EXHIBIT 4.1
RIGHTS AGREEMENT
dated as of / /, 2003
between
BIOVERIS CORPORATION
and
EQUISERVE TRUST COMPANY, N.A.
as Rights Agent
Table of Contents
Page
SECTION 1. Certain Definitions.................................................................1
SECTION 2. Appointment of Rights Agent.........................................................9
SECTION 3. Issue of Rights and Right Certificates..............................................9
SECTION 4. Form of Right Certificates.........................................................11
SECTION 5. Execution, Countersignature and Registration.......................................12
SECTION 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates; Uncertificated Rights............................................12
SECTION 7. Exercise of Rights; Expiration Date of Rights......................................13
SECTION 8. Cancellation and Destruction of Right Certificates.................................15
SECTION 9. Reservation and Availability of Preferred Shares...................................16
SECTION 10. Preferred Shares Record Date.......................................................17
SECTION 11. Adjustments in Rights After There is an Acquiring Person;
Exchange of Rights for Shares; Business Combinations...........................18
SECTION 12. Certain Adjustments................................................................23
SECTION 13. Certificate of Adjustment..........................................................24
SECTION 14. Additional Covenants...............................................................24
SECTION 15. Fractional Rights and Fractional Shares............................................24
SECTION 16. Rights of Action...................................................................25
SECTION 17. Transfer and Ownership of Rights and Right Certificates............................26
SECTION 18. Right Certificate Holder Not Deemed a Stockholder..................................27
SECTION 19. Concerning the Rights Agent........................................................27
SECTION 20. Merger or Consolidation or Change of Rights Agent..................................27
SECTION 21. Duties of Rights Agent.............................................................28
SECTION 22. Change of Rights Agent.............................................................30
SECTION 23. Issuance of Additional Rights and Right Certificates...............................31
SECTION 24. Redemption and Termination.........................................................32
SECTION 25. Notices............................................................................32
SECTION 26. Supplements and Amendments.........................................................33
SECTION 27. Successors.........................................................................34
SECTION 28. Benefits of Rights Agreement; Determinations and Actions by the
Board of Directors, etc........................................................34
SECTION 29. Severability.......................................................................35
SECTION 30. Governing Law......................................................................35
SECTION 31. Counterparts; Effectiveness........................................................35
SECTION 32. Descriptive Headings...............................................................35
Exhibits
A Certificate of Designation
B Form of Right Certificate
C Summary of Rights
RIGHTS AGREEMENT dated as of /--/, 2003
(this "Rights Agreement"), between BIOVERIS
CORPORATION, a Delaware corporation (the "Company"),
and EQUISERVE TRUST COMPANY, N.A., as rights agent
(the "Rights Agent").
The board of directors of the Company (the "Board of Directors")
has authorized and declared a dividend of one Right (as hereinafter defined) for
each share of common stock, par value $0.001 per share, of the Company (the
"Common Stock") outstanding immediately after the Effective Time (as hereinafter
defined) (the "Record Date"), and has authorized the issuance of one Right (as
such number may hereafter be adjusted pursuant to the provisions of this Rights
Agreement) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earliest to occur of the
Distribution Date, the Redemption Date, the Exchange Date, or the Expiration
Date (as such terms are hereinafter defined); provided, however, that Rights may
be issued with respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the earliest of the Redemption Date,
the Exchange Date, to the extent applicable, or the Expiration Date in
accordance with the provisions of Section 23. Each Right shall initially
represent the right to purchase one one-thousandth (1/1,000th) of a share of
Series A Participating Cumulative Preferred Stock, par value $0.001 per share,
of the Company (the "Preferred Shares"), having the powers, rights and
preferences set forth in the Certificate of Designation attached as Exhibit A.
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 Rights
Agreement, the following terms shall have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of more than 10% of the Common Shares then outstanding, but
shall not include
(a) any Exempt Person,
(b) any such Person that the Board of Directors determines has
become the Beneficial Owner of more than 10% of the Common Shares then
outstanding solely as the result of (i) a change in the aggregate number
of Common Shares outstanding since the last date on which such Person
acquired Beneficial Ownership of any Common Shares (provided, however,
that if a Person becomes the Beneficial Owner of more than 10% of the
Common Shares then outstanding by reason of such change in the aggregate
number of Common Shares outstanding and thereafter becomes the Beneficial
Owner of any additional Common Shares (other than pursuant to a dividend
or distribution paid or made by the Company
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on the outstanding Common Shares or pursuant to a split or subdivision of
the outstanding Common Shares), then such Person shall be deemed to be an
"Acquiring Person" unless upon becoming the Beneficial Owner of such
additional Common Shares such Person does not beneficially own more than
10% of the Common Shares then outstanding), (ii) the acquisition by such
Person or one or more of its Affiliates or Associates of Beneficial
Ownership of additional Common Shares if such acquisition was made in the
good faith belief that such acquisition would not (A) cause the
Beneficial Ownership by such Person, together with its Affiliates and
Associates, to exceed 10% of the Common Shares outstanding at the time of
such acquisition and such good faith belief was based on the good faith
reliance on information contained in publicly filed reports or documents
of the Company that are inaccurate or out-of-date or (B) otherwise cause
a Distribution Date or the adjustment provided for in Section 11(a) to
occur or (iii) the acquisition by such Person or one or more of its
Affiliates or Associates of Beneficial Ownership of additional Common
Shares if the Board of Directors determines (which determination shall be
final, conclusive and binding on such Person, the Rights Agent, the
holders of the Rights and all other Persons) that such acquisition was
made in good faith without the knowledge by such Person or one or more of
its Affiliates or Associates that such Person would thereby become an
Acquiring Person and without the intention of changing or influencing
control of the Company, including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of Common
Shares that would otherwise cause such Person to be an Acquiring Person
or (B) such Person was aware of the extent of its Beneficial Ownership of
Common Shares but had no actual knowledge of the consequences of such
Beneficial Ownership under this Rights Agreement, or
(c) any such Person that is immediately following the Effective
Time, and solely as a result of receiving Common Shares pursuant to the
Agreement and Plan of Merger (and not attributable in whole or in part to
any other acquisition of Common Shares) the Beneficial Owner of more than
10% of the Common Shares then outstanding if such Person was not an
"Acquiring Person" within the meaning of the Rights Agreement dated as of
November 6, 1996, as amended, between IGEN International, Inc. and the
Rights Agent (provided, however, that if such Person thereafter becomes
the Beneficial Owner of any additional Common Shares (other than pursuant
to a dividend or distribution paid or made by the Company on the
outstanding Common Shares or pursuant to a split or subdivision of the
outstanding Common Shares), then such Person shall be deemed to be an
"Acquiring Person" unless upon becoming the Beneficial Owner of such
additional Common Shares such Person does not beneficially own more than
10% of the Common Shares then outstanding).
Notwithstanding clause (b)(ii) or (b)(iii) above, if any Person that is not an
Acquiring Person due to such clause (b)(ii) or (b)(iii) does not reduce its
percentage of Beneficial Ownership of Common Shares to 10% or less by the Close
of Business on the tenth calendar day, or such other calendar day as determined,
in good faith, by the Board of
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Directors, after notice from the Company (the date of notice being the first
day) that such Person's Beneficial Ownership of Common Shares would make it an
Acquiring Person, such Person shall, at the end of such ten calendar day period
(or other period determined by the Board of Directors), become an Acquiring
Person (and such clause (b)(ii) or (b)(iii) shall no longer apply to such
Person). For purposes of this definition, the determination whether any Person
acted in "good faith" shall be conclusively determined by the Board of
Directors.
"Affiliate" and "Associate," when used with reference to any
Person, shall have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Rights Agreement.
"Agreement and Plan of Merger" shall mean the Agreement and Plan
of Merger dated as of July 24, 2003, among Roche Holding Ltd, 66 Acquisition
Corporation II, IGEN International, Inc. and the Company, as successor to IGEN
Integrated Healthcare, LLC.
A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," and shall be deemed to have "Beneficial Ownership"
of, any securities:
(a) 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;
(b) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly: (i) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (written or
oral), or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), options or warrants, or otherwise; provided,
however, that a Person shall not be deemed under this clause (i) to be
the Beneficial Owner of, or to beneficially own, or to have Beneficial
Ownership of, any 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 thereunder or cease to be subject to withdrawal by
the tendering security holder; or (ii) the right to vote pursuant to any
agreement, arrangement or understanding (written or oral); provided,
however, that a Person shall not be deemed under this clause (ii) to be
the Beneficial Owner of, or to beneficially own, any security if (A) the
agreement, arrangement or understanding (written or oral) to vote such
security arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made
generally to all holders of Common Shares pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act and (B)
the beneficial
4
ownership of such security is not also then reportable on Schedule 13D or
13G under the Exchange Act (or any comparable or successor report); or
(c) 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 (written or
oral) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to clause (b)(ii) of this
definition) or disposing of any securities of the Company; provided,
however, that no Person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such Person's status
or authority as such, to be the "Beneficial Owner" of, to have
"Beneficial Ownership" of or to "beneficially own" any securities that
are "beneficially owned" (as defined herein), including, without
limitation, in a fiduciary capacity, by an Exempt Person or by any other
such officer, director or employee of an Exempt Person.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
deemed the "Beneficial Owner" of, or to "beneficially own," or to have
"Beneficial Ownership" of, any securities acquired in a bona fide firm
commitment underwriting pursuant to an underwriting agreement with the Company.
"Board of Directors" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Book Value," when used with reference to Common Shares issued by
any Person, shall mean the amount of equity of such Person applicable to each
Common Share, determined (a) in accordance with United States generally accepted
accounting principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a Business Combination and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price, per Common Share,
which is less than such Book Value before giving effect to such exercise or
conversion (whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (ii) all dividends and other distributions on the
capital stock of such Person declared prior to the date as of which such Book
Value is to be determined and to be paid or made after such date and (iii) any
other agreement, arrangement or understanding (written or oral), or transaction
or other action contemplated prior to the date as of which such Book Value is to
be determined that would have the effect of thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in Section
11(c)(i).
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"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking institutions in the
Borough of Manhattan, the City of New York, are authorized or obligated by law
or executive order to close.
"Certificate of Designation" shall mean the Certificate of
Designation of Series A Participating Cumulative Preferred Stock setting forth
the powers, preferences, rights, qualifications, limitations and restrictions of
such series of preferred stock of the Company, a copy of which is attached
hereto as Exhibit A.
"Close of Business" on any given date shall mean 5:00 p.m.,
Eastern time, on such date; provided, however, that, if such date is not a
Business Day, "Close of Business" shall mean 5:00 p.m., Eastern time, on the
next succeeding Business Day.
"Common Shares," when used with reference to the Company prior to
a Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares," when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as a
maximum amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed.
"Common Stock" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of this
Rights Agreement; provided, however, that if there is a Business Combination,
"Company" shall have the meaning set forth in Section 11(c)(iii).
The term "control" with respect to any Person shall mean the power
to direct the management and policies of such Person, directly or indirectly, by
or through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Distribution Date" shall have the meaning set forth in Section
3(b).
"Effective Time" shall have the meaning assigned to such term in
the Agreement and Plan of Merger.
6
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, (or any comparable or successor law or act) as in effect on the date in
question, unless otherwise specifically provided.
"Exempt Person" shall mean (a) the Company or any Subsidiary of
the Company, (b) any employee benefit or compensation plan of the Company or any
of its Subsidiaries or any Person holding Common Shares for or pursuant to the
terms of any such employee benefit or compensation plan or for the purpose of
funding other employee benefits for employees of the Company or any of its
Subsidiaries, (c) ▇▇▇▇▇▇▇▇▇▇▇ and (d) until immediately after the Effective
Time, IGEN International, Inc. or any Affiliate or Associate thereof.
"Exchange Date" shall have the meaning set forth in Section 7(a).
"Exchange Consideration" shall have the meaning set forth in
Section 11(b)(i).
"Expiration Date" shall have the meaning set forth in Section
7(a).
"Major Part," when used with reference to the assets of the
Company and its Subsidiaries as of any date, shall mean assets (a) having a fair
market value aggregating 50% or more of the total fair market value of all the
assets of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (b) accounting for 50% or more of the total value (net of depreciation
and amortization) of all the assets of the Company and its Subsidiaries (taken
as a whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with United States generally accepted accounting principles then in effect or
(c) accounting for 50% or more of the total amount of earnings before interest,
taxes, depreciation and amortization or of the revenues of the Company and its
Subsidiaries (taken as a whole) as would be shown on, or derived from, a
consolidated or combined statement of income or net earnings of the Company and
its Subsidiaries for the period of 12 months ending on the last day of the
Company's monthly accounting period next preceding the date in question,
prepared in accordance with United States generally accepted accounting
principles then in effect.
"Market Value," when used with reference to Common Shares or
Preferred Shares on any date, shall mean the average of the daily closing
prices, per share, of such Common Shares or Preferred Shares, as applicable, for
the period which is the shorter of (a) 30 consecutive Trading Days ending on the
Trading Day immediately prior to the date in question or (b) the number of
consecutive Trading Days beginning on the Trading Day immediately after the date
of the first public announcement of the event requiring a determination of the
Market Value of Common Shares or Preferred Shares, as applicable, and ending on
the Trading Day immediately prior to the date in question; provided, however,
that, in the event that the Market Value of such Common Shares or Preferred
Shares, as applicable, is to be determined in whole or in part during a period
following the announcement by the issuer of such Common Shares or Preferred
Shares,
7
as applicable, of any action of the type described in Section 12(a) that would
require an adjustment thereunder, then, and in each such case, the Market Value
of such Common Shares or Preferred Shares, as applicable, shall be appropriately
adjusted to reflect the effect of such action on the market price of such Common
Shares or Preferred Shares, as applicable. The closing price for each Trading
Day shall be the closing price quoted on the composite tape for securities
listed on the New York Stock Exchange, or, if such securities are not quoted on
such composite tape or if such securities are not listed on such exchange, on
the principal United States securities exchange registered under the Exchange
Act (or any recognized foreign stock exchange) on which such securities are
listed, or, if such securities are not listed on any such exchange, the closing
price quoted on the Nasdaq Stock Market or, if such securities are not so
quoted, the average of the closing bid and asked quotations with respect to a
share of such securities on any National Association of Securities Dealers, Inc.
quotations system or such other system then in use, or if no such quotations are
available, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such securities selected by the
Board of Directors, or if on any such Trading Day no market maker is making a
market in such securities, the closing price of such securities on such Trading
Day shall be deemed to be the fair value of such securities as determined in
good faith by the Board of Directors (whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent, the holders of Rights and all other Persons); provided, however, that for
the purpose of determining the closing price of the Preferred Shares for any
Trading Day on which there is no such market maker for the Preferred Shares the
closing price on such Trading Day shall be deemed to be the Formula Number (as
defined in the Certificate of Designation) multiplied by the closing price of
the Common Shares of the Company on such Trading Day.
"Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization, firm or group or other entity and shall include any successor (by
merger or otherwise) of such entity.
"Preferred Shares" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement. Any reference in this Rights
Agreement to Preferred Shares shall be deemed to include any authorized fraction
of a Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person in a Business
Combination; provided, however, that (i) if such Surviving Person is a direct or
indirect Subsidiary of any other Person, "Principal Party" shall mean the Person
which is the ultimate parent of such Surviving Person and which is not itself a
Subsidiary of another Person and (ii) in the event ultimate control of such
Surviving Person is shared by two or more Persons, "Principal Party" shall mean
that Person that is immediately controlled by such two or more Persons.
8
"Purchase Price" with respect to each Right shall mean $50.00, as
such amount may from time to time be adjusted as provided herein, and shall be
payable in lawful money of the United States of America. All references herein
to the Purchase Price shall mean the Purchase Price as in effect at the time in
question.
"Record Date" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section
24(a).
"Redemption Price" with respect to each Right shall mean $0.001,
as such amount may from time to time be adjusted in accordance with Section 12.
All references herein to the Redemption Price shall mean the Redemption Price as
in effect at the time in question.
"Registered Common Shares" shall mean Common Shares that are, as
of the date of consummation of a Business Combination, and have continuously
been for the 12 months immediately preceding such date, registered under Section
12 of the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a Right in
substantially the form attached hereto as Exhibit B.
"Rights" shall mean the rights to purchase Preferred Shares (or
other securities) as provided in this Rights Agreement.
"Rights Agent" shall have the meaning set forth in the heading of
this Rights Agreement.
"Rights Agreement" shall have the meaning set forth in the heading
of this Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, (or any comparable or successor law or act) as in effect on the date in
question, unless otherwise specifically provided.
"Subsidiary" shall mean a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person.
"Summary of Rights" shall have the meaning set forth in Section
3(c).
"Surviving Person" shall mean (a) the Person which is the
continuing or surviving Person in a consolidation or merger specified in Section
11(c)(i)(A) or
9
11(c)(i)(B) or (b) the Person to which the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in a transaction specified in Section 11(c)(i)(C); provided,
however, that, if the Major Part of the assets of the Company and its
Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of
in one or more related transactions specified in Section 11(c)(i)(C) to more
than one Person, the "Surviving Person" in such case shall mean the Person that
acquired assets of the Company and/or its Subsidiaries with the greatest fair
market value in such transaction or transactions.
"Trading Day" shall mean a day on which the principal national
securities exchange or quotation system (or principal recognized foreign stock
exchange, as the case may be) on which the security in question or the Rights,
as the case may be, are listed or quoted is open for the transaction of business
or, if the securities in question or the Rights, as the case may be, are not
listed or quoted on any national securities exchange or quotation system (or
recognized foreign stock exchange, as the case may be), a Business Day.
"▇▇▇▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ and their Affiliates, Associates and heirs and any trust or
foundation to which they have transferred or may transfer Common Shares.
SECTION 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3, shall prior to the Distribution Date
also be the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint one or more co-Rights Agents as it may
deem necessary or desirable (the term "Rights Agent" being used herein to refer,
collectively, to the Rights Agent together with any such co-Rights Agents). The
Company shall notify the Rights Agent in writing within ten (10) days of any
such appointment. In the event the Company appoints one or more co-Rights
Agents, the respective duties of the Rights Agent and any co-Rights Agents shall
be as the Company shall determine. Notwithstanding the foregoing, the Rights
Agent shall have no duty to supervise, and in no event shall be liable for, the
acts or omissions of any such co-Rights Agent.
SECTION 3. Issue of Rights and Right Certificates. (a) One Right
shall be associated with each Common Share outstanding on the Record Date, each
additional Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date, the Exchange
Date, to the extent applicable, or the Expiration Date and each additional
Common Share with respect to which Rights are issued after the Distribution Date
but prior to the earliest of the Redemption Date, the Exchange Date, to the
extent applicable, or the Expiration Date as provided in Section 23; provided,
however, that, if the number of outstanding Rights are combined into a smaller
or larger number of outstanding Rights pursuant to the terms hereof, the
appropriate number of Rights (or fraction thereof) determined pursuant to such
Section shall thereafter be associated with each such Common Share.
10
(b) Until the earlier of (i) such date as the Company learns that
a Person has become an Acquiring Person and (ii) such date, if any, as may be
designated by the Board of Directors following the commencement of, or the first
public disclosure of an intent to commence, a tender or exchange offer by any
Person (other than an Exempt Person) for outstanding Common Shares, if upon
consummation of such tender or exchange offer such Person could be the
Beneficial Owner of more than 10% of the outstanding Common Shares (the Close of
Business on the earlier of such dates being the "Distribution Date"), (x) the
Rights shall, except as otherwise provided in Section 3(c), be evidenced by the
certificates for Common Shares registered in the names of the holders thereof
and not by separate Right Certificates, and (y) the Rights, including, without
limitation, the right to receive Right Certificates, will be transferable only
in connection with the transfer of Common Shares. The Company shall notify the
Rights Agent in writing as promptly as practicable that the Distribution Date
has occurred and, if the Rights Agent is not then also the transfer agent and
registrar for the Common Shares, provide the Rights Agent with the names and
addresses (as shown on the registry books of the transfer agent for the Common
Shares) of all record holders of Common Shares as of the Distribution Date. As
soon as practicable after the Distribution Date, the Rights Agent shall send, by
first-class mail, postage prepaid, to each record holder of Common Shares as of
the Distribution Date, at the address of such holder shown on the registry books
for the transfer agent for the Common Shares, a Right Certificate evidencing one
whole Right for each Common Share (or for the number of Common Shares with which
one whole Right is then associated if the number of Rights per Common Share held
by such record holder has been adjusted in accordance with the proviso in
Section 3(a)). If the number of Rights associated with each Common Share has
been adjusted in accordance with the proviso in Section 3(a), at the time of
distribution of the Right Certificates the Company may make any necessary and
appropriate rounding adjustments so that Right Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Right in accordance with Section 15(a). The Company shall notify the
Rights Agent in writing as promptly as practicable of any such adjustments. As
of and after the Distribution Date, the Rights shall be evidenced solely by such
Right Certificates.
(c) As soon as practicable, and in any event no later than 30 days
after the Record Date, the Company shall send a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form attached hereto as Exhibit
C (the "Summary of Rights"), by first-class mail, postage prepaid, 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 registry books of the transfer agent.
With respect to any certificate for Common Shares outstanding as of the Record
Date, until the earliest of the Distribution Date, the Redemption Date, the
Exchange Date, to the extent applicable, or the Expiration Date, (i) the Rights
associated with the Common Shares represented by any such certificate shall be
evidenced by such certificates for the Common Shares with a copy of the Summary
of Rights attached thereto and the registered holders of the Common Shares shall
also be the registered holders of the associated Rights and (ii) the surrender
for transfer of any such certificate, even without a copy of the Summary of
Rights attached thereto, shall also
11
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(d) Certificates issued for Common Shares after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Shares), but prior to the earliest of the Distribution Date, the Redemption
Date, the Exchange Date, to the extent applicable, or the Expiration Date, shall
have printed on, written on or otherwise affixed to them the following legend or
such similar legend as the Company may deem appropriate and as is not
inconsistent with the provisions of this Rights Agreement:
This certificate also evidences and entitles the holder hereof to
certain Rights (the "Rights") as set forth in a Rights Agreement dated as
of /--/, 2003 (as it may be amended from time to time, the "Rights
Agreement"), between BioVeris Corporation (the "Corporation") and
EquiServe Trust Company, N.A., as rights agent (the "Rights Agent"), the
terms of which (including, without limitation, restrictions on the
transfer of such Rights) are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of the
Corporation. Under certain circumstances, as set forth in the Rights
Agreement, such Rights shall be evidenced by separate certificates and
shall no longer be evidenced by this certificate. The Corporation shall
mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES AND
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF ARE NULL AND VOID AND ARE NO LONGER
TRANSFERABLE.
Notwithstanding this Section 3(d), neither the omission of a legend nor the
inclusion of a legend that makes reference to a rights agreement other than this
Rights Agreement shall affect the enforceability of any part of this Rights
Agreement or the rights of any holder of Rights. In the event that the Company
purchases or otherwise 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 which are no longer
outstanding; provided, however, that any such Common Shares reissued shall again
have rights associated therewith as contemplated by Section 3(a).
SECTION 4. Form of Right Certificates. The Right Certificates (and
the form of election to purchase and form of assignment to be printed on the
reverse side thereof) shall be in substantially the form attached hereto as
Exhibit B and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or
12
to conform to usage. Subject to the provisions of Sections 7, 11 and 23, the
Right Certificates, whenever issued, shall be dated as of the Distribution Date,
and on their face shall entitle the holders thereof to purchase such number of
Preferred Shares as shall be set forth therein for the Purchase Price set forth
therein, subject to adjustment from time to time as herein provided.
SECTION 5. Execution, Countersignature and Registration. (a) The
Right Certificates shall be executed on behalf of the Company by the Chairman of
the Board of Directors, any Vice Chairman of the Board of Directors, the Chief
Executive Officer, the President, the Chief Operating Officer, the Treasurer or
any Vice President (whether preceded by any additional title) of the Company,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof, which shall be attested by the Secretary,
an Assistant Secretary or a Vice President (whether preceded by any additional
title, provided that such Vice President shall not have also executed the Right
Certificates) 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 or obligatory for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such an officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates may
nevertheless 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 an 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 execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
execution of this Rights Agreement any such person was not such an officer of
the Company.
(b) Following the Distribution Date and receipt by the Rights
Agent of written notice to that effect, the Rights Agent shall 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 by each of the Right Certificates, the certificate
number of 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;
Uncertificated Rights. (a) Subject to Sections 7(e) and 15, at any time after
the Distribution Date, and at or prior to the Close of Business on the earliest
of the Redemption Date, the Exchange Date, to the extent applicable, or the
Expiration Date, any Right Certificate or Right Certificates (other than those
that have become null and void) may be transferred, split-up, combined or
exchanged for another Right Certificate or Right Certificates representing, in
the aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate shall make such
request in
13
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; provided, however, that
neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have (i) properly completed and
signed the certificate contained in the form of assignment set forth on the
reverse side of such Right Certificate and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections 7(e)
and 15, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split-up,
combination or exchange of Right Certificates.
(b) Subject to Sections 7(e) and 15, at any time after the
Distribution Date, and at or prior to the Close of Business on the earliest of
the Redemption Date, the Exchange Date, to the extent applicable, or the
Expiration Date, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company shall make a new
Right Certificate of like tenor and deliver such new Right Certificate to the
Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision 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 Right Certificates.
SECTION 7. Exercise of Rights; Expiration Date of Rights. (a)
Subject to Section 7(e) and except as otherwise provided herein (including,
without limitation, Section 11), each Right shall entitle the registered holder
thereof, upon exercise thereof as provided herein, to purchase for the Purchase
Price, at any time after the Distribution Date and at or prior to the earliest
of (i) the Close of Business on the 10th anniversary of the date of this Rights
Agreement (the Close of Business on such date being the "Expiration Date"), (ii)
the Redemption Date or (iii) the time at which such Right is exchanged as
provided in Section 11(b) hereof (the Close of Business on such date as to such
Right being the "Exchange Date"), one one-thousandth (1/1,000th) of a Preferred
Share, subject to adjustment from time to time as provided in Sections 11 and
12.
(b) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of
14
election to purchase set forth 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-thousandth
(1/1,000th) of a Preferred Share as to which the Rights are exercised, at or
prior to the earliest of (i) the Expiration Date, (ii) the Exchange Date, to the
extent applicable, and (iii) the Redemption Date.
(c) Except as otherwise provided herein, 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
Preferred Shares to be purchased together with an amount equal to any applicable
transfer tax or similar governmental charge, in lawful money of the United
States of America, in cash or by certified check or money order payable to the
order of the Company, the Rights Agent shall thereupon (i) either (A) promptly
requisition from any transfer agent of the Preferred Shares (or make available,
if the Rights Agent is the transfer agent) 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 shall
have elected to deposit the Preferred Shares with a depositary agent under a
depositary arrangement, promptly requisition from the depositary agent
depositary receipts representing the number of one one-thousandths (1/1,000ths)
of a Preferred Share to be purchased (in which case certificates for the
Preferred Shares to be represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company shall direct the
depositary agent to comply with all such requests, (ii) when necessary to comply
with this Rights Agreement, promptly requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 15, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when necessary to comply with this Rights
Agreement, after receipt promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered
holder of any Right Certificate shall exercise fewer than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights Agent and delivered
to the registered holder of such Right Certificate or to such holder's duly
authorized assigns, subject to the provisions of Section 15.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, any Rights that are at any time beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Affiliate or Associate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Affiliate or Associate) who becomes a
transferee prior to or concurrently with the Acquiring Person 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
15
agreement, arrangement or understanding (written or oral) regarding the
transferred Rights or (B) a transfer which the Board of Directors has determined
is part of a plan, agreement, arrangement or understanding (written or oral)
which has as a primary purpose or effect the avoidance of this Section 7(e), and
subsequent transferees of such Persons, in each case shall be 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
Rights Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) are complied with, but neither
the Company nor the Rights Agent shall have any liability to any holder of any
Right Certificate or any other Person as a result of the Company's failure to
make any determinations with respect to an Acquiring Person or its Affiliate or
Associate, or any transferee thereof, hereunder. From and after the time a
Person becomes an Acquiring Person, no Right Certificate shall be issued
pursuant to Section 3 or Section 6 hereof that represents Rights that are or
have become null and void pursuant to the provisions hereof, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or
have become null and void pursuant to the provisions of this paragraph shall be
canceled.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to a registered holder of any Right
Certificates upon the occurrence of any purported exercise as set forth in this
Section 7 until such registered holder shall have (i) properly completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Right Certificate surrendered for such exercise and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
or the Rights Agent shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not
to exceed 90 calendar days after the Distribution Date, the exercisability of
the Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall
promptly notify the Rights Agent in writing of such suspension and shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect (with prompt written notice to the
Rights Agent that such suspension is no longer in effect). Notwithstanding any
provision herein to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification under the blue sky or securities
laws of such jurisdiction shall not have been obtained or the exercise of the
Rights shall not be permitted under applicable law.
SECTION 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered or presented for the purpose of exercise,
transfer, split-up,
16
combination or exchange shall, and any Right Certificate representing Rights
that have become null and void and nontransferable pursuant to Section 7(e)
surrendered or presented for any purpose shall, if surrendered or presented to
the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered or presented to the Rights
Agent, shall be canceled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by this Rights Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any Right Certificate purchased or
acquired by the Company. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of Preferred Shares. (a)
The Company shall cause to be reserved and kept available out of its authorized
and unissued Preferred Shares or any authorized and issued Preferred Shares held
in its treasury, free from preemptive rights or any right of first refusal, a
number of Preferred Shares sufficient to permit the exercise in full of all
outstanding Rights.
(b) If there are not sufficient Preferred Shares issued but not
outstanding or authorized but unissued to permit the exercise or exchange of
Rights in accordance with Section 11, the Company shall take all such action as
may be necessary to authorize additional Preferred Shares for issuance upon the
exercise or exchange of Rights pursuant to Section 11; provided, however, that
if the Company is unable to cause the authorization of additional Preferred
Shares, then the Company shall, or (if action by the Company's stockholders is
necessary to cause such authorization) in lieu of seeking any such
authorization, the Company may, to the extent necessary and permitted by
applicable law and any agreements or instruments in effect prior to the
Distribution Date to which it is a party, (i) upon surrender of a Right, pay
cash equal to the Purchase Price in lieu of issuing Preferred Shares and
requiring payment therefor, (ii) upon due exercise of a Right and payment of the
Purchase Price for each Preferred Share as to which such Right is exercised,
issue common stock or other equity securities having a value equal to the value
of the Preferred Shares that otherwise would have been issuable pursuant to
Section 11, which value shall be determined by a nationally recognized
investment banking firm selected by the Board of Directors, or (iii) upon due
exercise of a Right and payment of the Purchase Price for each Preferred Share
as to which such Right is exercised, distribute a combination of Preferred
Shares, cash and/or other equity and/or debt securities having an aggregate
value equal to the value of the Preferred Shares that otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors. To the
extent that any legal or contractual restrictions (pursuant to agreements or
instruments in effect prior to the Distribution Date to which it is party)
prevent the Company from paying the full amount payable in accordance with the
foregoing sentence, the Company shall pay to holders of the Rights as to which
such payments are being made all amounts that are not then restricted on a pro
rata basis as such payments
17
become permissible under such legal or contractual restrictions until such
payments have been paid in full.
(c) The Company shall take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise or exchange 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.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights may be listed or quoted on any national securities exchange
or other quotation system, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable or exchangeable, all
Preferred Shares reserved for such issuance to be listed or quoted on such
securities exchange or other quotation system upon official notice of issuance
upon such exercise or exchange.
(e) The Company shall pay when due and payable any and all Federal
and state transfer taxes and similar charges which may be payable in respect of
the issuance or delivery of Right Certificates or of any Preferred Shares or
Common Shares or other securities upon the exercise or exchange of the Rights.
The Company shall not, however, be required to pay any transfer tax or similar
charge which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or in respect of the issuance or delivery
of certificates for the Preferred Shares or Common Shares or other securities,
as the case may be, in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or exchange or to
issue or deliver any certificates for Preferred Shares or Common Shares or other
securities, as the case may be, upon the exercise or exchange of any Rights
until any such tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax or
charge is due.
SECTION 10. Preferred Shares Record Date. Each Person in whose
name any certificate for Preferred Shares or Common Shares or other securities
is issued upon the exercise or exchange of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares or Common
Shares or other securities, as the case may be, represented thereby on, and such
certificate shall be dated, the date on which the Right Certificate evidencing
such Rights was duly surrendered and payment of any Purchase Price (and any
applicable transfer taxes and similar charges) was made; provided, however,
that, if the date of such surrender and payment is a date upon which the
transfer books of the Company for the Preferred Shares or Common Shares or other
securities, as the case may be, are closed, such Person shall be deemed to have
become the record holder of such Preferred Shares or Common Shares or other
securities, as the case may be, on, and such certificate shall be dated, the
next succeeding Business Day on which the transfer books of the Company for the
Preferred Shares or Common Shares or other securities, as the case may be, are
open.
18
SECTION 11. Adjustments in Rights After There is an Acquiring
Person; Exchange of Rights for Shares; Business Combinations. (a) Upon a Person
becoming an Acquiring Person, each holder of a Right, except as provided in
Section 7(e), shall thereafter have a right to receive, upon exercise thereof
for the Purchase Price in accordance with the terms of this Rights Agreement,
such number of one one-thousandths (1/1,000ths) of a Preferred Share as shall
equal the result obtained by multiplying the Purchase Price by a fraction, the
numerator of which is the number of one one-thousandths (1/1,000ths) of a
Preferred Share for which such Right is then exercisable and the denominator of
which is 50% of the Market Value of the Common Shares on the date on which such
Person became an Acquiring Person. As soon as practicable after a Person becomes
an Acquiring Person (provided the Company shall not have elected to make the
exchange permitted by Section 11(b)(i) for all outstanding Rights), the Company
shall use its best efforts to:
(i) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights;
(ii) cause such registration statement to become effective as soon
as practicable after such filing;
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date; and
(iv) qualify or register the Preferred Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b)(i) The Board of Directors may, at its option, at any time
after a Person becomes an Acquiring Person, mandatorily exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
shall have become null and void and nontransferable pursuant to Section 7(e))
for consideration per Right consisting of either (A) one-half of the securities
that would be issuable at such time upon the exercise of one Right in accordance
with Section 11(a) or, if applicable, Section 9(b)(ii) or 9(b)(iii) or (B) if
applicable, the cash consideration specified in Section 9(b)(i) (the
consideration issuable per Right pursuant to this Section 11(b)(i) being the
"Exchange Consideration"). The Board of Directors may, at its option, issue a
number of Common Shares in lieu of each Preferred Share equal to the Formula
Number (as defined in the Certificate of Designation) if there are sufficient
Common Shares issued but not outstanding or authorized but unissued. If the
Board of Directors, at any time after a Person becomes an Acquiring Person,
elects to exchange all the Rights for Exchange Consideration pursuant to this
Section 11(b)(i) prior to the physical distribution of the Right Certificates,
the Company may distribute the Exchange Consideration in lieu of distributing
Right Certificates, in which case for purposes of this Rights Agreement holders
of Rights shall be deemed to have simultaneously received and surrendered for
19
exchange Right Certificates on the date of such distribution. Notwithstanding
the foregoing, the Board of Directors may not effect such exchange at any time
after any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of more than 50% of the
Common Shares then outstanding. From and after the time a Person becomes an
Acquiring Person and, subsequent thereto, a Business Combination occurs, any
Rights that theretofore have not been exchanged pursuant to this Section 11(b)
shall thereafter be exercisable only in accordance with Section 11(c) and may
not be exchanged pursuant to this Section 11(b). The exchange of the Rights by
the Board of Directors may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.
(ii) Any action of the Board of Directors ordering the exchange of
any Rights pursuant to Section 11(b)(i) shall be irrevocable and, immediately
upon the effectiveness of such action and without any further action and without
any notice, the right to exercise any such Right so exchanged pursuant to
Section 11(a) shall terminate and the only right thereafter of a holder of such
Right shall be to receive the Exchange Consideration in exchange for each such
Right held by such holder or, if the Exchange Consideration shall not have been
paid or issued, to exercise any such Right pursuant to Section 11(c)(i). The
Company shall promptly notify the Rights Agent in writing of such exchange and
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all holders of the Rights to be exchanged at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange shall state the method by
which the exchange of the Rights for the Exchange Consideration 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 shall have become null and void and
nontransferable pursuant to the provisions of Section 7(e)) held by each holder
of Rights.
(c)(i) In the event that following the time a Person becomes an
Acquiring Person, directly or indirectly, any transactions specified in the
following clause (A), (B) or (C) of this Section 11(c)(i) (each such transaction
being a "Business Combination") shall be consummated:
(A) the Company shall consolidate with, or merge with and into,
any Person (other than ▇▇▇▇▇▇▇▇▇▇▇);
(B) any Person (other than ▇▇▇▇▇▇▇▇▇▇▇) shall merge with and into
the Company and, in connection with such merger, all or part of the
outstanding Common Shares shall be changed into or exchanged for capital
stock or other securities of the Company or of any other Person or cash
or any other property; or
20
(C) the Company shall sell, lease, exchange or otherwise transfer
or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange or otherwise transfer or dispose of), in one or more
transactions, the Major Part of the assets of the Company and its
Subsidiaries (taken as a whole) to any Person (other than ▇▇▇▇▇▇▇▇▇▇▇,
the Company or any Subsidiary of the Company),
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a) if the Company is the
surviving corporation in such Business Combination):
(1) if the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights
Agreement, such number of Registered Common Shares of such
Principal Party, free and clear of all liens, encumbrances or
other adverse claims, as shall have an aggregate Market Value as
of the time of exercise thereof equal to the result obtained by
multiplying the Purchase Price by two;
(2) if the Principal Party involved in such Business
Combination does not have Registered Common Shares outstanding,
each Right shall thereafter represent the right to receive, upon
the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, at the election of the holder of
such Right at the time of the exercise thereof, any of:
(x) such number of Common Shares of the Surviving
Person in such Business Combination as shall have an
aggregate Book Value immediately after giving effect to such
Business Combination equal to the result obtained by
multiplying the Purchase Price by two;
(y) such number of Common Shares of the Principal Party
in such Business Combination (if the Principal Party is not
also the Surviving Person in such Business Combination) as
shall have an aggregate Book Value immediately after giving
effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two; or
(z) if the Principal Party in such Business Combination
is an Affiliate of one or more Persons that has Registered
Common Shares outstanding, such number of Registered Common
Shares of whichever of such Affiliates of the Principal Party
has Registered
21
Common Shares with the greatest aggregate Market Value
on the date of consummation of such Business
Combination as shall have an aggregate Market Value on
the date of such Business Combination equal to the
result obtained by multiplying the Purchase Price by
two.
(ii) The Company shall not consummate any Business
Combination unless each issuer of Common Shares for which Rights may be
exercised, as set forth in this Section 11(c), shall have sufficient authorized
Common Shares that have not been issued or reserved for issuance (and which
shall, when issued upon exercise thereof in accordance with this Rights
Agreement, be validly issued, fully paid and nonassessable and free of
preemptive rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof) to permit the exercise in full
of the Rights in accordance with this Section 11(c) and unless prior thereto:
(A) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares
of such issuer purchasable upon exercise of the Rights, shall be
effective under the Securities Act; and
(B) the Company and each such issuer shall have:
(1) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such
issuer of the obligations set forth in this Section 11(c)
(including, without limitation, the obligation of such issuer
to issue Common Shares upon the exercise of Rights in
accordance with the terms set forth in Sections 11(c)(i) and
11(c)(iii)) and further providing that such issuer, at its
own expense, shall use its best efforts to:
(x) cause a registration statement under the
Securities Act on an appropriate form, with respect
to the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights, to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the
Expiration Date;
(y) qualify or register the Rights and the
Common Shares of such issuer purchasable upon
exercise of the Rights under the blue sky or
securities laws of such jurisdictions as may be
necessary or appropriate; and
(z) approve for listing or quotation the Rights
and the Common Shares of such issuer purchasable upon
exercise of the Rights on each national securities
exchange or other quotation system on which the
Common Shares were listed or quoted prior to the
consummation of the Business Combination or, if the
Common
22
Shares were not listed or quoted on a national
securities exchange or other quotation system prior
to the consummation of the Business Combination, on a
national securities exchange;
(2) furnished to the Rights Agent a written opinion
of independent counsel stating that such supplemental
agreement is a valid, binding and enforceable agreement of
such issuer; and
(3) filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants setting
forth the number of Common Shares of such issuer that may be
purchased upon the exercise of each Right after the
consummation of such Business Combination.
(iii) After consummation of any Business Combination and
subject to the provisions of Section 11(c)(ii), (A) each issuer of Common Shares
for which Rights may be exercised as set forth in this Section 11(c) shall be
liable for, and shall assume, by virtue of such Business Combination, all the
obligations and duties of the Company pursuant to this Rights Agreement, (B) the
term "Company" shall thereafter be deemed to refer to such issuer, (C) each such
issuer shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including, without limitation,
the provisions of Sections 11(a) and 11(c)) shall thereafter be applicable, as
nearly as reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights, and (D) the number of Common Shares
of each such issuer thereafter 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 of Sections 11 and 12 and the
provisions of Sections 7, 9 and 10 with respect to the Preferred Shares shall
apply, as nearly as reasonably may be, on like terms to any such Common Shares.
(iv) In case the issuer of Common Shares for which Rights may
be exercised, as set forth in this Section 11(c), has a provision in any of its
authorized securities or in its certificate of incorporation or by-laws or other
instrument governing its affairs, which provision would have the effect of (A)
causing such issuer to issue (other than to holders of Rights pursuant to this
Section 11(c)), in connection with, or as a consequence of, the consummation of
a transaction referred to in this Section 11(c), Common Shares of such issuer at
less than the then Market Value per share thereof or securities exercisable for,
or convertible into, Common Shares of such issuer at less than such then Market
Value, or (B) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Shares of such issuer pursuant to the
provisions of Section 11(c), then, in such event, the Company hereby agrees with
each holder of Rights that it shall not consummate any such transaction unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement providing that the provision in
question of such issuer shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
23
SECTION 12. Certain Adjustments. (a) To preserve the actual or
potential economic value of the Rights, if at any time after the date of this
Rights Agreement there shall be any change in the Common Shares or the Preferred
Shares, whether by reason of stock dividends, stock splits, reclassifications,
recapitalizations, mergers, consolidations, combinations or exchanges of
securities, split-ups, split-offs, spin-offs, liquidations, other similar
changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to holders
of Common Shares or Preferred Shares, as the case may be (other than
distribution of the Rights or regular quarterly cash dividends), or otherwise,
then, in each such event the Board of Directors shall make such appropriate
adjustments in the number of Preferred Shares (or the number and kind of other
securities) issuable upon exercise of each Right, the Purchase Price and
Redemption Price in effect at such time and the number of Rights outstanding at
such time (including, without limitation, the number of Rights or fractional
Rights associated with each Common Share) such that following such adjustment
such event shall not have had the effect of reducing or limiting the benefits
the holders of the Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section
12(a), the holder of any Right thereafter exercised shall become entitled to
receive any securities other than Preferred Shares, thereafter the number of
such securities 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 of Sections 11 and 12 and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(d) Irrespective of any adjustment or change in the Purchase Price
or the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms that were expressed in the
initial Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Shares and/or other securities, if any, issuable upon such
exercise over and above the Preferred Shares and/or other securities, if any,
issuable before giving effect 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 securities upon the
occurrence of the event requiring such adjustment.
24
SECTION 13. Certificate of Adjustment. Whenever an adjustment is
made as provided in Section 11 or 12, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) in accordance with Section 25,
provided that the failure to prepare, file or mail such certificate or summary
shall not affect the validity of such adjustment. The Rights Agent shall be
fully authorized and protected in relying on any such certificate and on any
adjustment or statement therein contained.
SECTION 14. Additional Covenants. (a) Notwithstanding any other
provision of this Rights Agreement, no adjustment to the number of Preferred
Shares (or fractions of a share) or other securities for which a Right is
exercisable or the number of Rights outstanding or associated with each Common
Share or any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 12, unless the terms of this
Rights Agreement are amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the Distribution
Date, except as permitted by Section 26, it shall not take (or permit any
Subsidiary of the Company to take) any action if at the time such action is
taken it is intended or reasonably foreseeable that such action will reduce or
otherwise limit the benefits the holders of the Rights would have had absent
such action, including, without limitation, the benefits under Sections 11 and
12. Any 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 14(b) from and after the
Distribution Date. Following the time a Person becomes an Acquiring Person, the
Company shall not consummate any Business Combination if (i) any issuer of
Common Shares for which Rights may be exercised after such Business Combination
in accordance with Section 11(c) shall have taken any action that reduces or
otherwise limits the benefits the holders of the Rights would have had absent
such action, including, without limitation, the benefits under Sections 11 and
12, (ii) at the time of or immediately after such consolidation, merger, sale,
transfer or other transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (iii) prior to, simultaneously with or immediately after
such consolidation, merger, sale, transfer or other transaction, the
stockholders of the Person who constitutes, or would constitute, the issuer for
purposes of Section 11(c) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates or (iv)
the form or nature of organization of the issuer would preclude or limit the
exercisability of the Rights.
SECTION 15. Fractional Rights and Fractional Shares. (a) The
Company may, but shall not be required to, issue fractions of Rights or
distribute Right
25
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company may pay 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 purposes of this Section 15(a), the current market value of a whole
Right shall be the closing price of the Rights (as determined pursuant to the
second sentence of the definition of Market Value contained in Section 1) for
the Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractions
of Preferred Shares upon exercise of the Rights or distribute certificates that
evidence fractional Preferred Shares. In lieu of fractional Preferred Shares,
the Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Preferred Shares or (ii) in the case of a fraction of a Preferred
Share (other than one one-thousandths (1/1,000ths) of a Preferred Share or any
integral multiple thereof), 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, if any
are outstanding and publicly traded (or the same fraction of the current market
value of one Common Share times the Formula Number if the Preferred Shares are
not outstanding and publicly traded). For purposes of this Section 15(b), the
current market value of a Preferred Share (or Common Share) shall be the closing
price of a Preferred Share (or Common Share) (as determined pursuant to the
second sentence of the definition of Market Value contained in Section 1) for
the Trading Day immediately prior to the date of such exercise. If, as a result
of an adjustment made pursuant to Section 12(a), the holder of any Right
thereafter exercised shall become entitled to receive any securities other than
Preferred Shares, the provisions of this Section 15(b) shall apply, as nearly as
reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractions
of Common Shares upon exercise or exchange of Rights, or to distribute
certificates that evidence fractional Common Shares. In lieu of such fractional
Common Shares, the Company may 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 Market Value of
one Common Share as of the date on which a Person became an Acquiring Person.
(d) Each holder of Rights by the acceptance of such Rights
expressly waives such holder's right to receive any fractional Rights or any
fractional shares upon exercise or exchange of a Right except as provided in
this Section 15.
SECTION 16. Rights of Action. (a) All rights of action in respect
of this Rights Agreement, except the rights of action given to the Rights Agent
pursuant to Sections 19 and 21 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
26
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 such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Rights Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Rights Agreement and shall be entitled to
specific performance of the obligations of any Person under, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including, without limitation, attorneys' fees, incurred in
such action.
(c) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Rights Agreement by reason of any preliminary
or permanent injunction or other order, decree, judgment or ruling (whether
interlocutory or final) issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Company must use its reasonable efforts to have any
such order, decree, judgment or ruling lifted or otherwise overturned as soon as
possible.
SECTION 17. Transfer and Ownership of Rights and Right
Certificates. (a) Prior to the Distribution Date, the Rights shall be
transferable only in connection with the transfer of the Common Shares and the
Right associated with each Common Share shall be automatically transferred upon
the transfer of each Common Share.
(b) After the Distribution Date, the Right Certificates shall be
transferable, subject to Section 7(e), 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.
(c) The Company and the Rights Agent may deem and treat the Person
in whose name a 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 certificate for
Common Shares made by anyone other than
27
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 18. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote or receive
dividends or other distributions or be deemed, for any purpose, the holder of
the Preferred Shares or of any other securities of the Company which may at any
time be issuable on the exercise 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, including, without limitation, 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, or to
receive dividends or other distributions 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 19. Concerning the Rights Agent. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration, execution and amendment of this Rights Agreement and the
exercise and performance of its duties hereunder, including, without limitation,
any taxes or governmental charges imposed as a result of the action taken by it
hereunder (other than any taxes on the fees payable to it). The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including, without limitation, the
costs and expenses of defending against any claim of liability arising
therefrom. The indemnity provided in this Section 19 shall survive the
termination of this Rights Agreement and the expiration of the Rights.
(b) The Rights Agent shall be authorized and protected and shall
incur no liability for or in respect of any action taken or suffered by it in
connection with the acceptance and administration of this Rights Agreement in
reliance upon any Right Certificate or certificate for the 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.
SECTION 20. Merger or Consolidation or Change of Rights Agent. (a)
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the shareholder services, stock
transfer or corporate
28
trust business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Rights Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such Person would be eligible for appointment as
a successor Rights Agent under the provisions of Section 22. In case, at the
time such successor Rights Agent shall succeed to the agency created by this
Rights Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; 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 Rights Agreement.
SECTION 21. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Rights Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates (or, prior to the Distribution Date, of the Common Shares), by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization to the Rights Agent as to any action taken, suffered
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, refraining from taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board of Directors, any Vice Chairman of the Board of Directors,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, a Vice President (whether preceded by any additional
title), the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full and complete authorization of
the Rights
29
Agent for any action taken or suffered in good faith by it under the provisions
of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be liable for nor be under any
responsibility in respect of the validity of this Rights Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be liable or responsible for
any breach by the Company of any covenant or condition contained in this Rights
Agreement or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11 or 12 or responsible for
the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after actual notice of
any such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Shares to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any Preferred Shares or Common Shares
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it shall perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board of Directors, any Vice Chairman of the Board of
Directors, the Chief Executive Officer, the President, the Chief Operating
Officer, a Vice President (whether preceded by any additional title), the
Secretary or the Treasurer of the Company, and to apply to such officers for
instructions, in connection with its duties and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer,
employee or Affiliate 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
30
Company or its Subsidiaries may be interested, or contract with or lend money to
the Company or its Subsidiaries or otherwise act as fully and freely as though
it were not the Rights Agent under this Rights Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent
harmless against any loss, liability, damage, judgment, fine, penalty, claim,
demand, settlement, cost or expense (including, without limitation, reasonable
fees and expenses of legal counsel) which the Rights Agent may incur resulting
from its actions as Rights Agent pursuant to this Rights Agreement; provided,
however, that the Rights Agent shall not be indemnified or held harmless with
respect to any such loss, liability, damage, judgment, fine, penalty, claim,
demand, settlement, cost or expense incurred by the Rights Agent as a result of,
or arising out of, its own gross negligence, bad faith or willful misconduct. In
no case shall the Company be liable with respect to any action, proceeding, suit
or claim against the Rights Agent unless the Rights Agent shall have notified
the Company, by letter or by facsimile confirmed by letter, of the assertion of
any action, proceeding, suit or claim against the Rights Agent, promptly after
the Rights Agent shall have notice of any such assertion of an action,
proceeding, suit or claim or have been served with the summons or other first
legal process giving information as to the nature and basis of the action,
proceeding, suit or claim. The Company shall be entitled to participate at its
own expense in the defense of any such action, proceeding, suit or claim, and,
if the Company so elects, the Company shall assume the defense of any such
action, proceeding, suit or claim. In the event that the Company assumes such
defense, the Company shall not thereafter be liable for the fees and expenses of
any additional counsel retained by the Rights Agent, so long as the Company
shall retain counsel satisfactory to the Rights Agent, in the exercise of its
reasonable judgment, to defend such action, proceeding, suit or claim. The
Rights Agent agrees not to settle any litigation in connection with any action,
proceeding, suit or claim with respect to which it may seek indemnification from
the Company without the prior written consent of the Company. The provisions of
this Section 21 shall survive the termination of this Rights Agreement, the
exercise or expiration of the Rights, and the resignation or removal of the
Rights Agent.
SECTION 22. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and the Preferred Shares by registered
or certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. In the event the transfer agency
relationship in effect between the Company and the
31
Rights Agent terminates, the Rights Agent will be deemed to resign on the
earlier of (a) 30 days from the effective date of such termination or (b) the
appointment of a successor Rights Agent. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares and the Preferred Shares by registered or certified
mail and, following the Distribution Date, 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 such holder's Right Certificate), 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 a Person
organized and doing business under the laws of the United States or of the State
of New York (or of any other state of the United States so long as such Person
is authorized to conduct a shareholder services, stock transfer or corporate
trust business in the State of New York), in good standing, having a principal
office in the State of New York, which is authorized under such laws to exercise
stock transfer or corporate trust powers and is subject to supervision or
examination by Federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000; provided, however, that the principal transfer agent for the Common
Shares shall in any event be qualified to be the Rights Agent. 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 as soon as practicable the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Shares and the 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 22, 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 23. Issuance of Additional Rights and Right Certificates.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earliest of the
Redemption Date, the Exchange Date, to the extent applicable, and the 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
32
plan or arrangement, or upon the exercise, conversion or exchange of securities,
notes or debentures issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be required to be (but in the sole discretion of the Board of Directors,
may be) issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Right Certificate
would be issued, (ii) no such Right Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof and (iii) no such Right Certificate shall be issued to an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
SECTION 24. Redemption and Termination. (a) The Board of Directors
may, at its option, at any time prior to the earlier of (i) such time as a
Person becomes an Acquiring Person and (ii) the Expiration Date, order the
redemption of all, but not fewer than all, the then outstanding Rights at the
Redemption Price (the date of such redemption being the "Redemption Date"), and
the Company, at its option, may pay the Redemption Price either in cash or
Common Shares or other securities of the Company deemed by the Board of
Directors, in the exercise of its sole discretion, to be at least equivalent in
value to the Redemption Price. The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights (or at such later time as the Board of Directors
may establish for the effectiveness of such redemption), and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 Business Days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give written
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Each such notice of redemption shall state the method by which
payment of the Redemption Price will be made. The notice, if mailed in the
manner herein provided, shall be conclusively presumed to have been duly given,
whether or not the holder of Rights receives such notice. In any case, failure
to give such notice by mail, or any defect in the notice, to any particular
holder of Rights shall not affect the sufficiency of the notice to other holders
of Rights. 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
except as specifically set forth in this Section or in Section 11(b) or in
connection with the purchase of Common Shares prior to the Distribution Date.
SECTION 25. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of a Right
33
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
BioVeris Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Rights Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
EquiServe Trust Company, N.A.
Blue Hills Office Park
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Client Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Common Shares) 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 Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares.
SECTION 26. Supplements and Amendments. At any time prior to the
time any Person becomes an Acquiring Person, and subject to the last sentence of
this Section 26, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of this Rights Agreement in any
manner which the Company may deem necessary or desirable (including, without
limitation, the date on which the Expiration Date or the Distribution Date shall
occur, the amount of the Purchase Price, the definition of "Acquiring Person" or
the time during which the Rights may be redeemed pursuant to Section 24) without
the approval of any holder of the Rights. From and after the time any Person
becomes an Acquiring Person, and subject to applicable law, the Company may, and
the Rights Agent shall if the Company so directs, amend this Rights Agreement
without the approval of any holders of Right Certificates (a) to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision of this Rights Agreement
or (b) to otherwise change or supplement any other provisions in this Rights
Agreement in any matter which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person). Any supplement or amendment adopted during any period after
any Person has become an
34
Acquiring Person but prior to the Distribution Date shall be null and void
unless such supplement or amendment could have been adopted under the prior
sentence from and after the Distribution Date. Any supplement or amendment to
this Rights Agreement duly approved by the Company that does not amend Section
19, 20, 21 or 22 in a manner adverse to the Rights Agent shall immediately
become effective after execution by the Company, whether or not also executed by
the Rights Agent; provided, that to the extent any such supplement or amendment
amends Section 19, 20, 21 or 22 in a manner adverse to the Rights Agent, such
supplement or amendment, unless also executed by the Rights Agent, shall be
invalid and unenforceable only to the extent it amends Section 19, 20, 21 or 22
in a manner adverse to the Rights Agent and shall otherwise immediately become
effective after execution by the Company. In addition, notwithstanding anything
to the contrary contained in this Rights Agreement, no supplement or amendment
to this Rights Agreement shall be made which reduces the Redemption Price
(except as required by Section 12(a)).
SECTION 27. Successors. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 28. Benefits of Rights Agreement; Determinations and
Actions by the Board of Directors, etc. (a) Nothing in this Rights Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, of the Common Shares) any legal or equitable right, remedy or
claim under this Rights Agreement; but this Rights 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, of the
Common Shares).
(b) Except as explicitly otherwise provided in this Rights
Agreement, the Board of Directors shall have the exclusive power and authority
to administer this Rights Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may be
necessary or advisable in the administration of this Rights Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Rights Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Rights Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or to amend this Rights Agreement and a determination of whether there is
an Acquiring Person). All such actions, calculations, interpretations and
determinations that are done or made by the Board of Directors in good faith
shall be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties. The Rights Agent shall
always be entitled to assume that the Company's Board of Directors acted in good
faith and shall be fully protected and incur no liability in reliance thereon.
(c) Nothing contained in this Rights Agreement shall be deemed to
be in derogation of the obligation of the Board of Directors to exercise its
fiduciary duty. Without limiting the foregoing, nothing contained herein shall
be construed to suggest or
35
imply that the Board of Directors shall not be entitled to reject any tender
offer or other acquisition proposal, or to recommend that holders of Common
Shares reject any tender offer, or to take any other action (including, without
limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer or other acquisition proposal that
the Board of Directors believes is necessary or appropriate in the exercise of
such fiduciary duty.
SECTION 29. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 30. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the law
of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the law of such State applicable to contracts to be made and
performed entirely within such State.
SECTION 31. Counterparts; Effectiveness. This Rights Agreement may
be executed in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument. This Rights Agreement shall
be effective as of the Close of Business on the date hereof.
SECTION 32. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
of this Rights Agreement.
36
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
BIOVERIS CORPORATION,
by
----------------------------
Name:
Title:
EQUISERVE TRUST COMPANY, N.A.,
by
----------------------------
Name:
Title:
EXHIBIT A
CERTIFICATE OF THE VOTING POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS OF SERIES A
PARTICIPATING CUMULATIVE
PREFERRED STOCK OF
BIOVERIS CORPORATION
Pursuant to Section 151 of the General Corporation Law of the
State of Delaware, BioVeris Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Company"), in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of
Directors of the Company by Section 4.02 of the certificate of incorporation of
the Company (the "Certificate of Incorporation"), the Board of Directors of the
Company (the "Board of Directors") on /--/, 2003, adopted the following
resolution designating a new series of preferred stock as Series A Participating
Cumulative Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board
of Directors in accordance with the provisions of the Certificate of
Incorporation and the provisions of Section 151(g) of the General
Corporation Law of the State of Delaware, a series of preferred stock
of the Company is hereby authorized, and the designation and number of
shares thereof, and the voting powers, preferences and relative,
participating, optional and other special rights, and the
qualifications, limitations or restrictions thereof, shall be as
follows:
SECTION 1. Designation and Number of Shares. The shares of such
series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"). The number of shares initially
constituting the Series A Preferred Stock shall be 600,000; provided, however,
that, if more than a total of 600,000 shares of Series A Preferred Stock shall
be issuable upon the exercise of Rights (the "Rights") issued pursuant to the
Rights Agreement dated as of /--/, 2003, as it may be amended from time to time
(the "Rights Agreement"), between the Company and EquiServe Trust Company, N.A.,
as rights agent, the Board of Directors, pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware, shall direct by resolution or
resolutions that a certificate be properly executed, acknowledged, filed and
recorded, in accordance with the provisions of Section 103 thereof, providing
for the total number of shares of Series A Preferred Stock authorized to be
issued to be increased (to the extent that the Certificate of Incorporation then
permits) to the largest number of whole shares (rounded up to the nearest whole
number) issuable upon exercise of such Rights.
2
SECTION 2. Dividends or Distributions. (a) Subject to the superior
rights of the holders of shares of any other series of Preferred Stock or other
class of capital stock of the Company ranking superior to the shares of Series A
Preferred Stock with respect to dividends, the holders of shares of the Series A
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of the assets of the Company legally available therefor,
(1) quarterly dividends payable in cash on the last day of each fiscal quarter
in each year, or such other dates as the Board of Directors shall approve (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or a fraction of a share of Series A Preferred Stock, in the amount
of $0.05 per whole share (rounded to the nearest cent) less the amount of all
cash dividends declared on the Series A Preferred Stock pursuant to the
following clause (2) since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock
(the total of which shall not, in any event, be less than zero) and (2)
dividends payable in cash on the payment date for each cash dividend declared on
the Common Stock in an amount per whole share (rounded to the nearest cent)
equal to the Formula Number (as hereinafter defined) then in effect times the
cash dividends then to be paid on each share of Common Stock. In addition, if
the Company shall pay any dividend or make any distribution on the Common Stock
payable in assets, securities or other forms of noncash consideration (other
than dividends or distributions solely in shares of Common Stock), then, in each
such case, the Company shall simultaneously pay or make on each outstanding
whole share of Series A Preferred Stock a dividend or distribution in like kind
equal to the Formula Number then in effect times such dividend or distribution
on each share of the Common Stock. As used herein, the "Formula Number" shall be
1,000; provided, however, that, if at any time after the date of the Rights
Agreement, the Company shall (i) declare or pay any dividend on the Common Stock
payable in shares of Common Stock or make any distribution on the Common Stock
in shares of Common Stock, (ii) subdivide (by a stock split or otherwise) the
outstanding shares of Common Stock into a larger number of shares of Common
Stock or (iii) combine (by a reverse stock split or otherwise) the outstanding
shares of Common Stock into a smaller number of shares of Common Stock, then in
each such event the Formula Number shall be adjusted to a number determined by
multiplying the Formula Number in effect immediately prior to such event by a
fraction, the numerator of which is the number of shares of Common Stock that
are outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that are outstanding immediately prior to such
event (and rounding the result to the nearest whole number); and provided
further that, if at any time after date of the Rights Agreement, the Company
shall issue any shares of its capital stock in a merger, reclassification, or
otherwise change the outstanding shares of Common Stock, then in each such event
the Formula Number shall be appropriately adjusted to reflect such merger,
reclassification or change so that each share of Preferred Stock continues to be
the economic equivalent of a Formula Number of shares of Common Stock prior to
such merger, reclassification or change.
3
(b) The Company shall declare a dividend or distribution on the
Series A Preferred Stock as provided in Section 2(a) immediately prior to or at
the same time it declares a dividend or distribution on the Common Stock (other
than a dividend or distribution solely in shares of Common Stock); provided,
however, that, in the event no dividend or distribution (other than a dividend
or distribution in shares of Common Stock) shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $0.05 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a dividend or distribution declared thereon, which
record date shall be the same as the record date for any corresponding dividend
or distribution on the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from and after the Quarterly
Dividend Payment Date next preceding the date of original issue of such shares
of Series A Preferred Stock; provided, however, that dividends on such shares
which are originally issued after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on or prior to the next succeeding Quarterly Dividend Payment Date
shall begin to accrue and be cumulative from and after such Quarterly Dividend
Payment Date. Notwithstanding the foregoing, dividends on shares of Series A
Preferred Stock which are originally issued prior to the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend on the first Quarterly Dividend Payment Date shall
be calculated as if cumulative from and after the last day of the fiscal quarter
next preceding the date of original issuance of such shares. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares then outstanding.
(d) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.
(e) The holders of the shares of Series A Preferred Stock shall
not be entitled to receive any dividends or other distributions except as
provided herein.
SECTION 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share of
Series A Preferred Stock held of record on each matter on which holders of the
Common Stock or stockholders generally are entitled to vote, multiplied by the
maximum number of votes
4
per share which any holder of the Common Stock or stockholders generally then
have with respect to such matter (assuming any holding period or other
requirement to vote a greater number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class for the election of directors of
the Company and on all other matters submitted to a vote of stockholders of the
Company.
(c) If, at the time of any annual meeting of stockholders for the
election of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series A Preferred Stock are in
default, the number of directors constituting the Board of Directors shall be
increased by two. In addition to voting together with the holders of Common
Stock for the election of other directors of the Company, the holders of record
of the Series A Preferred Stock, voting separately as a class to the exclusion
of the holders of Common Stock, shall be entitled at said meeting of
stockholders (and at each subsequent annual meeting of stockholders), unless all
dividends in arrears have been paid or declared and set apart for payment prior
thereto, to vote for the election of two directors of the Company, the holders
of any Series A Preferred Stock being entitled to cast a number of votes per
share of Series A Preferred Stock equal to the Formula Number. Each such
additional director shall not be classified, but shall serve until the next
annual meeting of stockholders for the election of directors, or until his
successor shall be elected and shall qualify, or until his right to hold such
office terminates pursuant to the provisions of this Section 3(c). Until the
default in payments of all dividends which permitted the election of said
directors shall cease to exist, any director who shall have been so elected
pursuant to the next preceding sentence may be removed at any time, without
cause, only by the affirmative vote of the holders of the shares of Series A
Preferred Stock at the time entitled to cast a majority of the votes entitled to
be cast for the election of any such director at a special meeting of such
holders called for that purpose, and any vacancy thereby created may be filled
by the vote of such holders. If and when such default shall cease to exist, the
holders of the Series A Preferred Stock shall be divested of the foregoing
special voting rights, subject to revesting in the event of each and every
subsequent like default in payments of dividends. Upon the termination of the
foregoing special voting rights, the terms of office of all persons who may have
been elected directors pursuant to said special voting rights shall forthwith
terminate, and the number of directors constituting the Board of Directors shall
be reduced by two. The voting rights granted by this Section 3(c) shall be in
addition to any other voting rights granted to the holders of the Series A
Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by applicable law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for authorizing or taking
any corporate action.
5
SECTION 4. Certain Restrictions. (a) Whenever quarterly dividends
or other dividends or distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full, the Company shall
not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock; provided, however, that the Company may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Company ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under Section 4(a), purchase or otherwise
acquire such shares at such time and in such manner.
SECTION 5. Liquidation Rights. Upon the liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not
6
declared, to the date of such payment, plus an amount equal to the greater of
(x) $1,000 per whole share or (y) an aggregate amount per share equal to the
Formula Number then in effect times the aggregate amount to be distributed per
share to holders of Common Stock or (2) to the holders of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all other such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. Neither the merger or consolidation of
the Company into or with another entity nor the merger or consolidation of any
other entity into or with the Company shall be deemed to be a liquidation,
dissolution or winding up of the Company within the meaning of this Section 5.
SECTION 6. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the then
outstanding shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share equal to the Formula
Number then in effect times the aggregate amount of stock, securities, cash or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is exchanged or changed. In the event both this
Section 6 and Section 2 appear to apply to a transaction, this Section 6 will
control.
SECTION 7. No Redemption; No Sinking Fund. (a) The shares of
Series A Preferred Stock shall not be subject to redemption by the Company or at
the option of any holder of Series A Preferred Stock; provided, however, that,
subject to Section 4(a)(iv), the Company may purchase or otherwise acquire
outstanding shares of Series A Preferred Stock in the open market or by offer to
any holder or holders of shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be subject to
or entitled to the operation of a retirement or sinking fund.
SECTION 8. Ranking. The Series A Preferred Stock shall rank junior
to all other series of Preferred Stock of the Company as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, unless the Board of Directors shall specifically determine otherwise
in fixing the powers, preferences and relative, participating, optional and
other special rights of the shares of such series and the qualifications,
limitations and restrictions thereof.
SECTION 9. Fractional Shares. The Series A Preferred Stock shall
be issuable upon exercise of the Rights issued pursuant to the Rights Agreement
in whole shares or in any fraction of a share that is one one-thousandth of a
share or any integral multiple of such fraction which shall entitle the holder,
in proportion to such holder's fractional shares, to receive dividends, exercise
voting rights, participate in distributions and to have the benefit of all other
rights of holders of Series A Preferred Stock. In lieu of fractional shares, the
Company, prior to the first issuance of a share or a fraction of a
7
share of Series A Preferred Stock, may elect (a) to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one
one-thousandths of a share or any integral multiple thereof or (b) to issue
depository receipts evidencing such authorized fraction of a share of Series A
Preferred Stock pursuant to an appropriate agreement between the Company and a
depository selected by the Company; provided, however, that such agreement shall
provide that the holders of such depository receipts shall have all the rights,
privileges and preferences to which they are entitled as holders of the Series A
Preferred Stock.
SECTION 10. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancelation become authorized but unissued shares of
Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board of Directors
pursuant to the provisions of the Certificate of Incorporation.
SECTION 11. Amendment. None of the powers, preferences and
relative, participating, optional and other special rights of the Series A
Preferred Stock as provided herein shall be amended in any manner which would
alter or change the powers, preferences, rights or privileges of the holders of
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least 66-2/3% of the outstanding shares of Series A
Preferred Stock, voting as a separate class.
8
IN WITNESS WHEREOF, the Company has caused this Certificate to be
duly executed in its corporate name on this /--/ day of /--/, 2003.
BIOVERIS CORPORATION,
by
---------------------------------
Name:
Title:
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- Rights
-------
NOT EXERCISABLE AFTER /--/, 2013, OR EARLIER IF REDEEMED OR
EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT, AND ARE SUBJECT TO
EXCHANGE, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF ARE NULL AND
VOID AND ARE NO LONGER TRANSFERABLE.
Right Certificate
BIOVERIS CORPORATION
This certifies that, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of /--/, 2003, as it may be amended from time to time (the "Rights
Agreement"), between BioVeris Corporation, a Delaware corporation (the
"Company"), and EquiServe Trust Company, N.A., as rights agent (the "Rights
Agent"), unless the Rights evidenced hereby shall have been previously redeemed
or exchanged by the Company, to purchase from the Company at any time after the
Distribution Date (as defined in the Rights Agreement) and prior to 5:00 p.m.,
New York City time, on the 10th anniversary of the date of the Rights Agreement
(the "Expiration Date"), at the principal office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth (1/1,000th) of a fully paid, nonassessable share of Series A
Participating Cumulative Preferred Stock, par value $0.001 per share, of the
Company (the "Preferred Shares"), at a purchase price per one one-thousandth
(1/1,000th) of a share equal to $50.00 (the "Purchase Price") payable in cash,
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.
The Purchase Price and the number and kind of shares which may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of the date of the Rights Agreement. As provided in the
Rights Agreement, the Purchase Price and the number and kind of shares which may
be purchased upon the exercise of each Right evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
2
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including, without limitation, any purported transferee or subsequent
holder) shall not have any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
reference to the Rights Agreement is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates. Copies
of the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number and kind of shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price (in cash or shares of Common Stock or other securities of
the Company deemed by the Board of Directors to be at least equivalent in value)
of $0.001 per Right (which amount shall be subject to adjustment as provided in
the Rights Agreement) at any time prior to the earlier of (i) such time as a
Person becomes an Acquiring Person and (ii) the Expiration Date.
The Company may, but shall not be required to, issue fractions of
Preferred Shares or distribute certificates which evidence fractions of
Preferred Shares upon the exercise of any Right or Rights evidenced hereby. In
lieu of issuing fractional shares, the Company may elect to make a cash payment
as provided in the Rights Agreement for fractions of a share other than one
one-thousandth (1/1,000th) of a share or any integral multiple thereof or to
issue certificates or utilize a depository arrangement as provided in the terms
of the Rights Agreement and the Preferred Shares.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise or exchange hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of
3
the Company, including, without limitation, 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 the Rights Agreement), or to receive dividends or other distributions or
subscription rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised or exchanged as provided in
accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by an authorized signatory of the
Rights Agent.
4
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of:
BIOVERIS CORPORATION,
by
---------------------------
Name:
Title:
Attest:
-------------------------
Name:
Title:
Date of countersignature:
Countersigned:
EQUISERVE TRUST COMPANY, N.A.,
as Rights Agent,
by
---------------------
Authorized Signatory
5
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Preferred Shares (or other
shares) issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:
Please insert social security
or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
6
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: ,
------------------- -----
------------------------------------
Signature
Signature Guaranteed:
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), (2) this Right Certificate is not
being sold, assigned or transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement) and (3) after inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
------------------------------------
Signature
7
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED hereby sells,
-------------------------------
assigns and transfer unto
------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to
---------------
transfer the within Right Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated: ,
------------------- -----
------------------------------------
Signature
Signature Guaranteed:
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), (2) this
Right Certificate is not being sold, assigned or transferred to or on behalf of
any such Acquiring Person, Affiliate or Associate and (3) after inquiry and to
the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement).
------------------------------------
Signature
8
NOTICE
The signature on the foregoing Form of Election to Purchase or
Form of Assignment must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
EXHIBIT C
RIGHTS BENEFICIALLY OWNED BY ANY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES AND CERTAIN TRANSFEREES THEREOF ARE NULL AND VOID AND ARE NO LONGER
TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK OF
BIOVERIS CORPORATION
On /--/, 2003, the board of directors (the "Board of Directors")
of BioVeris Corporation (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, of the Company (the "Common Shares"). The Rights will be
issued to the holders of record of Common Shares outstanding at the Effective
Time (the date on which the Effective Time occurs being the "Record Date"), and
with respect to Common Shares issued thereafter until the Distribution Date (as
defined below). Each Right, when it becomes exercisable as described below, will
entitle the registered holder to purchase from the Company one one-thousandth
(1/1,000th) of a share of Series A Participating Cumulative Preferred Stock, par
value $0.001 per share, of the Company (the "Preferred Shares") at a price of
$50.00 (the "Purchase Price"). The description and terms of the Rights are set
forth in a Rights Agreement dated as of /--/, 2003, as it may be amended from
time to time (the "Rights Agreement"), between the Company and EquiServe Trust
Company, N.A., as rights agent (the "Rights Agent").
Until the earlier of (a) such date as the Company learns that a
person or group (other than (i) the Company or any subsidiary of the Company,
(ii) any employee
2
benefit or compensation plan of the Company or of any of its subsidiaries and
(iii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and their affiliates,
associates and heirs and any trust or foundation to which they have transferred
to may transfer Common Shares (each such person or entity, an "Exempt Person")),
including, without limitation, any affiliate or associate of such person or
group, has acquired or obtained the right to acquire, beneficial ownership of
more than 10% of the outstanding Common Shares (such person or group being
called an "Acquiring Person"), and (b) such date, if any, as may be designated
by the Board of Directors following the commencement of, or the first public
disclosure of an intention to commence, a tender or exchange offer for
outstanding Common Shares which could result in any person or group (other than
an Exempt Person) becoming the beneficial owner of more than 10% of the
outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by certificates for Common
Shares registered in the names of the holders thereof and not by separate Right
Certificates (as defined below). With respect to any certificate for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates with a copy of this Summary of Rights attached
thereto, and the surrender for transfer of any such certificate, even without a
copy of this Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
Therefore, until the Distribution Date, the Rights will be transferred with and
only with the Common Shares.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of
3
record of the Common Shares as of the close of business on the Distribution
Date, and such separate Right Certificates alone will thereafter evidence the
Rights.
The Rights are not exercisable until the Distribution Date and
will expire on /--/, 2013 (the "Expiration Date"), unless earlier redeemed or
exchanged by the Company as described below.
The number of Preferred Shares or other securities issuable upon
exercise of the Rights is subject to adjustment by the Board of Directors in the
event of any change in the Common Shares or the Preferred Shares, whether by
reason of stock dividends, stock splits, reclassifications, recapitalizations,
mergers, consolidations, combinations or exchanges of securities, split-ups,
split-offs, spin-offs, liquidations, other similar changes in capitalization,
any distribution or issuance of cash, assets, evidences of indebtedness or
subscription rights, options or warrants to holders of Common Shares or
Preferred Shares or otherwise. The Purchase Price and the number of Preferred
Shares or other securities issuable upon exercise of the Rights are subject to
adjustment from time to time in the event of the declaration of a stock dividend
on the Common Shares payable in Common Shares or a subdivision or combination of
the Common Shares prior to the Distribution Date.
The Preferred Shares are authorized to be issued in fractions
which are an integral multiple of one one-thousandth (1/1,000th) of a Preferred
Share. The Company may, but is not required to, issue fractions of shares upon
the exercise of the Rights. In lieu of issuing fractional shares, the Company
may elect to make a cash payment with respect to fractions of shares other than
one one-thousandth (1/1,000th) of a Preferred Share based on the market price of
such shares on the first trading date prior to the date of
4
exercise or utilize a depositary arrangement as provided by the terms of the
Preferred Shares.
Subject to the right of the Board of Directors to redeem or
exchange the Rights as described below, at such time as there is an Acquiring
Person, the holder of each Right will thereafter have the right to receive, upon
exercise thereof, for the Purchase Price, that number of one one-thousandths of
a Preferred Share equal to the number of Common Shares which at the time of such
transaction would have a market value of twice the Purchase Price. Any Rights
that are or were beneficially owned by an Acquiring Person on or after the
Distribution Date will become null and void and will not be subject to the
"flip-in" provision.
In the event that after a person becomes an Acquiring Person, the
Company is acquired in a merger or other business combination by a person that
is a publicly traded corporation or 50% or more of the Company's assets or
assets representing 50% or more of the Company's earning power are sold, leased,
exchanged or otherwise transferred (in one or more transactions) to a person
that is a publicly traded corporation, proper provision must be made so that
each Right will entitle its holder to purchase, for the Purchase Price, that
number of common shares of such corporation which at the time of the transaction
would have a market value of twice the Purchase Price. In the event that after a
person becomes an Acquiring Person, the Company is acquired in a merger or other
business combination by a person that is not a publicly traded entity or 50% or
more of the Company's assets or assets representing 50% or more of the earning
power of the Company are sold, leased, exchanged or otherwise transferred (in
one or more transactions) to a person that is not a publicly traded entity,
proper
5
provision must be made so that each Right will entitle its holder to purchase,
for the Purchase Price, at such holder's option, (i) that number of shares of
the surviving corporation in the transaction with such entity (or, at such
holder's option, of the surviving corporation in such acquisition, which could
be the Company) which at the time of the transaction would have a book value of
twice the Purchase Price or (ii) that number of shares of such entity which at
the time of the transaction would have a book value of twice the Purchase Price
or (iii) if such entity has an affiliate which has publicly traded common
shares, that number of common shares of such affiliate which at the time of the
transaction would have a market value of twice the Purchase Price.
ANY RIGHTS THAT ARE OR WERE, AT ANY TIME ON OR AFTER THE DATE AN
ACQUIRING PERSON BECOMES SUCH, BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (OR CERTAIN TRANSFEREES THEREOF)
WILL BECOME NULL AND VOID AND ANY HOLDER OF ANY SUCH RIGHT (INCLUDING, WITHOUT
LIMITATION, CERTAIN TRANSFEREES THEREOF) WILL BE UNABLE TO EXERCISE OR TRANSFER
ANY SUCH RIGHT.
The Rights are redeemable by the Board of Directors at a
redemption price of $0.001 per Right (the "Redemption Price") any time prior to
the earlier of (i) such time as there is an Acquiring Person and (ii) the
Expiration Date. Immediately upon the effectiveness of the action of the Board
of Directors electing to redeem the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
6
After there is an Acquiring Person the Board of Directors may
elect to exchange each Right (other than Rights owned by an Acquiring Person)
for consideration per Right consisting of one-half of the securities that would
be issuable at such time upon the exercise of one Right pursuant to the terms of
the Rights Agreement. Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any person
(other than an Exempt Person), together with all affiliates and associates of
such person, becomes the beneficial owner of more than 50% of the Common Shares
then outstanding.
At any time prior to such time as there shall be an Acquiring
Person, the Company may, without the approval of any holder of the Rights,
supplement or amend any provision of the Rights Agreement (including, without
limitation, the date on which the Expiration Date or the Distribution Date shall
occur, the amount of the Purchase Price or the definition of "Acquiring
Person"), except that no supplement or amendment shall be made that reduces the
Redemption Price of the Rights.
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.
A copy of the Rights Agreement, including, without limitation, the
terms of the Preferred Shares, will be filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form S-4 (Registration
No. 333-109196). A copy of the Rights Agreement is available free of charge from
the Company upon written request. This summary description of the Rights does
not purport to be complete and is
7
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.