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EXHIBIT 4.2
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KING PHARMACEUTICALS, INC.
and
UNION PLANTERS NATIONAL BANK
Rights Agent
RIGHTS AGREEMENT
Dated as of ____________, 1997
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TABLE OF CONTENTS
Section 1 Certain Definitions ............................................................ -1-
Section 2 Appointment of Rights Agent .................................................... -8-
Section 3 Issuance of Rights Certificates ................................................ -8-
Section 4 Form of Rights Certificates .................................................... -10-
Section 5 Execution. Countersignature and Registration ................................... -11-
Section 6 Transfer, Division, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates .................................. -11-
Section 7 Exercise of Rights. Purchase Price; Expiration Date of Rights .................. -12-
Section 8 Cancellation and Destruction of Rights Certificates ............................ -14-
Section 9 Reservation and Availability of Preferred Stock ................................ -15-
Section 10 Preferred Stock Record Date .................................................... -16-
Section 11 Adjustments to Purchase Price. Number of Shares or Number of Rights ............ -17-
Section 12 Certification of Adjustments ................................................... -25-
Section 13 Consolidation. Merger or Sale or Transfer of Assets or Earning Power ........... -25-
Section 14 Fractional Rights and Fractional Shares ........................................ -28-
Section 15 Rights of Action ............................................................... -29-
Section 16 Agreement of Rights Holders Concerning Transfer and Ownership of Rights ........ -30-
Section 17 Rights Holder Not Deemed a Stockholder ......................................... -30-
Section 18 Concerning the Rights Agent .................................................... -31-
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Section 19 Merger or Consolidation or Change of Name of Rights Agent ...................... -31-
Section 20 Duties of Rights Agent ......................................................... -32-
Section 21 Change of Rights Agent ......................................................... -33-
Section 22 Issuance of New Rights Certificates ............................................ -34-
Section 23 Redemption and Termination ..................................................... -35-
Section 24 Notice of Certain Events ....................................................... -36-
Section 25 Notices ........................................................................ -36-
Section 26 Supplements and Amendments ..................................................... -37-
Section 27 Successors ..................................................................... -38-
Section 28 Benefits of this Agreement; Determinations and Actions by the Board of Directors -38-
Section 29 Severability ................................................................... -39-
Section 30 Governing Law .................................................................. -39-
Section 31 Counterparts ................................................................... -▇▇-
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Section 33 Grammatical Construction ....................................................... -39-
EXHIBIT A Certificate of Designation, Preferences and Rights of
Junior Participating Preferred Stock, Series A ................................. A-1
EXHIBIT B Form of Rights Certificate ..................................................... B-1
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RIGHTS AGREEMENT
Rights Agreement dated as of ________ __, 1997, between King
Pharmaceuticals, Inc. a Tennessee corporation (the "Company") and Union Planters
National Bank, a national banking association (the "Rights Agent").
RECITALS
The Board of Directors of the Company has authorized and declared the
payment of a dividend of one preferred share purchase right (the "Right") for
each share of Common Stock (as defined in Section 1) outstanding at the Close of
Business on the Record Date (as defined in Section 1) and has authorized the
issuance of one Right for each share of Common Stock issued between the Record
Date and the Distribution Date (as defined in Section 1), and, in certain cases
following the Distribution Date. Each Right represents, as of the Close of
Business on the Record Date, the right to purchase one one-thousandth of a share
of Preferred Stock (as defined in Section 1) upon the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows
Section 1. Certain Definitions For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, is (or has previously been, at any
time after the date of this Agreement, whether or not such Person(s) continues
to be) the Beneficial Owner of 15% or more of the Common Stock then outstanding,
(determined without taking into account any securities exercisable or
exchangeable for, or convertible into, Common Stock, other than any such
securities beneficially owned by the Acquiring Person and Affiliates and
Associates of such Person). In any case, an Exempt Person, so long as such
Person remains an Exempt Person, is not an Acquiring Person and an acquisition
of Common Stock by an Exempt Person is not a Triggering Event, so long as such
acquisition is an Exempt Event.
A Person does not become an "Acquiring Person" solely as the result of
(i) an acquisition of Common Stock by the Company which, by reducing the number
of shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Stock then outstanding as
determined above, or (ii) such Person becoming the Beneficial Owner of 15% or
more of the Common Stock then outstanding as determined above solely as a result
of an Exempt Event; provided, however, that if a Person becomes the Beneficial
Owner of 15% or more of the Common Stock then outstanding as determined above
solely by reason of such a share acquisition by the Company or the occurrence of
such an Exempt Event and such Person shall, after
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becoming the Beneficial Owner of such Common Stock, become the Beneficial Owner
of any additional shares of Common Stock by any means whatsoever (other than as
a result of the subsequent occurrence of an Exempt Event, a share acquisition by
the Company, a stock dividend or a subdivision of the Common Stock into a larger
number of shares or a similar transaction), then such Person shall be deemed to
be an "Acquiring Person."
(b) "Affiliate" of a Person has the meaning given to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Agreement; provided that, for purposes of this Agreement,
the term "Affiliate" shall not include any Person that is an Exempt Person.
(c) "Associate" of a Person has the meaning given to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Agreement, provided that, for purposes of this Agreement,
the term "Associate" shall not include any Person that is an Exempt Person.
(d) Except as provided below, a Person is the "Beneficial Owner" of,
and "beneficially owns," any securities:
(i) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether or
not then exercisable or effective) to acquire pursuant to any
agreement, arrangement or understanding (whether or not in writing), or
upon the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; provided,
however, that a Person will not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any Affiliate or
Associate of such Person until such tendered securities are accepted
for purchase or exchange, and provided further, that prior to the
occurrence of a Triggering Event, a Person will not be deemed the
Beneficial Owner of, or to beneficially own, securities obtainable upon
exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then
exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security pursuant to this clause
(iii) if the agreement, arrangement or understanding to vote, or to
direct the voting of, such security (A) arises solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made
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pursuant to, and in accordance with, the Exchange Act and applicable
rules and regulations thereunder and (B) is not also then reportable
under Item 6 (or any comparable or successor item) of Schedule 13D
under the Exchange Act (or any comparable or successor schedule or
report);
(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act or
any successor provision); or
(v) which are beneficially owned, directly or indirectly, by
any other Person or any Affiliate or Associate of such other Person
with whom such Person or any Affiliate or Associate of such Person has
any agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in subparagraph (iii) of this Section 1
(d)) or disposing of any securities of the Company.
Nothing in this Section 1 (d) causes a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in good faith
in a firm commitment underwriting until the expiration of 40 days after the date
of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, in the absence of a written agreement entered into
for the purpose of acquiring, holding, voting or disposing of any securities of
the Company, no Person is to be treated as the "Beneficial Owner" of, or to
"beneficially own," any securities owned by any other Person that is an Exempt
Person, and no Exempt Person shall be treated as the "Beneficial Owner" of, or
to "beneficially own" any securities owned by any other Person (other than an
Associate of such Exempt Person).
(e) "Business Combination" has the meaning set forth in Section 13 of
this Agreement.
(f) "Business Day" means any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of Tennessee are authorized or
obligated by law or executive order to close.
(g) "Close of Business" on any given date means 5:00 p.m. Eastern Time,
on such date; provided, however, that if such date is not a Business Day it
shall mean 5:00 p.m. Eastern Time, on the next succeeding Business Day.
(h) "Common Stock" when used in any context applicable prior to a
Business Combination means the Common Stock, no par value per share, of the
Company (as the same may be changed by reason of any combination, subdivision or
reclassification of the Common Stock).
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"Common Stock" when used with reference to any Person (other than the Company
prior to a Business Combination) means 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 shares or units do not limit (as a fixed amount and
not merely in proportional terms) the amount of dividends or income payable or
distributable on such shares or units or the amount of assets distributable on
such shares or units upon any voluntary or involuntary liquidation, dissolution
or winding up of such Person and do not provide that such shares or units are
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; provided, however, that if at any time there are more
than one such class or series of capital stock of or equity interests in such
Person, "Common Stock" of such Person will include all such classes and series
substantially in the proportion of the total number of shares or other units of
each such class or series outstanding at such time.
(i) "Continuing Director" means (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board of
Directors of the Company, who is not an Acquiring Person (as defined herein), or
an Affiliate or Associate of an Acquiring Person or a representative, designee
or nominee of an Acquiring Person or of any such Affiliate or Associate, and who
was a member of the Board of Directors of the Company on the date of this
Agreement, and (ii) any Person who becomes a member of the Board of Directors of
the Company after the date of this Agreement, while such Person is a member of
the Board of Directors of the Company, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative, designee or
nominee of an Acquiring Person or of any such Affiliate or Associate, if such
Person's nomination for election, or election, to the Board of Directors of the
Company is recommended or approved by a majority of the Continuing Directors.
(j) "Current Market Price" per share of Common Stock, Preferred Stock
or Equivalent Shares on any date is the average of the daily closing prices per
share of such Common Stock, Preferred Stock or Equivalent Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date for the purpose of any computation under this Agreement except
computations made pursuant to Section 11(a)(iv), and for the Trading Day
immediately prior to such date for the purpose of any computation under Section
11(a)(iv); provided, however, that in the event that the Current Market Price
per share of Common Stock, Preferred Stock or Equivalent Shares is determined
during a period following the announcement by the issuer of such Common Stock,
Preferred Stock or Equivalent Shares of (i) a dividend or distribution on such
Common Stock, Preferred Stock or Equivalent Shares other than a regular
quarterly cash dividend, or (ii) any subdivision, combination or
reclassification of such Common Stock, Preferred Stock or Equivalent Shares, and
prior to the expiration of 30 Trading Days after the "ex-dividend" date for such
dividend or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Current Market Price" must
be appropriately adjusted to take into account such dividend, distribution,
subdivision, combination or reclassification. The closing price
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for each Trading Day shall be the last sale price, regular way, on such day, or,
in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, on such day, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Common
Stock, Preferred Stock or Equivalent Shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction repourities listed on the principal United States
national securities exchange on which the Common Stock, Preferred Stock or
Equivalent Shares are listed or admitted to trading or, if the Common Stock,
Preferred Stock or Equivalent Shares are not listed or admitted to trading on
any United States national securities exchange, the last quoted sale price on
such day or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market on such days as reported by the Nasdaq National
Market ("Nasdaq") or such other system then in use. If on such day the Common
Stock, Preferred Stock or Equivalent Shares are not quoted by any such
organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in the Common Stock,
Preferred Stock or Equivalent Shares selected by a majority of the Continuing
Directors (or if no Continuing Directors are then in office, the Board of
Directors of the Company) shall be used. If no such market maker is making a
market, the fair market value of such shares on such day as determined in good
faith by a majority of the Continuing Directors (or if no Continuing Directors
are then in office, the Board of Directors of the Company) or the Board of
Directors of the issuer of such Common Stock, Preferred Stock or Equivalent
Shares must be used, which determination must be described in a statement filed
with the Rights Agent and is binding and conclusive for all purposes. The term
"Trading Day" means a day on which the principal United States national
securities exchange on which the Common Stock, Preferred Stock or Equivalent
Shares are listed or admitted to trading is open for the transaction of business
or, if the Common Stock, Preferred Stock or Equivalent Shares are not listed or
admitted to trading on any United States national securities exchange, but are
traded in the over-the-counter market and reported by Nasdaq, then any day for
which Nasdaq reports the high bid and low asked prices in the over-the-counter
market, or if the Common Stock, Preferred Stock or Equivalent Shares are not
traded in the over-the-counter market and reported by Nasdaq, then a Business
Day. If the Common Stock, Preferred Stock or Equivalent Shares have not been so
listed or admitted to trading for 30 or more Trading Days or traded in the
over-the-counter market and reported by Nasdaq for 30 or more Trading Days,
"Current Market Price" per share means the fair market value per share as
determined in good faith by a majority of the Continuing Directors (or, if no
Continuing Directors are then in office, the Board of Directors of the Company),
whose determination must be described in a statement filed with the Rights Agent
and will be final, binding and conclusive for all purposes.
(k) "Distribution Date" means the earlier of (i) the day after the
Company's right to redeem the Rights pursuant to Section 23(a)(i) expires and
(ii) the tenth Business Day after commencement or public disclosure of an
intention to commence (including, without limitation, any such commencement or
public disclosure which occurs on or after the date of this Agreement and prior
to the issuance of the Rights) a tender offer or exchange offer by a Person if,
after acquiring
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the maximum number of securities sought pursuant to such offer, such Person, or
any Affiliate or Associate of such Person, would be an Acquiring Person. If
there is at least one Continuing Director then in office, the Board of Directors
of the Company, with the concurrence of a majority of the Continuing Directors
then in office, may defer the date set forth in clause (ii) of the preceding
sentence to a specified later date or to an unspecified later date to be
determined by a subsequent action or event.
(l) "Equivalent Shares" means any class or series of capital stock of
the Company, other than the Preferred Stock, which is entitled to participate on
a proportional basis with the Preferred Stock in dividends and other
distributions, including distributions upon the liquidation, dissolution or
winding up of the Company. In calculating the number of any class or series of
Equivalent Shares for purposes of Section 11, the number of shares, or fractions
of a share, of such class or series of capital stock that is entitled to the
same dividend or distribution as a whole share of Preferred Stock shall be
deemed to be one share.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(n) "Exchange Date" means the time at which the Rights are exchanged
pursuant to Section 11(a)(iv) .
(o) "Exempt Event" means (i) the acquisition of additional Common Stock
by an Exempt Person, so long as such Person does not cease to be an Exempt
Person under clause (p) below, or (ii) with respect to any Person, the
acquisition by such Person of Beneficial Ownership of Common Stock solely as a
result of the occurrence of a Triggering Event and the effect of such Triggering
Event on the last proviso of clause (ii) of the definition of Beneficial Owner,
other than a Triggering Event in which such Person becomes an Acquiring Person.
(p) "Exempt Person" means (i) the Company, (ii) any Subsidiary of the
Company, (iii) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
their respective spouses or issue, any trust of which any of them and/or their
respective spouses are the grantor or of which any of them or their respective
spouses, his issue or any charity is a beneficiary, (iv) any employee benefit
plan of the Company or of any Subsidiary of the Company, and (v) any Person
holding Common Stock for any such employee benefit plan or for employees of the
Company or of any Subsidiary of the Company pursuant to the terms of any such
employee benefit plan.
(q) "Expiration Date" means the Close of Business on the tenth
anniversary of the Record Date.
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(r) "Person" means any individual firm, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity, and
shall include any "group" as that term is used in Rule 13d-5(b) under the
Exchange Act (or any successor provision).
(s) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, Series A, no par value per share, having the rights and
preferences set forth in the Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A, attached hereto as Exhibit A
(t) "Principal Party" means (i) in the case of any Business Combination
described in clause (i), (ii) or (iii) of the first sentence of Section 13(a),
(A) the Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted or for which they are exchanged in such
Business Combination or, if there is more than one such issuer, the issuer of
the Common Stock which has the greatest aggregate market value or (B) if no
securities are so issued, the Person that survives or results from the Business
Combination or, if there is more than one such Person, the Person the Common
Stock of which has the greatest aggregate market value, and (ii) in the case of
any Business Combination described in clause (iv) of the first sentence in
Section 13(a), the Person that receives the greatest portion of the assets or
earning power transferred pursuant to such Business Combination or, if each
Person that is a party to such Business Combination receives the same portion of
the assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot reasonably be determined,
whichever of such Persons is the issuer of the Common Stock which has the
greatest aggregate market value; provided, however, that in any such case, if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value, or (z)
if the Cr Persons has been so registered, "Principal Party" refers to whichever
of such other Persons (other than an individual) is the Person which has the
equity securities with the greatest aggregate market value. In case such Person
is owned, directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth above apply to each of the chains of ownership having an
interest in such joint venture as if such Person were a Subsidiary of both or
all of such joint venturers and the Principal Parties in each such chain shall
bear the obligations set forth in Section 13 in the same ratio as their direct
or indirect interests in such Person bear to the total of such interests.
(u) "Purchase Price" with respect to each Right is initially $60 per
one one-thousandth of a share of Preferred Stock, shall be subject to adjustment
from time to time as provided in
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Sections 11 and 13, and shall be payable in lawful money of the United States of
America in cash or by certified check or bank draft payable to the order of the
Company.
(v) "Record Date" means the date which is four Business Days after the
date on which the registration of the Common Stock under the Securities Act
becomes effective.
(w) "Redemption Date" means the time at which the Rights are scheduled
to be redeemed as provided in Section 23.
(x) "Redemption Price" has the meaning given to such term in Section
23.
(y) "Securities Act" means the Securities Act of 1933, as amended, and
any successor statute.
(z) "Stock Acquisition Date" means the first date (including, without
limitation, any such date which is on or after the date of this Agreement and
prior to the issuance of the Rights) of public disclosure by the Company or an
Acquiring Person that an Acquiring Person has become such.
(aa) "Subsidiary" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
(bb) "Triggering Event" means a Person becoming an Acquiring Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights shall be issued in
respect of and shall be evidenced by the certificates representing the shares of
Common Stock issued and outstanding on the Record Date and shares of Common
Stock issued after the Record Date and prior to the earliest of the Distribution
Date, the Redemption Date, the Exchange Date or the Expiration Date (which
certificates for Common Stock shall be deemed to also be certificates evidencing
the Rights), and not by separate certificates, (ii) the registered holders of
such shares of Common Stock shall also be the registered holders of the Rights
associated with such shares, and (iii) the Rights shall be transferable only in
connection with the transfer of shares of Common Stock, and the surrender for
transfer of any certificate for such shares of Common Stock shall also
constitute the surrender for transfer of the Rights associated with such shares.
As soon as practicable after the Company has notified the Rights Agent of the
occurrence of the Distribution Date, the Rights Agent shall mail,
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by first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the Close of Business on the Distribution Date. as shown by
the records of the Company, at the address of such holder shown on such records,
one or more certificates evidencing the Rights ("Rights Certificates"), in
substantially the form of Exhibit B hereto, evidencing one Right (as adjusted
from time to time pursuant to this Agreement) for each share of Common Stock so
held. From and after the Distribution Date, the Rights will be evidenced solely
by such Rights Certificates. In the event that an adjustment in the number of
Rights per share of Common Stock has been made pursuant to Section 11 (o) of
this Agreement, at the time of distribution of the Rights Certificates, the
Company may make the necessary and appropriate adjustments (in accordance with
Section 14(a) of this Agreement) so that Rights Certificates representing only
whole numbers of nd cash is paid in lieu of any fractional Rights.
(b) Rights shall be issued in respect of all shares of Common Stock
which are issued or sold by the Company after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date and the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold pursuant to (i)
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or arrangement created prior to the Distribution Date, or (ii)
upon the exercise conversion or exchange of securities issued by the Company
prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and Rights Certificate shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (y) no such Rights and Rights Certificates shall be issued, if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof. Certificates issued after the Record Date
representing shares of Common Stock outstanding on the Record Date or shares of
Common Stock issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date shall have impressed, printed, or written on, or otherwise affixed to them
a legend substantially in the following form:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a
Rights Agreement between King Pharmaceuticals, Inc.
and Union Planters National Bank, as Rights Agent,
dated as of ________ __, 1997 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal executive offices of King
Pharmaceuticals, Inc. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no
longer be evidenced by this certificate. King
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Pharmaceuticals, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor.
Under certain circumstances, Rights that were, are or
become beneficially owned by Acquiring Persons or
their Associates or Affiliates (as such terms are
defined in the Rights Agreement) may become null and
void and the holder of any of such Rights (including
any subsequent holder) shall not have any right to
exercise such Rights.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase
shares and form of assignment to be printed on the reverse thereof) shall be in
substantially the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of this Agreement, the
Rights 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 shares of Preferred Stock as shall be set forth therein at the
Purchase Price set forth therein, but the number of such securities and the
Purchase Price shall be subject to adjustment as provided in this Agreement.
(b) Notwithstanding any other provision of this Agreement, (i) any
Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned or formerly beneficially owned, on or after the earlier of
the Distribution Date and the Stock Acquisition Date, by a Person known by the
Company to be: (A) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (B) a direct or indirect transferee of an Acquiring Person (or
of an Associate or Affiliate of such Acquiring Person) who becomes or becomes
entitled to be a transferee after the Acquiring Person becomes such, or (C) a
direct or indirect transferee of an Acquiring Person (or of an Associate or
Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (x) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in an Associate or
Affiliate of such Acquiring Person) or to any Person with whom such Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (y) a direct or indirect transfer which a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors of the Company) has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7(e) of this Agreement, or (ii) any Rights Certificate issued pursuant to this
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Agreement upon transfer, exchange, replacement or adjustment of any other Rights
Certificate beneficially owned by a Person referred to in this Section 4(b),
shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this
Rights Certificate and the Rights represented hereby
may become null and void in the circumstances
specified in Section 7(e) of the Rights Agreement.
Section 5. Execution. Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the Company
by the Company's Chairman of the Board and Chief Executive Officer, President or
any Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Company's Secretary or an Assistant Secretary, either manually
or by facsimile signature. Each Rights Certificate shall be countersigned by the
Rights Agent either manually or, if permitted by the Company, by facsimile
signature and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed a Rights Certificate shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights Certificate
nevertheless may be countersigned by the Rights Agent and issued and delivered
with the same force and effect as though the Person who signed such Rights
Certificate had not ceased to be such officer of the Company, and any Rights
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced by each Rights Certificate, and the
certificate number and the date of issuance of each Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14, at any time after the
Close of Business on the Distribution Date and at or prior to the Close of
Business on the earliest of the Redemption Date, the
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Exchange Date and the Expiration Date, any Rights Certificate or Rights
Certificates may be transferred, divided, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock (or other securities, cash
or other property, following a Triggering Event or a Business Combination, as
the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, divide, combine or exchange any Rights Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, divided, combined or
exchanged at the principal corporate office of the Rights Agent. Thereupon the
Rights Agent shall countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
As a condition to such transfer, division, combination or exchange, the Company
may require payment by the surrendering holder of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection therewith. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have duly completed and executed
the form of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or such former or proposed Beneficial Owner) thereof or such Beneficial Owner's
Affiliates or Associates as the Company shall reasonably request
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and 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 Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights. Purchase Price; Expiration Date of
Rights
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-thousandth (1/1000) of a share of
Preferred Stock, subject to adjustment from time to time as provided in Sections
11 and 13.
(b) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time on or after the Distribution Date and prior to the earliest of the
Expiration Date, the Exchange Date and the Redemption Date, by surrendering the
Rights Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the
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Rights Agent at the principal corporate trust office of the Rights Agent,
together with payment of the Purchase Price for each one one-thousandth of a
share of Preferred Stock (or other securities, cash or other assets, as the case
may be) as to which the Rights are exercised
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each one one-thousandth of a share of
Preferred Stock (or, following a Triggering Event or a Business Combination,
other securities, cash or other assets, as the case may be) to be purchased and
an amount in cash, certified bank check or bank draft payable to the order of
the Company equal to any applicable transfer tax required to be paid by the
surrendering holder pursuant to Section 9(d), the Rights Agent shall, subject to
the provisions of this Agreement, thereupon promptly (i)(A) requisition from any
transfer agent for the Preferred Stock (or make available, if the Rights Agent
is the transfer agent for such shares) certificates for the total number of one
one-thousandths of a share of Preferred Stock (or other securities, as the case
may be) 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 total number of shares of Preferred Stock (or other
securities, as the case may be) issuable upon exercise of the Rights with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of Preferred Stock
(or other securities, as the case may be) as are to be purchased (in which case
certificates for the Preferred Stock (or other securities, as the case may 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 such request, (ii) 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 Rights Certificate, registered in such name or names as may be
designated by such holder, and (iii) if appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 of this Agreement and, promptly after receipt
thereof, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate. In the event that the Company is obligated to
issue other securities (including shares of Common Stock) of the Company, pay
cash and/or distribute other property pursuant to this Agreement, the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date or the Stock
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Acquisition Date by (i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person, (ii) a direct or indirect transferee of an Acquiring Person
(or of an Associate or Affiliate of such Acquiring Person) who becomes or
becomes entitled to be a transferee after the Acquiring Person becomes such, or
(iii) a direct or indirect transferee of an Acquiring Person (or of an Associate
or Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in any Associate or
Affiliate of such Acquiring Person) or to any Person with whom the Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a direct or indirect transfer which a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors of the Company) determines is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall, immediately upon the occurrence of a Triggering Event and
without any further action, be null and void and no holder of such Rights shall
have any rights whatsoever with respect to such Rights whether under this
Agreement or otherwise, provided, however, that, in the case of transferees
under clause (ii) or clause (iii) above, any Rights beneficially owned by such
transferee shall be null and void only if and to the extent such Rights were
formerly beneficially owned by a Person who was, at the time such Person
beneficially owned such Rights, or who later became, an Acquiring Person or an
Affiliate or Associate of such Acquiring Person. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but shall have no liability to any holder of a
Rights Certificate or to any other Person as a result of the Company's failure
to make, or any delay in making (including any such failure or delay by the
Continuing Directors and/or the Board of Directors of the Company) any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to the registered holder of a Rights Certificate upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former or proposed Beneficial Owner)
thereof or the Affiliates or Associates of such Beneficial Owner (or former or
proposed Beneficial Owner) as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, division,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
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Certificates shall be issued in lieu thereof except as expressly permitted by
the provisions of this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares of Common Stock and/or other securities held in
its treasury) free from preemptive rights or any right of first refusal, a
sufficient number of shares of Preferred Stock (and, following the occurrence of
a Triggering Event, shares of Common Stock and/or other securities) to permit
the exercise in full of all Rights from time to time outstanding.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event, shares of Common
Stock and/or other securities) issuable upon the exercise of Rights may be
listed on any United States national securities exchange, to use its best
efforts to cause, from and after the time that the Rights become exercisable all
such shares and/or other securities reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and,
following the occurrence of a Triggering Event or a Business Combination, shares
of Common Stock and/or other securities) delivered upon the exercise of Rights
shall, at the time of delivery of the certificates for such shares and/or such
other securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued, fully paid, nonassessable, freely tradeable, not subject
to liens or encumbrances, and free of preemptive rights, rights of first
refusal, or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however be required to (i) pay any transfer tax which may
be payable in respect of any transfer involved in the issuance or delivery of
any Rights Certificates or the issuance or
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delivery of any certificates for shares of Preferred Stock (or Common Stock
and/or other securities as the case may be) to a Person other than, or in a name
other than that of, the registered holder of the Rights Certificate evidencing
Rights surrendered for exercise or (ii) transfer or deliver any Rights
Certificate or issue or deliver any certificates for shares of Preferred Stock
(or Common Stock and/or other securities as the case may be) upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
(e) The Company shall use its best efforts (i) as soon as practicable
following a Triggering Event (provided the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) of this Agreement), or as soon as is required by law
following the Distribution Date, as the case may be, to prepare and file a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company shall also use its
best efforts to take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date of a
Triggering Event described in clause (i) of the first sentence of this paragraph
of Section 9, the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (and/or such other securities, as the
case may be) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
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Section 11. Adjustments to Purchase Price. Number of Shares or Number
of Rights. The Purchase Price, the number and kind of securities, cash and other
property obtainable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time on or after
the date of this Agreement (A) pay a dividend or make a distribution on
the Preferred Stock payable in shares of Preferred Stock, (B) subdivide
(by a stock split or otherwise) the outstanding Preferred Stock into a
larger number of shares, (C) combine (by a reverse stock split or
otherwise) the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any securities in a reclassification of the
Preferred Stock (including any such reclassification in connection with
a consolidation or merger in which the Company is the surviving
corporation), then in each such event the Purchase Price and the
Redemption Price set forth in Section 23, as each is in effect at the
time of the record date for such dividend or distribution, or of the
effective date of such subdivision, combination or reclassification,
shall be proportionately adjusted by multiplying the Purchase Price and
such Redemption Price by a fraction the numerator of which shall be the
total number of shares of Preferred Stock outstanding immediately prior
to the occurrence of such event and the denominator of which shall be
the total number of shares of Preferred Stock outstanding immediately
following the occurrence of such event. If an event occurs which would
require an adjustment under both this Section 11( a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to any adjustment required
pursuant to Section 11(a)(ii).
(ii) Upon the first occurrence of a Triggering Event, proper
provision shall be made so that each holder of a Right, except as
otherwise provided in this Agreement, shall thereafter have the right
to receive, and the Company shall issue, upon exercise thereof at the
then-current Purchase Price required to be paid in order to exercise a
Right in accordance with the terms of this Agreement, in lieu of the
number of one one-thousandths of a share of Preferred Stock or other
securities receivable upon exercise of a Right prior to the occurrence
of the Triggering Event such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-thousandths of a
share of Preferred Stock or other securities for which a Right was then
exercisable (without giving effect to such Triggering Event) and (y)
dividing that product by 50% of the Current Market Price per share of
Common Stock on the date of the occurrence of the Triggering Event
(such number of shares being referred to as the "Adjustment Shares");
provided, however, that if the transaction or event that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 of this Agreement, then only the provisions of
Section 13 of this Agreement shall apply and no adjustment shall be
made pursuant to this Section 11(a)(ii). Upon the occurrence of such
Triggering Event, the Purchase Price required to be paid in order to
exercise a Right shall be unchanged, and the Purchase Price shall be
appropriately adjusted to reflect, and
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shall thereafter mean, the amount required to be paid per share of
Common Stock upon exercise of a Right
(iii) In lieu of issuing shares of Common Stock in accordance
with Section 11 (a)(ii), the Company may, if a majority of the
Continuing Directors (or if no Continuing Directors are then in office,
the Board of Directors of the Company) determine that such action is
necessary or appropriate and not contrary to the interests of holders
of Rights (and, in the event that the number of shares of Common Stock
which are authorized by the Company's charter, but which are not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights, are not sufficient to permit the exercise in
full of the Rights in accordance with Section 11(a)(ii), the Company
shall) take one or more of the following actions (A) reduce the
Purchase Price required to be paid in order to exercise a Right by any
amount (the "Reduction Amount"), in which event the number of
Adjustment Shares and/or the amount of any Substitute Consideration (as
hereinafter defined) issuable in respect of each Right (the Adjustment
Shares, if any, and the Substitute Consideration, if any, issuable in
respect of a Right are herein collectively referred to as the "Total
Consideration") shall be reduced so that the aggregate value of the
Total Consideration issuable in respect of each Right is equal to the
Current Value (as hereinafter defined) less the Reduction Amount
(herein the "Adjusted Current Value"), and/or (B) make adequate
provision with respect to each Right to substitute for all or part of
the Adjustment Shares otherwise obtainable upon exercise of a Right:
(1) cash, (2) other equity securities of the Company (including without
limitation, shares, or units of shares, of preferred stock which a
majority of the Continuing Directors (or if no Continuing Directors are
then in office, the Board of Directors of the Company) have determined
to have the same value as shares of Common Stock (such shares or units
of preferred stock being referred to as "Common Stock Equivalents")),
(3) debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing (collectively, "Substitute
Consideration"), having an aggregate value which, when added to the
value of the Adjustment Shares (if any) in respect of which no
substitution is being made, is equal to the Adjusted Current Value. If
a majority of the Continuing Directors (or if no Continuing Directors
are then in office, the Board of Directors) determine to issue or
deliver any equity securities (other than Common Stock or Common Stock
Equivalents), debt securities and/or other assets pursuant to this
Section 11(a)(iii), the value of such securities and/or assets shall be
determined by a majority of the Continuing Directors (or if no
Continuing Directors are then in office, the Board of Directors of the
Company) based upon the advice of a nationally recognized investment
banking firm selected by a majority of the Continuing Directors (or if
no Continuing Directors are then in office, the Board of Directors of
the Company). If the Company is required to make adequate provision to
deliver value pursuant to the first sentence of this Section 11
(a)(iii) and the Company shall not have made such adequate provision to
deliver value within ninety (90) days following the first occurrence of
a Triggering Event (the "Substitution Period"), then notwithstanding
any provision of Section 11(a)(ii) or this Section 11(a)(iii) to the
contrary, the Company shall be
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obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the excess of the Current
Value over the Purchase Price. If both Common Stock and cash are to be
delivered pursuant to the preceding sentence, amounts of both Common
Stock and cash shall be delivered upon surrender of each Right in a
ratio of Common Stock to cash that bears the same ratio as the total
value of all Common Stock to be delivered (as determined pursuant to
this Section 11(a)(iii)) bears to the total value of all cash to be
delivered; provided, however, that the Company may adjust such ratio to
avoid issuing any fractional shares of Common Stock so long as the
method of adjustment is applied consistently to each holder of Rights
entitled to receive value thereon pursuant to this Section 11(a)(iii).
To the extent that the Company determines that some action is to be
taken pursuant to the first and/or third sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights but in no
event to a time later than the expiration of the Substitution Period.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Upon any change in the
Adjustment Shares obtainable upon exercise of a Right pursuant to this
Section 11(a)(iii), the Purchase Price shall thereafter mean the
amount, if any, required to be paid upon exercise of a Right for the
Adjustment Shares, if any, and the Substitute Consideration, if any,
then issuable or deliverable upon exercise of a Right, and a majority
of the Continuing Directors (or if no Continuing Directors are then in
office, the Board of Directors of the Company) shall make any necessary
provisions to ensure that the provisions of Section 11(e) shall
thereafter apply as appropriate to the Total Consideration. For
purposes of this Section 11(a)(iii), (A) "Current Value" shall be the
product derived by multiplying (x) the number of Adjustment Shares
issuable in respect of each Right determined under Section 11(a)(ii),
by (y) the Current Market Price per share of Common Stock on the date
of the Triggering Event, and (B) the value of each share of Common
Stock and each share or unit of any "Common Stock Equivalent" shall be
deemed conclusively to be equal to the Current Market Price per share
of the Common Stock on the date of the Triggering Event.
(iv) A majority of the Continuing Directors (or if no
Continuing Directors are then in office, the Board of Directors of the
Company) may, at their option at any time and from time to time after
the first occurrence of a Triggering Event, cause the Company to
exchange, for all or part of the then-outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant
to the provisions of Section 7(e) hereof), shares of Common Stock or
Common Stock Equivalents at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date of this
Agreement (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Any partial exchange shall be effected on a pro rata
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basis based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) held by
each holder of Rights.
Immediately upon the action of a majority of the Continuing Directors
(or if no Continuing Directors are then in office the Board of Directors of the
Company) ordering the exchange of any Rights pursuant to this Section 11(a)(iv)
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock and/or Common
Stock Equivalents equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange and in addition, the Company shall promptly mail a notice
of any such exchange to all of the holders of such Rights in accordance with
Section 25 of this Agreement; provided, however, that the failure to give, any
delay in giving or any defect in, such notice shall not affect the validity of
such exchange. Each such notice of exchange will state the method by which the
exchange of the Common Stock or Common Stock Equivalents for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. In the event that the number of shares of Common Stock which
is authorized but not outstanding or reserved for issuance for a purpose other
than exercise of the Rights is not sufficient to permit any exchange of Rights
as contemplated in accordance with this Section 11(a)(iv), the Board of
Directors of the Company shall take all such action within its power as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights. The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) the last sale price of
the Company's Common Stock on the fifth Trading Day following the public
announcement of the exchange by the Company, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices on such day,
in either case on a when issued basis (taking into account the exchange), as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange (or,
if the Company's Common Stock is not so listed or traded, then as determined in
the manner provided under the definition of "Current Market Price," adjusted to
take into account the exchange). For the purposes of this Section 11(a)(iv) the
value of any Common Stock Equivalent on any date shall be the same as the value
of the Common Stock, as determined pursuant to the previous sentence, on such
date.
(b) If the Company shall at any time on or after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
holders of Preferred Stock entitling them to subscribe for or purchase Preferred
Stock or Equivalent Shares (or securities convertible into Preferred Stock or
Equivalent Shares) at a price per share of Preferred Stock or Equivalent Shares
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(or, in the case of a convertible security, having a conversion price per share
of Preferred Stock or Equivalent Shares) less than the Current Market Price per
share of Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock and Equivalent Shares (if
any) outstanding on such record date, plus the number of shares of Preferred
Stock or Equivalent Shares, as the case may be, which the aggregate exercise
and/or conversion price for the total number of shares of Preferred Stock or
Equivalent Shares, as the case may be, which are obtainable upon exercise and/or
conversion of such rights, options, warrants or convertible securities would
purchase at such Current Market Price, and the denominator of which shall be the
number of shares of Preferred Stock and Equivalent Shares (if any) outstanding
on such record date, plus the number of additional shares of Preferred Stock or
Equivalent Shares, as the case may be, which may be obtained upon exercise
and/or conversion of such rights, options, warrants or convertible securities.
In case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by a majority of the Continuing Directors (or, if
no Continuing Directors are then in office, by the Board of Directors of the
Company), whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent. Preferred Stock and
Equivalent Shares owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not issued following such adjustment, the Purchase Price shall be readjusted to
be the Purchase Price which would have been in effect if such record date had
not been fixed.
(c) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to holders of
Preferred Stock (including any such distribution made in connection with a
reclassification of the Preferred Stock or a consolidation or merger in which
the Company is the surviving corporation) of securities (other than Preferred
Stock and rights, options or warrants referred to in Section 11 (b)), cash
(other than a regular periodic cash dividend at an annual rate not in excess of
(x) 125% of the annual rate of the regular cash dividend paid on the Preferred
Stock during the immediately preceding fiscal year (or, if the Preferred Stock
was not outstanding during such preceding fiscal year, then 125% of the annual
rate of the regular cash dividend paid on the Common Stock during such year), or
(y) in the event that a regular cash dividend was not paid on the Preferred
Stock (or Common Stock) during such preceding fiscal year, 5% of the Current
Market Value of the Preferred Stock on the date such regular cash dividend was
first declared), property, evidences of indebtedness, or assets, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price per share of
Preferred Stock on such record date, less the fair market value (as determined
in good faith by a majority of the Continuing Directors (or if no Continuing
Directors are then in office, by the Board of Directors of the Company) whose
determination shall be described in a statement filed with the
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Rights Agent) of such securities, cash, property, evidences of indebtedness or
assets to be so distributed in respect of one share of Preferred Stock, and the
denominator of which shall be such Current Market Price per share of Preferred
Stock on such record date. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not made
following such adjustment, the Purchase Price shall be readjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed
(d) Except as provided below, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(d) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent to the nearest
ten-thousandth of a share of Common Stock, or to the nearest ten-millionth of a
share of Preferred Stock, as the case may be. Notwithstanding the first sentence
of this Section 11(d), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the Expiration Date.
(e) If, as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) of this Agreement, the holder of any Right thereafter exercised
shall become entitled to receive any securities of the Company other than shares
of Preferred Stock, thereafter the Purchase Price and the number of such other
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 with respect to the shares of Preferred Stock
contained in this Section 11 and the provisions of Sections 7, 9, 10, 12, 13, 14
and 24 with respect to the shares of Preferred Stock shall apply on like terms
to any such other securities.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock or other securities, cash or other property purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(g) Unless the Company shall have exercised its election as provided in
Section 11(h), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11 (a)(i), 11 (b) and 11 (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-millionth of a share of Preferred Stock) obtained by (i) multiplying the
number of one one-thousandths of a share of Preferred Stock covered by a Right
immediately prior to adjustment pursuant to this Section 11(g) by the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii)
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dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(h) The Company may elect, on or after the date of any adjustment of
the Purchase Price or any adjustment to the number of shares of Preferred Stock
for which a Right may be exercised, to adjust the number of Rights, in lieu of
an adjustment in the number of one one-thousandths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right outstanding prior
to such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment by the Purchase
Price in effect immediately after such adjustment. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and. if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter but if the Rights Certificates have been
issued, shall be at least 10 days after the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(h) the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates
on such record date a new Rights Certificate evidencing, subject to Section 14,
the additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be distributed
to such holders of record, in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment and upon
surrender thereof (if required by the Company), new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment Rights Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for in this Agreement (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number or kind of shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-thousandth of a share of Preferred Stock and the
number of shares of Preferred Stock which were expressed in the initial Rights
Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of one one-thousandth of a
share of Preferred Stock issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable one one-thousandth shares of such Preferred Stock at such adjusted
Purchase Price.
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(k) In any case in which this Section 11 shall require 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 issuance to
the holder of any Right exercised after such record date the shares of Preferred
Stock and other securities, cash or property of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due ▇▇▇▇ or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or other securities, cash or property upon the
occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any combination or subdivision of the Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the Current Market Price,
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable or exercisable for Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to in this Section
11, hereafter made by the Company to holders of its Preferred Stock, shall not
be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not (i) consolidate
with, (ii) merge with or into, or (iii) directly or indirectly sell, lease, or
otherwise transfer or dispose of (in one transaction or a series of related
transactions) assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries taken as a whole, to any other
Person if (A) at the time of or immediately after such consolidation, merger,
sale, lease, transfer or disposition there are any rights, warrants, securities
or other instruments outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (B) prior to, simultaneously with or immediately after
such consolidation, merger, sale, lease, transfer or disposition the
stockholders (or equity holders) of the Person who constitutes, or would
constitute, the Principal Party in such transaction shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates or (C) the form or nature of organization of the Principal Party
would preclude or limit the exercisability of the Rights. The Company shall not
consummate any such consolidation, merger, sale, lease, transfer or disposition
unless prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11 (m).
(n) The Company covenants and agrees that, after the Stock Acquisition
Date it will not, except as permitted by Section 11(a)(iv), 26 or 29(b) of this
Agreement, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such
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action will, directly or indirectly, diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, if the
Company shall at any time prior to the Distribution Date (i) pay a dividend or
distribution on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares then the number of
Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, and the Purchase Price
under, and the number of one one-thousandths of a share of Preferred Stock
issuable in respect of, the Rights, shall be proportionately adjusted, so that
following such event one Right (with the Purchase Price and the number of one
one-thousandths of a share proportionately adjusted thereunder) shall thereafter
be associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date For example, if the
Company effects a two-for-one stock split at a time when each Right (if it
becomes exercisable) would entitle the holder to purchase one one-thousandth of
a share of Preferred Stock for a Purchase Price of $"Z", then following such
stock split each previous Right would be split into two current Rights and
thereafter each current Right, upon becoming exercisable would (subject to
further adjustment) entitle the holder to purchase one two thousandth of a share
of Preferred Stock at a Purchase Price of 1/2 X $"Z".
Section 12. Certification of Adjustments. Whenever an adjustment is
made as provided in Sections 11 and 13, 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 Stock a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Rights Certificate (or, if no
Rights Certificates have been issued, to each holder of a certificate
representing shares of Common Stock) in accordance with Section 2.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. Any adjustment to be made pursuant to Sections
11 and 13 of this Agreement shall be effective as of the date of the event
giving rise to such adjustment.
Section 13. Consolidation. Merger or Sale or Transfer of Assets or
Earning Power.
(a) A "Business Combination" shall be deemed to occur in the event
that, in or following a Triggering Event (i) the Company shall. directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(m) and Section 11(n) of this Agreement) in a transaction in which the Company
is not the continuing, resulting or surviving corporation of such merger or
consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) and Section 11(n) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting
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or surviving corporation of such merger or consolidation and, in connection with
such merger or consolidation, all or part of the Common Stock shall be changed
(including, without limitation, any conversion into or exchange for securities
of the Company or of any other Person, cash or any other property), (iii) the
Company shall, directly or indirectly, effect a share exchange in which all or
part of the Common Stock shall be changed (including, without limitation, any
conversion into or exchange for securities of any other Person, cash or any
other property) or (iv) the Company shall, directly or indirectly, sell, lease,
exchange, mortgage, pledge or otherwise transfer or dispose of (or one or more
of its Subsidiaries shall directly or indirectly sell, lease, exchange,
mortgage, pledge or otherwise transfer or dispose of), in one transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any other Person (other than the Company or any of its Subsidiaries
in one or more transactions each and all of which comply with Section 11 (m) and
Section 11 (n) of this Agreement).
In the event of a Business Combination, proper provision shall be made
so that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise thereof at the
Purchase Price immediately prior to the first occurrence of a Triggering Event
multiplied by the number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first occurrence of a
Triggering Event (without giving effect to the Triggering Event) in accordance
with the terms of this Agreement, such number of shares of Common Stock of the
Principal Party as shall be equal to the result obtained by (x) multiplying the
Purchase Price immediately prior to the first occurrence of a Triggering Event
by the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Triggering
Event (without giving effect to the Triggering Event), and (y) dividing that
product by 50% of the Current Market Price per share of the Common Stock of such
Principal Party immediately prior to the consummation of such Business
Combination All shares of Common Stock of any Person for which any Right may be
exercised after consummation of a Business Combination as provided in this
Section 13(a) shall. when issued upon exercise thereof in accordance with this
Agreement, be duly and validly authorized and issued fully paid, nonassessable,
freely tradeable, not subject to liens or encumbrances, and free of preemptive
rights, rights of first refusal or any other restrictions or limitations on the
transfer or ownership thereof of any kind or nature whatsoever.
(b) After consummation of any Business Combination, (i) the Principal
Party shall be liable for. and shall assume, by virtue of such Business
Combination and without the necessity of any further act, all the obligations
and duties of the Company pursuant to this Agreement, (ii) the term "Company" as
used in this Agreement shall thereafter be deemed to refer to such Principal
Party, and (iii) such Principal Party shall take all steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such Business Combination as
necessary to ensure that the provisions of this Agreement shall
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thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights.
(c) The Company shall not consummate any Business Combination unless
prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13, (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such Business Combination,
the Principal Party, at its own expense, shall (A) prepare and file, if
necessary, a registration statement on an appropriate form under the Securities
Act with respect to the Rights and the securities purchasable upon exercise of
the Rights, (B) use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date, (C) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act, (D) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the Rights
under the state securities or "blue sky" laws of such jurisdictions as may be
necessary or appropriate, (E) use its best efforts to list the Rights and the
securities purchasable upon exercise of the Rights on a United States national
securities exchange, and (F) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights, (iii) the Company and the
Principal Party shall have furnished to the Rights Agent an opinion of
independent counsel stating that such supplemental agreement is a legal, valid
and binding agreement of the Principal Party enforceable against the Principal
Party in accordance with its terms, and (iv) the Company and the Principal Party
shall have filed with the Rights Agent a certificate of a nationally recognized
firm of independent accountants setting forth the number of shares of Common
Stock of such issuer which may be purchased upon the exercise of each Right
after the consummation of such Business Combination
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a) Following a
Business Combination, the provisions of Section 11(a)(ii) of this Agreement
shall be of no effect.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number of shares of Preferred Stock (or fractions of a share)
or other securities, cash or other property for
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which a Right is exercisable or the number of Rights outstanding or associated
with each share of Common Stock 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 13, unless the
terms of this Agreement are amended so as to preserve such benefits.
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the event
the nature of the organization of any Principal Party shall preclude or limit
the acquisition of Common Stock of such Principal Party upon exercise of the
Rights as required by Section 13(a) as a result of a Business Combination, it
shall be a condition to such Business Combination that such Principal Party
shall take such steps (including, but not limited to, a reorganization) as may
be necessary to ensure that the benefits intended to be derived under this
Section 13 upon the exercise of the Rights are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, the Company may at its option pay to the registered holders
of the Rights Certificates with respect to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of a Right
for the Trading Day immediately prior to the date on which such fractional
Rights otherwise would have been issuable. The closing price for any Trading Day
shall be the last sale price on such day, regular way or in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, on such day, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal United States national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any United States national securities exchange the last
quoted sale price on such day or, if not so quoted, the average of the high bid
and low asked prices on such day in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on such day the Rights are not
quoted by any such system, the average of the closing bid and asked prices on
such day as furnished by a professional market maker making a market in the
Rights selected by a majority of the Continuing Directors (or if no Continuing
Directors are then in office,
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the Board of Directors of the Company). If on such day no such market maker is
making a market in the Rights, the current market value of the Rights on such
day shall be determined in good faith by a majority of the Continuing Directors
(or if no Continuing Directors are then in office, the Board of Directors of the
Company), whose determination shall be described in a statement filed with the
Rights Agent and shall be binding and conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-thousandth
of a share of Preferred Stock, the Company may at its option (i) issue scrip or
warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive a full one one-thousandth of a share of Preferred
Stock upon the surrender of such scrip or warrants aggregating a full one
one-thousandth of a share of Preferred Stock, or (ii) pay to the registered
holders of Rights Certificates at the time such Rights Certificates are
exercised as provided in this Agreement an amount in cash equal to the same
fraction of the current market value of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of a share of Preferred Stock
shall be the closing price of a share of Preferred Stock (as determined pursuant
to the second sentence of the definition of "Current Market Price" in Section 1)
for the Trading Day immediately prior to the date of such exercise
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Stock Equivalents or to distribute certificates which
evidence fractional shares of Common Stock or Common Stock Equivalents. In lieu
of such fractional shares of Common Stock or Common Stock Equivalents the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) Current Market Price of
the Company's Common Stock
(d) The holder of a Right by his acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement)
Section 15. Rights of Action. Except as otherwise provided, all rights
of action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior
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to the Distribution Date, any registered holders of associated Common Stock),
and any registered holder of any Rights Certificate (or, prior to the
Distribution Date, any share of associated Common Stock), without the consent of
the Rights Agent or of the holder of any other Right, may, on his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
rights pursuant to this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights. Every holder of a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificate or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the Common Stock
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 17. Rights Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote or to receive dividends or
distributions or shall be deemed for any purpose the holder of Preferred Stock
or any other securities, cash or other property which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right (i) to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, (ii) to give or withhold consent to any corporate action,
(iii) to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24), (iv) to receive dividends, distributions or
subscription rights, (v) to institute, as a holder of Preferred Stock or other
securities issuable on exercise of the Rights represented by any Rights
Certificate any derivative
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action on behalf of the Company, or otherwise, until and only to the extent that
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith, willful misconduct or breach of this Agreement on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Preferred Stock or Common Stock 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 reasonably believed by it to be genuine and to be signed,
executed and, when necessary, verified or acknowledged, by the proper Person or
Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any document or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights 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 Rights Certificate so countersigned,
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent, and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
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35
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board and Chief Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights Agent, and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the gross
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agent.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof), nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate;
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nor shall it be responsible for any change or adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Sections
3, 11, 13 or 23 or the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any change or adjustment
is required), nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock, Common Stock or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock, Common Stock or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board and Chief Executive Officer, the President, any Vice
President, the Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and 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 or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause I and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock by
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registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock or Preferred Stock by registered or certified mail, and to the
holders of the Rights 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. Notwithstanding any other
provision of this Agreement, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
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 corporation organized and doing business
under the laws of the United States or of the State of Tennessee (or of any
other state of the United States so long as such corporation is authorized to
conduct a corporate trust or banking business in the State of Tennessee) in good
standing, which is authorized under such laws to exercise 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 After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed, but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for such purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock or Preferred Stock and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing new
Rights in such form as may be approved by a majority of the Continuing Directors
(or if no Continuing Directors are then in office, by the Board of Directors of
the Company) to reflect any adjustment or change in the Purchase Price per share
and the number or kind or class of securities, cash or other property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement.
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Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the Stock Acquisition Date and (ii) the
Expiration Date, redeem all but not less than all of the then-outstanding Rights
at a redemption price of $.01 per Right (the "Redemption Price") appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement. The Company may, at its option, pay
the Redemption Price in cash, shares (including fractional shares) of Common
Stock (based on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors.
(b) At the time and date of effectiveness set forth in any resolution
of the Board of Directors of the Company ordering the redemption of the Rights,
without any further action and without any further 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; provided, however, that such
resolution of the Board of Directors of the Company may be revoked, rescinded or
otherwise modified at any time prior to the time and date of effectiveness set
forth in such resolution, in which event the right to exercise will not
terminate at the time and date originally set for such termination by the Board
of Directors of the Company. As soon as practicable after the action of the
Board of Directors of the Company ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and to the
holders of the then-outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the issuance of Rights Certificates, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed in
the manner provided in this Agreement shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made 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. In the case of a redemption permitted under this Section 23, the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the issuance of the Rights Certificates,
on the registry books of the transfer agent for the Common Stock, and upon such
action, all outstanding Rights Certificates shall be null and void without any
further action by the Company. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23, and other
than in connection with the purchase of shares of Common Stock prior to the
earlier of the Distribution Date and the Expiration Date.
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Section 24. Notice of Certain Events. In case the Company, on or after
the Distribution Date, shall propose to (a) pay any dividend payable in stock of
any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
periodic cash dividend at an annual rate not in excess of 125% of the annualized
rate of the cash dividend paid on the Preferred Stock during the immediately
preceding fiscal year), or (b) offer to the holders of its Preferred Stock
rights, options, or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (c) effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock, a change in the par value of such
Preferred Stock or a change from par value to no par value), or (d) directly or
indirectly effect any consolidation or merger into or with, or effect any sale,
lease, exchange, or other transfer or disposition (or to permit one or more of
its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition), in one transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (e) effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 25, a notice of
such proposed action, which shall specify any record date for the purposes of
such stock dividend or distribution of rights, or the date on which such
reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition, liquidation, dissolution, or winding up is to take place and if
such holders will or may participate therein, the date of participation therein
by the holders of Common Stock and/or Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein, if any, by
the holders of Preferred Stock, whichever shall be the earlier. The failure to
give notice as required by this Section 24 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote
upon any such action.
In case any Triggering Event or Business Combination shall occur, then,
in any such case, the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, in accordance with Section 25, notice of
the occurrence of such Triggering Event or Business Combination, which shall
specify the Triggering Event or Business Combination and include a description
of the consequences of such event to holders of Rights under Section 11(a)(ii)
or 13.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agreement) as follows:
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King Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Union Planters National Bank
Corporate Trust Department
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Officer
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
Section 26. Supplements and Amendments
(a) At any time prior to the Stock Acquisition Date, a majority of the
Continuing Directors (or, if no Continuing Directors are then in office, the
Board of Directors of the Company) may, except as provided in Section 26(c), and
the Rights Agent shall, if so directed, supplement or amend any provision of
this Agreement without the approval of any holders of Rights; provided, however,
that no amendment shall adversely affect the rights of any Exempt Person without
the written consent of such Person
(b) From and after the Stock Acquisition Date, a majority of the
Continuing Directors (or, if no Continuing Directors are then in office, the
Board of Directors of the Company) may, except as provided in Section 26(c), and
the Rights Agent shall, if so directed, amend this Agreement without the
approval of any holders of Rights Certificates (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained in this Agreement which may be
defective or inconsistent with any other provision of this Agreement, or (iii)
to change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person).
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(c) No supplement or amendment to this Agreement shall be made which
changes the Purchase Price, the number of shares of Preferred Stock, other
securities, cash or other property for which a Right is then exercisable or the
Redemption Price or provides for an earlier Expiration Date.
(d) Immediately upon the action of a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors) providing for any amendment or supplement pursuant to this Section
26, and without any further action and without notice, such amendment or
supplement shall be deemed effective. Promptly following the adoption of any
amendment or supplement pursuant to this Section 26, the Company shall deliver
to the Rights Agent a copy, certified by the Secretary or any Assistant
Secretary of the Company, of resolutions of a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors of the Company) adopting such amendment or supplement. Upon such
delivery, the amendment or supplement shall be administered by the Rights Agent
as part of this Agreement in accordance with the terms of this Agreement as so
amended or supplemented
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Benefits of this Agreement; Determinations and Actions by
the Board of Directors. Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent, an Exempt Person and the
registered holders of Rights any legal or equitable right, remedy or claim under
this Agreement, it being understood that each Exempt Person has relied, and will
continue to rely, on the exemption set forth herein, and, except as set forth
above this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent and the registered holders of the Rights.
For purposes of this Agreement any calculation of the number of shares
of Common Stock outstanding at any particular time shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act (or any successor provision); provided,
however, that any such calculation made for purposes of determining the
particular percentage of outstanding shares of Common Stock of which any Person
is the Beneficial Owner shall also include any such other securities not then
actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section l(d) of this
Agreement The Board of Directors of the Company (or, where specifically provided
for herein, a majority of the Continuing Directors) shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Continuing Directors, the Board of Directors
of the Company or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination
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to redeem or not redeem the Rights, to exchange or not exchange the Rights for
Common Stock or other securities of the Company, or to amend or supplement this
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors of the Company (or,
where specifically provided for herein, a majority of the Continuing Directors)
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other Persons, and (y) not
subject the Board of Directors of the Company or the Continuing Directors to any
liability to the holders of the Rights.
Section 29. Severability.
(a) If any term, provision, covenant or restriction of this Agreement
or the application thereof to any Person or to any circumstance is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(b) If legal counsel to the Company delivers to the Company a written
opinion to the effect that, as a result of changes in federal law or Tennessee
law, any term, provision, covenant or restriction of this Agreement may be
invalid, void, or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
Section 30. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Tennessee and for all purposes shall be governed by and construed in
accordance with the internal laws of such state applicable to contracts to be
made and performed entirely within such State.
Section 31. Counterparts. This Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
Section 33. Grammatical Construction. Throughout this Agreement, where
such meanings would be appropriate, (a) any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms (e g., references to "he"
shall also include "she" and "it" and references to "who" and "whom" shall also
include "which"), and (b) the plural form of nouns and
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pronouns shall include the singular and vice-versa (e g., references to
"Continuing Directors" shall also mean "Continuing Director" if there be only
one Continuing Director at the relevant time).
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
KING PHARMACEUTICALS, INC.
By:
-------------------------
Title:
----------------------
UNION PLANTERS NATIONAL BANK
By:
-------------------------
Title:
----------------------
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EXHIBIT "A"
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
KING PHARMACEUTICALS, INC.
Pursuant to the Tennessee Business Corporation Act
I, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of the Board and Chief Executive Officer
of King Pharmaceuticals, Inc., a corporation organized and existing under the
laws of the State of Tennessee, in accordance with the provisions thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Second Amended and Restated Charter, the Board of Directors on ___________
__, 1997, adopted the following resolution creating a series of 50,000 shares of
Preferred Stock designated as Junior Participating Preferred Stock, Series A:
RESOLVED, that pursuant to the authority vested in the Board by Section
2 of the Second Amended and Restated Charter, a series of Preferred Stock of the
Corporation be, and it hereby is, created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Junior Participating Preferred Stock, Series A" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
50,000.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the fifteenth day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred
A-1
45
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $25.00 or (b) the Adjustment Number (as defined below) times the
aggregate per share amount of all cash dividends, and the Adjustment Number
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. The "Adjustment Number" shall initially be 1000. In
the event the Corporation shall at any time after ___________ __, 1997 (i)
declare or pay any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock into a greater number of shares or
(iii) combine the outstanding Common Stock into a smaller number of shares, then
in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $25.00 per share on
the Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
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Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(a) Each share of Series A Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number (as adjusted from
time to time pursuant to Section 2A hereof) on all matters submitted to a vote
of the stockholders of the Corporation.
(b) Except as otherwise provided herein, in the Second Amended and
Restated Charter or bylaws, as amended, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the Corporation.
(c) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends
thereon, the occurrence of such contingency shall ▇▇▇▇ the beginning of
a period (herein called a "default period") that shall extend until
such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly period on all
shares of Series A Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period,
(1) the number of Directors shall be increased by two, effective as of
the time of election of such Directors as herein provided, and (2) the
holders of Series A Preferred Stock and the holders of other Preferred
Stock upon which these or like voting rights have been conferred and
are exercisable (the "Voting Preferred Stock") with dividends in
arrears equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect such two
Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section
3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that such voting right shall not be
exercised unless the holders of at least one-third in number of the
shares of Voting Preferred Stock outstanding shall be present in person
or by proxy. The absence of a quorum of the holders of Common Stock
shall not affect the exercise by the holders of Voting Preferred Stock
of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than 10%
of the total number of shares of Voting Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting
of the holders of Voting Preferred Stock, which meeting shall thereupon
be called by the Chairman of the Board, the President, a Vice President
or the Secretary of the Corporation. Notice of such meeting and of any
annual
A-3
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meeting at which holders of Voting Preferred Stock are entitled to vote
pursuant to this paragraph (C)(iii) shall be given to each holder of
record of Voting Preferred Stock by mailing a copy of such notice to
him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than
10 days and not later than 60 days after such order or request or, in
default of the calling of such meeting within 60 days after such order
or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than 10%
of the total number of shares of Voting Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, after the holders of Voting
Preferred Stock shall have exercised their right to elect Directors
voting as a class, (x) the Directors so elected by the holders of
Voting Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration of the
default period, and (y) any vacancy in the Board of Directors may be
filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class or classes of stock which elected
the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class
or classes of stock shall include Directors elected by such Directors
to fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Voting Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Voting Preferred Stock as a class shall terminate and (z)
the number of Directors shall be such number as may be provided for in
the Amended and Restated Certificate of Incorporation or Amended and
Restated By-Laws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by law or
in the Amended and Restated Certificate of Incorporation or Amended and
Restated By-Laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be
filled by a majority of the remaining Directors.
(d) Except as set forth herein, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and
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unpaid dividends and distributions, whether or not declared, on shares
of Series A Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled:
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any 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 Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
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49
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the greater of (i) $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, and (ii) an aggregate amount per
share, equal to the Adjustment Number (as adjusted from time to time pursuant to
Section 2A hereof) times the aggregate amount to be distributed per share to
holders of Common Stock, or (B) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Section 7. Consolidation, Merger. etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2A hereof) times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Amendment. The Second Amended and Restated Charter of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this ______ day
of _______, 1997.
-------------------------------------------------
Chairman of the Board and Chief Executive Officer
A-6
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EXHIBIT "B"
[Form of Rights Certificate]
Certificate No. R- __________Rights
NOT EXERCISABLE AFTER DECEMBER _, 2007 OR EARLIER IF NOTICE
OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION OR EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT. ]
Rights Certificate
KING PHARMACEUTICALS, INC.
This certifies that ____________________________, or registered
assigns. is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of _______ ___, 1997 (the "Rights
Agreement") between King Pharmaceuticals, Inc., a Tennessee corporation (the
"Company"). and Union Planters National Bank, a national banking corporation
(the "Agent"), unless notice of redemption shall have been previously given by
the Company, to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Eastern Time) on December ___, 2007, at the principal corporate trust office of
the Rights Agent, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid nonassessable share of the Junior Participating
Preferred Stock, Series A, no par value per share, of the Company (the
"Preferred Stock"), at a purchase price (the "Purchase Price") of $.01 per one
one-thousandth share, upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase duly executed. The Purchase Price may be
paid in cash or by certified bank check or bank draft payable to the order of
the Company
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities, cash or other property which
may be purchased upon the exercise
B-1
51
of the Rights evidenced by this Rights Certificate are subject to modification
and adjustment upon the happening of certain events.
If the Rights evidenced by this Rights Certificate are or were formerly
beneficially owned, on or after the earlier of the Distribution Date and the
Stock Acquisition Date, by (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, or (ii) a direct or indirect transferee of an Acquiring
Person (or of any Associate or Affiliate of an Acquiring Person), such Rights
may become null and void, in which event the holder of any such Right (including
any subsequent holder) shall not have any right with respect to such Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates Capitalized
terms used but not defined in this Rights Certificate that are defined in the
Rights Agreement shall have the same meanings ascribed to them in the Rights
Agreement Copies of the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned office of the Rights Agent.
This Rights Certificate with or without other Rights Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (a) may be redeemed by the Board of Directors of the Company
at its option at a redemption price of $. 01 per Right subject to adjustment,
payable, at the election of the Company in cash or shares (including fractional
shares) of Common Stock or such other consideration as the Board of Directors
may determine, at any time prior to the earlier of (i) 12:00 a m. (midnight,
Eastern Time) on the Stock Acquisition Date, and (ii) the Expiration Date, or,
(b) may be exchanged after the Stock Acquisition Date by the Board of Directors
of the Company at its option in whole or in part for shares of the Company's
Common Stock or other Company securities.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
but in lieu thereof the Company may elect to (i) evidence fractional shares by
depositary receipts, (ii) issue scrip or warrants in registered form (either
represented by a certificate
B-2
52
or uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive a full share upon the surrender of such scrip or
warrants aggregating a full share, or (iii) make a cash payment, as provided in
the Rights Agreement
No holder of this Rights Certificate, as such, shall be entitled to
vote or to receive dividends on, or shall be deemed for any purpose the holder
of, Preferred Stock or of any other securities, cash or property which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Certificate be construed to confer upon the holder
hereof, 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 (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent
* * * * *
B-3
53
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _________________,________.
KING PHARMACEUTICALS, INC.
By:
--------------------------
Countersigned:
By:
-------------------------------
Authorized Signature
B-4
54
[Form of Reverse Side of Rights Certificate]
FORM OF ASSlGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned _______________________________
hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name and address of transferee)
____________ Rights evidenced by this Rights Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _________________ Attorney, to transfer the said Rights and a Rights
Certificate evidencing such Rights on the books of King Pharmaceuticals, Inc.,
with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned).
Please insert Social Security or
other identifying number of transferee: _________________________________
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
55
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
1. this Rights Certificate or any Rights evidenced hereby [ ] are [ ]
are not being sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement);
2. after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire any of the Rights evidenced by this
Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ___________________________ -----------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
NOTICE
The signature on the foregoing Form of Assignment must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
56
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: KING PHARMACEUTICALS, INC.
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or other property issuable upon the
exercise of such Rights and requests that certificates for such shares or other
securities be issued in the name of, and such cash or other property be paid to:
Please insert social security
or other identifying number: ________________________
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby exercised shall be mailed to and registered in the name
of the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned):
Please insert social security
or other identifying number. _________________________
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
57
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
1. the Rights evidenced by this Rights Certificate are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement);
2. after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ___________________________ -----------------------------
Signature
Signature Guaranteed
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever
In the event the certification set forth above in the Form of Election
to Purchase is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.