XENOPORT, INC. and MELLON INVESTOR SERVICES LLC, as Rights Agent RIGHTS AGREEMENT Dated as of December 15, 2005
EXHIBIT 4.2
XENOPORT, INC.
and
MELLON INVESTOR SERVICES LLC,
as Rights Agent
Dated as of December 15, 2005
This Rights Agreement (“Agreement”), dated as of December 15, 2005, between
XenoPort, Inc., a Delaware corporation (the “Company”), and Mellon Investor Services
LLC, a New Jersey limited liability company (“Rights Agent”).
The Board of Directors of the Company has authorized and declared a dividend of one preferred
share purchase right (a “Right”) for each Common Share (as such term is hereinafter defined)
outstanding at the Close of Business on January 13, 2006 (the “Record Date”), each Right
representing the right to purchase one one-hundredth of a Preferred Share (as such term is
hereinafter defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earliest to occur of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are hereinafter defined);
provided, however, that Rights may be issued with respect to Common Shares that shall become
outstanding after the Distribution Date and prior to the earlier of the Redemption Date and the
Final Expiration Date in accordance with the provisions of Section 22 hereof.
Accordingly, 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 such term is hereinafter defined) who or
which, together with all Affiliates and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
Common Shares then outstanding. Notwithstanding the foregoing, (A) the term Acquiring Person shall
not include (i) the Company, (ii) any Subsidiary (as such term is hereinafter defined) of the
Company, (iii) any employee benefit or compensation plan of the Company or any Subsidiary of the
Company or (iv) any entity holding Common Shares for or pursuant to the terms of any such employee
benefit or compensation plan of the Company or any Subsidiary of the Company and (B) no Person
shall become an “Acquiring Person” either (x) as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to 15% or more of the Common Shares then outstanding;
provided, however, that if a Person shall become the Beneficial Owner of 15% or more of the Common
Shares then outstanding by reason of share purchases by the Company and shall, following written
notice from, or public disclosure by the Company of such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares without the prior consent of the Company and shall
then Beneficially Own more than 15% of the Common Shares then outstanding, then such Person shall
be deemed to be an “Acquiring Person,” (y) as the result of the acquisition of Common Shares
directly from the Company, provided, however, that if a Person shall become the Beneficial Owner of
15% or more of the Common Shares then outstanding by reason of share
purchases directly from the Company and shall, after that date, become Beneficial Owner of any
additional Common Shares without the prior written consent of the Company and shall then
Beneficially Own more than 15% of the Common Shares then outstanding, then such Person shall be
deemed to be an “Acquiring Person” or (z) if the Board of Directors determines in good faith that a
Person who would otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person divests, as
promptly as practicable (as determined in good faith by the Board of Directors), following receipt
of written notice from the Company of such event, of Beneficial Ownership of a sufficient number of
Common Shares so that such Person would no longer be an Acquiring Person, as defined pursuant to
the foregoing provisions of this paragraph (a), then such Person shall not be deemed to be an
“Acquiring Person” for any purposes of this Agreement; provided, however, that if such Person shall
again become the Beneficial Owner of 15% or more of the Common Shares then outstanding, such Person
shall be deemed an “Acquiring Person,” subject to the exceptions set forth in this Section 1(a).
(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 of this Agreement; provided, however, that
the limited partners of a limited partnership shall not be deemed to be Associates of such limited
partnership solely by virtue of their limited partnership interests.
(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 is deemed to
beneficially own, within the meaning of Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Rights Agreement;
(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) pursuant
to any agreement, arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public offering of securities
and other than agreements between the Company and any corporate partner pursuant to which the right
to purchase shares is conditioned upon the achievement of research or development milestones) 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 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 or consent given to
such Person in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under 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 agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section 1(c)(ii)(B) hereof) or
disposing of any securities of the Company; provided, however, an agreement, arrangement or
understanding for purposes of this Section 1(c)(iii) shall not be deemed to include actions,
including any agreement, arrangement or understanding, or statements by any member of the Company’s
Board of Directors on the date of this Agreement, any subsequent directors of the Company (the
“Successor Directors”) who have been nominated by a majority of directors who are directors as of
the date of this Agreement or who are Successor Directors, or by any Person of whom such a director
is an Affiliate or Associate, provided, however that this exception shall not apply to a particular
Person or Persons if and to the extent that such Person or Persons, after the date of this
Agreement, acquires Beneficial Ownership of more than an additional 5% of the then outstanding
Common Shares of the Company unless (A) the shares are acquired directly from the Company or as
part of an employee benefit or compensation plan of the Company or a subsidiary of the Company or
(B) the Person establishes to the satisfaction of the directors of the Company that it is acting on
its own behalf and not in concert with any other Person and will not, upon completion of any
purchases, be the Beneficial Owner of 15% or more of the outstanding Common Shares.
Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the
phrase, “then outstanding,” when used with reference to a Person’s Beneficial Ownership of
securities of the Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) “Business Day” shall mean any day other than a Saturday, a Sunday, or a day on which
banking institutions in the State of California, State of New York or State of New Jersey are
authorized or obligated by law or executive order to close.
(e) “Close of Business” on any given date shall mean 5:00 p.m., Pacific Time, on such date;
provided, however, that if such date is not a Business Day it shall mean 5:00 p.m., Pacific Time,
on the next succeeding Business Day.
(f) “Common Shares” shall mean the shares of common stock, par value $0.001 per share, of the
Company; provided, however, that, “Common Shares,” when used in this Agreement in connection with a
specific reference to any Person other than the Company, shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned
Person.
(g) “Distribution Date” shall have the meaning set forth in Section 3 hereof.
(h) “Final Expiration Date” shall have the meaning set forth in Section 7 hereof.
(i) “Interested Stockholder” shall mean any Acquiring Person or any Affiliate or Associate of
an Acquiring Person or any other Person in which any such Acquiring Person, Affiliate or Associate
has an interest, or any other Person acting directly or indirectly on behalf of or in concert with
any such Acquiring Person, Affiliate or Associate.
(j) “Person” shall mean any individual, firm, corporation or other entity, and shall include
any successor (by merger or otherwise) of such entity.
(k) “Preferred Shares” shall mean shares of Series A Junior Participating Preferred Stock, par
value $0.001 per share, of the Company having the designations and the powers, preferences and
rights, and the qualifications, limitations and restrictions set forth in the Form of Certificate
of Designation attached to this Agreement as Exhibit A.
(l) “Purchase Price” shall have the meaning set forth in Section 7(b) hereof.
(m) “Redemption Date” shall have the meaning set forth in Section 7 hereof.
(n) “Shares Acquisition Date” shall mean the first date of public announcement by the Company
or an Acquiring Person that an Acquiring Person has become such; provided, however, that, if such
Person is determined not to have become an Acquiring Person pursuant to clause (z) of Subsection
1(a)(B) hereof, then no Shares Acquisition Date shall be deemed to have occurred.
(o) “Subsidiary” of any Person shall mean any corporation or other entity of which a majority
of the voting power of the voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
(p) “Transaction” shall mean any merger, consolidation or sale of assets described in Section
13(a) hereof or any acquisition of Common Shares that would result in a Person becoming an
Acquiring Person or a Principal Party (as such term is hereinafter defined).
(q) “Transaction Person” with respect to a Transaction shall mean (i) any Person who (x) is or
will become an Acquiring Person or a Principal Party (as such term is hereinafter defined) if the
Transaction were to be consummated and (y) directly or indirectly proposed or nominated a director
of the Company which director is in office at the time of consideration of the Transaction, or (ii)
an Affiliate or Associate of such a Person.
SECTION 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to
act as rights agent for the Company in accordance with the terms and conditions 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. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any such co-Rights Agents.
SECTION 3. Issue of Right Certificates.
(a) Until the earlier of the Close of Business on (i) the Shares Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person) after the date of the commencement
(determined in accordance with Rule 14d-2 under the Exchange Act) by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to the terms of any
such plan) of, or of the first public announcement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to the terms of any
such plan) to commence, a tender or exchange offer (which intention to commence remains in effect
for five Business Days after such announcement), the consummation of which would result in any
Person becoming an Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights, the earlier of such dates being herein referred
to as the “Distribution Date”), (x) the Rights will be evidenced by the certificates for Common
Shares registered in the names of the holders thereof (which certificates shall also be deemed to
be Right Certificates) and not by separate Right Certificates, and (y) the Rights (and the right to
receive Right Certificates therefor) will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution Date, the Company will promptly
notify the Rights Agent in writing of the occurrence thereof and the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested and provided with all necessary information, send) by first-class,
insured, postage-prepaid mail, to each record holder of Common Shares 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 (a “Right Certificate”),
evidencing one Right for each Common Share so held, subject to the adjustment provisions of Section
11 of this Rights Agreement. Until such written notice is received by the Rights Agent, the Rights
Agent may presume conclusively for all purposes that the Distribution Date has not occurred. As of
the Distribution Date, the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company will send (directly
or through the Rights Agent or its transfer agent) a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto (the “Summary of Rights”), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered in the names of the
holders thereof. Until the Distribution Date (or the earlier of the Redemption Date and the Final
Expiration Date), the surrender for transfer of any certificate for Common Shares outstanding on
the Record Date shall also constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(c) Certificates for Common Shares which become outstanding (including, without limitation,
reacquired Common Shares referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them the
legend substantially as follows:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement between XenoPort, Inc. (the “Company”) and
Mellon Investor Services LLC as Rights Agent (the “Rights Agent”), dated as of
December 15, 2005, as amended from time to time (the “Rights Agreement”), the terms
of which are hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. As described in the Rights Agreement,
Rights issued to any Person who becomes an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and certain related persons,
whether currently held by or on behalf of such Person or by any subsequent holder,
shall become null and void.
With respect to such certificates containing the foregoing legend, until the Distribution Date
(or, if earlier, the earlier of the Redemption Date or the Final Expiration Date), the Rights
associated with the Common Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares represented thereby. In the event
that the Company purchases or acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights associated with the Common
Shares that are no longer outstanding. Notwithstanding this Section 3(c), the omission of a legend
shall not affect the enforceability of any part of this Rights Agreement or the rights of any
holder of the Rights.
SECTION 4. Form of Right Certificates.
(a) The Right Certificates (and the form of election to purchase Preferred Shares, the form of
assignment and the form of certification to be printed on the reverse thereof) 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
(but which do not affect the rights, duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or quotation system on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Sections 7, 11 and 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one one-hundredths of a
Preferred Share as shall be set forth therein at the Purchase Price (as defined in Section 7(b)),
but the number of such one one-hundredths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents
Rights which are null and void pursuant to the second paragraph of Section 11(a)(ii)
hereof and any Right Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer,
exchange, replacement or adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent the Rights Agent has written notice thereof and to the
extent feasible) 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 an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement). Accordingly, this Right Certificate and the Rights
represented hereby are null and void.
The provisions of Section 11(a)(ii) hereof shall be operative whether or not the foregoing
legend is contained on any such Right Certificate.
SECTION 5. Countersignature and Registration. The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its
Vice Chairman of the Board, its Chief Financial Officer or any of its Vice Presidents, either
manually or by facsimile signature, shall have affixed thereto the Company’s seal or a facsimile
thereof, and shall be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Agreement any such person was not such an officer.
Following the Distribution Date and receipt by the Rights Agent of notice to that effect and
all other relevant information referred to in Section 3(a), the Rights Agent will keep or cause to
be kept, at its office designated for such purpose, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates and the date of each of the Right Certificates.
SECTION 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Section 11(a)(ii),
Section 14 and Section 24 hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the earlier of the Redemption 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 one one-hundredths of a Preferred Share 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 or
Right Certificates shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split up,
combined or
exchanged at the office of the Rights Agent designated for such purpose. 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 registered holder shall have properly completed
and signed the certificate contained in the form of assignment on the reverse side of such Right
Certificate and shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights
Agent shall reasonably request. Thereupon the Rights Agent shall, subject to Section 11(a)(ii),
Section 14 and Section 24 hereof, 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. The Rights
Agent shall have no duty or obligation under this Section unless and until it is satisfied that all
such taxes and/or governmental charges have been paid.
Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security satisfactory to them, and, 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 will issue, execute and deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered holder in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
Notwithstanding any other provisions hereof, the Company and the Rights Agent may amend this
Rights Agreement to provide for uncertificated Rights in addition to or in place of Rights
evidenced by Rights Certificates.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) 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 duly executed, to the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one one-hundredth of a Preferred
Share (or such other number of shares or other securities) as to which the Rights are exercised, at
or prior to the earliest of (i) the Close of Business on January 13, 2016 (the “Final Expiration
Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the
“Redemption Date”) or (iii) the time at which such Rights are exchanged as provided in Section 24
hereof. Except for those provisions herein that expressly survive the termination of this
Agreement, this Agreement shall terminate at such time as the Rights are no longer exercisable
hereunder.
(b) The purchase price for each one one-hundredth of a Preferred Share pursuant to the
exercise of a Right shall initially be $140.00 (the “Purchase Price”) and shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase 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 hereof by certified check, cashier’s check,
bank draft or money order payable to the order of the Company, subject to Section 20(k) hereof, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent for 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, or (B) if the Company,
in its sole discretion, shall have elected to deposit the Preferred Shares issuable upon exercise
of the Rights hereunder into a depository, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths 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 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such Right Certificate. In the
event that the Company is obligated to issue securities of the Company other than Preferred Shares
(including Common Shares) of the Company pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities are available for distribution by the
Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a holder pursuant to Section
11(a)(ii) hereof, the Rights Agent shall return such Right Certificate to the registered holder
thereof after imprinting, stamping or otherwise indicating thereon that the rights represented by
such Right Certificate no longer include the rights provided by Section 11(a)(ii) hereof, and, if
fewer than all the Rights represented by such Right Certificate were so exercised, the Rights Agent
shall indicate on the Right Certificate the number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii) hereof.
(d) In case the registered holder of any Right Certificate shall exercise fewer than all the
Rights evidenced thereby (other than a partial exercise of rights pursuant to Section 11(a)(ii) as
described in Section 7(c) hereof), 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.
(e) The Company covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury, the
number of Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with this Section 7.
(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) properly completed and signed the certification following the
form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise,
(ii) tendered the Purchase Price (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) to the Company in the
manner set forth in Section 7(c) and (iii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall reasonably request.
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 delivered or 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 approximately one and
one-half years after the cancellation date, or shall, at the written request of the Company, and
after any Securities and Exchange Commission required retention period, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. Availability of Preferred Shares. The Company covenants and agrees that so
long as the Preferred Shares (and, after the time a person becomes an Acquiring Person, Common
Shares or any other securities) issuable upon the exercise of the Rights may be listed on any
national securities exchange or quotation system, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange or quotation system upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares (or Common Shares and other securities, as the case may be)
delivered upon exercise of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares or other securities.
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 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 or depositary receipts for the Preferred Shares in a name other
than that of, the registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or to deliver any certificates or depositary receipts for Preferred Shares
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 or the Rights Agent’s reasonable satisfaction that no such tax is due.
As soon as practicable after the Distribution Date, the Company shall use its best efforts to:
(i) prepare and file a registration statement under the Securities Act of 1933, as amended
(the “Act”), with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, will use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements
of the Act) until the Final Expiration Date; and
(ii) use its best efforts to qualify or register the Rights and the securities purchasable
upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or
appropriate.
SECTION 10. Preferred Shares Record Date. Each person in whose name any certificate for
Preferred Shares or other securities 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 other securities
represented thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered with the forms of election and
certification duly executed 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 Preferred Shares or other securities transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Shares or other securities transfer
books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder
of a Right Certificate, as such, shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as provided herein.
SECTION 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The
Purchase Price, the number of Preferred Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this Section 11.
(a)
(i) In the event the Company shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred 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), except as
otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock 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 shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time when the Preferred Shares transfer
books of the Company were open, such holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company issuable upon exercise
of one Right. If an event occurs which would require an adjustment under both 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 hereof and the provisions of the next paragraph of this Section
11(a)(ii), in the event any Person shall become an Acquiring Person, each holder of a Right shall,
for a period of 60 days after the later of such time any Person becomes an Acquiring Person or the
effective date of an appropriate registration statement filed under the Act pursuant to Section 9
hereof (provided, however, that, if at any time prior to the expiration or termination of the
Rights there shall be a temporary restraining order, a preliminary injunction, an injunction, or
temporary suspension by the Board of Directors, or similar obstacle to exercise of the Rights (the
“Injunction”) which prevents exercise of the Rights, a new 60-day period shall commence on the date
the Injunction is removed), have a right to receive, upon exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product by (B) 50% of the then
current per share market price of the Common Shares (determined pursuant to Section 11(d) hereof)
on the date such Person became an Acquiring Person; provided, however, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to the provisions of Section
13 hereof, then only the provisions of Section 13 hereof shall apply and no adjustment shall be
made pursuant to this Section 11(a)(ii). In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company shall not take any action that would
eliminate or diminish the benefits intended to be afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary, from and after the time any Person
becomes an Acquiring Person, any Rights beneficially owned by (i) such Acquiring Person or an
Associate or Affiliate of such Acquiring Person, (ii) a transferee of such Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee after the Acquiring Person became such or
(iii) a transferee of such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person’s
becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 11(a)(ii), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts
to insure that the provisions of this Section 11(a)(ii) and Section 4(b) hereof are complied with,
but shall have no liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. No Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Right Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence shall be canceled.
The Company shall give the Rights Agent written notice of the identity of any such Acquiring
Person, Associate or Affiliate, or the nominee of any of the foregoing, and the Rights Agent may
rely on such notice in carrying out its duties under this Agreement and shall be deemed not to have
knowledge of the identity of any such Acquiring Person, Associate or Affiliate, or the nominee of
any of the foregoing, unless and until it shall have received such notice.
(iii) In lieu of issuing Common Shares in accordance with Section 11(a)(ii) hereof, the
Company may, if a majority of the Board of Directors then in office determines that such action is
necessary or appropriate and not contrary to the interests of holders of Rights, elect to (and, in
the event that the Board of Directors has not exercised the exchange right contained in Section
24(c) hereof and there are not sufficient treasury shares and authorized but unissued Common Shares
to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii),
the Company shall) take all such action as may be necessary to authorize, issue or pay, upon the
exercise of the Rights, cash (including by way of a reduction of the Purchase Price), property,
Common Shares, other securities or any combination thereof having an aggregate value equal to the
value of the Common Shares which otherwise would have been issuable pursuant to Section 11(a)(ii)
hereof, which aggregate value shall be determined by a nationally recognized investment banking
firm selected by a majority of the Board of Directors then in office. For purposes of the
preceding sentence, the value of the Common Shares shall be determined pursuant to Section 11(d)
hereof. Any such election by the Board of Directors must be made within 60 days following the date
on which the event described in Section 11(a)(ii) hereof shall have occurred. Following the
occurrence of the event described in Section 11(a)(ii) hereof, a majority of the Board of Directors
then in office may suspend the exercisability of the Rights for a period of up to 60 days following
the date on which the event described in Section 11(a)(ii) hereof shall have occurred to the extent
that such directors have not determined whether to exercise their rights of election under this
Section 11(a)(iii). In the event of any such suspension, the Company shall issue a public
announcement (with prompt written notice thereof to the Rights Agent) stating that the
exercisability of the Rights has been temporarily suspended.
(b) In case the Company shall fix a record 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 designations and the powers, preferences and rights, and the qualifications,
limitations and restrictions as the Preferred Shares (“equivalent preferred shares”)) or securities
convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per share market price
of the Preferred Shares (as such term is hereinafter defined) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the numerator of which shall be the
number of 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 initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record 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);
provided, however, that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent. 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 case the Company shall 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 or surviving 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) hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market price of the Preferred
Shares (as such term is hereinafter defined) on such record date, less the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the 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 of the Preferred Shares;
provided, however, that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. 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 that would then be in effect
if such record date had not been fixed.
(d)
(i) For the purpose of any computation hereunder, the “current per share market price” of any
security (a “Security” for the purpose of this Section 11(d)(i)) on any date shall be deemed to be
the average of the daily closing prices per share of such Security for the 30
consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that
in the event that the current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such shares, (B) any
subdivision, combination or reclassification of such Security or securities convertible into such
shares or (C) any subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the 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 New
York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Security is listed or
admitted to trading or as reported on the Nasdaq National Market or, if the Security is not listed
or admitted to trading on any national securities exchange or reported on the Nasdaq National
Market, the last quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System (“Nasdaq”) or such other system then in use, or, if on
any such date the Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in the Security
selected by the Board of Directors or, if on any such date no professional market maker is making a
market in the Security, the price as determined in good faith by the Board of Directors. The term
“Trading Day” shall mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the “current per share market price” of the
Preferred Shares shall be determined in accordance with the method set forth in Section 11(d)(i)
hereof. If the Preferred Shares are not publicly traded, 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 as determined pursuant to Section 11(d)(i) hereof (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date hereof) multiplied
by one hundred. 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, whose
determination 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% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one one-hundredth of a Preferred Share or
one ten-thousandth of any other share or security as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which requires such adjustment
or (ii) the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter 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 Sections 11(a) through 11(c) hereof, inclusive, 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 one one-hundredths 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) hereof,
upon each adjustment of the Purchase Price as a result of the calculations made in Section 11(b)
and Section 11(c) hereof, each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a Preferred Share
covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in substitution for any adjustment in the number of one one-hundredths
of a Preferred Share purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths 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 one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company
shall make a public announcement (with prompt written notice thereof to the Rights Agent) 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 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing, subject to Section
14 hereof, the additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and delivered by the Company, and
countersigned and delivered by the Rights Agent, in the manner provided for herein and 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 one
one-hundredths of a Preferred Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the Purchase Price and the
number of one one-hundredths of a Preferred Share 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
one one-hundredth 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 opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid and nonassessable
Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
(with prompt written notice thereof to the Rights Agent) until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the Preferred Shares 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) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary to take) any action
the purpose of which is to, or if at the time such action is taken it is reasonably foreseeable
that the effect of such action is to, materially diminish or eliminate the benefits intended to be
afforded by the Rights. Any such action taken by the Company during any period after any Person
becomes an Acquiring Person but prior to the Distribution Date shall be null and
void unless such action could be taken under this Section 11(m) from and after the
Distribution Date.
(n) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Preferred Shares, issuance wholly
for cash of any Preferred Shares at less than the current market price, issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or issuance of
rights, options or warrants referred to hereinabove in Section 11(b), hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such stockholders.
(o) In the event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the Common Shares payable
in Common Shares or (ii) effect a subdivision, combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right shall be determined
by multiplying the number of one one-hundredths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the number of Common
Shares outstanding immediately after such event, and (B) each Common Share outstanding immediately
after such event shall have issued with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(o) shall be made successively whenever such a dividend is declared
or paid or such a subdivision, combination or consolidation is effected.
(p) The exercise of Rights under Section 11(a)(ii) hereof shall only result in the loss of
rights under Section 11(a)(ii) hereof to the extent so exercised and shall not otherwise affect the
rights represented by the Rights under this Agreement, including the rights represented by Section
13 hereof.
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made or any event affecting the Rights or their exercisability occurs (including,
without limitation, an event that causes Rights to become null and void) as provided in Sections 11
and 13 hereof, the Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief, reasonably detailed statement of the facts, computations and methodology accounting
for such adjustment or describing such event, (b) file with the Rights Agent and with each transfer
agent for the Common Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or
statement therein contained and shall have no duty or liability with respect to, and shall not be
deemed to have knowledge of, any adjustment or any such event unless and until it shall have
received such a certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following the Shares Acquisition Date or, if a Transaction is proposed,
the Distribution Date, directly or indirectly (x) the Company shall consolidate with, or merge with
and into, any Interested Stockholder, or if in such merger or consolidation all holders of Common
Stock are not treated alike, any other Person, (y) any Interested Stockholder, or if in such merger
or consolidation all holders of Common Stock are not treated alike, any other Person 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 (other than, in the case
of either transaction described in (x) or (y), a merger or consolidation which would result in all of the voting power
represented by the securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into securities of the surviving
entity) all of the voting power represented by the securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and the holders of such
securities not having changed as a result of such merger or consolidation) or (z) the Company shall
sell, mortgage or otherwise transfer (or one or more of its subsidiaries shall sell, mortgage or
otherwise transfer), in one or more transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its subsidiaries (taken as a whole) to any
Interested Stockholder or Stockholders, or if in such transaction all holders of Common Stock are
not treated alike, any other Person, (other than the Company or any Subsidiary of the Company in
one or more transactions each of which individually and the aggregate does not violate Section
13(d) hereof) then, and in each such case, proper provision shall be made so that: (i) each holder
of a Right, subject to Section 11(a)(ii) hereof, shall have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of freely tradeable Common
Shares of the Principal Party (as such term is hereinafter defined), free and clear of liens,
rights of call or first refusal, encumbrances or other adverse claims, as shall be equal to the
result obtained by (A) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable (without taking into
account any adjustment previously made pursuant to Section 11(a)(ii) hereof) and dividing that
product by (B) 50% of the then current per share market price of the Common Shares of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) 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 to such Principal Party; and (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient number of shares of its
Common Shares in accordance with Section 9 hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon the exercise of the
Rights.
(b) “Principal Party” shall mean:
(i) in the case of any transaction described in clause (x) or (y) of Section 13(a) hereof, the
Person that is the issuer of any securities into which Common Shares are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the other party to the
merger or consolidation (or, if applicable, the Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) of Section 13(a) hereof, the
Person that is the party receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any case, (1) if the Common Shares of such Person are not at such time
and have not been continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act, and such Person is a direct or indirect Subsidiary or Affiliate of another Person
the Common Shares of which are and have been so registered, “Principal Party” shall refer to such
other Person; (2) if such Person is a Subsidiary, directly or indirectly, or Affiliate of more than
one Person, the Common Shares of two or more of which are and have been so registered, “Principal
Party” shall refer to whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value; and (3) if such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such party were a “Subsidiary” of both or all of
such joint venturers and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect interests in such Person
bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
the Principal Party shall have a sufficient number of authorized Common Shares that have not been
issued or reserved for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and each Principal Party and each other Person
who may become a Principal Party as a result of such consolidation, merger, sale or transfer shall
have (i) executed and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and (ii) prepared, filed and had
declared and remain effective a registration statement under the Act on the appropriate form with
respect to the Rights and the securities exercisable upon exercise of the Rights and further
providing that, as soon as practicable after the date of any consolidation, merger, sale or
transfer of assets mentioned in paragraph (a) of this Section 13, the Principal Party at its own
expense will:
(i) cause the registration statement under the Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form to remain effective (with
a prospectus at all times meeting the requirements of the Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the securities purchasable
upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or
appropriate;
(iii) list the Rights and the securities purchasable upon exercise of the Rights on each
national securities exchange on which the Common Shares were listed prior to the consummation of
such consolidation, merger, sale or transfer of assets or on the Nasdaq National Market if the
Common Shares were listed on the Nasdaq National Market or, if the Common Shares were not listed on
a national securities exchange or the Nasdaq National Market prior to the consummation of such
consolidation, merger, sale or transfer of assets, on a national securities exchange or the Nasdaq
National Market; and
(iv) deliver to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all material respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
(d) After the Distribution Date, the Company covenants and agrees that it shall not (i)
consolidate with, (ii) merge with or into or (iii) sell or transfer to, in one or more
transactions, assets or earning power aggregating more than 50% of the assets or earning power of
the Company and its subsidiaries taken as a whole, any other Person (other than a Subsidiary of the
Company in a transaction which does not violate Section 11(m) hereof), if (x) at the time of or
after such consolidation, merger or sale there are any charter or bylaw provisions or any rights,
warrants or other instruments or securities outstanding, agreements in effect or any other action
taken which would diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of the Person who constitutes, or would constitute, the “Principal Party”
for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned
by such Person or any of its Affiliates and Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a supplemental agreement evidencing
compliance with this Section 13(d).
SECTION 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to distribute Right
Certificates that evidence fractional Rights. In lieu of 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 or
admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, 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 as reported on the Nasdaq National Market or,
if the Rights are not listed or admitted to trading on any national securities exchange or reported
on the Nasdaq National Market, 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 as determined in good faith by
the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred Share) upon exercise of
the Rights or to distribute certificates that evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts; provided, however, that holders of
such depositary receipts shall have all of the designations and the powers, preferences and rights,
and the qualifications, limitations and restrictions to which they are entitled as beneficial
owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-hundredth of a Preferred Share, 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 the purposes of this Section 14(b), the current market value of
a Preferred Share shall be the current per share market price of the Preferred Shares (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise (or, if not publicly traded, in accordance with
Section 11(d)(ii) hereof).
(c) Following the occurrence of one of the transactions or events specified in Section 11
hereof giving rise to the right to receive Common Shares, capital stock equivalents (other than
Preferred Shares) or other securities upon the exercise of a Right, the Company shall not be
required to issue fractions of Common Shares or units of such Common Shares, capital stock
equivalents or other securities upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares, capital stock equivalents or other securities. In lieu of
fractional Common Shares, capital stock equivalents or other securities, 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 Common
Share or unit of such Common Shares, capital stock equivalents or other securities. For purposes
of this Section 14(c), the current market value shall be the current per share market price (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date
of such exercise and, if such capital stock equivalent is not traded, each such capital stock
equivalent shall have the value of one one-hundredth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right expressly waives his right to receive
any fractional Rights or any fractional shares upon exercise of a Right (except as provided above).
(e) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts relating to such payments and the prices and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in
the form of fully collected funds to make such payments. The Rights Agent shall be fully protected
in relying on such a certificate and shall have no duty with respect to, and shall not be deemed to
have knowledge of, any payment for fractional Rights or fractional shares under any Section of this
Agreement relating to the payment of fractional Rights or fractional shares unless and until the
Rights Agent shall have received such a certificate and sufficient monies.
SECTION 15. Rights of Action. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent under Sections 18 and 20 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 by the Company
and will be entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations by the Company of the obligations of any Person subject to,
this Agreement. Holders of Rights shall be entitled to recover from the Company the reasonable
costs and expenses, including attorneys’ fees, incurred by them in any action to enforce the
provisions of this Agreement.
Notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final)
issued by a court or by a governmental, regulatory, self-regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Company must use all reasonable efforts to have any such injunction,
order, judgment, decree or ruling lifted or otherwise overturned as soon as possible.
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 will be transferable only in connection with
the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable (subject to the
provisions of this Agreement) only on the registry books of the Rights Agent if surrendered at the
office of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the 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 Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares 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 Certificate, as such,
any of the rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or
subscription rights, 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. The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time to time, on demand
of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in
the preparation, delivery, amendment, administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, settlement, cost or expense (including, without limitation, the reasonable fees and
expenses of legal counsel), incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent (which gross negligence, bad faith or willful misconduct must be
determined by a final non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction), for any action taken, suffered or omitted by the Rights Agent in connection with the
acceptance, administration, exercise and performance of its duties under this Agreement. The costs
and expenses incurred in enforcing this right of indemnification shall be paid by the Company. The
provisions of this Section 18 and Section 20 below shall survive the termination of this Agreement,
the exercise or expiration of the Rights and the resignation, replacement or removal of the Rights
Agent.
The Rights Agent shall be authorized and protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with its acceptance and
administration of this Agreement and the exercise and performance of its duties hereunder, 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 counsel as set
forth in Section 20 hereof.
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent. Any Person into
which the Rights Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or
any successor Rights Agent shall be a party, or any Person succeeding to the shareholder services
or business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof.
In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement any of the Right
Certificates shall have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
In case at any time the name of the Rights Agent shall be changed and at such time any of the
Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in the Right Certificates and
in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent undertakes to perform only the
duties and obligations expressly imposed by this Agreement (and no implied duties) upon the
following terms and conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its choice (who may be legal counsel
for the Company or an employee of the Rights Agent), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent and the Rights Agent
shall incur no liability for or in respect of any action taken, suffered or omitted by it 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 (including without limitation, the identity of
an Acquiring Person and the determination of the current per share market price of any security) be
proved or established by the Company prior to taking, suffering or omitting to take any action
hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a certificate signed by any
one of the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial
Officer, any Vice President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full and complete authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it under the provisions of this 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 (which gross negligence, bad faith or
willful misconduct must be determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction). Anything to the contrary notwithstanding, in no event shall
the Rights Agent be liable for special, punitive, 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. Any liability of the Rights Agent under
this Agreement will be limited to the amount of annual fees paid by the Company to the Rights
Agent.
(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 have any liability for or be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible for any breach by
the 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 void pursuant to Section 11(a)(ii) hereof) or any change or adjustment in the terms
of the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13,
23 or 24 hereof, or the ascertaining of the existence of facts that would require any such change
or adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after
receipt of a certificate pursuant to Section 12 hereof, upon which the Rights Agent may rely,
describing such change or adjustment); 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 Chief
Executive Officer, the President, the Chief Financial Officer, any Vice President, the Secretary or
the Treasurer of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and such instructions shall be full authorization and protection to the
Rights Agent and the Rights Agent shall not be liable for or in respect of any action taken,
suffered or omitted by it in accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. The Rights Agent shall be fully authorized and
protected in relying upon the most recent instructions received by any such officer. Any
application by the Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken, suffered or omitted by the
Rights Agent under this Agreement and the date on and/or after which such action shall be taken, or
suffered or such omission shall be effective. The Rights Agent shall not be liable for any action
taken or suffered by, or the omission of, the Rights Agent or omitted in accordance with a proposal
included in any such application on or after the date specified therein (which date shall not be
less than three Business Days after the date indicated in such application unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking
any such action (or the effective date in case of an omission), the Rights Agent shall have received written instructions
in response to such application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any stockholder, affiliate, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent or any such
stockholder, affiliate, director, officer or employee from acting in any other capacity for the
Company or for any other 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 (through its directors, officers and employees) or by
or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the
Company or any other Person resulting from any such act, default, neglect or misconduct, absent
gross negligence, bad faith or willful misconduct in the selection and continued employment thereof
(which gross negligence, bad faith or willful misconduct must be determined by a final
non-appealable order, judgment, decree or ruling of a court of competent jurisdiction).
(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has not been completed, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with the Company.
SECTION 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing
mailed to the Company and to each transfer agent for the Common Shares or Preferred Shares known to
the Rights Agent by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor Rights Agent 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 for the Common Shares or Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such appointment within a period
of 30 days after giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the 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, business trust or
limited liability company organized and doing business under the laws of the United States or of
any other state of the United States which is authorized under such laws to exercise 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) a direct or indirect wholly owned Subsidiary of such an entity or its wholly-owning parent.
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 for the Common Shares or 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 its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earlier of the Redemption Date and the
Final Expiration Date, the Company (a) shall with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any employee plan or arrangement in existence
prior to the Distribution Date, or upon the exercise, conversion or exchange of securities, notes
or debentures issued by the Company and in existence prior to the Distribution Date, 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) the Company shall not be obligated to issue any such Right
Certificates 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 Right Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
SECTION 23. Redemption.
(a) The Rights may be redeemed by action of the Board of Directors pursuant to Section 23(b)
hereof and shall not be redeemed in any other manner.
(b)
(i) The Board of Directors may, at its option, at any time prior to the earlier of (A) such
time as any Person becomes an Acquiring Person, or (B) the Final Expiration Date, redeem all but
not less than all of the then outstanding Rights at a redemption price of $0.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as the “Redemption
Price”), and the Company may, at its option, pay the Redemption Price in Common Shares (based on
the “current per-share market price,” as such term is defined in Section 11(d) hereof, of the
Common Shares at the time of redemption), cash or any other form of consideration deemed
appropriate by the Board of Directors. The redemption of the Rights by the Board of Directors may
be made effective at such time, on such basis and subject to such conditions as the Board of
Directors in its sole discretion may establish. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable pursuant to Section 11(a)(ii) hereof
prior to the expiration or termination of the Company’s right of redemption under this Section
23(b)(i).
(ii) In addition, the Board of Directors may, at its option, at any time after the time a
Person becomes an Acquiring Person and after the expiration of any period during which the holder
of Rights may exercise the rights under Section 11(a)(ii) hereof but prior to any event described
in clause (x), (y) or (z) of the first sentence of Section 13 hereof, redeem all but not less than
all of the then outstanding Rights at the Redemption Price (x) in connection with any merger,
consolidation or sale or other transfer (in one transaction or in a series of related transactions)
of assets or earning power aggregating 50% or more of the assets or earning power of the Company
and its subsidiaries (taken as a whole) in which all holders of Common Shares are treated alike and
not involving (other than as a holder of Common Shares being treated like all other such holders)
an Interested Stockholder or a Transaction Person or (y)(A) if and for so long as the Acquiring
Person is not thereafter the Beneficial Owner of 15% or more of the then
outstanding Common Shares, and (B) at the time of redemption no other Persons are Acquiring
Persons.
(c) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights pursuant to Section 23(b) hereof, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public notice of any
such redemption (with prompt written notice thereof to the Rights Agent); provided, however, that
the failure to give, or any defect in, any such notice shall not affect the legality or validity of
such redemption. Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 23(b) hereof, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares, provided, however, that failure to give, or any
defect in, any such notice shall not affect the validity of such redemption. Any notice that 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 at any time in any
manner other than that specifically set forth in this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of Common Shares prior to the Distribution Date.
(d) The Company may, at its option, discharge all of its obligations with respect to any
redemption of the Rights by (i) issuing a press release announcing the manner of redemption of the
Rights (with prompt written notice thereof to the Rights Agent) and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their last addresses as they appear on
the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Shares, and upon such action, all outstanding Right Certificates
shall be null and void without any further action by the Company.
SECTION 24. Exchange.
(a) The Board of Directors may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section 11(a)(ii) 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 hereinafter 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 employee benefit plan of the
Company or any such Subsidiary, or any entity 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% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to Section 24(a) hereof 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 (with prompt written notice thereof to the Rights Agent);
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; provided, however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. Any notice that 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 11(a)(ii) hereof) held by each holder of Rights.
(c) In lieu of issuing Common Shares in accordance with Section 24(a) hereof, the Company may,
if a majority of the Board of Directors then in office determines that such action is necessary or
appropriate and not contrary to the interests of the holders of Rights, elect to (and,
in the event that there are not sufficient treasury shares and authorized but unissued Common Shares to permit
any exchange of the Rights in accordance with Section 24(a) hereof, the Company shall) take all
such action as may be necessary to authorize, issue or pay, upon the exchange of the Rights, cash,
property, Common Shares, other securities or any combination thereof having an aggregate value
equal to the value of the Common Shares which otherwise would have been issuable pursuant to
Section 24(a) hereof, which aggregate value shall be determined by a nationally recognized
investment banking firm selected by a majority of the Board of Directors then in office. For
purposes of the preceding sentence, the value of the Common Shares shall be determined pursuant to
Section 11(d) hereof. Any election pursuant to this Section 24(c) by the Board of Directors must
be made by resolution within 60 days following the date on which the event described in Section
11(a)(ii) hereof shall have occurred. Following the occurrence of the event described in Section
11(a)(ii) hereof, a majority of the Board of Directors then in office may suspend the
exercisability of the Rights for a period of up to 60 days following the date on which the event
described in Section 11(a)(ii) hereof shall have occurred to the extent that such directors have
not determined whether to exercise their rights of exchange under this Section 24(c). In the event
of any such suspension, the Company shall issue a public announcement (with prompt written notice
thereof to the Rights Agent) stating that the exercisability of the Rights has been temporarily
suspended.
(d) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates that evidence fractional Common Shares. In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Right Certificates with regard to which such
fractional Common 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 Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately after the date of the first public announcement by the Company that an exchange is to
be effected pursuant to this Section 24.
SECTION 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable in stock of any class to
the holders of its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer to the holders of
its Preferred Shares 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, (iii) to effect
any reclassification of its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole), to any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any
dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends
in Common Shares), then, in each such case, the Company shall give to the Rights Agent and 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 purpose of such stock dividend,
or distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or 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 10 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 10 days prior to the
date of the taking of such proposed action or the date of participation therein by the holders of
the Common Shares and/or the Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall occur, then the Company
shall as soon as practicable thereafter give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which
notice shall describe the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof.
SECTION 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) or by facsimile transmission as follows:
XenoPort, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Cooley Godward llp
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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) or by facsimile transmission
as follows:
Mellon Investor Services LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Client Relationship Executive
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Client Relationship Executive
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Mellon Investor Services LLC
Newport Office Center VII
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Newport Office Center VII
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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 shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
SECTION 27. Supplements and Amendments. Prior to the Distribution Date, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights, in accordance with this Section 27.
From and after the Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, from time to time supplement or amend any provision of this Agreement without the approval
of any holders of Right Certificates in order to (i) cure any ambiguity, (ii) correct or supplement
any provision contained herein which may be defective or inconsistent with any other provisions
herein, or (iii) change any other provisions with respect to the Rights which the Company may deem
necessary or desirable; provided, however, that no such supplement or amendment shall be made which
would adversely affect the interests of the holders of Rights (other than the interests of an
Acquiring Person or its Affiliates or Associates). Any supplement or amendment adopted during any
period after any Person has become an Acquiring Person but prior to the Distribution
Date shall become null and void unless such supplement or amendment could have been adopted by the
Company from and after the Distribution Date. Any such supplement or amendment shall be evidenced
by a writing signed by the Company and the Rights Agent. Upon delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, 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 Common Shares. Notwithstanding anything contained
in this Agreement to the contrary, the Rights Agent may, but shall not be obligated to, enter into
any supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or
immunities under this Agreement.
SECTION 28. Determination and Actions by the Board of Directors, Etc. For all purposes of
this Agreement, any calculation of the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of such outstanding Common Shares
or any other securities of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the Board, or the
Company, or as may be necessary or advisable in the
administration of this Agreement, including
without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii)
make all determinations deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend the Agreement). All such
actions, calculations, interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by the Board in good
faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other Persons, and (y) not subject the Board to any liability to the holders of
the Rights. The Rights Agent is entitled always to assume the Company’s Board of Directors acted
in good faith and shall be fully protected and incur no liability in reliance thereon.
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 or corporation other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) 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).
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.
SECTION 32. 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 Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State; provided, however, the rights,
duties and obligations of the Rights Agent shall be governed by the laws of the State of New York,
concerning contracts made and to be performed entirely within the State of New York, without regard
to principles or rules concerning conflicts of laws which might otherwise require application of
the substantive laws of another jurisdiction.
SECTION 33. Counterparts. This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
SECTION 34. Descriptive Headings. Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
In Witness Whereof, parties whereto have caused this Agreement to be duly executed,
all as of the day and year first above written.
Attest:
|
XenoPort, Inc. | |||
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, PhD | |||
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D. | |||
Secretary
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Chief Executive Officer |
| Attest: | Mellon Investor Services LLC | |||||||
By:
|
/s/ ▇▇▇ ▇▇▇▇ | By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||||
Name:
|
▇▇▇ ▇▇▇▇ | Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||||
Title:
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Vice President | Title: | Assistant Vice President | |||||
Exhibit A
Form of Certificate of Designation
of Series A Junior Participating Preferred Stock
Form of Certificate of Designation
of Series A Junior Participating Preferred Stock
Please see Exhibit 3.1 to the Current Report of Form 8-K
Exhibit B
Form of Rights Certificate
Form of Rights Certificate
Please see Exhibit 4.1 to the Current Report of Form 8-K
XENOPORT, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
PREFERRED SHARES
(Exhibit C to Rights Plan)
On December 15, 2005, the Board of Directors of XenoPort, Inc. (the “Company”)
declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of
common stock, par value $0.001 per share (the “Common Shares”), of the Company. The dividend is
effective as of January 13, 2006 (the “Record Date”) with respect to the stockholders of record on
that date. The Rights will also attach to new Common Shares issued after the Record Date. Each
Right entitles the registered holder to purchase from the Company one one-hundredth of a share of
Series A Junior Participating Preferred Stock, par value $0.001 per share (the “Preferred Shares”),
of the Company at a price of $140.00 per one one-hundredth of a Preferred Share (the “Purchase
Price”), subject to adjustment. Each Preferred Share is designed to be the economic equivalent of
100 Common Shares. The description and terms of the Rights are set forth in a Rights Agreement,
dated as of December 15, 2005 (the “Rights Agreement”), between the Company and Mellon Investor
Services LLC (the “Rights Agent”).
Detachment and Transfer of Rights
Initially, the Rights will be evidenced by the stock certificates representing Common Shares
then outstanding, and no separate Right Certificates will be distributed. Until the earlier to
occur of (i) a public announcement that a person or group of affiliated or associated persons, has
become an “Acquiring Person” (as such term is defined in the Rights Agreement) or (ii) ten business
days (or such later date as the Board may determine) following the commencement of, or announcement
of an intention to make, a tender offer or exchange offer which would result in the beneficial
ownership by an Acquiring Person of 15% or more of the outstanding Common Shares (the earlier of
such dates being called the “Distribution Date”), the Rights will be evidenced, with respect to any
of the Common Share certificates outstanding as of the Record Date, by such Common Share
certificate. In general, an “Acquiring Person” is a person, the affiliates or associates of such
person, or a group, which has acquired beneficial ownership of 15% or more of the outstanding
Common Shares.
The Rights Agreement provides that, until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be transferable with and only with the Common Shares.
Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights) the surrender or transfer of any certificates
for Common Shares outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights (“Right
Certificates”) will be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and such separate Right Certificates alone will evidence the
Rights.
Exercisability of Rights
The Rights are not exercisable until the Distribution Date. The Rights will expire on January
13, 2016 (the “Final Expiration Date”), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company, in each case as described below. Until a
Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to vote or to receive dividends.
The Purchase Price payable, and the number of Preferred Shares or other securities or property
issuable or payable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution. The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to adjustment in the event of
a stock split of the Common Shares or a stock dividend on the Common Shares payable in Common
Shares, or subdivisions, consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares will be issued (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash will be made based on
the market price of the Preferred Shares on the last trading day prior to the date of exercise.
Terms of Preferred Shares
Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each
Preferred Share will be entitled to a minimum preferential quarterly dividend payment of $l per
share but will be entitled to an aggregate dividend of 100 times the dividend declared per Common
Share. In the event of liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $100 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each Preferred Share will have 100 votes,
voting together with the Common Shares. Finally, in the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are protected by customary
anti-dilution provisions. Because of the nature of the Preferred Shares’ dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common Share. The Preferred Shares
would rank junior to any other series of the Company’s preferred stock.
Trigger of Flip-In and Flip-Over Rights
In the event that any person or group of affiliated or associated persons becomes an Acquiring
Person, proper provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person or any affiliate or associate thereof (which will
thereafter be void), will thereafter have the right to receive upon exercise that number of Common
Shares having a market value of two times the exercise price of the Right. This right will
commence on the date of public announcement that a person has become an Acquiring Person (or the
effective date of a registration statement relating to distribution of the rights, if later) and
terminate 60 days later (subject to adjustment in the event exercise of the rights is enjoined).
In the event that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold to an Acquiring
Person, its affiliates or associates or certain other persons in which such persons have an
interest, proper provision will be made so that each such holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then current exercise price of the Right,
that number of shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of the Right.
Redemption and Exchange of Rights
At any time prior to the earliest of (i) the close of business on the day of the first public
announcement that a person has become an Acquiring Person or (ii) the Final Expiration Date, the
Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of
$0.001 per Right (the “Redemption Price”). In general, the redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to receive the Redemption
Price.
At any time after any Person becomes an Acquiring Person and prior to the acquisition by such
person or group of 50% or more of the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or, under
circumstances set forth in the Rights Agreement, cash, property or other securities of the Company,
including fractions of a Preferred Share (or of a share of a class or series of the Company’s
preferred stock having equivalent designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions), per Right (with value equal to such Common Shares).
Amendment of Rights
The terms of the Rights generally may be amended by the Board of Directors of the Company
without the consent of the holders of the Rights, except that from and after such time as the
Rights are distributed no such amendment may adversely affect the interests of the holders of the
Rights (excluding the interest of any Acquiring Person).
Additional Information
A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Current Report on Form 8-K dated December [___], 2005. A copy of the Rights
Agreement is available from the Company by writing to: Secretary, XenoPort, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇. This summary description of the Rights is not intended to be
complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.