAQ or, if the shares of Common Stock are not listed or
admitted to trading on the NASDAQ, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are listed
or
admitted to trading or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, the last quoted sale price
or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the NASDAQ or such other system then
in
use, or, if on any such date the shares of Common Stock are not quoted by
any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Stock selected
by
the Board of Directors. If on any such date no market maker is making a market
in the Common Stock, the fair value of such shares on such date as determined
in
good faith by the Board of Directors shall be used and shall be binding on
the
Rights Agent. If the Common Stock is not publicly held or not so listed or
traded, “Current Market Price” per share shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination shall
be
described in a statement filed with the Rights Agent and shall be conclusive
for
all purposes.
18
(ii) For
the
purpose of any computation hereunder, the “Current Market Price” per share (or
one one-thousandth of a share) of Preferred Stock shall be determined in
the
same manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the Current Market
Price per share (or one one-thousandth of a share) of Preferred Stock cannot
be
determined in the manner provided above or if the Preferred Stock is not
publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the “Current Market Price” per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such number
may
be appropriately adjusted for such events as stock splits, stock dividends
and
recapitalizations with respect to the Common Stock occurring after the date
of
this Rights Agreement) multiplied by the Current Market Price per share of
the
Common Stock and the “Current Market Price” per one one-thousandth of a share of
Preferred Stock shall, be equal to the Current Market Price per share of
the
Common Stock (as appropriately adjusted). If neither the Common Stock nor
the
Preferred Stock is publicly held or so listed or traded, “Current Market Price”
shall mean the fair value per share as determined in good faith by the Board
of
Directors, whose determination shall be described in a statement filed with
the
Rights Agent and shall be conclusive for all purposes.
(e) Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common
Stock
or other share or one-hundred-thousandth of a share of Preferred Stock, as
the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates
such adjustment, or (ii) the Expiration Date.
19
(f) If
as a
result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise
of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the
provisions with respect to the shares of Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All
Rights originally issued by the Company subsequent to any adjustment made
to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of shares of Preferred Stock purchasable from
time to
time hereunder upon exercise of the Rights, all subject to further adjustment
as
provided herein.
(h) Unless
the Company shall have exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations
made
in Sections 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase,
at
the adjusted Purchase Price, that number of one one-thousandth of a share
of
Preferred Stock (calculated to the nearest one-hundred-thousandth) obtained
by
(i) multiplying (x) the number of one one-thousandth of a share of
Preferred Stock covered by a Right immediately prior to this adjustment,
by
(y) the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The
Company may elect on or after the date of any adjustment of the Purchase
Price
or any adjustment to the number of shares of Preferred Stock for which a
Right
may be exercised made pursuant to Sections 11(a)(i), 11(b) or 11(c), to
adjust the number of Rights in lieu of any adjustment in the number of shares
of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be exercisable
for the number of shares of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to
such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and,
if
known at the time, the amount of the adjustment to be made. The Company shall
notify the Rights Agent whenever it makes a public announcement pursuant
to this
Section 11(i) and shall promptly give the Rights Agent a written notice of
such
announcement. This record date may be the date on which the Purchase Price
is
adjusted or any day thereafter, but, if the Right Certificates have been
issued,
shall be at least 10 days later than the date of the public announcement.
If Right Certificates have been issued, upon each adjustment of the number
of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as
a
result of such adjustment, or, at the option of the Company, shall cause
to be
distributed to such holders of record in substitution and replacement for
the
Right Certificates held by such holders prior to the date of adjustment,
and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and delivered by the Company, and countersigned and delivered by the Rights
Agent, in the manner provided for herein (and may bear, at the option of
the
Company, the adjusted Purchase Price) and shall be registered in the names
of
the holders of record of Right Certificates on the record date specified
in the
public announcement.
20
(j) Irrespective
of any adjustment or change in the Purchase Price or the number of shares
of
Preferred Stock issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price
per
share and the number of shares which were expressed in the initial Right
Certificate issued hereunder.
(k) Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then par value, if any, of the shares of Common Stock, Preferred
Stock
or other capital stock issuable upon exercise of the Rights, the Company
shall
take any corporate action, including using its best efforts to obtain any
required stockholder approvals, which may, in the opinion of its counsel,
be
necessary in order that the Company may validly and legally issue fully paid
and
nonassessable shares of Common Stock, Preferred Stock or other capital stock
at
such adjusted Purchase Price. If upon any exercise of the Rights, a holder
is to
receive a combination of Common Stock and Common Stock Equivalents, a portion
of
the consideration paid upon such exercise, equal to at least the then par
value
of a share of Common Stock of the Company, shall be allocated as the payment
for
each share of Common Stock of the Company so received.
(l) In
any
case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event,
the
Company may elect to defer (with prompt written notice thereof to the Rights
Agent) until the occurrence of such event the issuance to the holder of any
Right exercised after such record date the shares of Preferred Stock and
other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis
of
the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due ▇▇▇▇ or other
appropriate instrument evidencing such holder’s right to receive such additional
shares of Preferred Stock and other capital stock or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly permitted or required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors shall
determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance for cash of any shares of
Preferred Stock at less than the Current Market Price, (iii) issuance for
cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such stockholders.
21
(n) The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person, (ii) merge
with or into any other Person, or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets
or
earning power of the Company and its Subsidiaries (taken as a whole) to,
any
other Person or Persons, if (x) at the time of or immediately after such
consolidation, merger or sale there are any charter or by-law provisions
or any
rights, warrants or other instruments or securities outstanding or agreements
in
effect which substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of
the
Person who constitutes, or would constitute, the “Principal Party” for purposes
of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
The
Company shall not consummate any such consolidation, merger or sale unless
prior
thereto the Company and such other Person shall have executed and delivered
to
the Rights Agent a supplemental agreement evidencing compliance with this
subsection.
(o) The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time
such
action is taken it is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by the
Rights.
(p) Anything
in this Rights Agreement to the contrary notwithstanding, in the event that
the
Company shall at any time after the Record Date and prior to the Distribution
Date (i) declare or pay any dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of Common
Stock into a smaller number of shares, the number of Rights associated with
each
share of Common Stock then outstanding, or issued or delivered thereafter,
shall
be proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event equals the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction, the numerator
or
which shall be the number of shares of Common Stock outstanding immediately
prior to the occurrence of such event and the denominator of which shall
be the
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
12. Certification
of Adjustments or Number of Shares.
Whenever an adjustment is made or any event affecting the Rights or their
exercisability (including, without limitation, an event which causes the
Rights
to become null and void) occurs as provided in Sections 11 and 13 hereof, ,
the Company shall (a) promptly prepare a certificate signed by its Chief
Executive Officer, its President or any Vice President and by the Treasurer
or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company setting forth such adjustment or describing such event, and a brief,
reasonably detailed statement of the facts, computations and methodology
accounting for such adjustment or event, (b) promptly file with the Rights
Agent and with each transfer agent for the Preferred Stock and the Common
Stock
a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate (or, if prior to the Distribution Date, to
each
holder of a certificate representing shares of Common Stock) in accordance
with
Section 26 hereof. Notwithstanding the foregoing sentence, the failure of
the Company to give such notice shall not affect the validity of or the force
or
effect of or the requirement for such adjustment. The Rights Agent shall
be
fully protected in relying on any certificate prepared by the Company pursuant
to Sections 11 and 13 and on any adjustment or statement therein contained
and shall have no duty or liability with respect to, and shall not be deemed
to
have knowledge of, any such adjustment or event unless and until it shall
have
received such certificate. Any adjustment to be made pursuant to
Sections 11 and 13 of this Rights Agreement shall be effective as of the
date of the event giving rise to such adjustment.
22
13. Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.
(a) In
the
event that following the first occurrence of a Flip-In Event, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person or Persons and the Company, as the case may be, shall not
be
the surviving or continuing Person of such consolidation or merger, or
(y) any Person or Persons shall consolidate with, or merge with and into,
the Company, and the Company shall be the continuing or surviving Person
of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into
or
exchanged for stock or other securities of any other Person or of the Company
or
cash or any other property other than, in the case of the transactions described
in subparagraphs (x) or (y), a merger or consolidation which would result
in all of the Voting Power represented by the securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities of the surviving
entity) all of the Voting Power represented by the securities of the Company
or
such surviving entity outstanding immediately after such merger or consolidation
and the holders of such securities not having changed as a result of such
transactions), or (z) the Company or one or more of its Subsidiaries shall
sell, mortgage or otherwise transfer to any other Person or any Affiliate
or
Associate of such Person, in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets
or
earning power of the Company and its Subsidiaries (taken as a whole), then,
on
the first occurrence of any such event (a “Flip-Over Event”), proper provision
shall be made so that (i) each holder of a Right (other than Rights which
have become null and void pursuant to Section 11(a)(ii) hereof) shall
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof), in accordance with the terms of this Rights Agreement and in lieu
of
shares of Preferred Stock or Common Stock of the Company, such number of
validly
authorized and issued, fully paid, non-assessable and freely tradeable shares
of
Common Stock of the Principal Party (as such term is hereinafter defined),
not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by dividing the Purchase Price
(as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of
the Current Market Price per share of the Common Stock of such Principal
Party
(determined pursuant to Section 11(d) hereof) on the date of consummation
of such consolidation, merger, sale or transfer; provided,
however,
that
the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof) and the number of shares of Common Stock of such
Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof
to reflect any events occurring in respect of the Common Stock of such Principal
Party after the occurrence of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such Flip-Over Event, all the obligations and duties of the
Company
pursuant to this Rights Agreement; (iii) the term “Company” for all
purposes of this Rights Agreement shall thereafter be deemed to refer to
such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall only apply to such Principal Party following the
first occurrence of a Flip-Over Event; and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with Section 9 hereof)
in connection with the consummation of any such transaction as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; provided, however, that, upon
the
subsequent occurrence of any merger, consolidation, sale of all or substantially
all assets, recapitalization, reclassification of shares, reorganization
or
other extraordinary transaction in respect of such Principal Party, each
holder
of a Right shall thereupon be entitled to receive, upon exercise of a Right,
such cash, shares, rights, warrants and other property which such holder
would
have been entitled to receive had he, at the time of such transaction, owned
the
shares of Common Stock of the Principal Party purchasable upon the exercise
of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for
such
cash, shares, rights, warrants and other property.
23
(b) “Principal
Party” shall mean
(i) in
the
case of any transaction described in (x) or (y) of the first sentence of
Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which shares of Common Stock of the Company are converted
in
such merger or consolidation, or, if there is more than one such issuer,
the
issuer the Common Stock of which has the greatest aggregate market value
or
(B) if no securities are so issued, (x) the Person that is the other
party to the merger or consolidation and that survives said merger or
consolidation, or, if there is more than one such Person, the Person the
Common
Stock of which has the greatest market value or (y) if the Person that is
the other party to the merger or consolidation does not survive the merger
or
consolidation, the Person that does survive the merger or consolidation
(including the Company if it survives); and
(ii) in
the
case of any transaction described in (z) of the first sentence in
Section 13(a) hereof, the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets
or
earning power cannot be determined, whichever of such Persons that is the
issuer
of Common Stock having the greatest aggregate market value of shares
outstanding;
24
provided,
however,
that in
any such case described in the foregoing paragraphs (b)(i) or (b)(ii),
(1) if the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered, the
term
“Principal Party” shall refer to such other Person, or (2) if such Person
is a Subsidiary, directly or indirectly, of more than one Person, the Common
Stocks of all of which are and have been so registered, the term “Principal
Party” shall refer to whichever of such Persons is the issuer of the Common
Stock having the greatest market value of shares outstanding, or (3) if
such Person is owned, directly or indirectly, by a joint venture formed by
two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in clauses (1) and (2) above shall apply to each of the
owners having an interest in the joint venture as if the Person owned by
the
joint venture was a Subsidiary of both or all of such joint venturers, and
the
Principal Party in each such case shall bear the obligations set forth in
this
Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.
(c) The
Company shall not consummate any consolidation, merger, sale, disposition
or
transfer referred to in Section 13(a) unless the Principal Party shall have
a sufficient number of authorized shares of its Common Stock that have not
been
issued or reserved for issuance to permit the exercise in full of the Rights
in
accordance with this Section 13 and unless prior thereto the Company and
the Principal Party involved therein shall have executed and delivered to
the
Rights Agent an agreement confirming that the requirements of
Sections 13(a) and (b) hereof shall promptly be performed in accordance
with their terms and that such consolidation, merger, sale, disposition or
transfer of assets shall not result in a default by the Principal Party under
this Rights Agreement as the same shall have been assumed by the Principal
Party
pursuant to Sections 13(a) and (b) hereof and further providing that, as
soon as practicable after executing such agreement pursuant to this
Section 13, the Principal Party at its own expense shall:
(i) prepare
and file a registration statement under the Securities Act, if necessary,
with
respect to the Rights and the securities purchasable upon exercise of the
Rights
on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and
use
its best efforts to cause such registration statement to remain effective
(with
a prospectus at all times meeting the requirements of the Securities Act)
until
the date of expiration of the Rights, and similarly comply with applicable
state
securities laws;
(ii) use
its
best efforts, if the Common Stock of the Principal Party shall become listed
on
a national securities exchange, to list (or continue the listing of) the
Rights
and the securities purchasable upon exercise of the Rights on such securities
exchange and, if the Common Stock of the Principal Party shall not be listed
on
a national securities exchange, to cause the Rights and the securities purchased
upon exercise of the Rights to be reported by the NASDAQ or
such
other system then in use;
(iii) deliver
to holders of the Rights historical financial statements for the Principal
Party
which comply in all respects with the requirements for registration on
Form 10 (or any successor form) under the Exchange Act; and
25
(iv) obtain
waivers of any rights of first refusal or preemptive rights in respect of
the
shares of Common Stock of the Principal Party subject to purchase upon exercise
of outstanding Rights.
In
the
event that any of the transactions described in Section 13(a) hereof shall
occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been
exercised shall thereafter be exercisable in the manner described in
Section 13(a).
(d) Furthermore,
in case the Principal Party which is to be a party to a transaction referred
to
in this Section 13 has a provision in any of its authorized securities or
in its Certificate of Incorporation or Bylaws or other instrument governing
its
corporate affairs, which provision would have the effect of (i) causing
such Principal Party to issue, in connection with, or as a consequence of,
the
consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then Current Market
Price
per share (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party
at
less than such then current market price (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special
payment, tax or similar provisions in connection with the issuance of the
Common
Stock of such Principal Party pursuant to the provisions of Section 13;
then, in such event, the Company hereby agrees with each holder of Rights
that
it shall not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights
Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision
will
have no effect in connection with, or as a consequence of, the consummation
of
the proposed transaction.
14. Fractional
Rights and Fractional Shares.
(a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the holders of record of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable,
an
amount in cash equal to the same fraction of the then current market value
of a
whole Right. For the purposes of this Section 14(a), the then current
market value of a Right shall be determined in the same manner as the Current
Market Price of a share of Common Stock shall be determined pursuant to
Section 11(d) hereof.
(b) The
Company shall not be required to issue fractions of shares of Preferred Stock
or
Preferred Stock Equivalent (other than fractions which are integral multiples
of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights
or
to distribute certificates which evidence fractional shares of Preferred
Stock
Equivalent (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock). Fractions of shares of Preferred
Stock in integral multiples of one one-thousandth of a share of Preferred
Stock
or Preferred Stock Equivalent may, at the election of the Company, be evidenced
by depositary receipts, pursuant to an appropriate agreement between the
Company
and a depositary selected by it, provided that such agreement shall provide
that
the holders of such depositary receipts shall have all the rights, privileges
and preferences to which they are entitled as Beneficial Owners of the shares
of
Preferred Stock or Preferred Stock Equivalent represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock or Preferred
Stock
Equivalent, the Company may pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an amount in cash
equal
to the same fraction of the current market value of one one-thousandth of
a
share of Preferred Stock or Preferred Stock Equivalent. For purposes of this
Section 14(b), the current market value of one one-thousandth of a share of
Preferred Stock or Preferred Stock Equivalent shall be the Current Market
Price
of a share of Common Stock (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such
exercise.
26
(c) Following
the occurrence of a Flip-In Event, the Company shall not be required to issue
fractions of shares or units of Common Stock or Common Stock Equivalents
or
other securities upon exercise of the Rights or to distribute certificates
which
evidence fractional shares of such Common Stock or Common Stock Equivalents
or
other securities. In lieu of fractional shares or units of such Common Stock
or
Common Stock Equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the Current
Market Value of a share or unit of such Common Stock or Common Stock Equivalent
or other securities. For purposes of this Section 14(c), the Current Market
Value shall be determined in the manner set forth in Section 11(d) hereof
for the Trading Day immediately prior to the date of such exercise and, if
such
Common Stock Equivalent is not traded, each such Common Stock Equivalent
shall
have the value of one one-thousandth of a share of Preferred Stock.
(d) The
holder of a Right by the acceptance of a Right expressly waives his right
to
receive any fractional Right or any fractional shares upon exercise of a
Right.
(e) Whenever
a payment for fractional Rights or fractional shares or other securities
of the
Company is to be made by the Rights Agent, the Company shall (i) promptly
prepare and deliver to the Rights Agent a certificate setting forth in
reasonable detail the facts related to such payment and the prices and/or
formulas utilized in calculating such payments, and (ii) provide sufficient
monies to the Rights Agent in the form of fully collected funds to make such
payments. The Rights Agent shall be fully protected in relying upon such
a
certificate and shall have no duty with respect to, and shall not be deemed
to
have knowledge or any payment for the fractional Rights or fractional shares
or
other securities of the Company under any Section of this Rights Agreement
relating to the payment of fractional Rights or fractional shares or other
securities of the Company unless and until the Rights Agent shall have received
such a certificate and sufficient monies.
15. Rights
of Action.
As of
the Record Date, all rights of action in respect of this Right Agreement,
other
than any rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereunder, are vested in the respective holders of
record of the Right Certificates (and, prior to the Distribution Date, the
holders of record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company or any other Person to enforce,
or otherwise act in respect of, his right to exercise the Rights evidenced
by
such Right Certificate in the manner provided in such Right Certificate and
in
this Rights 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 by the Company
of
this Rights Agreement and, accordingly, that they will be entitled to specific
performance of the obligations under, and injunctive relief against actual
or
threatened violations by the Company of, the obligations of any Person subject
to this Rights Agreement. Holders of Rights shall be entitled to recover
from
the Company the reasonable costs and expenses, including attorneys’ fees,
incurred by them in any action to enforce the provisions of this Rights
Agreement.
27
16. Agreement
of Right Holders.
Every
holder of a Right by accepting the same consents and agrees with the Company
and
the Rights Agent and with every other holder of a Right that:
(a) prior
to
the Distribution Date, the Rights will not be evidenced by a Right Certificate
and will be transferable only in connection with the transfer of Common
Stock;
(b) after
the
Distribution Date, the Right Certificates will be transferable only on the
registry books of the Rights Agent if surrendered at the office of the Rights
Agent designated for such purpose, duly endorsed or accompanied by a proper
instrument of transfer with all required certificates completed;
(c) the
Company and the Rights Agent may deem and treat the Person in whose name
the
Right Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights
evidenced thereby (notwithstanding any notations of ownership or writing
on the
Right Certificate or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent or the transfer agent of the Common
Stock) for all purposes whatsoever, and neither the Company nor the Rights
Agent
shall be affected by any notice to the contrary; and
(d) notwithstanding
anything in this Rights Agreement to the contrary, neither the Company nor
the
Rights Agent shall have any liability to any holder of a Right or other Person
as a result of its inability to perform any of its obligations under this
Rights
Agreement by reason of any preliminary or permanent injunction or other order,
judgment, decree or ruling (whether interlocutory or final) issued by a court
or
by a governmental, regulatory, self-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, that the Company must use its best efforts to have any such injunction,
order, judgment, decree or ruling lifted or otherwise overturned as soon
as
possible.
17. Right
Certificate Holder Not Deemed a Stockholder.
No
holder of a Right, as such, shall be entitled to vote, receive dividends
in
respect of or be deemed for any purpose to be the holder of Common Stock
or any
other securities of the Company which may at any time be issuable upon the
exercise of the Rights, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate,
as
such, any of the rights of a stockholder of the Company or any right to vote
in
the election of directors or upon any matter submitted to stockholders at
any
meeting thereof, or to give or withhold consent to any corporate action,
or to
receive notice of meetings or other actions affecting stockholders (except
as
provided in Section 25 hereof), or to receive dividends or subscription
rights in respect of any such stock or securities, or otherwise, until the
Right
or Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
28
18. Concerning
the Rights Agent.
(a) The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the preparation, negotiation, delivery, administration, amendment
and execution of this Rights Agreement and the exercise and performance of
its
duties hereunder. The Company also agrees to indemnify the Rights Agent for,
and
to hold it harmless against, any loss, liability, damage, judgment, fine,
penalty, claim, demand, settlement, cost or expense (including, without
limitation, the reasonable fees and expenses of legal counsel) incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent (which gross negligence, bad faith or willful misconduct must be
determined by a final, non-appealable order, judgment, decree or ruling of
a
court of competent jurisdiction), for any action taken, suffered or omitted
by
the Rights Agent in connection with the acceptance, administration, exercise
and
performance of its duties under this Rights Agreement. The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company, including, without limitation, the costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly.
The
provisions of this Section 18 and Section 20 below shall survive the termination
of this Rights Agreement and the exercise or expiration of the Rights and
the
resignation, replacement or removal of the Rights Agent.
(b) The
Rights Agent shall be authorized and protected and shall incur no liability
for
or in respect of any action taken, suffered or omitted by it in connection
with
its acceptance and administration of this Rights Agreement and the exercise
and
performance of its duties hereunder in reliance upon any Right Certificate,
certificate for Common Stock or 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,
guaranteed, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof. The
Rights Agent shall not be deemed to have knowledge of any event of which
it is
entitled to receive notice thereof hereunder, and the Rights Agent shall
be
fully protected and shall incur no liability for failing to take any action
in
connection therewith unless and until it has received such notice in
writing.
19. Merger
or Consolidation or Changed Name of Rights Agent.
(a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger
or
consolidation to which the Rights Agent or any successor Rights Agent shall
be a
party, or any Person succeeding to the shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights
Agent under this Rights Agreement without the execution or filing of any
paper
or any further act on the part of any of the parties hereto, provided that
such
Person would be eligible for appointment as a successor Rights Agent under
the
provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement, any of
the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor
Rights
Agent and deliver such Right Certificates so countersigned; and, in case
at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in
the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full
force
provided in the Right Certificates and in this Rights Agreement.
29
(b) In
case
at any time the name of the Rights Agent shall be changed and at such time
any
of the Right Certificates shall have been countersigned but not delivered,
the
Rights Agent may adopt the countersignature under its prior name and deliver
such Right Certificates so countersigned; and in case at that time any of
the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificate shall have the full force
provided in the Right Certificates and in this Rights Agreement.
20. Rights
and Duties of Rights Agent.
The
Rights Agent undertakes to perform only the duties and obligations expressly
imposed by this Rights Agreement (and no implied duties) upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The
Rights Agent may consult with legal counsel (who may be legal counsel for
the
Company or an employee of the Rights Agent), and the advice or opinion of
such
counsel shall be full and complete authorization and protection to the Rights
Agent and the Rights Agent shall incur no liability for or in respect of
any
action taken, suffered or omitted by it in accordance with such advice or
opinion.
(b) Whenever
in the performance of its duties under this Rights Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (including,
without
limitation, the identity of any Acquiring Person and the determination of
Current Market Price) be proved or established by the Company prior to taking,
suffering or omitting to take any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may
be
deemed to be conclusively proved and established by certificate signed by
the
President or any Vice President and by 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 shall be full and complete authorization
and
protection to the Rights Agent and the Rights Agent shall incur no liability
for
or in respect of any action taken, suffered or omitted by it under the
provisions of this Rights Agreement in reliance upon such
certificate.
(c) The
Rights Agent shall be liable hereunder only for its own gross negligence,
bad
faith or willful misconduct (which gross negligence, bad faith or willful
misconduct must be determined by a final, non-appealable order, judgment,
decree
or ruling of a court of competent jurisdiction). Anything in this Rights
Agreement to the contrary notwithstanding, in no event shall the Rights Agent
be
liable for special, indirect, incidental, punitive 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 action. Any liability of the Rights Agent under
this Rights Agreement will be limited to the amount of annual fees paid by
the
Company to the Rights Agent.
30
(d) The
Rights Agent shall not be liable for or by reason of any of the statements
of
fact or recitals contained in this Rights Agreement or in the Right Certificates
(except its countersignature thereof) or be required to verify the same,
but all
such statements and recitals are and shall be deemed to have been made by
the
Company only.
(e) The
Rights Agent shall not have any liability for or be under any responsibility
in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability
of
the Rights (including the Rights becoming null and void pursuant to Section
11(a)(ii) hereof) or any change or adjustment in the terms of the Rights
(including the manner, method or amount thereof provided for in Sections
3, 11,
13, 23 or 24 or the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a Certificate furnished
pursuant to Section 12 describing any such adjustment upon which the Rights
Agent may rely); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares
of Common Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Common Stock will, when issued,
be
validly authorized and issued, fully paid and nonassessable.
(f) The
Company agrees that it will perform, execute, acknowledge and deliver or
cause
to be performed, executed, acknowledged and delivered all such further and
other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Rights Agreement.
(g) The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of the
Board, the Chief Executive Officer, the President or any Vice President or
the
Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer
of the Company, and to apply to such officers for advice or instructions
in
connection with its duties, and such instruction shall be full authorization
and
protection to the Rights Agent and the Rights Agent shall not be liable for
or
in respect of any action taken, suffered or omitted by it in accordance with
instructions of any such officer or for any delay in acting while waiting
for
those instructions. The Rights Agent shall be fully authorized and protected
in
relying upon the most recent instructions received by any such officer. Any
application by the Rights Agent for written instructions from the Company
may,
at the option of the Rights Agent, set forth in writing any action proposed
to
be taken, suffered or omitted by the Rights Agent under this Rights Agreement
and the date on and/or after which such action shall be taken or suffered
or
such omission shall be effective. The Rights Agent shall not be liable for
any
action taken or suffered by, or omission of, the Rights Agent in accordance
with
a proposal included in any such application on or after the date specified
in
such application (which date shall not be less than five Business Days after
the
date any officer of the Company actually 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.
31
(h) The
Rights Agent and any shareholder, affiliate, director, officer or employee
of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which
the
Company may be interested, or contract with or lend money to the Company
or
otherwise act as fully and freely as though the Rights Agent were not the
Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent (or any such shareholder, affiliate, director, officer or employee)
from
acting in any other capacity for the Company or for any other
Person.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby
vested
in it or perform any duty hereunder either itself (through its directors,
officers and employees) or by or through its attorneys or agents, and the
Rights
Agent shall not be answerable or accountable for any act, default, neglect
or
misconduct of any such attorneys or agents or for any loss to the Company
or to
any holders of Rights or to any other Person resulting from any such act,
default, neglect or misconduct, absent gross negligence, bad faith or willful
misconduct in the selection and continued employment thereof (which gross
negligence, bad faith or willful misconduct must be determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).
(j) No
provision of this Rights 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 it believes
that repayment of such funds or adequate indemnification against such risk
or
liability is not reasonably assured to it.
(k) If,
with
respect to any Right Certificate surrendered to the Rights Agent for exercise
or
transfer, the certificate contained in the form of assignment or the form
of
election to purchase set forth on the reverse thereof, as the case may be,
has
either not been completed or indicates an affirmative response to clause
1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with
the
Company.
21. Change
of Rights Agent.
The
Rights Agent or any successor Rights Agent may resign and be discharged from
its
duties under this Rights Agreement upon 30 days’ notice in writing, or such
earlier period as shall be agreed to in writing, mailed to the Company and
to
each transfer agent of the Common Stock by registered or certified mail,
and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent (with or without cause)
upon 30 days’ notice in writing, or such earlier period as shall be agreed
to in writing, mailed to the Rights Agent or successor Rights Agent, as the
case
may be, and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent.
If the Company shall fail to make such appointment within a period of
30 days after giving notice of such removal or after it has been notified
in writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then
the
incumbent Rights Agent or the holder of record of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new
Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by
such a
court, shall be (a) a Person organized and doing business under the laws of
the United States or any State thereof, in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and
is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate controlled by a Person
described in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder,
and
execute and deliver any further assurance, conveyance, act or deed necessary
for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights
Agent
and each transfer agent of the Common Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any
notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation, replacement
or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as
the case may be.
32
22. Issuance
of New Right Certificates.
Notwithstanding any of the provisions of this Rights Agreement or of the
Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to
reflect any adjustment or change in the Purchase Price per share and the
number
or kind or class of shares of stock or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of
shares
of Common Stock following the Distribution Date and prior to the redemption
or
expiration of the Rights, the Company shall, with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under
any
employee plan or arrangement, or upon the exercise, conversion or exchange
of
securities hereinafter issued by the Company, in each case existing prior
to the
Distribution Date, issue Right Certificates representing the appropriate
number
of Rights in connection with such issuance or sale; provided,
however,
that
(i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued, if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
33
23. Redemption.
(a) The
Board
of Directors may, at its option, at any time prior to the earlier of
(x) the first occurrence of a Flip-In Event or (y) the Close of
Business on the Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.001 per Right, as such amount
may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”).
(b) Immediately
upon the action of the Board of Directors ordering the redemption of the
Rights
(or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), and without any further action and without
any notice, the right to exercise the Rights will terminate and the only
right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption (with
prompt written notice thereof to the Rights Agent); provided,
however,
that
the failure to give, or any defect in, any such notice shall not affect the
legality or validity of such redemption. Within 10 days after such action
of the
Board of Directors ordering the redemption of the Rights (or such later time
as
the Board of Directors may establish for the effectiveness of such redemption),
the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed
in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall state the method
by
which the payment of the Redemption Price will be made. The failure to give
notice required by this Section 23(b) or any defect therein shall not
affect the legality or validity of the action taken by the Company.
(c) In
the
case of a redemption permitted under Section 23(a) hereof, the Company may,
at its option, discharge all of its obligations with respect to the Rights
by
(i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent of the Common Stock, and upon such action, all
outstanding Right Certificates shall be null and void without any further
action
by the Company.
24. Exchange
of Rights for Common Stock.
(a) The
Board
of Directors may, at its option, at any time after the occurrence of a Flip-In
Event, exchange all or part of the then outstanding and exercisable Rights
(which (i) shall not include Rights that have become null and void pursuant
to the provisions of Section 11(a)(ii) and (ii) shall include, without
limitation, any Rights issued after the Distribution Date in accordance with
Section 22 hereof) for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(the “Exchange Ratio”). Notwithstanding the foregoing the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than an Exempt Person), together with all Affiliates and Associates
of
such Person, becomes the Beneficial Owner of shares of Common Stock aggregating
50% or more of the shares of Common Stock then outstanding. From and after
the
occurrence of an event specified in Section 13(a) hereof, any Rights that
theretofore have not been exchanged pursuant to this Section 24(a) shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 24(a).
34
(b) Immediately
upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights
held by
such holder multiplied by the Exchange Ratio. The Company shall promptly
give
public notice of any such exchange (with prompt written notice of such exchange
to the Rights Agent); provided,
however,
that
the failure to give, or any defect in, such notice shall not affect the legality
or validity of such exchange. The Company promptly shall mail a notice of
any
such exchange to all of the holders of such Rights at their last addresses
as
they appear upon the registry books of the Rights Agent. Any notice which
is
mailed in the manner herein provided shall be deemed given, whether or not
the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the shares of Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will
be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become null and void pursuant to
the
provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
(c) In
any
exchange pursuant to this Section 24, the Company, at its option, may
substitute, and, in the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall substitute to the extent of such insufficiency, for each share
of
Common Stock that would otherwise be issuable upon exchange of a Right, a
number
of shares of Preferred Stock or Preferred Stock Equivalent or fractions thereof
having an aggregate current per share market price (determined pursuant to
Section 11(d) hereof) equal to the current per share market price of one
share of Common Stock (determined pursuant to Section 11(d) hereof) as of
the date of the Flip-In Event.
(d) In
the
event that there shall not be sufficient shares of Common Stock issued but
not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Common
Stock
for issuance upon exchange of the Rights.
(e) The
Company shall not be required to issue fractions of shares of Common Stock
or to
distribute certificates which evidence fractional shares of Common Stock.
In
lieu of such fractional shares of Common Stock, the Company shall pay to
the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in
cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market
value of a whole share of Common Stock shall be the Current Market Price
of a
share of Common Stock (as defined in Section 11(d) hereof for the purposes
of computations made other than pursuant to Section 11(a)(iii)) for the
Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
35
25. Notice
of Proposed Actions.
(a) In
case
the Company, after the Distribution Date, shall propose (i) to effect any
of the transactions referred to in Section 11(a)(i) or to pay any dividend
to the holders of record of its Preferred Stock payable in stock of any class
or
to make any other distribution to the holders of record of its Preferred
Stock
(other than a regular periodic cash dividend), or (ii) to offer to the
holders of record of its Preferred Stock or options, warrants, or other rights
to subscribe for or to purchase shares of Preferred Stock (including any
security convertible into or exchangeable for Preferred Stock) or shares
of
stock of any other class or any other securities, options, warrants, convertible
or exchangeable securities or other rights, or (iii) to effect any
reclassification of its Preferred Stock or any recapitalization or
reorganization of the Company, or (iv) to effect any consolidation or
merger with or into, or to effect any sale or other transfer (or to permit
one
or more of its Subsidiaries to effect any sale or other transfer), in one
or
more transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or Persons,
or (v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to the Rights Agent and to
each
holder of record of a Right Certificate, in accordance with Section 26
hereof, notice of such proposed action, which shall specify the record date
for
the purposes of such transaction referred to in Section 11(a)(i), or such
dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer
of
assets, disposition, liquidation, dissolution or winding up is to take place
and
the record date for determining participation therein by the holders of record
of Preferred Stock, if any such date is to be fixed, and such notice shall
be so
given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of record of
the Preferred Stock for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record
of
Preferred Stock, whichever shall be the earlier.
(b) In
case
any of the transactions referred to in Section 11(a)(ii) or Section 13
of this Rights Agreement are proposed, then, in any such case, the Company
shall
as soon as practicable thereafter give to the Rights Agent and to each holder
of
Rights, in accordance with Section 26 hereof, notice of the proposal of
such transaction at least 10 days prior to consummating such transaction,
which notice shall specify the proposed event and the consequences of the
event
to holders of Rights under Section 11(a)(ii) or Section 13 hereof, as
the case may be, and, upon consummating such transaction, shall similarly
give
notice thereof to each holder of Rights.
(c) The
failure to give notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by the Company
or
the vote upon any such action.
26. Notices.
Notices
or demands authorized by this Rights Agreement to be given or made by the
Rights
Agent or by the holder of record of any Right Certificate or Right to or
on
behalf of the Company shall be sufficiently given or made if in writing and
sent
by first-class mail, postage prepaid, addressed (until another address is
filed
in writing with the Rights Agent) as follows:
36
|
SciClone
Pharmaceuticals, Inc.
901
Mariner’s Island Boulevard, Suite 205
San
Mateo, California 94404
Attention:
Chief Financial Officer
|
Subject
to the provisions of Section 21 hereof, any notice or demand authorized by
this
Rights Agreement to be given or made by the Company or by the holder of record
of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
|
Mellon
Investor Services LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Client Relationship Executive
Mellon
Investor Services LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
General Counsel
|
Notices
or demands authorized by this Rights Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Right Certificate
or
Right shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Distribution
Date,
on the registry books of the Transfer Agent.
27. Supplements
and Amendments.
Except
as otherwise provided herein, for so long as the Rights are then redeemable,
the
Company may in its sole and absolute discretion supplement or amend any
provision of this Rights Agreement in any respect without the approval of
any
holders of the Rights. At any time when the Rights are no longer redeemable,
except as provided in the penultimate sentence of this Section 27, the
Company may supplement or amend this Rights Agreement without the approval
of
any holders of Right Certificates in order to (i) cure any ambiguity,
(ii) correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii) shorten
or lengthen any time period hereunder, or (iv) change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing
signed
by the Company and the Rights Agent; provided
that no
such supplement or amendment shall adversely affect the interests of the
holders
of Rights as such (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person), and no such amendment may cause the Rights again
to
become redeemable or cause the Rights Agreement again to become amendable
other
than in accordance with this sentence. Upon the delivery of a certificate
from
an appropriate officer of the Company that states that the proposed supplement
or amendment complies with this Section 27, the Rights Agent shall execute
such
supplement or amendment. Notwithstanding anything contained in this Rights
Agreement to the contrary, (a) no supplement or amendment shall be made which
changes the Redemption Price and (b) neither the Company nor the Rights Agent
shall be obligated to enter into any supplement or amendment that affects
the
Rights Agent’s rights, duties, obligations or immunities under this Rights
Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Stock.
37
28. Successors.
All of
the covenants and provisions of this Rights 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.
29. Benefits
of this Rights Agreement.
Nothing
in this Rights Agreement shall be construed to give to any Person other than
the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Rights Agreement; this Rights Agreement
shall
be for the sole and exclusive benefit of the Company, the Rights Agent and
the
holders of record of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
30. Determinations
and Actions by the Board of Directors.
The
Board of Directors shall have the exclusive power and authority to administer
this Rights Agreement and to exercise the rights and powers specifically
granted
to the Board of Directors or to the Company, or as may be necessary or advisable
in the administration of this Rights Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this Rights Agreement
and
(ii) make all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend or not amend
this
Rights Agreement). All such actions, calculations, interpretations and
determinations (including, for purpose of clause (y) below, all omissions
with
respect to the foregoing) which are done or made by the Board of Directors
in
good faith, including but not limited to those made under Sections 1 and
11
hereunder, (x) shall be final, conclusive and binding on the Company, the
Rights
Agent, the holders of the Rights, as such, and all other Persons, and (y)
not
subject the Board to any liability to the holders of the Rights. Notwithstanding
anything contained herein to the contrary, the Rights Agent is entitled always
to assume that the Company’s Board of Directors acted in good faith and shall be
fully protected and incur no liability in reliance thereon.
31. Three
Year Independent Director Evaluation.
A
committee of the Company’s Board of Directors shall review this Rights Agreement
in order to consider whether the maintenance of this Rights Agreement continues
to be in the best interests of the Company and its stockholders. Such committee
shall conduct such review periodically when, as and in such manner as the
committee deems appropriate, after giving due regard to all relevant
circumstances; provided, however, that the committee shall take such action
at
least every three years following the date hereof. Following each such review,
such committee will report its conclusions to the full Board of Directors,
including any recommendation in light thereof as to whether this Rights
Agreement should be modified or the Rights should be redeemed. Such committee
shall be comprised only of directors of the Company who shall have been
determined by the Company’s Board of Directors to be independent under NASDAQ
listing standards, or, if the Common Shares are listed on a national exchange,
such national exchange’s listing standards. Such committee is authorized to
retain such legal counsel, financial advisors and other advisors as the
committee deems appropriate in order to assist the committee in carrying
out its
foregoing responsibilities under this Rights Agreement. Such committee shall
initially be the Nominating and Corporate Governance Committee of the Company’s
Board of Directors, provided that the Board of Directors may, at its discretion,
delegate this review to another committee of independent directors pursuant
to
this provision.
38
32. Governing
Law.
This
Rights Agreement and each Right Certificate issued hereunder shall be deemed
to
be a contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such state
applicable to contracts to be made solely by residents of such state and
performed entirely within such state; provided, however, that all provisions
regarding the rights, duties and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New
York
applicable to contracts made and to be performed entirely within such
State.
33. Counterparts.
This
Rights 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.
34. Descriptive
Headings.
Descriptive headings of the several sections of this Rights Agreement are
inserted for convenience only and shall not control or affect the meaning
or
construction of any of the provisions hereof.
35. Severability.
If any
term, provision, covenant or restriction of this Rights Agreement is held
by a
court of competent jurisdiction or other authority to be invalid, illegal
or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect
and
shall in no way be affected, impaired or invalidated.
39
IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly
executed, and their seals affixed and attested, all as of the date and year
first above written.
|
[SEAL]
|
||||
|
ATTEST:
|
SciClone
Pharmaceuticals, Inc.
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
|||
|
[SEAL]
|
||||
|
ATTEST:
|
Mellon
Investor Services LLC
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
|||
40
TABLE
OF
CONTENTS
Page
|
1.
|
Certain
Definitions
|
1
|
|
2.
|
Appointment
of Rights Agent
|
6
|
|
3.
|
Issuance
of Right Certificates
|
6
|
|
4.
|
Form
of Right Certificates
|
8
|
|
5.
|
Countersignature
and Registration
|
8
|
|
6.
|
Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates
|
9
|
|
7.
|
Exercise
of Rights; Purchase Price; Expiration Date of Rights
|
10
|
|
8.
|
Cancellation
and Destruction of Right Certificates
|
11
|
|
9.
|
Reservation
and Availability of Shares of Preferred Stock
|
11
|
|
10.
|
Preferred
Stock Record Date
|
13
|
|
11.
|
Adjustments
to Number and Kind of Shares, Number of Rights or Purchase
Price
|
13
|
|
12.
|
Certification
of Adjustments or Number of Shares
|
22
|
|
13.
|
Consolidation,
Merger or Sale or Transfer of Assets or Earning Power
|
22
|
|
14.
|
Fractional
Rights and Fractional Shares
|
25
|
|
15.
|
Rights
of Action
|
26
|
|
16.
|
Agreement
of Right Holders
|
27
|
|
17.
|
Right
Certificate Holder Not Deemed a ▇▇▇▇▇▇▇▇▇▇▇
|
▇▇
|
|
▇▇.
|
Concerning
the Rights Agent
|
27
|
|
19.
|
Merger
or Consolidation or Changed Name of Rights Agent
|
28
|
|
20.
|
Duties
of Rights Agent
|
29
|
|
21.
|
Change
of Rights Agent
|
30
|
|
22.
|
Issuance
of New Right Certificates
|
31
|
|
23.
|
Redemption
|
32
|
-i-
TABLE
OF
CONTENTS
(continued)
Page
|
24.
|
Exchange
of Rights for Common Stock
|
32
|
|
25.
|
Notice
of Proposed Actions
|
34
|
|
26.
|
Notices
|
35
|
|
27.
|
Supplements
and Amendments
|
35
|
|
28.
|
Successors
|
36
|
|
29.
|
Benefits
of this Rights Agreement
|
36
|
|
30.
|
Determinations
and Actions by the Board of Directors
|
36
|
|
31.
|
Three
Year Independent Director Evaluation
|
36
|
|
32.
|
Governing
Law
|
37
|
|
33.
|
Counterparts
|
37
|
|
34.
|
Descriptive
Headings
|
37
|
|
35.
|
Severability
|
37
|
-ii-
EXHIBIT
A
SciClone
Pharmaceuticals, Inc.
CERTIFICATE
OF DESIGNATION,
PREFERENCES
AND RIGHTS
OF
THE
TERMS OF THE
SERIES
D
PREFERRED STOCK
Pursuant
to Section 151 of the General Corporation Law of the State of
Delaware
We,
the
President and Chief Executive Officer and the Secretary, respectively,
of
SciClone Pharmaceuticals, Inc., organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions
of
Section 103 thereof, DO HEREBY CERTIFY:
That
pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the said Corporation, the said Board of
Directors on December 18, 2006, adopted the following resolution creating
a
series of 150,000 shares of Preferred Stock designated as Series D Preferred
Stock:
RESOLVED,
that pursuant to the authority vested in the Board of Directors of this
Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it
hereby
is created, and that the designation and amount thereof and the powers,
preferences and relative, participating, optional and other special rights
of
the shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
Section
1. Designation
and Amount.
The
shares of such series shall be designated as “Series D Preferred Stock” (the
“Series D Preferred Stock”), $0.001 par value per share, and the number of
shares constituting such series shall be 150,000.
Section
2. Dividends
and Distributions.
(A)
The
dividend rate on the shares of Series D Preferred Stock shall be for each
quarterly dividend (hereinafter referred to as a “quarterly dividend period”),
which quarterly dividend periods shall commence on January 1, April 1,
July 1 and October 1 each year (each such date being referred to
herein as a “Quarterly Dividend Payment Date”) (or in the case of original
issuance, from the date of original issuance) and shall end on and include
the
day next preceding the first date of the next quarterly dividend period,
at a
rate per quarterly dividend period (rounded to the nearest cent) equal
to the
greater of (a) $625.00 or (b) subject to the provisions for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all
cash dividends, and 1,000 times the aggregate per share amount (payable in
cash, based upon the fair market value at the time the non-cash dividend
or
other distribution is declared as determined in good faith by the Board
of
Directors) of all non-cash dividends or other distributions other than
a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared (but
not
withdrawn) on the Common Stock, par value $0.001 per
share, of the Corporation (the “Common Stock”) during the immediately preceding
quarterly dividend period, or, with respect to the first quarterly dividend
period, since the first issuance of any share or fraction of a share of
Series D
Preferred Stock. In the event this Company shall at any time after January
2,
2007 (the “Rights Declaration Date”) (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of
shares
of Series D Preferred Stock were entitled immediately prior to such event
under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of
Common
Stock outstanding immediately after such event and the denominator of which
is
the number of shares of Common Stock that were outstanding immediately
prior to
such event.
1
(B)
Dividends
shall begin to accrue and be cumulative on outstanding shares of Series
D
Preferred Stock from the Quarterly Dividend Payment Date next preceding
the date
of issue of such shares of Series D Preferred Stock, unless the date of
issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment
Date, in which case dividends on such shares shall begin to accrue from
the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders
of shares of Series D Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events
such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series D Preferred Stock in an amount less than the
total
amount of such dividends at the time accrued and payable on such shares
shall be
allocated pro rata on a share-by-share basis among all such shares at the
time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series D Preferred Stock entitled to receive payment
of
a dividend or distribution declared thereon, which record date shall be
no more
than 45 days prior to the date fixed for the payment thereof.
Section
3. Voting
Rights.
The
holders of shares of Series D Preferred Stock shall have the following
voting
rights:
(A)
Subject
to the provision for adjustment hereinafter set forth, each share of Series
D
Preferred Stock shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of the stockholders of the Corporation. In
the event
the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case
the number of votes per share to which holders of shares of Series D Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number
of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
2
(B)
Except
as
otherwise provided herein, in the Certificate of Incorporation or Bylaws,
the
holders of shares of Series D Preferred Stock and the holders of shares
of
Common Stock shall vote together as one class on all matters submitted
to a vote
of stockholders of the Corporation.
(C)
Except
as
set forth herein, in the Certificate of Incorporation and in the Bylaws,
holders
of Series D Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section
4. Reacquired
Shares.
Any
shares of Series D Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued
as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section
5. Liquidation,
Dissolution or Winding Up.
(A)
In
the
event of any voluntary or involuntary liquidation, dissolution or winding
up of
the Corporation, the holders of the Series D Preferred Stock shall be entitled
to receive the greater of (a) $25,000.00 per
share, plus accrued dividends to the date of distribution, whether or not
earned
or declared, or (b) an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount
to be distributed per share to holders of Common Stock. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case
the amount to which holders of shares of Series D Preferred Stock were
entitled
immediately prior to such event pursuant to clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number
of
shares of Common Stock that were outstanding immediately prior to such
event.
Consolidation,
Merger, etc.
In case
the Corporation shall enter into any consolidation, merger, combination
or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in
any such
case the shares of Series D Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind),
as the
case may be, into which or for which each share of Common Stock is changed
or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series D Preferred Stock
shall be
adjusted by multiplying such amount by a fraction the numerator of which
is the
number of shares of Common Stock outstanding immediately after such event
and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
3
Section
6. No
Redemption.
The
shares of Series D Preferred Stock shall not be redeemable.
Section
7. Fractional
Shares.
Series
D Preferred Stock may be issued in fractions of a share which shall entitle
the
holder, in proportion to such holder’s fractional shares, to exercise voting
rights, receive dividends, participate in distributions and have the benefit
of
all other rights of holders of Series D Preferred Stock. All payments made
with
respect to fractional shares hereunder shall be rounded to the nearest
whole
cent.
Section
8. Certain
Restrictions.
(A)
Whenever
quarterly dividends or other dividends or distributions payable on the
Series D
Preferred Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series D Preferred Stock outstanding shall have
been paid
in full, the Corporation shall not:
(i) declare
or pay dividends on, make any other distributions on, or redeem or purchase
or
otherwise acquire for consideration any shares of stock ranking junior
(either
as to dividends or upon liquidation, dissolution or winding up) to the
Series D
Preferred Stock;
(ii) declare
or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or
winding up) with the Series D Preferred Stock, except dividends paid ratably
on
the Series D Preferred Stock and all such parity stock on which dividends
are
payable or in arrears in proportion to the total amounts to which the holders
of
all such shares are then entitled;
(iii) redeem
or
purchase or otherwise acquire for consideration shares of any stock ranking
on a
parity (either as to dividends or upon liquidation, dissolution or winding
up)
with the Series D Preferred Stock, provided that the Corporation may at
any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either
as to
dividends or upon dissolution, liquidation or winding up) to the Series
D
Preferred Stock; or
(iv) purchase
or otherwise acquire for consideration any shares of Series D Preferred
Stock,
or any shares of stock ranking on a parity with the Series D Preferred
Stock,
except in accordance with a purchase offer made in writing or by publication
(as
determined by the Board of Directors) to all holders of such shares upon
such
terms as the Board of Directors, after consideration of the respective
annual
dividend rates and other relative rights and preferences of the respective
series and classes shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
4
(B)
The
Corporation shall not permit any subsidiary of the Corporation to purchase
or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this Section 9,
purchase or otherwise acquire such shares at such time and in such
manner.
Section
10. Ranking.
The
Series D Preferred Stock shall be 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 series shall provide
otherwise.
Section
11. Amendment.
The
Certificate of Incorporation of the Corporation shall not be amended in
any
manner which would materially alter or change the powers, preferences or
special
rights of the Series D Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of two-thirds or more of the outstanding
shares of Series D Preferred Stock voting together as a single
class.
IN
WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm
the foregoing as true under the penalties of perjury this 22nd day of December,
2006.
|
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, President and Chief Executive Officer
|
|
|
Attest:
|
|
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Chief Financial Officer
|
|
5
EXHIBIT
B
[Form
of
Right Certificate]
|
Certificate
No. W-
|
___________
Rights
|
NOT
EXERCISABLE AFTER DECEMBER 19, 2016, OR EARLIER IF REDEEMED OR EXCHANGED.
AT THE
OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED AT $0.001 PER RIGHT OR
EXCHANGED FOR COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
IN
THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A
PERSON
WHO IS AN ACQUIRING PERSON OR CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY
OWNED
BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
SHALL
BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHT
CERTIFICATE
SCICLONE
PHARMACEUTICALS, INC.
This
certifies that ___________,
or
registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of December 19,
2006
(the “Rights Agreement”) between SciClone Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey
limited liability company (the “Rights Agent”), to purchase from the Company at
any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 p.m. Pacific time on December 19, 2016, at the
principal office of the Rights Agent, or of its successors as Rights Agent,
designated for such purpose, one one-thousandth of a fully paid and
nonassessable share of Series D Preferred Stock of the Company (“Preferred
Stock”) at a purchase price of $25.00 per one one-thousandth of a share, as the
same may from time to time be adjusted in accordance with the Rights Agreement
(the “Purchase Price”), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Rights Agreement.
1
As
provided in the Rights Agreement, the Purchase Price and the number of shares
of
Preferred Stock or other securities which may be purchased upon the exercise
of
the Rights evidenced by this Right Certificate are subject to modification
and
adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided by the Rights Agreement.
Upon
the
occurrence of a Flip-In Event, if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person, (ii) a transferee of
any such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a Person
who,
after such transfer, became an Acquiring Person, or any Affiliate or Associate
of an Acquiring Person, such Rights shall be null and void and will no longer
be
transferable and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Flip-In Events.
This
Right Certificate is subject to all the terms, provisions and conditions
of the
Rights Agreement, which terms, provisions and conditions are incorporated
herein
by reference and made a part hereof and to which Rights Agreement reference
is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities of the Rights Agent, the Company and the
holders of record of the Right Certificates, which limitation of rights include
the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement
are on file at the principal executive office of the Company and are available
upon written request to the Company.
This
Right Certificate, with or without other Right Certificates, upon surrender
at
the principal office of the Rights Agent designated for such purpose, may
be
exchanged for another Right Certificate or Right Certificates of like tenor
and
date evidencing Rights entitling the holder of record to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by
the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part,
the
holder shall be entitled to receive upon surrender hereof, another Right
Certificate or Right Certificates for the number of whole Rights not
exercised.
2
Subject
to the provisions of the Rights Agreement, at any time prior to the earlier
of
(i) the occurrence of a Flip-In Event (as such term is defined in the
Rights Agreement) or (ii) the Expiration Date (as such term is defined in
the Rights Agreement), the Rights evidenced by this Certificate may be redeemed
by the Company at its option at a redemption price of $0.001 per Right. Subject
to the provisions of the Rights Agreement, the Company may, at its option,
at
any time after a Flip-In Event, exchange all or part of the Rights evidenced
by
this Certificate for shares of the Company’s Common Stock or for Preferred Stock
(or shares of a class or series of the Company’s preferred stock having the same
rights, privileges and preferences as the Preferred Stock).
In
the
event (i) any Person or group becomes an Acquiring Person or (ii) any
of the types of transactions, acquisitions or other events described above
as
self-dealing transactions occur, and prior to the acquisition by such person
or
group of 50% or more of the outstanding shares of Common Stock, the Board
of
Directors may require all or any portion of the outstanding Rights (other
than
Rights owned by such Acquiring Person which have become null and void) to
be
exchanged for Common Stock on a pro rata basis, at an exchange ratio of one
share of Common Stock or one one-thousandth of a share of Preferred Stock
(or of
a share of a class or series of the Company’s Preferred Stock having equivalent
rights, preferences and privileges), per Right (subject to
adjustment).
No
fractional shares of Preferred Stock shall be issued upon the exercise of
any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may,
at the
option of the Company, be evidenced by depositary receipts), and no fractional
shares of Common Stock will be issued upon the exchange of any Right or Rights
evidenced hereby, and in lieu thereof, as provided in the Rights Agreement,
fractions of shares of Preferred Stock or Common Stock shall receive an amount
in cash equal to the same fraction of the then Current Market Price (as such
term is defined in the Rights Agreement) of a share of Preferred Stock or
Common
Stock, as the case may be.
3
No
holder
of this Right Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Common Stock or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or
herein
be construed to confer upon the holder hereof, as such, any of the rights
of a
stockholder of the Company or any right to vote in the election of directors;
or
upon any matter submitted to stockholders at any meeting thereof, or to give
or
withhold consent to any corporate action or to receive notice of meetings
or
other actions affecting stockholders (other than certain actions specified
in
the Rights Agreement) or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate
shall
have been exercised or exchanged as provided in the Rights
Agreement.
This
Right Certificate shall not be valid or obligatory for any purpose until
it
shall have been countersigned by the Rights Agent.
4
WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal. Dated as of ________________________, _____.
|
ATTEST:
|
SCICLONE PHARMACEUTICALS, INC. | ||
|
By:
|
|||
|
Secretary
|
|||
|
Title:
|
|||
|
COUNTERSIGNED:
|
MELLON
INVESTOR SERVICES LLC
As
Rights Agent
|
||
|
By:
|
|||
| Authorized Officer | |||
5
Form
of
Reverse Side of Right Certificate
FORM
OF ASSIGNMENT
(To
be
executed by the registered holder if such holder
desires
to transfer any or all of the Rights
represented
by this Right Certificate)
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
|
|
||||||
|
(Name,
address and social security or other
identifying
number of transferee)
|
||||||
|
___________________________________
(_______________) of the Rights represented by this Right
Certificate, together with all right, title and interest in and
to said
Rights, and hereby irrevocably constitutes and appoints
_________________________ attorney to transfer said Rights on the
books of the within-named Company with full power of
substitution.
|
|
Dated:
|
,
|
|||||
|
(Signature)
|
||||||
|
Signature
Guaranteed:
|
||||||
CERTIFICATE
The
undersigned hereby certifies by checking the appropriate boxes
that:
(1) the
rights evidenced by this Right Certificate [ ] are
[ ] are not being sold, assigned and transferred by or on
behalf of a Person who is or was an Acquiring Person (as such capitalized
terms
are defined in the Rights Agreement);
(2) after
due
inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate
or
Associate of an Acquiring Person or any transferee of such Persons.
|
Dated:
|
,
|
|||||
|
(Signature)
|
||||||
|
Signature
Guaranteed:
|
||||||
6
Form
of
Reverse Side of Right Certificate
(continued)
NOTICE
The
signatures to the foregoing Assignment and the foregoing Certificate, if
applicable, must correspond to the name as written upon the face of this
Right
Certificate in every particular, without alteration or enlargement or any
change
whatsoever, and must be guaranteed by a participant in a Securities Transfer
Association (“STA”) recognized signature program.
In
the
event that the foregoing Certificate is not duly executed, with signature
guaranteed, the Company may deem the Rights represented by this Right
Certificate to be beneficially owned by an Acquiring Person or an Affiliate
or
Associate of an Acquiring Person (as such capitalized terms are defined in
the
Rights Agreement), and not issue any Right Certificate or Right Certificates
in
exchange for this Right Certificate.
7
Form
of
Reverse of Right Certificate
(continued)
FORM
OF ELECTION TO PURCHASE
(To
be
executed by the registered holder if such holder
desires
to exercise any or all of the Rights
represented
by this Right Certificate)
To
SciClone Pharmaceuticals, Inc.:
The
undersigned hereby irrevocably elects to exercise _______________ (__________)
of the Rights represented by this Right Certificate to purchase the shares
of
the Common Stock of the Company, or other securities or property issuable
upon
the exercise of said number of Rights pursuant to the Rights
Agreement.
The
undersigned hereby requests that a certificate for any such securities and
any
such property be issued in the name of and delivered to:
(Name,
address and social security or other
identifying
number of issuee)
The
undersigned hereby further requests that if said number of Rights shall not
be
all the Rights represented by this Right Certificate, a new Right Certificate
for the remaining balance of such Rights be issued in the name of and delivered
to:
(Name,
address and social security or other
identifying
number of issuee)
|
Dated:
|
,
|
|||||
|
(Signature)
|
||||||
|
Signature
Guaranteed:
|
||||||
8
Form
of
Reverse Side of Right Certificate
(continued)
CERTIFICATE
The
undersigned hereby certifies by checking the appropriate boxes
that:
(1) the
Rights evidenced by this Right Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms
are defined pursuant to the Rights Agreement);
(2) after
due
inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate
or
Associate of an Acquiring Person or any transferee of such Persons.
|
Dated:
|
,
|
|||||
|
(Signature)
|
||||||
|
Signature
Guaranteed:
|
||||||
NOTICE
The
signature to the foregoing Election to Purchase and the foregoing Certificate,
if applicable, must correspond to the name as written upon the face of the
this
Right Certificate in every particular, without alteration or enlargement
or any
change whatsoever, and 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
correspondent in the United States.
In
the
event that the foregoing Certificate is not executed, with signature guaranteed,
the Company may deem the Rights represented by this Right Certificate to
be
beneficially owned by an Acquiring Person or an Affiliate or Associate of
an
Acquiring Person (as such capitalized terms are defined in the Rights
Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
9
EXHIBIT
C
UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, DATED DECEMBER
19,
2006 (THE “RIGHTS AGREEMENT”) BETWEEN SCICLONE PHARMACEUTICALS, INC. AND MELLON
INVESTOR SERVICES LLC RIGHTS ISSUED TO, BENEFICIALLY OWNED BY OR TRANSFERRED
TO
ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) OR AN ASSOCIATE OR AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT)
THEREOF AND CERTAIN TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL NO
LONGER
BE TRANSFERABLE.
SCICLONE
PHARMACEUTICALS, INC.
Summary
of Terms of
Rights
Agreement
|
Nature
of Right:
|
When
exercisable, each Right (a “Right”) will initially entitle the holder to
purchase one one-thousandth of a share of Series D Preferred Stock
(“Preferred Stock”) of SciClone Pharmaceuticals, Inc. (the
“Company”).
|
|
|
Means
of Distribution:
|
The
Rights will be distributed to holders of the Company’s outstanding Common
Stock as a dividend of one Right for each share of Common Stock.
The
Rights will also be attached to all future issuances of Common
Stock prior
to the Distribution Date (as defined below).
|
|
|
Exercisability:
|
Rights
become exercisable on the earlier of: (i) the date of public
announcement by the Company or by any person or group (an “Acquiring
Person”) that such person or group has acquired beneficial ownership of
15% or more of the Company’s outstanding Common Stock, or (ii) the
tenth business day (unless extended by the Board prior to the time
a
person becomes an Acquiring Person) following the commencement,
or
announcement of an intention to commence, by any person or group
of a
tender or exchange offer which would result in such person owning
15% or
more of the outstanding Common Stock of the Company (the earlier
of such
dates is referred to as the “Distribution Date”), provided
that an Acquiring Person does not include an Exempt Person or
Grandfathered Person (as such terms are defined in the Rights Agreement).
Rights will trade separately from the Common Stock once the Rights
become
exercisable.
|
|
|
Purchase
Price:
|
$25.00
per one one-thousandth of a share of Series D Preferred, which
is the
amount that in the judgment of the Board of Directors represents
the
long-term value of one share of Common Stock over the term of the
Rights
Agreement (the “Purchase Price”).
|
|
|
Term:
|
The
Rights will expire upon the earlier of (i) ten years after the date
of issuance, or December 19, 2016 or (ii) redemption or exchange by
the Company as described below.
|
|
|
Redemption
of Rights:
|
Rights
are redeemable at a price of $0.001 per Right, by the vote of the
Company’s Board of Directors, at any time until the occurrence of a
Flip-In Event (defined below).
|
1
|
Preferred
Stock:
|
The
Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock
the
Company may issue (unless otherwise provided in the terms of such
other
series). Each share of Preferred Stock will have a preferential
cumulative
quarterly dividend in an amount equal to the greater of (a)
$625.00 or b) 1,000 times the dividend declared on each share of
Common Stock. In the event of liquidation, the holders of Preferred
Stock
will receive a preferred liquidation payment equal to the greater
of (a)
$25,000.00 per share, plus accrued dividends to the date of
distribution whether or not earned or declared, or (b) an amount per
share equal to 1,000 times the aggregate payment to be distributed
per
share of Common Stock. Each share of Preferred Stock will have
1,000
votes, voting together with the shares of Common Stock. In the
event of
any merger, consolidation or other transaction in which shares
of Common
Stock are exchanged for or changed into other securities, cash
and/or
other property, each share of Preferred Stock will be entitled
to receive
1,000 times the amount and type of consideration received per share
of
Common Stock. The rights of the Preferred Stock as to dividends,
liquidation and voting, and in the event of mergers and consolidations,
are protected by customary anti-dilution provisions. Fractional
shares (in
integral multiples of one one-thousandth) of Preferred Stock will
be
issuable; however, the Company may elect to distribute depositary
receipts
in lieu of such fractional shares. In lieu of fractional shares
other than
fractions that are multiples of one one-thousandth of a share,
an
adjustment in cash will be made based on the market price of the
Preferred
Stock on the last trading date prior to the date of exercise. Because
of
the nature of the Preferred Stock’s dividend, liquidation and voting
rights, the value of one one-thousandth of a share of Preferred
Stock
purchasable upon exercise of each Right should approximate the
value of
one share of Common Stock.
|
|
|
Rights
in Event of Self-Dealing Transaction or Acquisition of Substantial
Amount
of Common Stock:
|
In
the event that an Acquiring Person engages in certain self-dealing
transactions with the Company, or becomes a Beneficial Owner of
15% or
more of the outstanding Common Stock (“Flip-In Events”), a holder of a
Right thereafter has the right to purchase, upon payment of the
then
current Purchase Price, in lieu of one one-thousandth of a share
of
Preferred Stock per outstanding Right, such number of shares of
Common
Stock having a market value at the time of the transaction equal
to the
Purchase Price divided by one-half the Current Market Price (as
defined in
the Rights Agreement) of the Common Stock. Notwithstanding the
foregoing,
Rights held by the Acquiring Person or any Associate or Affiliate
thereof
or certain transferees will be null and void and no longer be
transferable.
|
|
|
Self-dealing
transactions are defined to include a consolidation, merger or
other
combination of an Acquiring Person with the Company in which the
Company
is the surviving corporation, the transfer of assets to the Company
in
exchange for securities of the Company, the acquisition of securities
of
the Company (other than in a pro rata distribution to all stockholders),
the sale, purchase, transfer, distribution, lease, mortgage, pledge
or
acquisition of assets by the Acquiring Person to, from or with
the Company
on other than an arm’s length basis, compensation to an Acquiring Person
for services (other than for employment as a regular or part-time
employee
or director on a basis consistent with the Company’s past practice), a
loan or provision of other financial assistance (except proportionately
as
a stockholder) to an Acquiring Person or the licensing, sale or
other
transfer of proprietary technology or know-how from the Company
to the
Acquiring Person on terms not approved by the Board of Directors
or a
reclassification, recapitalization or other transaction with the
effect of
increasing by more than 1% the Acquiring Person’s proportionate share of
any class of securities of the
Company.
|
2
|
Rights
in Event of
Business
Combination:
|
If,
following the occurrence of a Flip-In Event, the Company is acquired
by
any person in a merger or other business combination transaction
in which
the Common Stock is exchanged or converted or in which the Company
is not
the surviving corporation, or 50% or more of its assets or earnings
power
are sold to any person (“Flip-Over Events”), each holder of a Right (other
than an Acquiring Person, or Affiliates or Associates thereof)
shall
thereafter have the right to purchase, upon payment of the then
current
Purchase Price, such number of shares of common stock of the acquiring
company having a current market value equal to the Purchase Price
divided
by one-half the Current Market Price of such common
stock.
|
|
|
Exchange
Option:
|
In
the event (i) any person or group becomes an Acquiring Person or
(ii) any of the types of transactions, acquisitions or other events
described above as self-dealing transactions occur, and prior to
the
acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board may require all or any portion
of the
outstanding Rights (other than Rights owned by such Acquiring Person
which
have become void) to be exchanged for Common Stock on a pro rata
basis, at
an exchange ratio of one share of Common Stock or one one-thousandth
of a
share of Preferred Stock (or of a share of a class or series of
the
Company’s Preferred Stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
|
|
|
Fractional
Shares:
|
No
fractional shares of Common Stock will be issued upon exercise
of the
Rights and, in lieu thereof, a payment in cash will be made to
the holder
of such Rights equal to the same fraction of the current market
value of a
share of Common Stock.
|
|
|
Adjustment:
|
The
Purchase Price payable, and the number of shares of Preferred Stock
or
other securities or property issuable, upon exercise of the Rights
are
subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination
or
reclassification of the Preferred Stock, (ii) upon the grant to
holders of the Preferred Stock of certain rights or warrants to
subscribe
for Preferred Stock or convertible securities at less than the
current
market price of the Preferred Stock or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or
assets
(excluding dividends payable in Preferred Stock) or of subscription
rights
or warrants (other than those referred to above). The number of
Rights
associated with each share of Common Stock is also subject to adjustment
in the event of a stock split of the Common Stock or a stock dividend
on
the Common Stock payable in Common Stock or subdivisions, consolidations
or combinations of the Common Stock occurring, in any such case,
prior to
the Distribution Date.
|
|
|
Rights
as Stockholder:
|
The
Rights themselves do not entitle the holder thereof to any rights
as a
stockholder, including, without limitation, voting rights or to
receive
dividends.
|
|
|
Amendment
of Rights:
|
Until
the Rights become nonredeemable, the Company may, except with respect
to
the redemption price, amend the Rights Agreement in any manner.
After the
Rights become nonredeemable, the Company may amend the Rights Agreement
to
cure any ambiguity, to correct or supplement any provision which
may be
defective or inconsistent with any other provisions, to shorten
or
lengthen any time period under the Rights Agreement, or to change
or
supplement any provision in any manner the Company may deem necessary
or
desirable, provided that no such amendment may adversely affect
the
interests of the holders of the Rights (other than the Acquiring
Person or
its Affiliates or Associates) or cause the Rights to again be redeemable
or the Rights Agreement to again be freely
amendable.
|
3
|
Independent
Director Evaluation:
|
Following
the adoption of the Rights Agreement, a committee comprised of
independent
members of the Company’s Board of Directors shall review the Rights
Agreement to determine whether the maintenance of the Rights Agreement
continues to be in the best interests of the Company and its stockholders.
Such review shall occur periodically, but at least every three
years.
|
A
copy of the Rights Agreement is available, free of charge, from the Company,
901
Mariner’▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Secretary.
This summary description of the Rights Agreement does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, as
amended from time to time, which is incorporated in this summary description
by
reference.
4