Exhibit 4.1
================================================================================
RIGHTS AGREEMENT
Dated as of August 9, 2002
between
ICOS CORPORATION
and
MELLON INVESTOR SERVICES LLC
as Rights Agent
================================================================================
CONTENTS
SECTION 1. CERTAIN DEFINITIONS.........................................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT.................................................8
SECTION 3. ISSUANCE OF RIGHTS AND RIGHTS CERTIFICATES..................................8
SECTION 4. FORM OF RIGHTS CERTIFICATES................................................10
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION...............................10
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
LOST, STOLEN, DESTROYED OR MUTILATED RIGHTS CERTIFICATES;
UNCERTIFICATED RIGHTS......................................................11
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS..............................12
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES........................14
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES...........................15
SECTION 10. PREFERRED SHARES RECORD DATE...............................................16
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON; EXCHANGE
OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS................................16
SECTION 12. CERTAIN ADJUSTMENTS........................................................20
SECTION 13. CERTIFICATE OF ADJUSTMENT..................................................22
SECTION 14. ADDITIONAL COVENANTS.......................................................22
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES....................................22
SECTION 16. RIGHTS OF ACTION...........................................................24
SECTION 17. AGREEMENT OF RIGHTS HOLDERS................................................24
SECTION 18. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.........................25
-i-
SECTION 19. CONCERNING THE RIGHTS AGENT................................................25
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT..................26
SECTION 21. DUTIES OF RIGHTS AGENT.....................................................27
SECTION 22. CHANGE OF RIGHTS AGENT.....................................................29
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHTS CERTIFICATES......................30
SECTION 24. REDEMPTION AND TERMINATION.................................................30
SECTION 25. NOTICES....................................................................31
SECTION 26. SUPPLEMENTS AND AMENDMENTS.................................................32
SECTION 27. SUCCESSORS.................................................................33
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY THE
COMPANY'S BOARD OF DIRECTORS...............................................33
SECTION 29. SEVERABILITY...............................................................34
SECTION 30. GOVERNING LAW..............................................................34
SECTION 31. COUNTERPARTS; EFFECTIVENESS................................................34
SECTION 32. DESCRIPTIVE HEADINGS.......................................................34
EXHIBIT INDEX............................................................................36
-ii-
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of August 9, 2002 between ICOS CORPORATION,
a Delaware corporation (the "Company"), and Mellon Investor Services LLC, a New
Jersey limited liability company, as Rights Agent (the "Rights Agent").
The Board of Directors of the Company (the "Board of Directors") has
authorized and declared a dividend of one Right (as hereinafter defined) for
each share of common stock, par value $0.01 per share, of the Company (the
"Common Stock") outstanding at the Close of Business (as hereinafter defined) on
August 27, 2002 (the "Record Date"). The Board of Directors has further
authorized the issuance of one Right (as such number may be hereinafter adjusted
pursuant to the provisions of this Rights Agreement) with respect to each share
of Common Stock that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Expiration Date
(as such terms are hereinafter defined); provided, however, that the Company may
issue Rights with respect to shares of Common Stock that shall become
outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date in accordance with the provisions of
Section 23. Each Right shall initially represent the right to purchase one
one-hundredth (1/100) of a share of Series A Junior Participating Preferred
Stock, par value $0.01 per share, of the Company (the "Preferred Shares"),
having the powers, rights and preferences set forth in the Certificate of
Designation (as hereinafter defined) attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual agreements
set forth in this Rights Agreement, the Company and the Rights Agent hereby
agree as follows:
SECTION 1. CERTAIN DEFINITIONS
For purposes of this Rights Agreement, the following terms have the
meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding, but shall
not include (a) the Company, any Subsidiary of the Company, any employee benefit
or compensation plan of the Company or of any of its Subsidiaries, or any Person
holding Common Shares for or pursuant to the terms of any such employee benefit
or compensation plan or (b) any Person who has become and is the Beneficial
Owner of 15% or more of the Common Shares outstanding at the time solely as the
result of (i) a change in the aggregate number of Common Shares outstanding
since the last date on which such Person acquired Beneficial Ownership of any
Common Shares, (ii) the acquisition by such Person or one or more of its
Affiliates or Associates of Beneficial Ownership of additional Common Shares if
such acquisition was made in the good faith belief that such acquisition would
not (A) cause the Beneficial Ownership by such Person, together with its
Affiliates and Associates, to equal or exceed 15% of the Common Shares
-1-
outstanding at the time of such acquisition and such good faith belief was based
on the good faith reliance on information contained in publicly filed reports or
documents of the Company that are inaccurate or out-of-date or (B) otherwise
cause a Distribution Date or the adjustment provided for in Section 11(a) to
occur or (iii) the acquisition by such Person or one or more of its Affiliates
or Associates of Beneficial Ownership of additional Common Shares if the Board
of Directors of the Company determines that such acquisition was made in good
faith without the knowledge by such Person or Affiliates or Associates that such
Person would thereby become an Acquiring Person (which determination of the
Board of Directors of the Company shall be conclusive and binding on such
Person, the Rights Agent, the holders of the Rights and all other Persons).
Notwithstanding clause (b)(ii) or (b)(iii) of the prior sentence, if any Person
that is not an Acquiring Person due to such clause (b)(ii) or (b)(iii) does not
reduce its percentage of Beneficial Ownership of Common Shares to less than 15%
by the Close of business on the tenth calendar day after notice from the Company
(the date of notice being the first day) that such Person's Beneficial Ownership
of Common Shares would make it an Acquiring Person, such Person shall, at the
end of such ten calendar day period, become an Acquiring Person (and such clause
(b)(ii) or (b)(iii) shall no longer apply to such Person). For purposes of this
definition, the determination whether any Person acted in "good faith" shall be
conclusively determined by the Board of Directors of the Company.
"Affiliate" and "Associate," when used with reference to any Person,
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act (as hereinafter defined),
as in effect on the date of this Rights Agreement.
A Person shall be deemed to be the "Beneficial Owner" of, to
"Beneficially Own," and to have "Beneficial Ownership" of, any securities:
(a) that such Person or any of such Person's Affiliates or
Associates is deemed to "Beneficially Own" within the meaning of Rule 13d-3 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Rights Agreement;
(b) that such Person or any of such Person's Affiliates or
Associates has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed to
be the Beneficial Owner of, to Beneficially Own, or to have Beneficial Ownership
of, any securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange thereunder or
(ii) the right to vote pursuant to any agreement, arrangement or understanding
(written or oral); provided, however, that a Person shall not be deemed to be
the Beneficial Owner of, to Beneficially Own, or to have Beneficial Ownership
of, any security if (A) the agreement, arrangement or understanding (written or
oral) to vote such security arises solely from a revocable proxy or consent
given to such
-2-
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations under the Exchange
Act and (B) the beneficial ownership of such security is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(c) that are Beneficially Owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (written or oral) for
the purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in clause (b)(ii) of this definition) or disposing of any
securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition
shall cause a Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "Beneficially Own," any
securities acquired in a bona fide firm commitment underwriting pursuant to an
underwriting agreement with the Company.
Notwithstanding anything in this definition to the contrary, the phrase
"then outstanding," when used with reference to a Person's Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued and outstanding, together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.
"Book Value," when used with reference to Common Shares issued by any
Person, shall mean the amount of such Person's equity applicable to each Common
Share, determined (a) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price per Common Share
that is less than such Book Value before the exercise or conversion (whether or
not exercisability or convertibility is conditioned upon occurrence of a future
event), (ii) all dividends and other distributions on the capital stock of such
Person declared prior to the date as of which such Book Value is to be
determined and to be paid or made after such date, and (iii) any other
agreement, arrangement or understanding (written or oral), transaction or other
action prior to the date as of which such Book Value is to be determined that
would have the effect of thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in Section
11(c)(i).
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New Jersey or the state of Washington, are
authorized or obligated by law or executive order to close.
-3-
"Certificate of Designation" shall mean the Certificate of Designation
of Series A Junior Participating Preferred Stock setting forth the powers,
preferences, rights, qualifications, limitations and restrictions of such series
of Preferred Stock of the Company, a form of which is attached to this Rights
Agreement as Exhibit A.
"Close of Business" on any given date shall mean 5:00 p.m., Pacific
time, on such date; provided, however, that if such date is not a Business Day,
"Close of Business" shall mean 5:00 p.m., Pacific time, on the next succeeding
Business Day.
"Common Shares," when used with reference to the Company prior to a
Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares," when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which (i) do not limit
(as a maximum amount and not merely in proportional terms) the amount of
dividends or income payable or distributable on such class or series or the
amount of assets distributable on such class or series upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person and (ii) do
not provide that such class or series is subject to redemption at the option of
such Person, or any shares of capital stock or units of equity interests into
which the foregoing shall be reclassified or changed; provided, however, that,
if at any time there shall be more than one such class or series of capital
stock or equity interests of such Person, "Common Shares" of such Person shall
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.
"Common Stock" shall have the meaning set forth in the second paragraph
of this Rights Agreement.
"Company" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement; provided, however, that if there is a
Business Combination, "Company" shall have the meaning set forth in Section
11(c)(iii).
"Control" with respect to any Person shall mean the power to direct the
management and policies of such Person, directly or indirectly, by or through
stock ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more other
Persons by or through stock ownership, agency or otherwise. The terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
"Distribution Date" shall have the meaning set forth in Section 3(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect on the date in question, unless otherwise specifically provided in this
Rights Agreement.
-4-
"Exchange Consideration" shall have the meaning set forth in Section
11(b)(i).
"Expiration Date" shall have the meaning set forth in Section 7(a).
"Formula Number" shall have the meaning set forth in the Certificate of
Designation.
"Major Part," when used with reference to the assets of the Company and
its Subsidiaries as of any date, shall mean assets (a) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (b) accounting for 50% or more of the total value (net of depreciation
and amortization) of all the assets of the Company and its Subsidiaries (taken
as a whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (c) accounting
for 50% or more of the total amount of net income or revenues of the Company and
its Subsidiaries (taken as a whole) as would be shown on or derived from a
consolidated or combined statement of income of the Company and its Subsidiaries
for the period of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in accordance
with generally accepted accounting principles then in effect.
"Market Value," when used with reference to any securities on any date,
shall mean the average of the daily per share closing prices of such securities
for the period that is the shorter of (a) 30 consecutive Trading Days (as
hereinafter defined) immediately prior to but not including the date in question
and (b) the number of consecutive Trading Days beginning on the Trading Day
immediately after the date of the first public announcement of the event
requiring a determination of the Market Value and ending on the Trading Day
immediately prior to but not including the record date of such event; provided,
however, that, in the event that the Market Value of such securities is to be
determined in whole or in part during a period following the announcement by the
issuer of such securities of any action of the type described in Section 12(a)
that would require an adjustment thereunder, then, and in each such case, the
Market Value of such securities shall be appropriately adjusted to reflect the
effect of such action on the market price of such securities. The closing price
for each Trading Day shall be the closing price quoted on the composite tape for
securities listed on the New York Stock Exchange or, if such securities are not
quoted on such composite tape or if such securities are not listed on such
exchange, on the principal United States securities exchange registered under
the Exchange Act (or any recognized foreign stock exchange) on which such
securities are listed, or if such securities are not listed on any such
exchange, the closing price quoted on the Nasdaq Stock Market or, if such
securities are not so quoted, the average of the closing bid and asked
quotations with respect to a share of such securities on the Nasdaq Stock Market
or such other system then in use or, if no such quotations are available, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such securities selected by the Company's Board
of Directors. If on any such Trading Day no market maker is making a market in
such securities, the closing price of such securities on such Trading Day shall
be deemed to be the fair value of such securities as determined in good faith by
the Company's Board of Directors
-5-
(whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent, the holders of Rights and all
other Persons); provided, however, that for the purpose of determining the
closing price of the Preferred Shares for any Trading Day on which there is no
public market for the Preferred Shares or there is no such market maker for the
Preferred Shares, the closing price on such Trading Day shall be deemed to be
the Formula Number times the closing price of the Common Stock on such Trading
Day.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity and shall include any successor (by merger or
otherwise) of such entity.
"Preferred Shares" shall have the meaning set forth in the second
paragraph of this Rights Agreement. Any reference in this Rights Agreement to
Preferred Shares shall be deemed to include any authorized fraction of a
Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person (as hereinafter
defined) in a Business Combination; provided, however, that if such Surviving
Person is a direct or indirect Subsidiary of any other Person, "Principal Party"
shall mean the Person which is the ultimate parent of such Surviving Person and
which is not itself a Subsidiary of another Person. In the event ultimate
control of such Surviving Person is shared by two or more Persons, "Principal
Party" shall mean that Person which is immediately controlled by such two or
more Persons.
"Purchase Price" with respect to each Right shall mean $250.00, subject
to adjustment as provided herein, and shall be payable in lawful money of the
United States of America. All references herein to the Purchase Price shall mean
the Purchase Price as in effect at the time in question.
"Record Date" shall have the meaning set forth in the second paragraph
of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
"Redemption Price" with respect to each Right shall mean $0.01, as such
amount may from time to time be adjusted in accordance with Section 12. All
references in this Rights Agreement to the Redemption Price shall mean the
Redemption Price as in effect at the time in question.
"Registered Common Shares" shall mean Common Shares that are, as of the
date of consummation of a Business Combination, and have continuously been for
the 12 months immediately preceding such date, registered under Section 12 of
the Exchange Act.
"Right" shall mean the right to purchase Preferred Shares (or other
securities) as provided in this Rights Agreement.
-6-
"Rights Agent" shall (a) have the meaning set forth in the introductory
paragraph of this Rights Agreement, (b) mean any successor or replacement to
Mellon Investor Services LLC as provided in Sections 20 and 22, or (c) mean
any additional Person appointed pursuant to Section 2.
"Rights Certificate" shall mean a certificate evidencing a Right in
substantially the form attached to this Rights Agreement as Exhibit B.
"Securities Act" shall mean the Securities Act of 1933, as in effect on
the date in question, unless otherwise specifically provided in this Rights
Agreement.
"Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
"Subsidiary" shall mean a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation) of
which is owned, directly or indirectly, by another Person or by one or more
other subsidiaries of such other Person or by such other Person or by one or
more other subsidiaries of such other Person.
"Summary of Rights" shall mean the Summary of Rights to Purchase
Preferred Shares in substantially the form of Exhibit C.
"Surviving Person" shall mean (a) the Person which is the continuing or
surviving Person in a consolidation or merger specified in Section 11(c)(i)(A)
or 11(c)(i)(B) or (b) the Person to which the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in a transaction specified in Section 11(c)(i)(C); provided,
however, that if the Major Part of the assets of the Company and its
Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of
in one or more related transactions specified in Section 11(c)(i)(C) to more
than one Person, the "Surviving Person" in such case shall mean the Person that
acquired assets of the Company and/or its Subsidiaries with the greatest fair
market value in such transaction or transactions.
"Trading Day" shall mean a day on which the principal national
securities exchange (or principal recognized foreign stock exchange, as the case
may be) on which any securities or Rights, as the case may be, are listed or
admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
-7-
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 of this Rights Agreement,
and the Rights Agent hereby accepts such appointment. The Company may from time
to time appoint one or more co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice thereof to the Rights Agent
(the term "Rights Agent" being used in this Rights Agreement to refer,
collectively, to the Rights Agent together with any such co-Rights Agents). The
Rights Agent shall have no duty to supervise, and in no event shall be liable
for, the acts or omissions of any such co-Rights Agent.
SECTION 3. ISSUANCE OF RIGHTS AND RIGHTS CERTIFICATES
(a) One Right shall be associated with each share of Common Stock
outstanding on the Record Date, each additional share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Expiration Date and each additional share of
Common Stock with which Rights are issued after the Distribution Date but prior
to the earlier of the Redemption Date and the Expiration Date as provided in
Section 23; provided, however, that if the number of outstanding Rights are
combined into a smaller number of outstanding Rights pursuant to Section 12(a),
the appropriate fractional Right determined pursuant to such Section shall
thereafter be associated with each such share of Common Stock.
(b) Until the earlier of (i) the Close of Business on the tenth
Business Day after the Shares Acquisition Date and (ii) the Close of Business on
such date, if any, as may be designated by the Company's Board of Directors
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any of
its Subsidiaries, or any Person holding Common Stock for or pursuant to the
terms of any such employee benefit plan) for outstanding Common Stock, if upon
consummation of such tender or exchange offer such Person could be the
Beneficial Owner of 15% or more of the outstanding Common Stock (the Close of
Business on the earlier of such dates being the "Distribution Date"), (x) the
Rights will be evidenced by the certificates for Common Stock registered in the
names of the holders thereof and not by separate Rights Certificates and (y) the
Rights, including the right to receive Rights Certificates, will be transferable
only in connection with the transfer of Common Stock. The Company will notify
the Rights Agent in writing as promptly as practicable that a Distribution Date
has occurred. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will deliver or cause to be sent (and the Rights Agent, if requested and
provided with a stockholder list and all other relevant information that it may
request) by first-class, postage-prepaid mail to each record holder of Common
Stock as of the Distribution Date, at the address of such holder shown on the
records of the Company, a Rights Certificate evidencing one whole Right for each
share of Common Stock (or for the number of shares of Common Stock with which
one whole Right is then associated if the number of Rights per share of Common
Stock held by such record
-8-
holder has been adjusted in accordance with the proviso in Section 3(a)). If the
number of Rights associated with each share of Common Stock has been adjusted in
accordance with the proviso in Section 3(a), at the time of distributing the
Rights Certificates the Company may make any necessary and appropriate rounding
adjustments so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Right in
accordance with Section 15(a). The Company will notify the Rights Agent in
writing as promptly as practicable of any such adjustments. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates. The Company shall promptly notify the Rights Agent in writing upon
the occurrence of the Distribution Date. Until such notice is received by the
Rights Agent, the Rights Agent may presume conclusively for all purposes that
the Distribution Date has not occurred.
(c) As soon as practicable, and in any event no later than 30 days after
the Record Date, the Company will send a copy of a Summary of Rights, by
first-class, postage-prepaid mail, to each record holder of Common Stock as of
the Close of Business on the Record Date at the address of such holder shown on
the records of the Company. With respect to certificates for Common Stock
outstanding as of the Record Date, until the earliest of the Distribution Date,
the Redemption Date and the Expiration Date, (i) the Rights will be evidenced by
such certificates registered in the names of the holders thereof, together with
a copy of the Summary of Rights attached thereto, and the registered holders of
the Common Stock shall also be the registered holders of the associated Rights,
and (ii) the surrender for transfer of any such certificate, even without a copy
of the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with the Common Stock represented thereby.
(d) Certificates representing Common Stock issued after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Stock), but prior to the earliest of the Distribution Date, the Redemption Date
and the Expiration Date, shall have printed on, written on or otherwise affixed
to them substantially the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in the Rights Agreement dated as of
August 9, 2002 as it may be amended or supplemented from time to
time (the "Rights Agreement"), between ICOS Corporation ("ICOS") and
Mellon Investor Services LLC (or any successor thereto), as Rights
Agent (or between ICOS and any successor Rights Agent under 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 ICOS. 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.
ICOS will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written request
therefor. Rights Beneficially Owned by Acquiring Persons or their
Affiliates or
-9-
Associates (as such terms are defined in the Rights Agreement) and
by any subsequent holder of such Rights are null and void and
nontransferable.
Notwithstanding the requirements of this paragraph (d), neither the omission of
this legend nor the inclusion of a legend that refers to a rights agreement
other than the Rights Agreement shall affect the enforceability of any part of
this Rights Agreement or the rights of any holder of Rights.
SECTION 4. FORM OF RIGHTS CERTIFICATES
The Rights Certificates (and the form of election to purchase and form of
assignment to be printed on the reverse side thereof) shall be in substantially
the form set forth as Exhibit B and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Rights Agreement and which do not affect the rights, duties or
responsibilities of the Rights Agent, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Sections 7,
11 and 23, 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 Preferred Shares as shall be set forth therein for the
Purchase Price set forth therein, subject to adjustment from time to time as
herein provided.
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION
(a) The Rights Certificates shall be executed on behalf of the Company
by the Chief Executive Officer, the President, the Chief Financial Officer, the
Treasurer or a Vice President (whether preceded by any additional title) of the
Company, either manually or by facsimile signature, and shall have affixed
thereon the Company's seal or a facsimile thereof, if any, which shall be
attested by the Secretary, an Assistant Secretary or a Vice President (whether
preceded by any additional title, provided that such Vice President shall not
have also executed the Rights Certificates) of the Company, either manually or
by facsimile signature. The Rights Certificates shall be manually countersigned
by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such an officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates may nevertheless be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such an
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 execution of such Rights
Certificate, shall be a proper
-10-
officer of the Company to sign such Rights Certificate, although at the date of
execution of this Rights Agreement any such person was not such an officer of
the Company.
(b) Following the Distribution Date and receipt by the Rights Agent of
(i) written notice of the occurrence of the Distribution Date pursuant to
Section 3(b), and (ii) all necessary information requested by the Rights Agent
pursuant to Section 3(b), the Rights Agent will keep or cause to be kept, at its
office designated for such purpose, books for registration and transfer of the
Rights Certificates issued under this Rights Agreement. 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, the certificate
number of each Rights Certificate and the date of each Rights Certificate.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; LOST, STOLEN, DESTROYED OR MUTILATED
RIGHTS CERTIFICATES; UNCERTIFICATED RIGHTS
(a) Subject to the provisions of Sections 7(e) and 15, at any time
after the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date and the Expiration Date, any Rights Certificate
or Rights Certificates (other than Rights Certificates representing Rights that
have become null and void pursuant to Section 7(e) or that have been exchanged
pursuant to Section 11(b)) may be transferred, split up, combined or exchanged
for another Rights Certificate or Rights Certificates entitling the registered
holder to purchase a like number of one one-hundredths of a Preferred Share as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent and shall surrender the
Rights Certificate or Rights Certificates to be transferred, split up, combined
or exchanged at the office of the Rights Agent designated for such purpose;
provided, however, that neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any
Rights Certificate surrendered for transfer until the registered holder shall
have properly completed and signed the certification contained in 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
former Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall reasonably request. Thereupon the Rights Agent shall,
subject to the provisions of Sections 7(e) and 15, countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Rights
Certificates.
-11-
The Rights Agent shall have no duty or obligation to take any action
under this Section 6 or under any Section of this Rights Agreement which
requires the payment of taxes or governmental charges unless and until it is
satisfied that all such taxes and/or charges have been paid in full.
(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 valid Rights Certificate, and, in case of such loss, theft or destruction, of
indemnity or security satisfactory to them, and, at the Company's or Rights
Agent's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company will make a
new Rights Certificate of like tenor and deliver such new Rights Certificate to
the Rights Agent for delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision of this Rights Agreement to the
contrary, the Company and the Rights Agent may amend this Rights Agreement to
provide for uncertificated Rights in addition to or in place of Rights evidenced
by Rights Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS
(a) Subject to Section 7(e) and except as otherwise provided in this
Rights Agreement (including Section 11), each Right shall entitle the registered
holder thereof, upon exercise thereof as provided in this Rights Agreement, to
purchase for the Purchase Price, at any time after the Distribution Date and at
or prior to the earlier of (i) the Close of Business on the 10th anniversary of
the date of this Rights Agreement (the Close of Business on such date being the
"Expiration Date") and (ii) the Redemption Date, one one-hundredth (1/100) of a
Preferred Share, subject to adjustment from time to time as provided in Sections
11 and l2.
(b) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Rights Agreement)
in whole or in part at any time after the Distribution Date, upon surrender of
the Rights Certificate with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each one one-hundredth (1/100) of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Expiration Date, (ii) the
Redemption Date, and (iii) the time at which such Rights are exchanged as
provided in Section 11(b).
(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 the Preferred Shares to be purchased, together
with an amount equal to any applicable tax or charge, by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon (i) either (A) promptly requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer
-12-
agent) certificates for the number of Preferred Shares to be purchased, and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the Preferred
Shares with a depositary agent under a depositary arrangement, promptly
requisition from the depositary agent depositary receipts representing the
number of one one-hundredths of a Preferred Share to be purchased (in which case
certificates for the Preferred Shares to be represented by such receipts shall
be deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with all such requests, (ii) when
necessary to comply with this Agreement, promptly requisition from the Company
the amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with Section 15, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) when necessary to comply with this
Rights Agreement, after receipt, promptly deliver such cash to or upon the order
of the registered holder of such Rights Certificate.
(d) In case the registered holder of any Rights Certificate shall
exercise fewer 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 or her duly authorized assigns, subject to the provisions
of Section 6 and Section 15.
(e) Notwithstanding anything in this Rights Agreement to the contrary,
if the Rights are at any time Beneficially Owned by (i) an Acquiring Person or
an Affiliate or Associate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Persons becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing arrangement, arrangement or understanding regarding the transferred
rights or (B) a transfer which the Board of Directors of the Company has
determined is part of an agreement, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), such Rights shall
be null and void and nontransferable and no holder of any such Right (including
any purported transferee or subsequent holder) shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Rights
Agreement or otherwise. No Rights Certificate shall be issued at any time upon
the transfer of any Rights to an Acquiring Person whose Rights would be null and
void pursuant to the preceding sentence or any Associate or Affiliate thereof or
to any nominee of such Acquiring Person, Associate or Affiliate; and any Rights
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be null and void pursuant to the preceding sentence shall be
canceled. The Company shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) are complied with, but neither the Company nor the Rights
Agent shall have any liability to any holder of any Rights
-13-
Certificate or any other Person as a result of the Company's failure to make any
determinations with respect to an Acquiring Person or its Affiliate or
Associate, or any transferee thereof, hereunder.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Rights Certificates upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) duly and properly 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 Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall notify
the Rights Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and shall issue a
further public announcement at such time as the suspension is no longer in
effect (with prompt notice thereof to the Rights Agent). Notwithstanding any
provision in this Rights Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification under the blue
sky or securities laws of such jurisdiction shall not have been obtained or the
exercise of the Rights shall not be permitted under applicable law.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES
All Rights Certificates surrendered or presented for the purpose of
exercise, transfer, split-up, combination or exchange shall, and any Rights
Certificate surrendered or presented for any purpose that represents Rights that
have become null and void and nontransferable pursuant to Section 7(e) shall, if
surrendered or presented to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if surrendered or
presented to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Rights Certificate purchased or acquired by the Company. The Rights Agent
shall deliver all canceled Rights Certificates to the Company, or shall, at the
Company's written request, destroy such canceled Rights Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.
-14-
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES
(a) The Company shall cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any authorized and issued
Preferred Shares held in its treasury, free from preemptive rights or any right
of first refusal, a number of Preferred Shares sufficient to permit the exercise
in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares
authorized but unissued to permit the exercise or exchange of Rights in
accordance with Section 11, the Company shall take all such action as may be
necessary to authorize additional Preferred Shares for issuance upon the
exercise or exchange of Rights pursuant to Section 11; provided, however, that
if the Company is unable to cause the authorization of additional Preferred
Shares, then the Company shall, or if action by the Company's stockholders is
necessary to cause such authorization in lieu of seeking any such authorization,
the Company may, to the extent necessary and permitted by applicable law and any
agreements or instruments in effect prior to the Distribution Date to which it
is a party, (i) upon surrender of a Right, pay cash equal to the Purchase Price
in lieu of issuing Preferred Shares and requiring payment therefor, (ii) upon
due exercise of a Right and payment of the Purchase Price for each Preferred
Share as to which such Right is exercised, issue equity securities having a
value equal to the value of the Preferred Shares that otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, or (iii) upon due exercise of a Right and payment of the Purchase Price
for each Preferred Share as to which such Right is exercised, distribute a
combination of Preferred Shares, cash and/or other equity and/or debt securities
having an aggregate value equal to the value of the Preferred Shares that
otherwise would have been issuable pursuant to Section 11, which value shall be
determined by a nationally recognized investment banking firm selected by the
Board of Directors of the Company. To the extent that any legal or contractual
restrictions (pursuant to agreements or instruments in effect prior to the
Distribution Date to which it is party) prevent the Company from paying the full
amount payable in accordance with the foregoing sentence, the Company shall pay
to holders of the Rights as to which such payments are being made all amounts
that are not then restricted on a pro rata basis as such payments become
permissible under such legal or contractual restrictions until such payments
have been paid in full.
(c) The Company shall take all such action as may be necessary to ensure
that all Preferred Shares delivered upon exercise or exchange of Rights shall,
at the time of delivery of the certificates for such Preferred Shares (subject
to payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are to be listed on the New York Stock Exchange, the Nasdaq
Stock Market or any national securities exchange, the Company shall use its
commercially reasonable best efforts to cause, from and after such time as the
Rights become exercisable or exchangeable, all
-15-
Preferred Shares reserved for such issuance to be listed on the New York Stock
Exchange, the Nasdaq Stock Market or such securities exchange upon official
notice of issuance.
(e) The Company shall pay when due and payable any and all taxes and
governmental charges that may be payable in respect of the issuance or delivery
of Rights Certificates or of any Preferred Shares upon the exercise or exchange
of Rights. The Company shall not, however, be required to pay any tax or charge
that may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or in respect of the issuance or delivery
of certificates representing the Preferred Shares in a name other than that of,
the registered holder of the Rights Certificate evidencing Rights surrendered
for exercise or exchange or to issue or deliver any certificates representing
Preferred Shares upon the exercise or exchange of any Rights until any such tax
or charge shall have been paid (any such tax or charge being payable by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax or charge is due.
SECTION 10. PREFERRED SHARES RECORD DATE
Each Person in whose name any certificate for Preferred Shares is issued
upon the exercise or exchange of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date on which the Rights Certificate
evidencing such Rights was duly surrendered and payment of any Purchase Price
(and any applicable taxes and governmental charges ) was made; provided,
however, that if the date of such surrender and payment is a date on which the
Preferred Shares transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such Preferred Shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON;
EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS
(a) Upon a Person's becoming an Acquiring Person, each holder of a
Right, except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of shares of Common Stock as shall
equal the result obtained by multiplying the Purchase Price by a fraction, the
numerator of which is the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and the denominator of which is 50% of the
Market Value of the Common Stock on the date on which a Person becomes an
Acquiring Person. As soon as practicable after a Person becomes an Acquiring
Person
-16-
(provided the Company shall not have elected to make the exchange permitted by
Section 11(b)(i) for all outstanding Rights), the Company shall use its
commercially reasonable best efforts to:
(i) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the securities purchasable upon
exercise of the Rights;
(ii) cause such registration statement to become effective as soon
as practicable after such filing;
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date; and
(iv) qualify or register the securities purchasable upon exercise of
the Rights under the blue sky or securities laws of such jurisdictions as may be
necessary or appropriate.
(b) (i) The Company's Board of Directors may, at
its option, at any time after a Person becomes an Acquiring Person, mandatorily
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that shall have become null and void and nontransferable
pursuant to the provisions of Section 7(e)) for consideration per Right
consisting of either (A) one-half of the securities that would be issuable at
such time upon the exercise of one Right in accordance with Section 11(a), or,
if applicable, Section 9(b)(ii) or 9(b)(iii) or (B) if applicable, the cash
consideration specified in Section 9(b)(i) (the consideration issuable per Right
pursuant to this Section 11(b)(i) being the "Exchange Consideration"). The
Company's Board of Directors may, at its option, issue, in substitution for
Preferred Shares, Common Shares in an amount per Preferred Share equal to the
Formula Number if there are sufficient Common Shares issued but not outstanding
or authorized but unissued. If the Company's Board of Directors elects to
exchange all the Rights for the Exchange Consideration pursuant to this Section
11(b)(i) prior to the physical distribution of the Rights Certificates, the
Company may distribute the Exchange Consideration in lieu of distributing Rights
Certificates, in which case for purposes of this Rights Agreement holders of
Rights shall be deemed to have simultaneously received and surrendered for
exchange Rights Certificates on the date of such distribution. Notwithstanding
the foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any Person holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial owner of more than 50% of the Common Shares then
outstanding.
(ii) Any action of the Company's Board of Directors ordering the
exchange of any Rights pursuant to Section 11(b)(i) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such Right
-17-
held by such holder or, if the Exchange Consideration shall not have been paid
or issued, to exercise any such Right pursuant to Section 11(c)(i). The Company
shall promptly notify the Rights Agent in writing and give public notice of any
such exchange; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all holders of such Rights at their
last addresses as they appear on the registry books of the Rights Agent. Any
notice that is mailed in the manner provided in this Rights Agreement shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange shall state the method by which the exchange of the Rights for the
Exchange Consideration will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights that
shall have become null and void and nontransferable pursuant to the provisions
of Section 7(e)) held by each holder of Rights.
(c) (i) In the event that, following a Distribution Date, any
transactions specified in the following clause (A), (B) or (C) of this Section
11(c)(i) (each such transaction being a "Business Combination") shall be
consummated, directly or indirectly:
(A) the Company shall consolidate with, or merge with and into,
any Acquiring Person or any Affiliate or Associate of an Acquiring Person;
(B) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into the Company and, in connection with
such merger, all or part of the Common Shares shall be changed into or exchanged
for capital stock or other securities of the Company or of an Acquiring Person
or any Affiliate or Associate of an Acquiring Person or cash or any other
property; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange or otherwise transfer or dispose of), in one or more transactions, the
Major Part of the assets of the Company and its Subsidiaries (taken as a whole)
to an Acquiring Person or any Affiliate or Associate of an Acquiring Person;
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a) if the Company is the
surviving corporation in such Business Combination):
(1) If the Principal Party in such Business Combination
has Registered Common Shares outstanding, each Right shall thereafter represent
the right to receive, upon the exercise thereof for the Purchase Price in
accordance with the terms of this Rights Agreement, such number of Registered
Common Shares of such Principal Party, free and clear of all liens, encumbrances
or other adverse claims, as shall have an aggregate Market Value equal to the
result obtained by multiplying the Purchase Price by two; or
-18-
(2) If the Principal Party in such Business Combination
does not have Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the Purchase Price
in accordance with the terms of this Rights Agreement, at the election of the
holder of such Right at the time of the exercise thereof, any of:
(x) such number of Common Shares of the Surviving
Person in such Business Combination as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two;
(y) such number of Common Shares of the Principal
Party in such Business Combination (if the Principal Party is not also the
Surviving Person in such Business Combination) as shall have an aggregate Book
Value immediately after giving effect to such Business Combination equal to the
result obtained by multiplying the Purchase Price by two; or
(z) if the Principal Party in such Business
Combination is an Affiliate of one or more Persons which has Registered Common
Shares outstanding, such number of Registered Common Shares of whichever of such
Affiliates of the Principal Party has Registered Common Shares with the greatest
aggregate Market Value on the date of consummation of such Business Combination
as shall have an aggregate Market Value on the date of such Business Combination
equal to the result obtained by multiplying the Purchase Price by two.
(ii) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised, as set
forth in this Section 11(c), shall have sufficient authorized Common Shares that
have not been issued or reserved for issuance (and that shall, when issued upon
exercise thereof in accordance with this Rights Agreement, be validly issued,
fully paid and nonassessable and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof) to permit the exercise in full of the Rights in accordance with this
Section 11(c) and unless prior thereto:
(A) a registration statement under the Securities Act, on an
appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights, shall be effective; and
(B) the Company and each such issuer shall have:
(1) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(c) (including the obligation of such
issuer to issue Common Shares upon the exercise of Rights in accordance with the
terms set forth in Sections 11(c)(i) and 11(c)(iii)) and further providing that
such issuer, at its own expense, will use its best efforts to:
-19-
(x) cause a registration statement under the
Securities Act, on an appropriate form, with respect to the Rights and the
Common Shares of such issuer purchasable upon exercise of the Rights, to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(y) qualify or register the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights under the blue sky
or securities laws of such jurisdictions as may be necessary or appropriate; and
(z) list the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights on each national securities
exchange on which the Common Shares were listed prior to the consummation of the
Business Combination or, if the Common Shares were not listed on a national
securities exchange prior to the consummation of the Business Combination, on a
national securities exchange;
(2) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a valid, binding
and enforceable agreement of such issuer; and
(3) filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants setting forth the number
of Common Shares of such issuer that may be purchased upon the exercise of each
Right after the consummation of such Business Combination.
(iii) After consummation of any Business Combination and subject to
the provisions of Section 11(c)(ii), (A) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11(c) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (B) the term
"Company" shall thereafter be deemed to refer to such issuer, (C) each such
issuer shall take such steps in connection with such consummation as may be
necessary to ensure that the provisions of this Rights Agreement (including the
provisions of Sections 11(a) and 11(c)) shall thereafter apply, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, and (D) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12, and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
SECTION 12. CERTAIN ADJUSTMENTS
(a) To preserve the actual or potential economic value of the Rights,
if at any time after the date of this Rights Agreement there shall be any change
in the Common Stock or the Preferred Shares, whether by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-
-20-
offs, liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Stock or Preferred Shares, as the case
may be (other than distribution of the Rights or regular quarterly cash
dividends), or otherwise, then, in each such event the Company's Board of
Directors shall make such appropriate adjustments in the number of Preferred
Shares (or the number and kind of other securities) issuable upon exercise of
each Right, the Purchase Price and Redemption Price in effect at such time and
the number of Rights outstanding at such time (including the number of Rights or
fractional Rights associated with each share of Common Stock) such that
following such adjustment such event shall not have had the effect of reducing
or limiting the benefits the holders of the Rights would have had absent such
event.
(b) If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Preferred Shares, then the number of such securities
so receivable upon exercise of any Right thereafter shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12, and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be possible, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time under this
Rights Agreement upon exercise of the Rights, all subject to further adjustment
as provided in this Rights Agreement.
(d) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the terms that were expressed in the
initial Rights Certificates issued under this Rights Agreement.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer (and shall give prompt written
notice of such election to the Rights Agent), until the occurrence of such
event, issuing to the holder of any Right exercised after such record date the
Preferred Shares and/or other securities, if any, issuable upon such exercise
over and above the Preferred Shares and/or other securities, if any, issuable
before giving effect to such adjustment; provided, however, that the Company
shall deliver to such holder a due ββββ or other appropriate instrument
evidencing such holder's right to receive such additional securities upon the
occurrence of the event requiring such adjustment.
-21-
SECTION 13. CERTIFICATE OF ADJUSTMENT
Whenever an adjustment is made or any event affecting the Rights or their
exercisability (including without limitation an event that causes rights to
become null and void) occurs as provided in Section 11 or 12, the Company shall
(a) promptly prepare a certificate setting forth such adjustment and a brief,
reasonably detailed statement of the facts and computations accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Preferred Shares a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, prior to the
Distribution Date, of Common Stock) in accordance with Section 25. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment contained therein, and shall have no duty with respect to and shall
not be deemed to have knowledge of any such adjustment or event unless and until
it shall have received such a certificate.
SECTION 14. ADDITIONAL COVENANTS
(a) Notwithstanding any other provision of this Rights Agreement, no
adjustment to the number of Preferred Shares (or fraction of a share) or other
securities for which a Right is exercisable or the number of Rights outstanding
or associated with each Common Share or any similar or other adjustment shall be
made or be effective if such adjustment would have the effect of reducing or
limiting the benefits the holders of the Rights would have had absent such
adjustment, including, without limitation, the benefits under Sections 11 and
12, unless the terms of this Rights Agreement are amended so as to preserve such
benefits.
(b) The Company shall not, after the Distribution Date, except as
permitted by Section 26, take (or permit any Subsidiary of the Company to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will reduce or otherwise limit the benefits the holders of the
Rights would have had absent such action, including, without limitation, the
benefits under Sections 11 and 12. Any action taken by the Company during any
period after any Person becomes an Acquiring Person but prior to the
Distribution Date shall be null and void unless such action could be taken under
this Section 14(b) from and after the Distribution Date. The Company shall not
consummate any Business Combination if any issuer of Common Shares for which
Rights may be exercised after such Business Combination in accordance with
Section 11(c) shall have taken any action that reduces or otherwise limits the
benefits the holders of the rights would have had absent such action, including
the benefits under Sections 11 and 12.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Company may, but shall not be required to, issue fractional
Rights or distribute Rights Certificates that evidence fractional Rights. In
lieu of such fractional Rights, the Company may pay to the registered holders of
the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 15(a), the
current market value of a whole Right shall be the closing price of the
-22-
Rights (as determined pursuant to the second and third sentences of the
definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable.
(b) The Company may, but shall not be required to, issue fractional
Preferred Shares upon exercise of the Rights or distribute certificates that
evidence fractional Preferred Shares. In lieu of fractional Preferred Shares,
the Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Preferred Shares or (ii) in the case of a fractional Preferred
Share (other than one one-hundredth (1/100th) of a Preferred Share or any
integral multiple thereof), pay to the registered holders of Rights Certificates
at the time such Rights are exercised as provided in this Rights Agreement an
amount in cash equal to the same fraction of the current market value of one
Preferred Share, if any are outstanding and publicly traded (or the Formula
Number times the current market value of one share of Common Stock if the
Preferred Shares are not outstanding and publicly traded). For purposes of this
Section 15(b), the current market value of a Preferred Share (or share of Common
Stock) shall be the closing price of a Preferred Share (or share of Common
Stock) (as determined pursuant to the second and third sentences of the
definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date of such exercise. If, as a result of an adjustment
made pursuant to Section 12(a), the holder of any Right thereafter exercised
shall become entitled to receive any securities other than Preferred Shares, the
provisions of this Section 15(b) shall apply, as nearly as reasonably may be, on
like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractional
Common Shares upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates that evidence fractional Common Shares. In lieu of such
fractional Common Shares, the Company may pay to the registered holders of
Rights Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current Market Value of one Common Share as of the date on which a Person became
an Acquiring Person.
(d) Each holder of Rights, by accepting the Rights, expressly waives
his or her right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as provided in this Section 15.
(e) Whenever a payment for fractional Rights or fractional shares is to
be made by the Rights Agent, the Company shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
-23-
SECTION 16. RIGHTS OF ACTION
(a) All rights of action in respect of this Rights Agreement are vested
in the respective registered holders of the Rights Certificates (and, prior to
the Distribution Date, the registered holders of the Common Stock), and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his or her own behalf and for his or her 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 or her right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in the Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and shall be entitled to specific
performance of the obligations of any Person under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
(c) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Rights Agreement by reason of any preliminary or
permanent injunction or other order, judgment, decree or ruling (whether
interlocutory or final) issued by a court or by a governmental, regulatory,
self-regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Company must use all reasonable efforts to have any
such injunction, order, judgment, decree or ruling lifted or otherwise
overturned as soon as possible.
SECTION 17. AGREEMENT OF RIGHTS HOLDERS
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock, and the Right
associated with each share of Common Stock shall be automatically transferred
upon the transfer of each share of Common Stock;
-24-
(b) after the Distribution Date, the Rights Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
which 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 Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
SECTION 18. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER
No holder, as such, of any Rights Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Rights 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 to vote
for the election of directors or on any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or other distributions or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions of this Rights Agreement.
SECTION 19. CONCERNING THE RIGHTS AGENT
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Rights Agreement and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in preparing, amending,
administering, delivering and executing this Rights Agreement and exercising and
performing its duties under this Rights Agreement, including any taxes or
governmental charges imposed as a result of any action taken by it hereunder
(other than taxes on the fees payable to it). The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense (including, without limitation, the reasonable fees and expenses of
legal counsel) incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent (which gross negligence, bad faith or
willful misconduct must be determined by a final, nonappealable order, judgment,
decree or ruling of a court of competent jurisdiction) for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance,
exercise, performance or administration of its duties under
-25-
this Rights Agreement, including, without limitation, the costs and expenses of
defending against any claim of liability in the premises. The indemnity provided
herein shall survive the termination of this Rights Agreement and the
termination, exercise or expiration of the Rights. The costs and expenses
incurred by the Rights Agent in enforcing this right of indemnification shall be
paid by the Company.
(b) The Rights Agent shall be authorized, 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 Rights Agreement or the
exercise or performance of its duties hereunder, in reliance on any Rights
Certificate or certificate for the Preferred Shares 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 believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged by the
proper Person or Persons, or otherwise upon the advice of counsel as set forth
in Section 21. The Rights Agent shall not be deemed to have knowledge of any
event of which it was supposed to receive notice thereof hereunder, and the
Rights Agent shall be fully protected and shall incur no liability for failing
to take any action in connection therewith, unless and until it has received
such notice.
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
stockholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Rights Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties to this Rights Agreement; provided, however, that such Person would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 22. In case at the time such successor Rights Agent shall succeed to the
agency created by this Rights Agreement, any of the 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 Certificates 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 Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and, in
all such cases, such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the 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
-26-
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 Rights Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT
The Rights Agent undertakes to perform only the duties and obligations,
expressly imposed by this Rights Agreement (and no implied duties or
obligations) upon the following terms and conditions, by all of which the
Company and the holders of the Rights Certificates (or, prior to the
Distribution Date, of the Common Stock), by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company, or may be an employee of the Rights Agent), and the
advice or opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent, and the Rights Agent shall incur no liability
for or in respect of any action taken, suffered or omitted by it in the absence
of bad faith and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, suffering or omitting any
action under this Rights Agreement, such fact or matter (unless other evidence
in respect thereof be specifically prescribed in this Rights Agreement) may be
deemed to be conclusively proved and established by a certificate signed by any
one of the Chairman of the Board, any Vice Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, a Vice President
(whether preceded by any additional title), the Treasurer or the Secretary of
the Company and delivered to the Rights Agent, and such certificate shall be
full and complete authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability for or in respect of any action taken or
suffered or omitted, in the absence of bad faith, by it under the provisions of
this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable under this Rights Agreement only
for its own gross negligence, bad faith or willful misconduct (which gross
negligence, bad faith or willful misconduct must be determined by a final,
nonappealable order, judgment, decree or ruling of a court of competent
jurisdiction). Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, punitive, indirect,
incidental or consequential loss or damage of any kind whatsoever (including,
but not limited to, lost profits), even if the Rights Agent has been advised of
the possibility of such loss or damage. Any and all liability of the Rights
Agent under this Agreement will be limited to a maximum of $50,000.
-27-
(d) The Rights Agent shall not have any liability for, nor be liable
for or by reason of any of the statements of fact or recitals contained in this
Rights Agreement or in the Rights Certificates (except as to its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not have any liability for, nor be under any
responsibility in respect of the validity of this Rights Agreement or the
execution and delivery hereof (except the due execution of this Rights Agreement
by the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); it shall not be responsible
for any breach by the Company of any covenant or condition contained in this
Rights Agreement or in any Rights Certificate; it shall not be responsible for
any adjustment required under the provisions of Section 11 or 12 or for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after actual notice
of any such adjustment, upon which the Rights Agent may rely); it shall not by
any act under this Rights Agreement be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Stock to be issued pursuant to this Rights Agreement or any Rights
Certificate or as to whether any Preferred Shares or Common Stock will, when so
issued, be validly authorized and issued, fully paid and nonassessable; and it
shall not be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void hereunder).
(f) The Company agrees that it shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Rights
Agreement from any one of the Chairman of the Board, any Vice Chairman of the
Board, the Chief Executive Officer, the President, the Chief Financial Officer,
a Vice President (whether preceded by any additional title), the Treasurer or
the Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such advice or instructions
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for or in respect of any action taken, suffered
or omitted by it, in the absence of its own gross negligence, bad faith or
willful misconduct (which gross negligence, bad faith or willful misconduct must
be determined by a final, nonappealable order, judgment, decree or ruling of a
court of competent jurisdiction), in accordance with the advice or instructions
of any such officer or in refraining from taking any action prior to receiving
such advice or instruction.
(h) The Rights Agent and any stockholder, Affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be
-28-
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not the Rights Agent under this Rights
Agreement. Nothing in this Rights Agreement shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty under this Rights Agreement either
itself (through its directors, officers and employees) or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company or any other Person resulting from any such act,
default, neglect or misconduct absent any gross negligence, bad faith or willful
misconduct (which gross negligence, bad faith or willful misconduct must be
determined by a final, nonappealable order, judgment, decree or ruling of a
court of competent jurisdiction) in the selection and continued employment
thereof.
(j) No provision of this Rights Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if it believes that repayment of such funds or adequate indemnifications against
such risk or liability is not assured to it.
SECTION 22. CHANGE OF RIGHTS AGENT
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Rights Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the Common Stock or
the Preferred Shares known to the Rights Agent by registered or certified mail,
and to the holders of the Rights Certificates (or, prior to the Distribution
Date, of the Common Stock) by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (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 the Preferred Shares 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. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (or, prior
to the Distribution Date, of Common Stock) (who shall, with such notice, submit
his or her Rights Certificate or, prior to the Distribution Date, the
certificate representing his or her Common Stock, for inspection by the
Company), then the registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Stock) may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be either (A)
a Person in good standing organized and doing business under the laws of the
United States or of any state of the United States so long as such Person 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
-29-
least fifty million dollars ($50,000,000), or (B) an affiliate of a Person
described in clause (A) of this sentence; provided that the principal transfer
agent for the Common Stock shall in any event be qualified to be the Rights
Agent. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; provided, however, that the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it under this Rights Agreement, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Rights Certificates
(or, prior to the Distribution Date, of the Common Stock). Failure to give any
notice provided for in this Section 22, however, or any defect therein shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHTS CERTIFICATES
Notwithstanding any of the provisions of this Rights Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of Common Stock following the Distribution Date and prior to
the earlier of the Redemption Date and the Expiration Date, the Company (a)
shall issue, with respect to Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company, and (b) may issue, in any other case, if deemed necessary or
appropriate by the Company's Board of Directors, Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such 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, (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof, and (iii) no such Rights Certificate shall be issued to an Acquiring
Person or an Affiliate or Associate of any Acquiring Person.
SECTION 24. REDEMPTION AND TERMINATION
(a) The Company's Board of Directors may, at its option, at any time prior
to the earlier of (i) such time as any Person becomes an Acquiring Person and
(ii) the Close of Business on the Expiration Date, order the redemption of all,
but not fewer than all, the then outstanding Rights at the Redemption Price (the
date of such redemption being the "Redemption Date"), and the Company, at its
option, may pay the Redemption Price either in
-30-
cash or in Common Shares or other securities of the Company deemed by the Board
of Directors of the Company, in the exercise of its sole discretion, to be at
least equivalent in value to the Redemption Price. The redemption of the Rights
by the Board of Directors may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.
(b) Immediately upon the action of the Company's Board of Directors
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within ten (10) Business Days after the action of the Company's Board of
Directors ordering the redemption of the Rights, the Company shall give written
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 Distribution Date, on the registry books of the transfer agent for the
Common Stock. Each such notice of redemption will state the method by which
payment of the Redemption Price will be made. The notice, if mailed in the
manner provided in this Rights Agreement, shall be conclusively presumed to have
been duly given, whether or not the holder of Rights receives such notice. In
any case, failure to give such notice by mail, or any defect in the notice, to
any particular holder of Rights shall not affect the sufficiency of the notice
to other holders of Rights.
SECTION 25. NOTICES
Notices or demands authorized by this Rights Agreement to be given or made
by the Rights Agent or by the holder of a Rights Certificate (or, prior to the
Distribution Date, of Common Stock) to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) or by facsimile
transmission as follows:
ICOS Corporation
22021 -- ββ/ββ/ ββββββ β.β.
βββββββ, ββββββββββ βββββ
Attention: Chief Financial Officer
Facsimile No.: (βββ) βββ-ββββ
Subject to the provisions of Section 22, notices or demands authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Rights
Certificate (or, prior to the Distribution Date, of Common Stock) to or on the
Rights Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) or by facsimile transmission as follows:
Mellon Investor Services LLC
βββ ββββ ββββββ, βββββ ββββ
βββββββ, ββ βββββ
-31-
Attention: Relationship Manager
Facsimile No.: (βββ) βββ-ββββ
with a copy to:
Mellon Investor Services LLC
ββ ββββββββββ ββββ
ββββββββββ ββββ, ββ βββββ-ββββ
Attention: General Counsel
Facsimile No.: (βββ) βββ-ββββ
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Rights Certificate (or, prior
to the Distribution Date, of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at such
holder's address as shown on the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer agent for the
Common Stock.
SECTION 26. SUPPLEMENTS AND AMENDMENTS
At any time prior to the time any Person becomes an Acquiring Person and
subject to the last sentence of this Section 26, the Company may, subject to the
other terms and conditions of this Rights Agreement, and the Rights Agent shall
if the Company so directs, supplement or amend any provision of this Rights
Agreement (including, without limitation, the date on which the Distribution
Date or the Expiration Date shall occur, the amount of the Purchase Price, the
definition of "Acquiring Person," the time during which the Rights may be
redeemed pursuant to Section 24 or any provision of the Certificate of
Designation) without the approval of any holder of the Rights. From and after
the time any Person becomes an Acquiring Person and subject to applicable law,
the Company may, and the Rights Agent shall if the Company so directs, amend
this Rights Agreement without the approval of any holder of Rights Certificates
to (a) cure any ambiguity or correct or supplement any provision contained in
this Rights Agreement that may be defective or inconsistent with any other
provision of this Rights Agreement or (b) make any other provision in regard to
matters or questions arising under this Rights Agreement that the Company may
deem necessary or desirable and that shall not adversely affect the interests of
the Rights Agent or the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person). Any supplement or
amendment adopted during any period after any Person has become an Acquiring
Person but prior to the Distribution Date shall be null and void unless such
supplement or amendment could have been adopted under the prior sentence from
and after the Distribution Date. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26 and, provided such
supplement or amendment does not change or increase the Rights Agent's rights,
duties, liabilities or obligations hereunder, the Rights Agent shall execute
such supplement or amendment. In addition, notwithstanding anything to the
contrary contained
-32-
in this Rights Agreement, no supplement or amendment to this
Rights Agreement shall be made which reduces the Redemption Price (except as
required by Section 12(a)).
SECTION 27. SUCCESSORS
All the covenants and provisions of this Rights Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns under this Rights Agreement.
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY
THE COMPANY'S BOARD OF DIRECTORS
(a) Nothing in this Rights Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, of the Common
Stock) any legal or equitable right, remedy or claim under this Rights
Agreement; provided, however, that this Rights Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, of the
Common Stock).
(b) Except as explicitly otherwise provided in this Rights Agreement, the
Company's Board of Directors shall have the exclusive power and authority to
administer this Rights Agreement and to exercise all rights and powers
specifically granted to the Company's Board of Directors or to the Company, or
as may be necessary or advisable in the administration of this Rights Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Rights Agreement and (ii) make all determinations and
computations deemed necessary or advisable for the administration of this Rights
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend this Rights Agreement and a determination of
whether there is an Acquiring Person). The Rights Agent shall always be entitled
to assume that the Company's Board of Directors acted in good faith and shall be
fully protected and incur no liability in reliance thereon.
(c) Nothing contained in this Rights Agreement shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer or other acquisition proposal, or to
recommend that holders of Common Stock reject any tender offer, or to take any
other action (including the commencement, prosecution, defense or settlement of
any litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer or other acquisition proposal that
the Board of Directors believes is necessary or appropriate in the exercise of
such fiduciary duty.
-33-
SECTION 29. SEVERABILITY
If any term, provision, covenant or restriction of this Rights Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
SECTION 30. GOVERNING LAW
This Rights Agreement and each Rights Certificate issued under this Rights
Agreement shall be deemed to be a contract made under the laws of the state of
Delaware and for all purposes shall be governed by and construed in accordance
with the law of Delaware applicable to contracts to be made and performed
entirely within Delaware; provided however, that all provisions regarding the
rights, duties and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the state of New York applicable to
contracts made and to be performed entirely within such state.
SECTION 31. COUNTERPARTS; EFFECTIVENESS
This Rights Agreement may be executed in any number of counterparts, each
of which shall for all purposes be deemed to be an original, and all of which
shall together constitute but one and the same instrument. This Rights Agreement
shall be effective as of the Close of Business on the date of this Rights
Agreement first set forth above.
SECTION 32. DESCRIPTIVE HEADINGS
Descriptive headings of the several Sections of this Rights Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Rights Agreement.
-34-
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed as of the day and year first above written.
ICOS CORPORATION
By: /s/ βββββββ β. βββββ
-------------------------------------------
Name: βββββββ β. βββββ
Its: Vice President and Chief Financial
Officer
MELLON INVESTOR SERVICES LLC
By: /s/ ββββββ β. ββββββ
-------------------------------------------
Name: ββββββ β. ββββββ
Its: Assistant Vice President
-35-
EXHIBIT INDEX
Exhibit Description
------- -----------
A Certificate of Designation
B Form of Rights Certificate
C Summary of Rights to Purchase Preferred Shares
-36-
EXHIBIT A
ICOS CORPORATION
CERTIFICATE OF DESIGNATION OF THE RIGHTS, POWERS,
PREFERENCES AND THE QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
The undersigned, βββββββ β. βββββ, Vice President and Chief Financial
Officer of ICOS Corporation, a Delaware corporation (the "Company"), pursuant to
Section 151 of the General Corporation Law of the State of Delaware, does hereby
certify that the following resolutions were duly approved by the Board of
Directors of the Company effective August 9, 2002.
DESIGNATION OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority granted to
and vested in this Board of Directors in accordance with the Company's
Restated Certificate of Incorporation, this Board of Directors hereby
creates a series of Preferred Stock, par value $0.01 per share, called the
"Series A Junior Participating Preferred Stock," and hereby fixes the
relative rights, preferences and limitations thereof (in addition to the
rights and preferences set forth in the Restated Certificate of
Incorporation of the Company that are applicable to the preferred stock of
the Company generally) as set forth in the Certificate of Designation in
the form attached hereto as Exhibit A.
IN WITNESS WHEREOF, this Certificate has been signed by the Vice President
and Chief Financial Officer of ICOS Corporation this 9th day of August, 2002.
ICOS CORPORATION
_______________________________________________
By: βββββββ β. βββββ
Title: Vice President and Chief Financial
Officer
A-1
EXHIBIT A
4.1 Designation of Rights and Preferences of Series A Junior
Participating Preferred Stock
The following series of Preferred Stock is hereby designated, which series
shall have the rights, preferences and privileges and limitations set forth
below:
4.1.1 Designation of Series A Junior Participating Preferred
Stock
The shares of such series shall be designated the "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock"), par value $0.01
per share. The number of shares initially constituting the Series A Preferred
Stock shall be 1,000,000; provided, however, if more than a total of 1,000,000
shares of Series A Preferred Stock shall be issuable upon the exercise of rights
(the "Rights") issued pursuant to the Rights Agreement dated as of August 9,
2002 between the corporation and Mellon Investor Services LLC, as Rights Agent
(the "Rights Agreement"), the corporation's Board of Directors shall direct by
resolution or resolutions that a Certificate of Amendment be properly executed
and filed with the Delaware Secretary of State providing for the total number of
shares of Series A Preferred Stock authorized for issuance to be increased (to
the extent that the Restated Certificate of Incorporation then permits) to the
largest number of whole shares (rounded up to the nearest whole number) issuable
upon exercise of such Rights. In addition, such number of shares may be
decreased by resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
corporation convertible into Series A Preferred Stock.
4.1.2 Dividends and Distributions
(a) Subject to the prior and superior rights of the holders of
shares of any other series of preferred stock or other class of capital stock of
the corporation 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 shall be entitled to receive, when, as, and if declared by the Board of
Directors, out of the assets of the corporation legally available therefor,
quarterly dividends payable in cash on the last day of each fiscal quarter in
each year, or such other dates as the corporation's Board of Directors shall
approve (each such date being referred to in this Designation as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or a fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (i) $0.01 and (ii) the Formula Number (as hereinafter defined)
then in effect times the cash dividends then to be paid on each share of Common
Stock. In addition, if the corporation shall pay any dividend or make any
distribution on the Common Stock payable in assets, securities or other forms of
noncash consideration (other than dividends or
A-2
distributions solely in shares of Common Stock), then, in each such case, the
corporation shall simultaneously pay or make on each outstanding whole share of
Series A Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each share
of Common Stock. As used in this Designation and in the Rights Agreement, the
"Formula Number" shall be 100; provided, however, that if at any time after
August 27, 2002 the corporation shall (i) declare or pay any dividend on the
Common Stock payable in shares of Common Stock or make any distribution on the
Common Stock in shares of Common Stock, (ii) subdivide (by a stock split or
otherwise) the outstanding shares of Common Stock into a larger number of shares
of Common Stock, or (iii) combine (by a reverse stock split or otherwise) the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then in each such event the Formula Number shall be adjusted to a number
determined by multiplying the Formula Number in effect immediately prior to such
event by a fraction, the numerator of which is the number of shares of Common
Stock that are outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that are outstanding immediately
prior to such event (and rounding the result to the nearest whole number); and
provided further, that if at any time after August 27, 2002 the corporation
shall issue any shares of its capital stock in a merger, reclassification or
change of the outstanding shares of Common Stock, then in each such event the
Formula Number shall be appropriately adjusted to reflect such merger,
reclassification or change so that each share of Preferred Stock continues to be
the economic equivalent of a Formula Number of shares of Common Stock prior to
such merger, reclassification or change.
(b) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in Section 4.1.2(a) immediately prior
to or at the same time it declares a dividend or distribution on the Common
Stock (other than a dividend or distribution solely in shares of Common Stock);
provided, however, that in the event no dividend or distribution (other than a
dividend or distribution in shares of Common Stock) shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Corporation's Board of Directors
may fix a record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a dividend or distribution declared thereon,
which record date shall be the same as the record date for any corresponding
dividend or distribution on the Common Stock and which shall not be more than 60
days prior to the date fixed for payment thereof.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from and after the Quarterly
Dividend Payment Date next preceding the date of original issue of such shares
of Series A Preferred Stock; provided, however, that dividends on such shares
that are originally issued after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend on or prior to the next succeeding Quarterly Dividend Payment Date
shall begin to accrue and be cumulative from and after such Quarterly Dividend
Payment Date. Notwithstanding the foregoing, dividends on shares of Series A
Preferred Stock that are
A-3
originally issued prior to the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a quarterly dividend on
or prior to the first Quarterly Dividend Payment Date shall be calculated as if
cumulative from and after the last day of the fiscal quarter (or such other
Quarterly Dividend Payment Date as the corporation's Board of Directors shall
approve) next preceding the date of original issuance of such shares. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the shares of
Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
(d) So long as any shares of Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 4.1.2 to be declared
on the Series A Preferred Stock shall have been declared.
(e) The holders of shares of Series A Preferred Stock shall
not be entitled to receive any dividends or other distributions except as
provided in this Designation.
4.1.3 Voting Rights
The holders of shares of Series A Preferred Stock shall have the following
voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled
to a number of votes equal to the Formula Number then in effect for each share
of Series A Preferred Stock held of record on each matter on which holders of
the Common Stock or stockholders generally are entitled to vote, multiplied by
the maximum number of votes per share that any holders of the Common Stock or
stockholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
(b) Except as otherwise provided in this Designation or by
applicable law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the corporation
having general voting rights shall vote together as one class for the election
of directors of the corporation and on all other matters submitted to a vote of
stockholders of the corporation.
(c) Except as provided in this Designation or by applicable
law, holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth in this Designation) for
authorizing or taking any corporate action.
4.1.4 Certain Restrictions
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 4.1.2 are in arrears, thereafter
A-4
and until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid
in full, the corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock; provided, however, 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) redeem or 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 corporation's Board of Directors) to all holders of
such shares upon such terms as the corporation's Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective Preferred Stock
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 4.1.4, purchase or otherwise acquire such shares at such time and
in such manner.
4.1.5 Liquidation Rights
Upon the liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, no distribution shall be made to (a) the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received an amount equal to the greater of (i) $0.01 per share and (ii) the
accrued and
A-5
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, plus an aggregate amount per share equal to the Formula Number
then in effect times the aggregate amount to be distributed per share to holders
of Common Stock or (b) the holders of 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 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.
4.1.6 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 then outstanding shares of Series A
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share equal to the Formula Number then in effect times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
exchanged or changed. In the event both this Section 4.1.6 and Section 4.1.2
appear to apply to a transaction, this Section 4.1.6 will control.
4.1.7 No Redemption; No Sinking Fund
(a) The shares of Series A Preferred Stock shall not be subject to
redemption by the corporation or at the option of any holder of Series A
Preferred Stock; provided, however, that the corporation may purchase or
otherwise acquire outstanding shares of Series A Preferred Stock in the open
market or by offer to any holder or holders of shares of Series A Preferred
Stock.
(b) The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
4.1.8 Ranking
The Series A Preferred Stock shall rank junior to all other series of
Preferred Stock of the corporation, unless the corporation's Board of Directors
shall specifically determine otherwise in fixing the powers, preferences and
relative, participating, optional and other special rights of the shares of such
Preferred Stock and the qualifications, limitations and restrictions thereof.
4.1.9 Fractional Shares
The Series A Preferred Stock shall be issuable upon exercise of the Rights
issued pursuant to the Rights Agreement in whole shares or in any fractional
share that is one one-hundredth (1/100th) of a share or any integral multiple of
such fraction, and shall entitle the holder, in proportion to such holder's
fractional shares, to receive dividends, exercise voting
A-6
rights, participate in distributions and have the benefit of all other rights of
holders of Series A Preferred Stock. In lieu of fractional shares, the
corporation, prior to the first issuance of a share or a fractional share of
Series A Preferred Stock, may elect to (a) make a cash payment as provided in
the Rights Agreement for a fractional share other than one one-hundredth
(1/100th) of a share or any integral multiple thereof or (b) issue depository
receipts evidencing such authorized fractional share of Series A Preferred Stock
pursuant to an appropriate agreement between the corporation and a depository
selected by the corporation; provided, however, that such agreement shall
provide that the holders of such depository receipts shall have all the rights,
privileges and preferences to which they are entitled as holders of the Series A
Preferred Stock.
4.1.10 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, without designation as
to series until such shares are once more designated as part of a particular
series by the corporation's Board of Directors pursuant to the provisions of
Article 4 of the Restated Certificate of Incorporation.
4.1.11 Amendment
None of the powers, preferences and relative, participating, optional and
other special rights of the Series A Preferred Stock as provided in this
Designation or in the Restated Certificate of Incorporation shall be amended in
any manner that would alter or change the powers, preferences, rights or
privileges of the holders of Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Series A Preferred Stock, voting as a separate class.
A-7
EXHIBIT B
Certificate No. A- Rights
NOT EXERCISABLE AFTER AUGUST 9, 2012 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF
THE COMPANY AT $0.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT.
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL
AND VOID AND NONTRANSFERABLE.
RIGHTS CERTIFICATE
ICOS CORPORATION
This certifies that ________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of August 9, 2002 (the "Rights Agreement"), between ICOS
CORPORATION, a Delaware corporation (the "Company"), and Mellon Investor
Services LLC, a New Jersey limited liability company (the "Rights Agent"),
unless the Rights evidenced hereby have been previously redeemed 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., Pacific time,
on August 9, 2012 at the office of the Rights Agent designated for such purpose,
or at the office of its successor as Rights Agent, one one-hundredth (1/100) of
a fully paid non-assessable share of Series A Junior Participating Preferred
Stock, par value $0.01 per share (the "Preferred Shares"), of the Company, at a
purchase price of $250.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of one-hundredths of a
Preferred Share that may be purchased upon exercise hereof) set forth above, and
the Purchase Price set forth above, are the number and Purchase Price as of
August 27, 2002, based on the Preferred Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of one
one-hundredths of a Preferred Share that may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
B-1
If the Rights evidenced by this Rights Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
The Rights Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
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. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the office of the Rights Agent designated for such purpose.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, 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 Preferred Shares as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have 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 (i) may be redeemed by the Company at a redemption price (in
cash or shares of Common Stock or other securities of the Company deemed by the
Company's Board of Directors to be at least equivalent in value) of $0.01 per
Right (subject to adjustment, as provided in the Rights Agreement) or (ii) may
be exchanged in whole or in part for shares of the Company's Common Stock, par
value $0.01 per share, or for Preferred Shares. The Company may, but shall not
be required to, issue fractions of Preferred Shares or distribute certificates
that evidence fractions of Preferred Shares upon the exercise of any Right or
Rights evidenced hereby. In lieu of issuing fractional shares, the Company may
elect to make a cash payment as provided in the Rights Agreement for fractions
of a share other than one one-hundredth of a share or any integral multiple
thereof or to issue certificates or utilize a depository arrangement as provided
in the terms of the Rights Agreement and the Preferred Shares.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company that may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote 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
B-2
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscriptions rights, or otherwise, until 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.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal, if any. Dated as of ___________________.
ICOS CORPORATION
By:
Its: ____________________________
COUNTERSIGNED:
Mellon Investor Services LLC
as Rights Agent
By: __________________________
Its:______________________
B-3
--Form of Reverse Side of Rights Certificate--
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate)
FOR VALUE RECEIVED _____________________________________________ hereby sells,
assigns and transfer unto ____________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________ as attorney, to
transfer this Rights Certificate on the books of the within-named Company, with
full power of substitution.
The undersigned hereby certifies that (1) the Rights evidenced by this
Rights Certificate are not being sold, assigned or transferred by or on behalf
of a Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), (2) this Rights
Certificate is not being sold, assigned or transferred to or on behalf of any
such Acquiring Person, Affiliate or Associate, and (3) after inquiry and to the
best knowledge of the undersigned, the undersigned did not acquire the Rights
evidenced by this Rights Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
Dated: _________________________
Signature: __________________________
Signature Guarantee*
________________________________
*Your signature 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.
B-4
--Form of Reverse Side of Rights Certificate--
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate)
To: ICOS CORPORATION
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security or other identifying number
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
The undersigned hereby certifies that (1) the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), and (2) after inquiry and to the best knowledge of the undersigned,
the undersigned 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
thereof (as such terms are defined in the Rights Agreement).
Dated: ________________________
Signature: ____________________________
Signature Guarantee*
_______________________________
*Your signature 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.
B-5
--Form of Reverse Side of Rights Certificate--
(continued)
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the
case may be, must conform to the name as written on 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 or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent 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 such
Assignment or Election to Purchase will not be honored.
B-6
EXHIBIT C
ICOS CORPORATION
STOCKHOLDER RIGHTS PLAN
SUMMARY OF RIGHTS
TO PURCHASE PREFERRED SHARES
Distribution and Transfer On August 9, 2002, ICOS Corporation (the
of Rights; Rights "Company") announced that its Board of Directors
Certificates: (the "Board of Directors") had adopted a
Stockholder Rights Plan and declared a dividend
of one preferred share purchase right (a "Right")
for each outstanding share of common stock, par
value $0.01 per share (the "Common Shares"), of
the Company. Prior to the Distribution Date
referred to below, if any, the Rights will be
evidenced by and trade with the certificates for
the Common Stock. After the Distribution Date, if
any, the Company will cause the rights
certificates to be delivered to the Company's
stockholders and the Rights will become
transferable apart from the Common Stock.
Distribution Date: The Rights will separate from the Common Shares
and become exercisable following the earlier of
(i) the close of business on the tenth business
day after a public announcement that a person or
group (including any affiliate or associate of
such person or group) has acquired beneficial
ownership of 15% or more of the outstanding
Common Shares (such person or group being an
"Acquiring Person") and (ii) such date, if any,
as may be designated by the Board of Directors
following the commencement of, or first public
disclosure of an intent to commence, a tender or
exchange offer for outstanding Common Shares
which could result in the offeror becoming the
beneficial owner of 15% or more of the
outstanding Common Shares (the earlier of such
dates being the "Distribution Date").
Preferred Shares After the Distribution Date, each Right will
Purchasable upon Exercise entitle the holder to purchase, for $250.00 (the
of Rights: "Purchase Price"), one one-hundredth (1/100) of a
share of Series A Junior Participating Preferred
Stock of the Company (a "Preferred Share") with
C-1
economic terms similar to that of one Common
Share.
Flip-In Provision: In the event a person or group becomes an
Acquiring Person, the Rights will entitle each
holder of a Right (other than an Acquiring Person
(or any affiliate or associate of such Acquiring
Person)) to purchase, for the Purchase Price,
that number of Common Shares equivalent to the
number of Common Shares which at the time of the
transaction would have a market value of twice
the Purchase Price. Any Rights that are at any
time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring
Person) will be null and void and nontransferable
and any holder of any such Right (including any
purported transferee or subsequent holder) will
be unable to exercise or transfer any such Right.
Flip-Over Provision: If, at any time after any person or group becomes
an Acquiring Person, the Company is acquired in a
merger or other business combination with another
entity, or if 50% or more of its assets or assets
accounting for 50% or more of its net income or
revenues are transferred (in one or more
transactions), each Right will entitle its holder
to purchase, for the Purchase Price, that number
of shares of common stock of the person engaging
in the transaction having a then current market
value of twice the Purchase Price.
Exchange Provisions: At any time after any person or group becomes an
Acquiring Person, but before a person or group
becomes the beneficial owner of more than 50% of
the Common Shares, the Board of Directors may
elect to exchange each Right (other than Rights
that have become null and void and
nontransferable as described above) for
consideration per Right consisting of one-half of
the number of Common Shares that would be
issuable at such time upon the exercise of one
Right and without payment of the Purchase Price.
Redemption of Rights: At any time prior to any person or group becoming
an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a
price of $0.01 per Right, subject to adjustment
as provided in the Rights Agreement (the
"Redemption Price").
C-2
Expiration of Rights: The Rights are not exercisable until the
Distribution Date and will expire on August 9,
2012, unless earlier redeemed or exchanged by the
Company.
Amendment of Terms of The terms of the Rights and the Rights Agreement
Rights: may be amended in any respect, without the
approval of any holder of the Rights, at any time
prior to the Distribution Date.
Voting Rights: Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of
the Company.
Antidilution Provisions: In order to preserve the actual or potential
economic value of the Rights, the number of
Preferred Shares or other securities issuable
upon exercise of the Right, the Purchase Price,
the Redemption Price and the number of Rights
associated with each outstanding Common Share are
all subject to adjustment by the Board of
Directors pursuant to certain customary
antidilution provisions.
Taxes: The Rights distribution should not be taxable for
federal income tax purposes. Following an event
that renders the Rights exercisable or upon
redemption of the Rights, stockholders may
recognize taxable income.
The foregoing is a summary of certain principal terms of the Stockholder
Rights Plan and is qualified in its entirety by reference to the detailed terms
of the Rights Agreement. A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a Registration Statement on
Form 8-A and is available free of charge from the Company.
C-3