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EPITOPE, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
RIGHTS AGENT
RIGHTS AGREEMENT
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Dated as of December 15, 1997
TABLE OF CONTENTS
Section Page
1. Certain Definitions................................................. 1
2. Appointment of Rights Agent......................................... 4
3. Issuance of Right Certificates...................................... 4
4. Form of Right Certificates.......................................... 6
5. Countersignature and Registration................................... 6
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificate......................................................... 7
7. Exercise of Rights; Purchase Price; Expiration Date of Rights....... 8
8. Cancellation and Destruction of Right Certificates.................. 10
9. Reservation and Availability of Capital Shares...................... 10
10. Preferred Shares Record Date........................................ 11
11. Adjustment of Purchase Price, Number of Shares or Number of Rights.. 11
12. Certificate of Adjusted Purchase Price or Number of Shares.......... 19
13. Consolidation, Merger, Statutory Plan of Exchange or Sale or
Transfer of Assets or Earning Power................................. 20
14. Fractional Rights and Fractional Shares............................. 23
15. Rights of Action.................................................... 24
16. Agreement of Right Holders.......................................... 25
17. Right Holders and Right Certificate Holders Not Deemed a
Shareholder......................................................... 25
18. Concerning the Rights Agent......................................... 25
19. Merger or Consolidation or Change of Name of Rights Agent........... 26
20. Duties of Rights Agent.............................................. 27
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21. Change of Rights Agent.............................................. 29
22. Issuance of New Right Certificates.................................. 30
23. Redemption.......................................................... 31
24. Exchange............................................................ 31
25. Notice of Certain Events............................................ 32
26. Notices............................................................. 33
27. Supplements and Amendments.......................................... 34
28. Certain Covenants................................................... 34
29. Successors.......................................................... 35
30. Benefits of This Agreement.......................................... 35
31. Severability........................................................ 35
32. Determinations and Actions by the Board of Directors, etc........... 35
33. Governing Law....................................................... 36
34. Counterparts........................................................ 36
35. Descriptive Headings................................................ 36
Exhibit A -- Form of Articles of Amendment
Exhibit B -- Form of Right Certificate
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TABLE OF DEFINED TERMS
Term Defined Section
Acquiring Person 1
Adjustment Shares 11(a)(ii)
Affiliate 1
Agreement Intro
Articles of Amendment Intro
Associate 1
Beneficial Owner; beneficially own 1
Board of Directors Intro
Business Day 1
close of business 1
Common Shares 1
common stock equivalents 11(a)(iii)
Company (Epitope, Inc.) Intro
Company (Following a Section 13(a) event) 13(a)
current per share market price of the
Common Shares 11(d)(i)
current per share market price of the
Preferred Shares 11(d)(ii)
Distribution Date 3(a)
equivalent preferred shares 11(b)
Exchange Act 1(b)
Exchange Date 7(b)
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Term Defined Section
Exchange Ratio 24(a)
Final Expiration Date 7(b)
Nasdaq 11(d)(i)
Person 1
Plan (Employee benefit plan) 1(a)
Preferred Shares 1
Principal Party 13(b)
Purchase Price 1
Qualifying Offer 11(a)(ii)
Record Date Intro
Redemption Date 7(b)
Redemption Price 23(a)
Registered Common Shares 13(b)
Right Intro
Right Certificate 3(a)
Rights Agent Intro
Section 11(a)(ii) event 11(a)(ii)
Section 13 event 13(a)
Securities Act 7(d)
Shares Acquisition Date 1
Shareholder Rights Plan 1 (end)
Subsidiary 1
Trading Day 11(d)(i)
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RIGHTS AGREEMENT
This Rights Agreement (the "Agreement") dated as of December 15,
1997, between EPITOPE, INC., an Oregon corporation (the "Company"), and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., a limited liability company (the
"Rights Agent");
W I T N E S S E T H :
WHEREAS the Board of Directors of the Company (the "Board of
Directors") has authorized the issuance of, and declared a dividend payable in,
one right (a "Right") for each Common Share (as defined herein) of the Company
outstanding on the record date to be established for the dividend payable in
shares of Agritope, Inc., common stock that is to be declared in connection with
the spin-off of that corporation (the "Record Date"), upon the terms and subject
to the conditions herein set forth;
WHEREAS each such Right shall represent the right to purchase
1/1,000 of a share of Series A Junior Participating Cumulative Preferred Stock,
no par value, of the Company, and shall have the rights and preferences set
forth in the form of Articles of Amendment ("Articles of Amendment") attached
hereto as Exhibit A; and
WHEREAS the Board of Directors has further authorized the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are defined in
Sections 3 and 7 hereof).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as defined
herein) who or which, together with all Affiliates and Associates
(as defined herein) of such Person, shall be the Beneficial Owner
(as defined herein) of 15 percent or more of the Common Shares of
the Company then outstanding, provided, however, that an Acquiring
Person shall not include the Company, any wholly owned Subsidiary
(as defined herein) of the Company, any employee benefit plan
("Plan") of the Company or of a Subsidiary of the Company, or any
Person holding Common Shares of the Company for or pursuant to the
terms of any such Plan. Notwithstanding the foregoing: (i) no
Person shall become an 'Acquiring Person' as the result of an
acquisition of Common Shares of the Company by the Company which,
by reducing the number of Common Shares of the Company
outstanding, increases the proportionate number of Common Shares
of the Company beneficially owned
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by such Person to 15 percent or more of the Common Shares of the
Company then outstanding, provided, however, that if a Person
shall become the Beneficial Owner of 15 percent or more of the
Common Shares of the Company then outstanding by reason of such
share acquisitions by the Company and shall thereafter become the
Beneficial Owner of any additional Common Shares of the Company,
then such Person shall be deemed to be an 'Acquiring Person'
unless upon the consummation of the acquisition of such additional
Common Shares of the Company such Person does not own 15 percent
or more of the Common Shares of the Company then outstanding; and
(ii) if the Board of Directors determines in good faith that a
Person who would otherwise be an 'Acquiring Person' became such
inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of the
Common Shares of the Company that would otherwise cause such
Person to be an 'Acquiring Person' or (B) such Person was aware of
the extent of its Beneficial Ownership of Common Shares of the
Company but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any
intention of changing or influencing control of the Company, and
if such Person as promptly as practicable divested or divests
itself of Beneficial Ownership of a sufficient number of Common
Shares of the Company so that such Person would no longer be an
'Acquiring Person', then such Person shall not be deemed to be or
to have become an 'Acquiring Person' for any purposes of this
Agreement. For purposes of this subsection (a), in determining the
percentage of the outstanding shares of Common Shares of the
Company with respect to which a Person is the Beneficial Owner (i)
all shares as to which such Person is deemed the Beneficial Owner
shall be deemed outstanding and (ii) shares which are subject to
issuance upon the exercise or conversion of outstanding conversion
rights, rights, warrants and options other than those referred to
in clause (i) of this sentence shall not be deemed outstanding.
Any determination made by the Board of Directors as to whether any
Person is or is not an 'Acquiring Person' shall be conclusive and
binding upon all holders of Rights.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, for purposes of Section 13(d) of the Exchange Act and
Regulation 13D-G thereunder (or
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any comparable or successor law or regulation), in each case as in
effect on the date hereof; or
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of
time or the fulfillment of a condition or both) pursuant to any
agreement, arrangement or understanding (other than customary
arrangements with and among underwriters and selling group members
with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or
(B) the right to vote, alone or in concert with others, pursuant
to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy given to such Person or any of such Person's
Affiliates or Associates in response to a public proxy
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary arrangements
with and among underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (other than voting pursuant to a
revocable proxy as described in the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the state of New
York are authorized or obligated by law or executive order to
close.
(e) "Close of business" on any given date shall mean 5 p.m.,
New York City time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5 p.m., New York City
time, on the next succeeding Business Day.
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(f) "Common Shares" when used with reference to the Company
shall mean shares of common stock, no par value, of the Company.
"Common Shares" when used with reference to any Person other than
the Company shall mean shares of the common stock of such Person
(or other class of equity securities or equity interests) having
power to control or direct the management of such Person or, if
such Person is a Subsidiary of another Person, of the Person which
ultimately controls such first-mentioned Person and which has
issued and outstanding such common stock (or such other class of
equity securities or equity interests).
(g) "Person" shall mean any individual, firm, partnership,
corporation, association, group (as such term is used in Rule
13d-5 under the Exchange Act) or other entity, and shall include
any successor (by merger or otherwise) of such entity.
(h) "Preferred Shares" shall mean shares of Series A Junior
Participating Cumulative Preferred Stock, no par value, of the
Company.
(i) "Purchase Price" shall mean the price to be paid for
each 1/1,000 of a Preferred Share pursuant to the exercise of a
Right, which price is, as of the date hereof, as set forth in
Section 7(c). The Purchase Price is subject to adjustment from
time to time as set forth in Sections 11 and 13.
(j) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for the purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(k) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting equity securities
or equity interests is owned, directly or indirectly, by such
Person.
The terms and conditions embodied in this Rights Agreement, as
from time to time amended, may be referred to as the "Shareholder Rights Plan"
of the Company.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of the close of business on (i) the 10th
day after the Shares Acquisition Date or (ii) the 10th Business Day (or such
later date as may be determined by the
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Board of Directors of the Company prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
the Company, any wholly owned Subsidiary of the Company, any Plan of the Company
or of any Subsidiary of the Company, or any entity holding Common Shares of the
Company for or pursuant to the terms of any such Plan) of, or first public
announcement of the intent of any such Person to commence, a tender or exchange
offer, the consummation of which would result in beneficial ownership by a
Person, together with its Affiliates and Associates, of 15 percent or more of
the outstanding Common Shares of the Company, including any such date which is
after the date of this Agreement and prior to the issuance of the Rights (the
earlier of (i) and (ii) being herein referred to as the "Distribution Date"),
then the following shall apply: (x) the Rights will be evidenced by certificates
for Common Shares of the Company (which certificates shall also be deemed to be
Right Certificates) or, as the case may be, certificates issued subsequent to
the Record Date and bearing the legend set forth in Section 3(b) hereof (and, in
neither case, by separate Right Certificates) and the record holders of such
certificates for Common Shares shall be the record holders of the Rights
represented thereby and (y) the Rights and the right to receive Right
Certificates will be transferable only simultaneously with and together with the
transfer of Common Shares of the Company. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date), the surrender for
transfer of such certificates for Common Shares shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby. As soon as practicable after the Distribution Date, after
notification by the Company, the Rights Agent will send, by first-class,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto, evidencing one Right for each Common Share so held,
subject to adjustment as provided herein. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates and may be
transferred by the transfer of the Right Certificates as permitted hereby,
separately and apart from any transfer of one or more shares of Common Shares,
and the holders of such Right Certificates as listed in the records of the
Company or any transfer agent or registrar for the Rights shall be the record
holders thereof.
(b) Rights shall be issued in respect of all Common Shares of the
Company issued after the Record Date, but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date, or the Final
Expiration Date. Certificates for such Common Shares shall also be deemed to be
certificates for Rights and shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Shareholder Rights Plan of
Epitope, Inc. (the "Plan"), until separate certificates for such
Rights are issued. Under certain circumstances, as set forth in
the Plan, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The terms of
the Plan, a copy of which is on file at the principal executive
offices of Epitope, Inc., are hereby incorporated herein by
reference. Epitope, Inc., shall mail or cause to be mailed to the
holder of this certificate a copy of the Plan without
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charge promptly following receipt of a written request therefor.
Under certain circumstances set forth in the Plan, Rights
beneficially owned by any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Plan) and any subsequent holder of such
Rights, may become null and void.
(c) Certificates for Common Shares, if any, issued after the
Distribution Date but prior to the earlier of the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not evidence any Right issued pursuant to
the terms of the Shareholder Rights Plan of Epitope, Inc.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase, assignment and certificate to be printed
on the reverse thereof), when, as and if issued, shall be substantially the same
as Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Shares of the Company or the Rights may from time
to time be listed, or to conform to usage. Subject to the provisions of Section
11 and Section 22 hereof, the Right Certificates, whenever issued, which are
issued in respect of Common Shares which were issued and outstanding as of the
close of business on the Distribution Date, shall be dated as of the close of
business on the Distribution Date, and on their face shall entitle the holders
thereof to purchase such number of Preferred Shares (including fractional shares
which are integral multiples of 1/1,000 of a share) as shall be set forth
therein at the price per 1/1,000 of a Preferred Share set forth therein, but the
number of such Preferred Shares and fractions thereof and the Purchase Price
shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, 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 countersigned by the Rights Agent,
either manually or by facsimile, 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
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the Company to sign such Right Certificate, although at the date of the
execution of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its shareholder services office, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificate.
(a) Subject to the provisions of Sections 7(f) and 14 hereof, at
any time after the close of business on the Distribution Date, and at or prior
to the close of business on the earliest of the Redemption Date, the Exchange
Date, or the Final Expiration Date, any Right Certificate or Right Certificates
may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a
like number of Preferred Shares as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent with the form of
assignment on the reverse side thereof (or with a written instrument of transfer
in form satisfactory to the Company and the Rights Agent enclosed with such
Right Certificate), executed by the registered holder thereof or his attorney
authorized in writing, and with such signature guaranteed. 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 until the
certificate set forth in the form of assignment on the reverse side of such
Right Certificate shall have been completed and executed by the registered
holder thereof or his attorney authorized in writing, and with such signature
guaranteed, and the Company shall have been provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
represented by such Right Certificate or the Affiliates or Associates of such
Beneficial Owner (or former Beneficial Owner) as the Company shall reasonably
request. Upon receipt of such executed form of assignment and certificate and of
such additional evidence, if requested, the Rights Agent shall countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company shall issue and deliver a new
Right Certificate of like tenor
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to the Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Until the Distribution Date, no Right may be exercised.
(b) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
and certificate thereon duly executed (with signatures duly guaranteed), to the
Rights Agent at the shareholder services office or agency of the Rights Agent
designated for such purpose, together with payment of the Purchase Price with
respect to each Right exercised, at or prior to the earliest of (i) the close of
business on the tenth anniversary of the Record Date (the "Final Expiration
Date"), (ii) the time at which the Rights are exchanged (the "Exchange Date") as
provided in Section 24, or (iii) the time at which the Rights are redeemed (the
"Redemption Date"), as provided in Section 23 hereof.
(c) The Purchase Price for each 1/1,000 of a Preferred Share
pursuant to the exercise of a Right shall initially be $60, and shall be payable
in lawful money of the United States of America in accordance with Section 7(d)
hereof. The Purchase Price and the number or type of securities 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.
(d) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and form of certificate thereon
duly executed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with Section 9 by bank
certified check or cashier's check payable to the order of the Company, and such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Right Certificate or the
Affiliates or Associates thereof as the Company may reasonably request, the
Rights Agent shall thereupon promptly (i) requisition from any transfer agent of
the Preferred Shares certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, and/or, as provided in Section 14 hereof,
requisition from the depositary agent depositary receipts representing such
number of 1/1,000s of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14, (iii) promptly
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.
Notwithstanding the foregoing provisions of
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this Section 7(d), the Company may suspend the issuance of Preferred Shares upon
exercise of Rights for a reasonable period, not in excess of 90 days, during
which the Company seeks to register under the Securities Act of 1933, as amended
(the "Securities Act"), and any applicable securities law of any jurisdiction,
the Preferred Shares to be issued pursuant to the Rights; provided, however,
that nothing contained in this Section 7(d) shall relieve the Company of its
obligations under Section 9(c) hereof.
(e) 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 Section 14 hereof.
(f) Notwithstanding anything in this Agreement to the contrary,
upon the occurrence of a Section 11(a)(ii) event or Section 13 event, any Rights
beneficially owned by (i) an Acquiring Person or any Affiliate or Associate of
an Acquiring Person, (ii) a transferee of an Acquiring Person or of any
Affiliate or Associate of such Acquiring Person who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee who acquired such
Rights from an Acquiring Person or an Affiliate or Associate of an Acquiring
Person prior to or concurrently with the Acquiring Person becoming such and who
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from an Acquiring Person or any Affiliate or Associate of such
Acquiring Person to holders of equity interests in such Acquiring Person,
Affiliate or Associate or to any Person with whom such Acquiring Person or any
such Associate or Affiliate has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors has determined (whether before or after such transfer) to be part
of an arrangement which has as a primary purpose or effect the avoidance of this
Section 7(f), shall become null and void, and any holder of such Rights (whether
or not such holder is an Acquiring Person or an Affiliate or Associate of an
Acquiring Person) shall thereafter have no right to exercise such Rights under
any provision of this Agreement or otherwise. Any Right Certificate issued
pursuant to Section 3 that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof and any Right Certificate issued at
any time upon the transfer of any Rights to an Acquiring Person or any Affiliate
or Associate thereof or to any nominee of such Acquiring Person, Affiliate or
Associate, and any Right Certificate issued pursuant to Sections 6 or 11 upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall or shall be deemed to contain the following
legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Shareholder Rights Plan). This Right
Certificate and the Rights represented hereby are void in the
circumstances specified in the Shareholder Rights Plan.
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The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(f) are complied with, but shall have no liability to any holder
of Rights or any other Person as a result of its failure to make any
determination under this Section 7(f) with respect to an Acquiring Person or its
Affiliates, Associates or transferees.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Shares.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
(and, will use its best efforts, following the occurrence of a Section 11(a)(ii)
event, to cause to be reserved and kept available out of its authorized and
unissued Common Shares and/or other securities or out of its authorized and
issued shares held in its treasury), the number of Preferred Shares (and,
following the occurrence of a Section 11(a)(ii) event, the number of Common
Shares and/or other securities) as will from time to time be sufficient to
permit the exercise in full of all outstanding Rights.
(b) If and so long as the Preferred Shares (and, following the
occurrence of a Section 11(a)(ii) event, Common Shares and/or other securities)
issuable upon the exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares issued or reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) If necessary to permit the issuance of shares and/or other
securities pursuant to the Rights, the Company will prepare and file a
registration statement under the Securities Act with respect to such shares
and/or other securities 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 Final Expiration Date, and similarly comply with
applicable state securities laws.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all 1/1,000s of Preferred Shares (and,
following the occurrence of a Section 11(a)(ii) event, Common Shares and/or
other securities) delivered upon exercise of
- 10 -
Rights shall, at the time of delivery of the certificates for such shares or
other securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares (or Common Shares and/or other
securities as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates for the Preferred Shares (or
Common Shares and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates for Preferred
Shares (or Common Shares and/or other securities, as the case may be) upon the
exercise of any Rights until any such tax shall have been paid (any such tax
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
is due.
Section 10. Preferred Shares Record Date. Each Person in whose
name any certificate for Preferred Shares (or Common Shares and/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 Preferred
Shares (or Common Shares and/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 transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
transfer books for the Preferred Shares (or Common Shares and/or other
securities, as the case may be) are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which such transfer books are open.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and kind of shares which may be
purchased upon exercise of a Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement and prior to the close of business on the
earliest of the Redemption Date, Exchange Date, or Final Expiration
Date (A) declare or pay any dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), then and in
each such event, the Purchase Price in effect at the time of the
- 11 -
record date for such dividend or on the effective date of such
subdivision, combination or reclassification, and the number and kind
of Preferred Shares 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 the
aggregate number and kind of Preferred Shares or capital stock, as the
case may be, which, if such Right had been exercised immediately prior
to such date and at a time when the Right was exercisable and the
transfer books of the Company were open, he 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) hereof.
(ii) Subject to Section 24, in the event that, at any
time after the date of this Agreement any Person, alone or together
with its Affiliates and Associates, shall become an Acquiring Person,
other than by an acquisition of Common Shares pursuant to (A) a
transaction to which the provisions of Section 13(a) hereof apply, or
(B) a tender offer or an exchange offer for all outstanding Common
Shares at a price and on terms determined by at least a majority of
the members of the Board of Directors who are not officers of the
Company and who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person, after receiving advice from one or
more investment banking firms, to be fair to the holders of the Common
Shares (taking into account all factors that such members of the Board
deem relevant including, without limitation, prices that could
reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and otherwise in the
best interests of the Company and its shareholders (a "Qualifying
Offer"), then, immediately upon the occurrence of such event (a
"Section 11(a)(ii) event"), proper provision shall be made so that
each holder of a Right, except as provided in Section 7(f) hereof,
shall thereafter have a right to receive for each Right, upon exercise
thereof in accordance with the terms of this Agreement and payment of
the then-current Purchase Price, in lieu of 1/1,000 of a Preferred
Share, such number of Common Shares of the Company as shall equal the
result obtained by multiplying the then-current Purchase Price by the
then number of 1/1,000s of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) event, and dividing that product by 50 percent of the
current per share market price (determined pursuant to Section 11(d)
hereof) for Common Shares on the date of such first occurrence (such
number of shares being hereinafter referred to as the "Adjustment
Shares"); provided that such provision shall not be effective until
such time as the Rights are no longer subject to redemption pursuant
to Section 23(a) hereof.
- 12 -
(iii) In lieu of issuing Common Shares in accordance
with Section 11(a)(ii) hereof, the Company may, if the Board of
Directors determines that such action is necessary or appropriate and
not contrary to the interest of holders of Rights, and, in the event
that the number of Common Shares which are authorized by the Company's
Articles of Incorporation but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii) hereof, the Company shall, with respect to each
Right, make adequate provision to substitute for all or a portion of
the Adjustment Shares upon payment of the applicable Purchase Price
(A) cash, (B) other equity securities of the Company (including,
without limitation, shares of preferred stock or units of preferred
stock having the same value as Common Shares (such shares or units of
preferred stock, "common stock equivalents")), (C) debt securities of
the Company, (D) other assets or (E) any combination of the foregoing,
having an aggregate value equal to the amount obtained by multiplying
the current per share market price for Common Shares on the date of
the substitution by the number of Adjustment Shares for which
substitution is made. To the extent that the Company determines that
some action is to be taken pursuant to this Section 11(a)(iii), the
Company shall provide, subject to Section 7(f) hereof, that such
action shall apply uniformly to all outstanding Rights.
(b) In the event that the Company shall at any time after
the close of business on the Record Date and prior to the close of
business on the earliest of the Redemption Date, Exchange Date, or
Final Expiration Date fix a record date prior to the Redemption Date,
Exchange Date, or Final Expiration Date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible into
Preferred Shares or equivalent preferred shares, at a price per
Preferred Share or per equivalent preferred share (or having an
effective price per share on a converted basis in the case of a
security convertible into Preferred Shares or equivalent preferred
shares) less than the current per share market price of the Preferred
Shares (as determined in accordance with Section 11(d) hereof) on such
record date, then 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 Preferred Shares outstanding on such
record date plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate
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 Preferred Shares outstanding on such record
- 13 -
date plus the number of additional Preferred Shares and/or equivalent
preferred shares 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 may be in a form other than
cash, the value of such consideration shall be as determined in good
faith by the Board of Directors, whose determination shall be set
forth in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights. Preferred Shares
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, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In the event that the Company shall at any time after
the close of business on the Record Date and prior to the close of
business on the earliest of the Redemption Date, Exchange Date, or
Final Expiration Date fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend
or a dividend payable in Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current
per share market price per one Preferred Share (as determined in
accordance with Section 11(d) hereof) on such record date, less the
fair market value of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Preferred Share, and the denominator of
which shall be such current per share market price per one Preferred
Share. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not
so made, the Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of the Common Shares on any date
shall be deemed to be the average of the daily closing prices per
share of such Common Shares on each of the 20 consecutive Trading Days
(as such term is hereinafter defined) through and including the
Trading Day immediately preceding such date; provided, however, that
in the event the current per share market price of the Common Shares
is determined during a period following the announcement by the issuer
of such Common Shares of (A) a
- 14 -
dividend or distribution on such Common Shares payable in such Common
Shares or securities convertible into such Common Shares, or (B) any
subdivision, combination, or reclassification of such Common Shares,
and prior to the expiration of 20 Trading Days after the ex-dividend
date for such dividend, distribution, subdivision, combination, or
reclassification, then, and in each such case the current per share
market price shall be appropriately adjusted to take into account such
event. 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
principal national securities exchange on which the Common Shares are
listed or admitted to trading or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, the last
sale price as reported by The Nasdaq Stock Market ("Nasdaq") or, if
the Common Shares are not listed or admitted to trading on any
national securities exchange and sale prices for Common Shares are not
reported by Nasdaq, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market as reported by Nasdaq or such other system then in use, or, if
on any such date the Common Shares 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
Shares selected by the Board of Directors. The term "Trading Day"
shall mean a day on which the principal national securities exchange
on which the Common Shares are listed or admitted to trading is open
for the transaction of business or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in the same manner as set forth above for Common Shares in
Section 11(d)(i). If the current per share market price of the
Preferred Shares cannot be determined in the manner provided above,
the "current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the
Common Shares (appropriately adjusted to reflect any stock split,
stock dividend, subdivision, combination, reclassification, or similar
transaction occurring after the date hereof) multiplied by 1,000.
(iii) If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in
good faith by the Board of Directors based upon such appraisals or
valuation reports of such independent experts as the Board of
Directors shall in good faith determine appropriate.
- 15 -
Any such determination of "current per share market price" shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least 1 percent in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest 1/100,000 of a Common Share
or other share or 1/100,000,000 of a Preferred Share as the case may
be.
(f) If, as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
of the Company other than Preferred Shares, the number of such other
shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in this Section 11 and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Shares 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
1/1,000s of a Preferred Share 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) below, 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 1/1,000s of a Preferred Share
(calculated to the nearest 1/100,000,000 of a Preferred Share)
obtained by (i) multiplying (x) the number of 1/1,000s of a Preferred
Share covered by a Right immediately prior to such adjustment by (y)
the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect, on or after the date of any
adjustment of the Purchase Price, to adjust the number of Rights
instead of making any adjustment in the number of Preferred Shares
purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment
- 16 -
of the number of Rights shall be exercisable for the number of
1/1,000s of a Preferred Share 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 1/100,000) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price by the Purchase Price in effect immediately after such
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be
at least ten days after 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 countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of 1/1,000s of a Preferred Share issuable upon the
exercise of the Rights, as applicable, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per 1/1,000 of a Preferred Share and the number of shares which
were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below 1/1,000 of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the advice or
opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable 1/1,000s of a
Preferred Share at such adjusted Purchase Price.
- 17 -
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer, until the
occurrence of such event, the issuance to the holder of any Right
exercised after such record date the number of 1/1,000s of a Preferred
Share and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of 1/1,000s of a
Preferred Share 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 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 further
adjustments in the number of 1/1,000s of a Preferred Share which may
be acquired upon exercise of the Rights, and such adjustments in the
Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that the Board of Directors in
their sole discretion shall determine to be advisable in order that
any (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the
current market price, (iii) issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) dividends on Preferred Shares
payable in Preferred Shares or (v) issuance of rights, options or
warrants referred to in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such
holders or shall reduce the taxes payable by such holders.
(n) The Company shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (iii) consummate a statutory plan of exchange with any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), or (iv) sell or transfer
(or permit any Subsidiary to sell or transfer), in one transaction, or
a series of transactions, assets or earning power aggregating more
than 50 percent of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (A)
at the time of or immediately after such consolidation, merger,
consummation or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which
would substantially
- 18 -
diminish or otherwise eliminate the benefits intended to be afforded
by the Rights or (B) prior to, simultaneously with or immediately
after such consolidation, merger, consummation or sale, the Person
which constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have distributed or otherwise
transferred to its shareholders, or other Persons holding an equity
interest in such Person, Rights previously owned by such Person or any
of its Affiliates or Associates; provided, however, this Section 11(n)
shall not affect the ability of any Subsidiary of the Company to
consolidate with, merge with or into, consummate a statutory plan of
exchange with, or sell or transfer assets or earning power to, any
other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not,
except as permitted by Sections 23 or 24 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 otherwise eliminate the benefits intended to be afforded by the
Rights, including, without limiting the generality of the foregoing,
any consolidation, merger, statutory plan of exchange or sale or
transfer of assets or earning power.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the date of this Agreement and prior to the Distribution Date (i)
declare or pay a dividend on the outstanding Common Shares payable in
Common Shares, (ii) subdivide the outstanding Common Shares, (iii)
combine the outstanding Common Shares into a smaller number of shares,
or (iv) issue any shares of its capital stock in a reclassification of
the outstanding Common Shares, the number of Rights associated with
each Common Share then outstanding, or issued or delivered thereafter
but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each Common
Share following any such event (including other Common Shares issued
after the date of such event, but prior to the Distribution Date)
shall equal the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such event by a
fraction the numerator of which shall be the total number of Common
Shares outstanding immediately prior to the occurrence of the event
and the denominator of which shall be the total number of Common
Shares outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Shares and the Common Shares 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
- 19 -
Date, to each holder of a certificate representing Common Shares, provided that
no such summary need be mailed to such holders with respect to adjustments made
pursuant to Section 11(p) prior to the Distribution Date) in accordance with
Section 25 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to make such certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such adjustment. 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.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained.
Section 13. Consolidation, Merger, Statutory Plan of Exchange or
Sale or Transfer of Assets or Earning Power.
(a) In the event that, directly or indirectly, after there is an
Acquiring Person, (i) the Company shall consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with the Company, or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such consolidation or merger,
all or part of the Common Shares 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, (iii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof) shall acquire all or a
majority of the Common Shares of the Company pursuant to a statutory plan of
exchange, or (iv) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions to any Person or Persons (other than the Company or any of its
wholly owned Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), assets or earning power aggregating more than 50
percent of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) (any event described in clauses (i), (ii), (iii) or (iv) of
this Section 13(a) being a "Section 13 event"), then, and in each such case,
proper provision shall be made so that (A) each holder of a Right, except as
provided in Section 7(f) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the then-current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and issued, fully
paid and nonassessable Common Shares of the Principal Party (as hereinafter
defined) which Common Shares shall not be subject to any liens, encumbrances,
rights of first refusal, transfer restrictions or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then-current Purchase
Price by the number of 1/1,000s of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 event (or,
if a Section 11(a)(ii) event has occurred prior to the Section 13 event,
multiplying the number of such 1/1,000s of a share for which a Right was
exercisable immediately prior to the first occurrence of such Section 11(a)(ii)
event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product by (2) 50 percent of the current per
share market price (determined in accordance with Section 11(d) hereof) of the
Common Shares of such Principal Party on the date of consummation of such
Section 13 event; (B) such Principal Party shall thereafter be liable for,
- 20 -
and shall assume, by virtue of such consolidation, merger, statutory plan of
exchange, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (C) the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party after
the first occurrence of a Section 13 event; (D) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Shares in accordance with Section 9 hereof
applicable to the reservation of capital shares) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Shares thereafter deliverable upon the exercise of the
Rights; and (E) the provisions of Section 11(a)(ii) hereof shall be of no
further effect following the first occurrence of any Section 13 event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (i),
(ii) or (iii) of Section 13(a) hereof, (A) the Person that is the
issuer of any securities into which Common Shares of the Company are
converted in such consolidation or merger or for which they are
exchanged in such statutory plan of exchange, or, if there is more
than one such issuer, the issuer of Common Shares that has the highest
aggregate current market price (determined in accordance with Section
11(d) hereof) and (B) if no securities are so issued, the Person that
is the other party to such consolidation, merger or statutory plan of
exchange, or, if there is more than one such Person, the Person the
Common Shares of which has the highest aggregate current market price
(determined in accordance with Section 11(d) hereof); and
(ii) in the case of any transaction described in clause (iv)
of Section 13(a) hereof, the Person that is the party receiving the
largest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the
assets or earning power transferred pursuant to such transaction or
transactions or if the Person receiving the largest portion of the
assets or earning power cannot be determined, whichever Person the
Common Shares of which has the highest aggregate current market price
(determined in accordance with Section 11(d) hereof);
provided, however, that in any such case: (A) if the Common Shares of such
Person are not at such time and have not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act ("Registered
Common Shares"), or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person that has Registered Common
Shares outstanding, "Principal Party" shall refer to such other Person; (B) if
the Common Shares of such Person are not Registered Common Shares or such Person
is not a corporation, and such Person is a direct or indirect Subsidiary of
- 21 -
another Person but is not a direct or indirect Subsidiary of another Person
which has Registered Common Shares outstanding, "Principal Party" shall refer to
the ultimate parent entity of such first-mentioned Person; (C) if the Common
Shares of such Person are not Registered Common Shares or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and one or more of such other Persons has Registered Common Shares
outstanding, "Principal Party" shall refer to whichever of such other Persons is
the issuer of the Registered Common Shares having the highest aggregate current
market price (determined in accordance with Section 11(d) hereof); and (D) if
the Common Shares of such Person are not Registered Common Shares or such Person
is not a corporation, and such Person is directly or indirectly controlled by
more than one Person, and none of such other Persons have Registered Common
Shares outstanding, "Principal Party" shall refer to whichever ultimate parent
entity is the corporation having the greatest shareholders' equity or, if no
such ultimate parent entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation,
merger, statutory plan of exchange, sale or transfer unless prior thereto the
Company and Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement confirming that (i) such Principal Party shall,
upon consummation of such consolidation, merger, statutory plan of exchange or
sale or transfer of assets or earning power, assume this Agreement in accordance
with Sections 13(a) and (b) hereof, (ii) all rights of first refusal or
preemptive rights in respect of the issuance of Common Shares of such Principal
Party upon exercise of outstanding Rights have been waived, (iii) any provision
of the authorized securities of such Principal Party or of its charter, bylaws
or other instruments governing its corporate affairs which would obligate such
Principal Party to issue in connection with, or as a consequence of, the
consummation of a transaction referred to in Section 13(a) hereof, Common Shares
of such Principal Party at less than the then-current per share market price
(determined in accordance with Section 11(d) hereof) or securities exercisable
for, or convertible into, such Common Shares at less than such then-current per
share market price (other than to the holders of Rights pursuant to this Section
13) have been waived or canceled, and (iv) such transaction shall not result in
a default by such Principal Party under this Agreement and further providing
that, as soon as practicable after the date of any consolidation, merger,
statutory plan of exchange or sale or transfer of assets or earning power
referred to in Section 13(a) hereof, such Principal Party will:
(A) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities
Act) until the Final Expiration Date of the Rights, and similarly
comply with applicable state securities laws;
- 22 -
(B) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on Nasdaq or such other system then in use;
and
(C) deliver to holders of the Rights historical financial
statements for such Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
In the event that at any time after the occurrence of a Section 11(a)(ii) event
hereof some or all of the Rights shall not have been exercised at the time of a
Section 13 event, the Rights which have not theretofore been exercised shall
thereafter be exercisable in the manner described in Section 13(a) (without
taking into account any prior adjustment required by Section 11(a)(ii)).
(d) The provisions of this Section 13 shall similarly apply to
successive consolidations, mergers or plans of exchange or sales or other
transfers.
(e) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in clause (i),
(ii) or (iii) of Section 13(a) hereof if (i) such transaction is consummated
with a Person or Persons who acquired Common Shares of the Company pursuant to a
Qualifying Offer (or a wholly owned subsidiary of any such Person or Persons),
(ii) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such Qualifying Offer, and (iii) the form of consideration
being offered to the remaining holders of Common Shares pursuant to such
transaction is the same as the form of consideration paid pursuant to such
Qualifying Offer. Upon consummation of any such transaction contemplated by this
Section 13(e), all Rights hereunder shall expire.
Section 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
(i.e., Rights to acquire less than 1/1,000 of a Preferred Share). If the Company
shall determine not to issue such fractional Rights, there shall be paid to the
registered holders 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 current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last sale price as reported by Nasdaq or, if the Rights
are not listed or admitted to trading on any national securities exchange and
sale prices for the Rights are not
- 23 -
reported by Nasdaq, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market as reported by
Nasdaq or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date will be
as determined in good faith by the Board of Directors, based upon such
appraisals or valuation reports of such independent experts as the Board of
Directors shall in good faith determine appropriate.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of 1/1,000
of a Preferred Share) upon exercise of the Rights, or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of 1/1,000 of a Preferred Share). Fractions of Preferred
Shares in integral multiples of 1/1,000 of a Preferred Share 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 Preferred Shares. With respect to
fractional Preferred Shares that are not integral multiples of 1/1,000 of a
Preferred Share, if the Company does not issue fractional shares or depositary
receipts in lieu thereof, the Company shall 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
Preferred Share. For purposes of this Section 14(b), the current market value of
1/1,000 of a Preferred Share shall be 1/1,000 of the closing price of a
Preferred Share (as determined in accordance with Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Rights,
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), 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 Shares), may in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
- 24 -
Section 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 shall be
evidenced by the certificates for Common Shares registered in the name
of the holders of the Common Shares (which certificates for Common
Shares shall also constitute certificates for Rights) and each Right
will be transferable only in connection with the transfer of the
Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly executed; and
(c) subject to Sections 6(a) and 7(f) hereof, 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 Shares certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated
Common Shares certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 17. Right Holders and Right Certificate Holders Not
Deemed a Shareholder. No holder, as such, of any Right or Right Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the number of 1/1,000s of a Preferred Share or any other securities of
the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 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 administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
- 25 -
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence, bad faith
or willful misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending against any
claim of liability. Anything to the contrary notwithstanding, in no event shall
the Rights Agent be liable for special, indirect, consequential or incidental
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.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of its counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation or entity into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation or entity resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party, or any
corporation or entity succeeding to the corporate trust or stock transfer
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation or entity would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. If, at the
time such successor Rights Agent shall succeed to the agency created by this
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 if at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) If at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and if 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 Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
- 26 -
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the 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), and the advice or opinion of such
counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; provided, however, that so
long as any Person is an Acquiring Person hereunder, such certificate
shall be signed by a majority of the members of the Board of
Directors; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own gross negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be responsible in any respect
for the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery hereof by
the Rights Agent) or in respect for 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 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 7(f) hereof) or any adjustment required under the provisions
of Sections 11 or 13 hereof (including the manner, method or
- 27 -
amount thereof) 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
by the Rights Agent of the certificate describing any such adjustment
as contemplated by Section 12 hereof); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether
any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President,
any Vice President, the Secretary, any Assistant Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer; provided, however,
that so long as any Person is an Acquiring Person hereunder, the
Rights Agent shall accept such instructions and advice only from the
Board of Directors and shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with such
instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The
Rights Agent shall not be liable for any action taken by, or omission
of, the Rights Agent in accordance with a proposal included in any
such application on or after the date specified in such application
(which date shall not be less than five Business Days after the date
any such officer of the Company or, if there is an Acquiring Person
hereunder, a majority of the members of the Board of Directors,
actually receives such application, unless any such officer or a
majority of the members of the Board of Directors 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.
- 28 -
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not the Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties or in the exercise
of its rights hereunder if the Rights Agent shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate included
with the form of assignment or form of election to purchase, as the
case may be, has either not been completed, not signed 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 or transfer without first consulting with the Company. If
such certificate has been completed and signed, the Rights Agent may
assume without further inquiry that the Right Certificate is not owned
by a person described in Section 7(f) hereof and shall not be charged
with any knowledge to the contrary.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the registered holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and Preferred Shares by registered or certified mail, and to the
registered 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
- 29 -
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 Company shall become the
Rights Agent and the registered holder 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 either (A) a corporation or other entity organized and doing business
under the laws of the United States or any state, in good standing, having an
office in the state of New York which is authorized 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 million or (B) an Affiliate of
such a corporation. 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 Shares and Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this 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 the Board of Directors to reflect any adjustment
or change in the Purchase Price per share and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Shares of the Company following
the Distribution Date and prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, the Company (a) shall, with
respect to Common Shares of the Company so issued or sold pursuant to the
exercise of stock options or under any Plan, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors, 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.
- 30 -
Section 23. Redemption.
(a) The Company may, at its option, by action of the Board of
Directors at any time prior to the earlier of (i) the 10th day after the Shares
Acquisition Date or (ii) the close of business on the Final Expiration Date,
redeem all, but not less than all, the then outstanding Rights at a redemption
price of $.01 per Right, as such amount may be appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
of this Agreement (such redemption price being hereinafter referred to as the
"Redemption Price"). The Company may, at its option, pay the Redemption Price in
cash, Common Shares of the Company (each share valued at the "current per share
market price" of a common share on the Redemption Date, as such price is
calculated under Section 11(d)(i) hereof), or any other form of consideration
the Board of Directors deems appropriate.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights, or at such time and date thereafter as
the Board of Directors may specify, 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.
Promptly after the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the holders of
the then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights in any manner
other than that specifically set forth in this Section 23, and other than in
connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Company may, at its option, by action of the Board of
Directors, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then-outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(f)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being herein
referred to as 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 the Company, any Subsidiary of the Company, any Plan of
the Company or of a Subsidiary of the Company, or any Person holding Common
Shares for or pursuant to the terms of any such Plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50
percent or more of the Common Shares then outstanding.
- 31 -
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to Section 24(a) 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 Common Shares 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; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last 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
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(f) hereof) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company may,
at its option, substitute Preferred Shares (or equivalent preferred shares, as
such term is defined in Section 11(b) hereof) for Common Shares exchangeable for
Rights, at the initial rate (as of the date of this Agreement) of 1/1,000 of a
Preferred Share (or equivalent preferred share) for each Common Share, as
appropriately adjusted to reflect subsequent adjustments in the rights of the
Preferred Shares pursuant to the terms thereof, so that the fraction of a
Preferred Share delivered in lieu of each Common Share shall have the same
rights to vote on the affairs of the Company, as does one Common Share.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Common Share. For the
purposes of this Section 24(d), the current market value of a whole share shall
be the closing price of a Common Share determined in the manner set forth in
Section 11(d) hereof.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to declare or pay any dividend payable in stock of any
class to the holders of its Preferred Shares or to make any other distribution
to the holders of its Preferred Shares (other than a regular quarterly cash
dividend), or (ii) to offer to the holders of its Preferred Shares options,
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), or (iv) to effect any consolidation or merger into or with, or to
effect any exchange of the Common Shares of the Company pursuant to a statutory
plan of exchange with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any
- 32 -
sale or other transfer), in one or more transactions, of more than 50 percent of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, exchange, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the Preferred Shares, 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 20 days prior to the record date for
determining holders of the Preferred Shares for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Preferred Shares, whichever shall be the earlier. 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.
(b) In case any Section 11(a)(ii) event shall occur, then (i) the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in
Section 25(a) to Preferred Shares shall be deemed thereafter to refer to Common
Shares and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Epitope, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) to the principal office of the Rights
Agent as follows:
ChaseMellon Shareholder Services, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
- 33 -
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if prior
to the Distribution Date, to the holder of certificates representing Common
Shares of the Company) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments.
(a) Prior to the occurrence of a Section 11(a)(ii) event, the
Company may by action of the Board of Directors, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Agreement in
any manner without the approval of any holders of Common Shares. From and after
the occurrence of a Section 11(a)(ii) event, the Company may by action of the
Board of Directors, and the Rights Agent shall if directed by the Company, from
time to time, supplement or amend this Agreement without the approval of any
holders of Right Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period herein or (iv) to change or supplement any other provisions
hereunder in any manner which the Board of Directors may deem necessary or
desirable so long as the interests of the holders of the Rights or Right
Certificates (other than an Acquiring Person or any Affiliate or Associate of an
Acquiring Person) shall not be materially and adversely affected thereby;
provided, however, this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a time period governing
redemption of the Rights if the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights
(other than an Acquiring Person or any Affiliate or Associate of an Acquiring
Person). Upon the delivery of a certificate from an appropriate officer of the
Company or, so long as any Person is an Acquiring Person hereunder, from the
Board of Directors, which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27(a), the Rights Agent shall execute
such supplement or amendment. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of the Common Shares of the Company.
(b) After the Distribution Date and prior to the earliest of the
Redemption Date, Exchange Date, or Final Expiration Date, the Company shall not
effect any amendment to the Articles of Incorporation respecting the Preferred
Shares which would materially and adversely affect the rights, privileges or
powers of the Preferred Shares, without the prior approval of the holders of
two-thirds or more of the then outstanding Rights.
Section 28. Certain Covenants. Subject to Section 27 and the
other provisions of this Agreement:
(a) no adjustment to the Purchase Price, the number of
Preferred Shares or Common Shares or other securities, as the case may
be (or fractions of a share), for which a Right is exercisable or the
number of Rights outstanding shall be made or be effective if such
adjustment would
- 34 -
have the effect of reducing or limiting the benefits the holders of
the Rights would have had absent such adjustment, including, without
limitation, the benefits under Section 11(a)(ii) and Section 13,
unless the terms of this Agreement are amended so as to preserve such
benefits; and
(b) the Company shall not, during any time when there exists
an Acquiring Person (i) sell or issue, or permit any Subsidiary to
sell or issue, to an Acquiring Person, or any Affiliate or Associate
thereof, any rights, options, warrants or convertible securities on
terms similar to, or which materially adversely affect the value of,
the Rights, or (ii) sell or issue to an Acquiring Person, or any
Affiliate or Associate thereof, Preferred Shares, Common Shares or
shares of any other class of capital stock if such sale or issue is
intended to or would materially adversely affect the value of the
Rights.
Section 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares of the Company).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement and the Rights shall not then be redeemable, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth Business Day following the date
of such determination by the Board of Directors.
Section 32. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of Common
Shares of the Company outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the Exchange Act regulations as in effect on
the date hereof. Except as otherwise specifically provided herein, the Board of
- 35 -
Directors shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power (a) to interpret the provisions of this Agreement and (b) to make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (ii) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith shall
(i) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (ii) not subject the Board of
Directors or any member thereof to any liability to the holders of the Rights.
Section 33. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the state of Oregon and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state; provided, however, that the
rights and obligations of the Rights Agent hereunder shall be governed by the
laws of the state of New Jersey (or state of incorporation or organization of
any successor Rights Agent).
Section 34. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
EPITOPE, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive
Officer
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: ASSISTANT VICE PRESIDENT
- 36 -
EXHIBIT A
ARTICLES OF AMENDMENT OF
OF
EPITOPE, INC.
Pursuant to ORS 60.134, Epitope, Inc., an Oregon corporation (the
"Corporation"), adopts the following Articles of Amendment for the purpose of
determining the terms of a series of shares of its Preferred Stock, no par
value:
1. The name of the Corporation is: Epitope, Inc.
2. The text of the amendment determining the terms of a series of
shares of Preferred Stock, no par value, of the Corporation is attached hereto
as Appendix I.
3. The amendment was duly adopted by the Board of Directors of
the Corporation on October 21, 1997.
Execution: ---------------------------
Name:
Title:
Dated: December --, 1997
Person to contact about this filing: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
(Telephone Number): (▇▇▇) ▇▇▇-▇▇▇▇
A - 1
APPENDIX I
DESIGNATION OF TERMS OF SERIES A JUNIOR
PARTICIPATING CUMULATIVE PREFERRED STOCK,
NO PAR VALUE,
OF
EPITOPE, INC.
----------------------------
RESOLVED that pursuant to the authority vested in the Board of
Directors of Epitope, Inc. (the "Corporation"), in accordance with the
provisions of its Articles of Incorporation, as amended (the "Articles of
Incorporation"), a series of the Preferred Stock, no par value (the "Preferred
Stock"), of the Corporation be, and it hereby is, created, and that the
designation and amount thereof and the preferences, limitations and relative
rights thereof are determined to be as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as Series A Junior Participating Cumulative Preferred Stock,
no par value, and the number of shares constituting such series shall be 30,000.
Such series is hereinafter referred to as the "Series A Preferred Stock."
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock, no par value (the "Common Stock"), of
the Corporation and of any other junior stock which may be outstanding, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, (i) quarterly dividends payable in cash
on the first day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 per share,
or (b) subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock, and
(ii) subject to the provision for adjustment hereinafter set forth, quarterly
distributions (payable in kind) on each Quarterly Dividend Payment Date in an
amount per share equal to 1,000 times the aggregate per share amount of all
noncash 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
A - 2
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or with respect to the
first Quarterly Dividend Payment Date since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time after October 21, 1997 (the "Rights Declaration Date"),
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount to
which holders of shares of Series A Preferred Stock are entitled under clauses
(i)(b) or (ii) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a mandatory dividend or
distribution on the Series A Preferred Stock as provided in Section 2(A)
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a mandatory dividend of $1.00 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A 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 cumulate but shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 45 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes (and each 1/1,000 of a share of Series A Preferred Stock shall
entitle the holder thereof to one vote) on all matters
A - 3
submitted to a vote of the shareholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided in the Articles of Incorporation
or herein or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of the shareholders of the Corporation.
(C) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote as set forth in the
Articles of Incorporation or herein or by law) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on or make any other
distributions on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the
A - 4
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any share of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Section 4(A),
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
The Corporation shall take all such action as is necessary so that all such
shares shall after their cancellation become authorized but unissued shares of
Preferred Stock, without designation as to series, 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 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the higher of (i) $1.00 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, or (ii) an aggregate 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; nor shall any distribution be made (B) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock are
entitled under clause (A)(ii) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
A - 5
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, statutory plan of exchange,
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, or otherwise changed, then in any such case the shares of Series A
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 declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable. Notwithstanding the foregoing, the Corporation may
acquire shares of Series A Preferred Stock in any other manner permitted by law,
the Articles of Incorporation or this amendment thereof.
Section 9. Rank. Unless otherwise provided in the Articles of
Incorporation or an amendment thereof relating to a subsequent series of
Preferred Stock of the Corporation, the Series A Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets on liquidation, dissolution
or winding up, and senior to the Common Stock of the Corporation.
Section 10. Amendment. The Articles of Incorporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least a
majority of the outstanding shares of Series A Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in 1/1,000s of a share or other fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Preferred Stock.
A - 6
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R--------------- ------------ Rights
NOT EXERCISABLE AFTER -------------- ---, ------, OR EARLIER IF
REDEEMED OR EXCHANGED. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01
PER RIGHT, AND ARE SUBJECT TO EXCHANGE, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE VOID IN
THE CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT.]*
Right Certificate
EPITOPE, INC.
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the
registered owner thereof, subject to the terms, provisions and conditions of the
Rights Agreement dated as of December ---, 1997 (the "Rights Agreement"),
between Epitope, Inc., an Oregon corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C. (the "Rights Agent," which term shall include every
successor Rights Agent under the Rights Agreement), 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 p.m. (New York City time) on -------------- ---,
------, at the office or agency of the Rights Agent or its successor designated
for such purpose, 1/1,000 of a fully paid, nonassessable share of Series A
Junior Participating Cumulative Preferred Stock, no par value (the "Preferred
Shares"), of the Company, at a purchase price initially of $60 per 1/1,000 of a
Preferred Share (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase and related certificate
duly executed. The purchase price shall be paid
--------
* That portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
B - 1
by bank certified check or cashier's check payable to the order of the Company.
As provided in the Rights Agreement, the Purchase Price and the number of
Preferred Shares 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.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and are available from the Rights Agent or the Company upon written
request.
Upon the occurrence of certain events specified in Section 7(f)
of the Rights Agreement, if the Rights evidenced by this Right Certificate are
or were beneficially owned by an Acquiring Person or an Affiliate or Associate
of an Acquiring Person (as such terms are defined in the Rights Agreement) or,
under certain circumstances, a transferee of any such Acquiring Person,
Affiliate or Associate, such Rights shall become null and void and any holder
thereof (whether or not such holder is an Acquiring Person or an Affiliate or
Associate of an Acquiring Person) shall thereafter have no right to exercise
such Rights.
In certain circumstances described in the Rights Agreement, the
Rights evidenced hereby may entitle the holder hereof to purchase capital stock
of an entity other than the Company or receive cash or other assets, all as
prescribed in the Rights Agreement.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office or agency 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 equal to the aggregate number of Rights
evidenced by the Right Certificate or Right Certificates surrendered. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised. Subject to the provisions of the
Rights Agreement, the Rights evidenced by this Right Certificate may, but are
not required to, be redeemed by the Company at a redemption price of $.01 per
Right, or be exchanged at the Company's option for one Common Share, as defined
in the Rights Agreement.
The Company may (but shall not be required to) issue fractional
Preferred Shares upon the exercise of any Right or Rights evidenced hereby
(other than fractions which are integral multiples of 1/1,000 of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts), and, in lieu thereof, a cash payment may be made, as provided in the
Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall
B - 2
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ----------------------------.
ATTEST: EPITOPE, INC.
-------------------------------- By -----------------------------------
Secretary Title
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By ----------------------------------
Authorized Signature
B - 3
[FORM OF REVERSE SIDE OF RIGHT CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED --------------------------- hereby sells, assigns and
transfers unto -----------------------------------------------------------------
-------------------------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ----------------------------
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ----------------------------
-----------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement); and
B - 4
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ----------------------------
--------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B - 5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: EPITOPE, INC.
The undersigned hereby irrevocably elects to exercise
------------------------------------------------- Rights represented by this
Right Certificate to purchase the Preferred Shares issuable upon the exercise of
such Rights (or such other securities as may be issuable upon exercise of the
Rights) and requests that certificates for such Preferred Shares (or such other
securities) be issued in the name of and delivered to:
-----------------------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------------------
Please insert social security or other identifying number: --------------------
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
-----------------------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------------------
Dated ----------------------------
--------------------------
Signature
Signature Guaranteed:
B - 6
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not beneficially owned by an Acquiring Person or an Affiliate or an
Associate thereof (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Right Certificate from any person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ---------------------------- -----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signatures in the foregoing Form of Election to Purchase and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
B - 7