EXHIBIT 4.1
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RIGHTS AGREEMENT
PAR PHARMACEUTICAL COMPANIES, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
AS RIGHTS AGENT
DATED AS OF OCTOBER 27, 2004
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TABLE OF CONTENTS
PAGE
SECTION 1. CERTAIN DEFINITIONS..............................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT......................................4
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES...................................4
SECTION 4. FORM OF RIGHT CERTIFICATES.......................................6
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION.....................7
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES.....................................................7
SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE OF RIGHTS....8
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES...............9
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK........9
SECTION 10. PREFERRED STOCK RECORD DATE....................................11
SECTION 11. NUMBER OF RIGHTS; ADJUSTMENT OF PURCHASE PRICE; AND NUMBER AND
KIND OF SHARES.................................................11
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.....18
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS............18
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES........................22
SECTION 15. RIGHTS OF ACTION...............................................23
SECTION 16. AGREEMENT OF RIGHT HOLDERS.....................................24
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER..............24
SECTION 18. CONCERNING THE RIGHTS AGENT....................................24
SECTION 19. MERGER, CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT........25
SECTION 20. DUTIES OF RIGHTS AGENT.........................................25
SECTION 21. CHANGE OF RIGHTS AGENT.........................................27
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.............................28
SECTION 23. REDEMPTION.....................................................28
SECTION 25. NOTICE OF CERTAIN EVENTS.......................................30
SECTION 26. NOTICES........................................................30
SECTION 27. SUPPLEMENTS AND AMENDMENTS.....................................31
SECTION 28. SUCCESSORS.....................................................31
SECTION 29. BENEFITS OF THIS RIGHTS AGREEMENT..............................32
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SECTION 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS...........32
SECTION 31. SEVERABILITY...................................................32
SECTION 32. GOVERNING LAW..................................................32
SECTION 33. COUNTERPARTS...................................................32
SECTION 34. DESCRIPTIVE HEADINGS...........................................33
EXHIBITS:
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Summary of Rights to Purchase Shares of Preferred
Stock
Exhibit C - Form of Right Certificate
Annex I - Rights Agent Compensation
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INDEX OF DEFINED TERMS
Page
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Acquiring Person 1
Affiliate 2
Associate 2
Authorized Officer 25
Beneficial Owner 2
Beneficial Ownership 2
beneficially own 2
Board of Directors 1
Business Day 3
close of business 3
Common Stock 3
Common Stock equivalents 12
Company 1
Current Value 12
Distribution Date 5
entire Board of Directors 3
equivalent preferred shares 13
Exchange Act 2
Exchange Ratio 28
Exempted Entity 3
Expiration Date 8
Final Expiration Date 3
invalidation time 11
Nasdaq 3
NYSE 4
Original Rights 2
Permitted Transaction 4
Person 4
Preferred Stock 4
Principal Party 19
Purchase Price 8
Record Date 1
Redemption Date 8
Redemption Price 28
Right 1
Right Certificate 5
Rights Agent 1
Rights Agreement 1
Section 11(a)(ii) Trigger Date 12
Securities Act 4
Security 14
Spread 12
Stock Acquisition Date 4
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Page
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Subsidiary 4
Substitution Period 13
Summary of Rights 5
then outstanding 2
Trading Day 15
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 27, 2004 (as amended, supplemented
or otherwise modified from time to time, the "Rights Agreement"), between Par
Pharmaceutical Companies, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company, a New York corporation (the "Rights
Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has on October 26, 2004 authorized and declared a dividend of one preferred
share purchase right (a "Right") for each share of Common Stock (as defined
below) of the Company outstanding as of the close of business (as defined below)
on November 8, 2004 (the "Record Date"), each Right representing the right to
purchase one one-thousandth (subject to adjustment) of a share of Preferred
Stock (as defined below) upon the terms and subject to the conditions herein set
forth, and the Board of Directors has further authorized and directed the
issuance of one Right (subject to adjustment as provided herein) with respect to
each share of Common Stock that shall become outstanding between the Record Date
and the earlier of the Distribution Date and the Expiration Date (as such terms
are hereinafter defined); PROVIDED, HOWEVER, that Rights may also be issued with
respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Expiration Date (as defined below) in
accordance with Section 22.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Rights Agreement, the
following terms have the meaning indicated:
(a) "Acquiring Person" shall mean any Person (as defined below) that shall
be the Beneficial Owner (as defined below) of 15% or more of the shares of
Common Stock then-outstanding, but shall not include an Exempted Entity (as
defined below); PROVIDED, HOWEVER, that if the Board of Directors determines in
good faith that a Person that would otherwise be an "Acquiring Person" has
become such inadvertently (including because such Person was actually unaware
that it beneficially owned a percentage of Common Stock that would otherwise
cause such Person to be an "Acquiring Person") without any intention of changing
or influencing the management or control of the Company, then such Person shall
not be deemed to be or to have become an "Acquiring Person" for any purposes of
this Rights Agreement, unless and until such Person shall have failed to divest
itself, as soon as practicable, if the Company so requests, of Beneficial
Ownership of a sufficient number of shares of Common Stock so that such Person
would no longer otherwise be an "Acquiring Person". Notwithstanding the
foregoing, no Person shall be deemed an "Acquiring Person" as the result of (i)
a Permitted Transaction, or (ii) an acquisition of shares of Common Stock by the
Company that, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the shares of Common Stock then-outstanding; PROVIDED, HOWEVER, that if a
Person shall become the Beneficial Owner of 15% or more of the shares of Common
Stock then-outstanding because of such share acquisitions by the Company and
thereafter becomes the Beneficial Owner of any additional shares of Common Stock
(other than pursuant
to a Permitted Transaction or a dividend or distribution paid or made by the
Company on the outstanding Common Stock or pursuant to a split or subdivision of
the outstanding Common Stock), then such Person shall be deemed to be an
"Acquiring Person," subject to the proviso set forth in the first sentence of
this Section 1(a), unless upon the consummation of the acquisition of such
additional shares of Common Stock such Person does not beneficially own 15% or
more of the shares of Common Stock then-outstanding. 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 plus the number of such securities not then actually
issued and outstanding that such Person would be deemed to own beneficially
hereunder.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended, and in effect on the date of
the Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, shall be deemed to
have "Beneficial Ownership" of and shall be deemed to "beneficially own" any
securities:
(i) 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 promulgated under the Exchange Act as in effect on
the date of this Rights Agreement or any successor provision;
(ii) that such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, (A) the right or obligation to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a BONA FIDE public offering of securities), written or
otherwise, 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 the Beneficial Owner of, or to beneficially
own, (x) 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, (y) securities
that such Person has a right to acquire on the exercise of Rights at any time
prior to the time a Person shall become an Acquiring Person or (z) securities
issuable upon exercise of Rights from and after the time a Person shall become
an Acquiring Person if such Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3 or Section 22 hereof (the "Original Rights") or pursuant to Section
11(i) or Section 11(n) hereof with respect to an adjustment to the Original
Rights; or (B) the right (whether or not then exercisable) to vote pursuant to
any agreement, arrangement or understanding, written or otherwise; PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security by reason of such agreement, arrangement or
understanding if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
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(iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c)(ii) above) or disposing of such securities of the Company;
PROVIDED, HOWEVER, that (x) nothing in this Section 1(c) shall cause a Person
regularly engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of forty (40) days after the date of such acquisition, and
then only if such securities continue to be owned by such Person at such
expiration of forty (40) days; (y) no Person who is an officer, director or
employee of an Exempted Entity shall be deemed, solely by reason of such
Person's status or authority as such, to be the "Beneficial Owner" of or to
"beneficially own" any securities that are "beneficially owned" (as defined in
this Section 1(c)), including in a fiduciary capacity, by an Exempted Entity or
by any other such officer, director or employee of an Exempted Entity; and (z) a
Person shall not be deemed the Beneficial Owner of or to beneficially own any
securities held by such Person in trust accounts, managed accounts and the like,
or otherwise held in a fiduciary capacity, that are Beneficially Owned by third
Persons who are not Affiliates or Associates of such Person.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of New York are obligated by law
or executive order to close.
(e) "close of business" on any given date shall mean 5:00 P.M., New York,
New York time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., New York, New York time, on the next
succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall mean the
common stock, par value $0.01, of the Company. "Common Stock" when used with
reference to any Person other than the Company (including a Principal Party)
shall mean the capital stock (or, in the case of an unincorporated entity, the
equivalent equity interest) with the greatest voting power of such other Person
or, if such other Person is a subsidiary of another Person, the Person or
Persons that ultimately control such first-mentioned Person.
(g) "entire Board of Directors" shall mean, at any given time, the total
number of members then appointed to the Company's Board of Directors.
(h) "Exempted Entity" shall mean (1) the Company, (2) any Subsidiary (as
defined below) of the Company, (3) any employee benefit plan of the Company or
of any Subsidiary of the Company or (4) any entity or trustee holding Common
Stock for, or pursuant to the terms of, any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company.
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(i) "Final Expiration Date" shall mean the close of business on October
27, 2014.
(j) "Nasdaq" shall mean the Nasdaq Stock Market National Market.
(k) "NYSE" shall mean the New York Stock Exchange, Inc.
(l) "Permitted Transaction" shall mean an action or transaction or series
of related actions or transactions, including, but not limited to, a purchase or
series of related purchases of Common Stock, which prior to the consummation
thereof, and based upon the good faith consideration by the Board of Directors
of all factors which the Board of Directors deems to be relevant (including, but
not limited to, the long-term value of the Company and prices that could
reasonably be expected if the Company or its assets were sold on an orderly
basis designed to realize maximum value), the Board of Directors determines to
be fair to and otherwise in the best interests of the holders of the Common
Stock.
(m) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company, trust or other entity, and shall include any
successor (by merger, consolidation or otherwise) of such entity, and shall
include any "group" as that term is used in Rule 13d-5(b) under the Exchange Act
(or any successor provision).
(n) "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, par value $0.0001 per share, of the Company having the rights
and preferences set forth in the Certificate of Designations attached to this
Rights Agreement as Exhibit A and, to the extent that there are not a sufficient
number of shares of Series A Junior Participating Preferred Stock authorized to
permit the full exercise of the Rights, any other series of preferred stock of
the Company designated for such purpose containing terms substantially similar
to the terms of the Series A Junior Participating Preferred Stock.
(o) "Securities Act" shall mean the Securities Act of 1933, as amended.
(p) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include a report
filed pursuant to Section 13(d) or (g) of the Exchange Act) by the Company or
such Acquiring Person that an Acquiring Person has become such or such earlier
date the Board of Directors shall become aware of the existence of an Acquiring
Person.
(q) "Subsidiary" of any Person shall mean any corporation or other entity
of which securities or other ownership interests having ordinary voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person, and any corporation or other entity that is otherwise controlled by
such Person.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights
(that, in accordance with Section 3 hereof, shall, prior to the Distribution
Date, also be the holders of Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agent or Agents as it may
deem necessary or desirable upon ten (10) days' prior notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for the acts or omissions of, any such co-Rights Agent(s).
Section 3. ISSUANCE OF RIGHT CERTIFICATES. (a) Until the close of business
on the earlier of (i) the tenth (10th) day after the Stock Acquisition Date or
(ii) the tenth (10th) Business Day (or such later date as may be determined by
action of a majority of the entire Board of Directors prior to such time as any
Person becomes an Acquiring Person) after the date of the commencement by any
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Person (other than an Exempted Entity) of a tender or exchange offer the
consummation of which would result in any Person (other than an Exempted Entity)
becoming the Beneficial Owner of 15% or more of the shares of Common Stock
then-outstanding (including, in the case of both clauses (i) and (ii), any such
date that is after the date of this Rights Agreement and prior to the issuance
of the Rights) (the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Stock
registered in the names of the holders thereof and not by separate Right
Certificates (as defined below) and (y) the Rights will be transferable only in
connection with the transfer of Common Stock. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested by the Company, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Stock as of the close of
business on the Distribution Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit C hereto (a "Right Certificate"), evidencing one Right (subject
to adjustment as provided herein) for each share of Common Stock so held. As of
and after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) The Company will make available, as promptly as practicable following
the Record Date, a Summary of Rights to Purchase Shares of Preferred Stock, in
substantially the form of Exhibit B hereto (the "Summary of Rights") and will,
upon written request of any holder of Common Stock as of the close of business
on the Record Date (other than any Acquiring Person or any Associate or
Affiliate of any Acquiring Person), mail a copy of the Summary of Rights to the
address of such holder shown on the records of the Company, by first-class,
postage-prepaid mail. With respect to shares of Common Stock outstanding as of
the Record Date, until the Distribution Date, the Rights associated with such
shares will be evidenced by the share certificate for such shares of Common
Stock registered in the names of the holders thereof. Until the Distribution
Date (or, if earlier, the Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby.
(c) Rights shall be issued in respect of all shares of Common Stock issued
or disposed of (including, upon disposition of Common Stock out of treasury
stock or issuance or reissuance of Common Stock out of authorized but unissued
shares) after the Record Date but prior to the earlier of the Distribution Date
and the Expiration Date or, in those certain circumstances provided in Section
22 hereof, after the Distribution Date. Certificates issued for Common Stock
(including, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the earlier
of the Distribution Date and the Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:
"This certificate also evidences and entitles the holder hereof to
certain rights ("Rights") as set forth in a Rights Agreement between
Par Pharmaceutical Companies, Inc. and American Stock Transfer &
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Trust Company, as Rights Agent, dated as of October 27, 2004, as the
same may be amended, supplemented or otherwise modified from time to
time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at
the principal executive offices of Par Pharmaceutical Companies,
Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this stock certificate. Par
Pharmaceutical Companies, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances,
as set forth in the Rights Agreement, Rights owned by or transferred
to any Person who is or becomes an Acquiring Person (as defined in
the Rights Agreement) and certain transferees thereof will become
null and void and will no longer be transferable."
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificates, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
shares of Common Stock represented thereby. In the event that the Company
purchases or otherwise acquires any shares of Common Stock after the Record Date
but prior to the Distribution Date, any Rights associated with such shares of
Common Stock shall be deemed cancelled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common Stock
that shall no longer be outstanding.
Notwithstanding this Section 3(c), the omission of a legend shall not
affect the enforceability of any part of this Rights Agreement or the rights of
any holder of the Rights. Notwithstanding any other provision of this Rights
Agreement, neither the Company, the Rights Agent nor any other Person shall have
an obligation to issue any Rights Certificate to an Acquiring Person or to any
other Person in whose hands the Rights nominally represented by such Certificate
shall be null and void either initially or in connection with a request to
register a transfer of Rights represented by a certificate previously issued.
Furthermore, neither the Company, the Rights Agent nor any other Person shall be
obligated to issue Rights Certificates to any Person making a tender offer,
that, if consummated, could render such Person an Acquiring Person or to any
Affiliate or Associate of such Person until and unless the tender offer is
withdrawn and the Person shall have established to the Company's reasonable
satisfaction that such Person is not, and does not intend to become, an
Acquiring Person. The Company may require any Person claiming the right to
receive a Rights Certificate to present such evidence as the Company shall
reasonably require to establish to the Company's satisfaction that the Rights
represented by the Certificate are not null and void or that the Company may not
withhold such Certificate under the provisions of the preceding sentence.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit C
hereto and may have such marks of identification or designation and such
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legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of NYSE
or of any other stock exchange or automated quotation system on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11, 13 and 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-thousandths of a
share of Preferred Stock as shall be set forth therein, at the Purchase Price
(as defined in Section 7(b) hereof), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall
each be subject to adjustment as provided herein.
Section 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION. (a) The Right
Certificates shall be executed on behalf of the Company by the Executive
Chairman, Chief Executive Officer, the President, any of the Vice Presidents or
the Treasurer of the Company, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at an office or agency designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the certificate number and the date of each of the Right
Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a)
Subject to the provisions of this Rights Agreement, at any time after the close
of business on the Distribution Date, and prior to the close of business on the
Expiration Date, any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or, following such time, other
securities, cash or assets as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office or agency of the
Rights Agent designated for such purpose. Thereupon, the Rights Agent, subject
to the provisions of this Rights Agreement, shall countersign and deliver to the
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Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. As a condition to such transfer, split up, combination
or exchange, the Company may require payment of a sum sufficient to cover any
tax or governmental taxes and/or charges that may be imposed in connection with
any transfer, split up, combination or exchange of Right Certificates. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have duly completed and executed
the form of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or such former or proposed Beneficial Owner) thereof or such Beneficial Owner's
Affiliates or Associates as the Company shall reasonably require.
(b) Subject to the provisions of this Rights Agreement, at any time after
the Distribution Date and prior to the Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and, at the Company's request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Except as otherwise provided herein, the Rights shall become exercisable on
the Distribution Date, and thereafter the registered holder of any Right
Certificate may, subject to Section 11(a)(ii) hereof and except as otherwise
provided herein, exercise the Rights evidenced thereby in whole or in part upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the office or agency
of the Rights Agent designated for such purpose, together with payment of the
Purchase Price for each one one-thousandth of a share of Preferred Stock (or
other securities, cash or assets, as the case may be) as to which the Rights are
exercised, at any time that is both after the Distribution Date and prior to the
time (the "Expiration Date") that is the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date") or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) Subject to the provisions of this Rights Agreement, the purchase price
(the "Purchase Price") shall be initially $225.00 for each one one-thousandth of
a share of Preferred Stock purchasable upon the exercise of a Right. The
Purchase Price and the number of one one-thousandths of a share of Preferred
Stock or other securities or property to be acquired upon exercise of a Right
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America
in accordance with Section 7(c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the number of shares of Preferred Stock to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 6 hereof, in cash or by certified check,
8
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock, or make available if the Rights Agent is also the transfer
agent for the Preferred Stock, certificates for the number of shares of
Preferred Stock to be purchased (and the Company will irrevocably authorize its
transfer agent to comply with all such requests), or (B) requisition from the
depositary agent appointed by the Company depositary receipts representing
interests in such number of one one-thousandths of a share of Preferred Stock as
are to be purchased, in which case certificates for the Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent (and the Company will irrevocably direct the depositary agent
to comply with such request), (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered holder of
any Right Certificate shall exercise less than all the Rights evidenced thereby,
a new Right Certificate evidencing Rights equivalent to the exercisable Rights
remaining unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Sections 3(c) and 14 hereof.
(e) 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 Rights upon the occurrence of any
purported transfer or exercise of Rights pursuant to Section 6 hereof or this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Right Certificate surrendered for such transfer
or exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former or proposed Beneficial Owner) thereof or such
Beneficial Owner's Affiliates or Associates as the Company shall reasonably
require.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof, except as expressly permitted by
any of the provisions of 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 other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company or shall, at the written request
of the Company, destroy or cause to be destroyed such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
9
any shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the time that
a Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on the NYSE or listed on any other national securities exchange or
quotation system, the Company shall use commercial best efforts to cause, from
and after such time as the Rights become exercisable, all shares reserved for
such issuance to be listed or admitted to trading on the NYSE or listed on any
other exchange or quotation system upon official notice of issuance upon such
exercise.
(c) From and after such time as the Rights become exercisable, the Company
shall use commercial best efforts, if then necessary to permit the issuance of
shares of Preferred Stock (and following the time that a Person first becomes an
Acquiring Person, shares of Common Stock and other securities) upon the exercise
of Rights, to register and qualify such shares of Preferred Stock (and following
the time that a Person first becomes an Acquiring Person, shares of Common Stock
and other securities) under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of (x) the date as of which the
Rights are no longer exercisable for such securities and (y) the Expiration
Date. The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days, the exercisability of the Rights in order to prepare and file
a registration statement under the Securities Act and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Rights Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless any
requisite qualification or exemption in such jurisdiction shall have been
obtained and until a registration statement under the Securities Act (if
required) shall have been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Preferred Stock (and, following
the time that a Person becomes an Acquiring Person, shares of Common Stock and
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
non-assessable shares.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock (or shares of Common Stock or other securities)
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax or charge that may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or issue or deliver
certificates or depositary receipts for the Preferred Stock (or shares of Common
Stock or other securities) in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise or to issue
10
or deliver any certificates or depositary receipts for Preferred Stock (or
shares of Common Stock or other securities) upon the exercise of any Rights
until any such tax or charge shall have been paid (any such tax or charge being
payable by that holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax or
charge is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for Preferred Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preferred Stock represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer taxes
or charges) was made; PROVIDED, HOWEVER, that, if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which such transfer books are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Preferred Stock for which the Rights shall be
exercisable, including the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. NUMBER OF RIGHTS; ADJUSTMENT OF PURCHASE PRICE; AND NUMBER AND
KIND OF SHARES. The Purchase Price, the number of shares of Preferred Stock or
other securities or property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall, at any time after the date of this
Agreement, (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding shares of Preferred Stock, (C)
combine the outstanding shares of Preferred Stock into a smaller number of
shares of Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the shares of Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, as the case may be, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock that, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, the holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; PROVIDED, HOWEVER, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Sections 23 and 24 of this Rights Agreement and
except as otherwise provided in this Section 11(a)(ii) or Section 11(a)(iii), in
the event that any Person becomes an Acquiring Person, each holder of a Right
shall thereafter have the right to receive, upon exercise thereof at a price
equal to the then-current Purchase Price required to be paid in order to
11
exercise a Right in accordance with the terms of this Rights Agreement and in
lieu of shares of Preferred Stock, such number of shares of Common Stock (or, at
the option of the Company, such number of one one-thousandths of a share of
Preferred Stock) as shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is then exercisable and dividing that product
by (y) 50% of the then-current per share market price of the Common Stock
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event; PROVIDED, HOWEVER, that the Purchase Price (as so adjusted) and the
number of shares of Common Stock (or thousandths of a share of preferred stock)
so receivable upon exercise of a Right shall thereafter be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof.
Notwithstanding anything in this Rights Agreement to the contrary, however, from
and after the time when any Person first becomes an Acquiring Person (the
"invalidation time"), any Rights that are beneficially owned by (x) any
Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (y) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
becomes a transferee after the invalidation time or (z) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a transferee
prior to or concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any agreement, arrangement or understanding, written or
otherwise, regarding the transferred Rights or (II) a transfer that the Board of
Directors has determined is part of a plan, arrangement or understanding,
written or otherwise, which has the purpose or effect of avoiding the provisions
of this Section 11(a)(ii), and subsequent transferees of such Persons described
in clauses (y) and (z) above, shall automatically be void without any further
action, and any holder of such Rights shall thereafter have no rights whatsoever
with respect to such Rights under any provision of this Rights Agreement or
otherwise. The Company shall use reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. From and after the invalidation
time, no Right Certificate shall be issued pursuant to Section 3 or Section 6
hereof that represents Rights that are or have become void pursuant to the
provisions of this Section 11(a)(ii), and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become void pursuant to the
provisions of this Section 11(a)(ii) shall be cancelled. From and after the
occurrence of an event specified in Section 13(a) hereof, any Rights that
theretofore have not been exercised pursuant to this Section 11(a)(ii) shall
thereafter be exercisable only in accordance with Section 13 and not pursuant to
this Section 11(a)(ii).
(iii) The Company may, at its option, substitute for a share of
Common Stock issuable upon the exercise of Rights in accordance with the
foregoing Section 11(a)(ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the current per share
market price of a share of Common Stock. In the event that there shall be an
insufficient number of Common Stock authorized but unissued (and unreserved) to
permit the exercise in full of the Rights in accordance with the foregoing
Section 11(a)(ii), the Board of Directors shall, with respect to such
deficiency, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, (A) determine the
excess of (x) the value of the shares of Common Stock issuable upon the exercise
of a Right in accordance with the foregoing Section 11(a)(ii) (the "Current
Value") over (y) the then-current Purchase Price multiplied by the number of one
12
one-thousandths of shares of Preferred Stock for which a Right was exercisable
immediately prior to the time that the Acquiring Person became such (such
excess, the "Spread"), and (B) with respect to each Right (other than Rights
that have become void pursuant to Section 11(a)(ii)), make adequate provision to
substitute for the shares of Common Stock issuable in accordance with Section
11(a)(ii) upon exercise of the Right and payment of the applicable Purchase
Price, (1) cash, (2) a reduction in such Purchase Price, (3) shares of Preferred
Stock or other equity securities of the Company (including shares or fractions
of shares of preferred stock that, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the shares of Common
Stock, are deemed in good faith by the Board of Directors to have substantially
the same value as the shares of Common Stock (such shares of preferred stock and
shares or fractions of shares of preferred stock are hereinafter referred to as
"Common Stock equivalents"), (4) debt securities of the Company, (5) other
assets or (6) any combination of any or all of the foregoing, having a value
that, when added to the value of the shares of Common Stock actually issued upon
exercise of such Right, shall have an aggregate value equal to the Spread, where
such aggregate value has been determined by the Board of Directors upon the
advice of a nationally recognized investment banking firm selected in good faith
by the Board of Directors; PROVIDED, HOWEVER, if the Company shall not make
adequate provision to deliver value pursuant to clause (B) above within thirty
(30) days following the date that the Acquiring Person became such (the "Section
11(a)(iii) Trigger Date"), then the Company shall be obligated to deliver, to
the extent permitted by applicable law and any material agreements then in
effect to which the Company is a party, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available), and then, if necessary, such number or
fractions of shares of Preferred Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread. If within the thirty (30) day period referred to above the Board of
Directors shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, then, if the Board of Directors so elects, such thirty
(30)-day period may be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(iii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such additional
shares (such thirty (30)-day period, as it may be extended, is hereinafter
called the "Substitution Period"). If the Company determines that some action
need be taken pursuant to the second and/or third sentence of this Section
11(a)(iii), then the Company (x) shall provide, subject to Section 11(a)(ii)
hereof and the last sentence of this Section 11(a)(iii), that such action shall
apply uniformly to all outstanding Rights and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such second sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the shares of Common Stock shall be the current per share market price
(as determined pursuant to Section 11(d)(i)) on the Section 11(a)(iii) Trigger
Date and the per share or fractional value of any Common Stock equivalent shall
be deemed to equal the current per share market price of the Common Stock. The
Board of Directors may, but shall not be required to, establish procedures to
allocate the right to receive shares of Common Stock
13
upon the exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase shares of Preferred Stock (or shares having similar
rights, privileges and preferences as the Preferred Stock ("equivalent preferred
shares")) or securities convertible into Preferred Stock or equivalent preferred
shares at a price per share of Preferred Stock or equivalent preferred shares
(or having a conversion price per share, if a security convertible into shares
of Preferred Stock or equivalent preferred shares) less than the then-current
per share market price of the Preferred Stock (determined pursuant to Section
11(d) hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock and equivalent preferred shares
outstanding on such record date plus the number of shares of Preferred Stock and
equivalent preferred shares that the aggregate offering price of the total
number of such shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at such
current market price, and the denominator of which shall be the number of shares
of Preferred Stock and equivalent preferred shares outstanding on such record
date plus the number of additional shares of Preferred Stock and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); PROVIDED,
HOWEVER, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and which shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock and equivalent
preferred shares owned by or held for the account of the Company shall be deemed
not to be outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price that otherwise would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then-current per share market price of the Preferred Stock (determined pursuant
to Section 11(d) hereof) on such record date, less the fair market value (as
determined in good faith by the Board of Directors whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights) of the portion of such assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one share of Preferred Stock, and the denominator of
14
which shall be such current per share market price of the Preferred Stock;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any date shall be deemed
to be the average of the daily closing prices per share of such Security for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; PROVIDED, HOWEVER, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
or exchangeable for such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported by (w) the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE or, (x) if the Security is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted to
trading or, if (y) the Security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use, or, (z) if on any such date
the Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by an independent professional market maker
making a market in the Security selected by the Board of Directors. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if the Preferred
Stock is publicly traded, the "current per share market price" of the Preferred
Stock shall be determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Stock is not publicly traded but the Common Stock is
publicly traded, the "current per share market price" of the Preferred Stock
shall be conclusively deemed to be the current per share market price of the
Common Stock, as determined pursuant to Section 11(d)(i) hereof, multiplied by
one thousand (appropriately adjusted to reflect any stock split, stock dividend,
combination or similar transaction occurring after the date hereof). If neither
the Common Stock nor the Preferred Stock is publicly traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
15
the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; PROVIDED, HOWEVER, that any adjustments not required to be made by reason
of this Section 11(e) shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one ten-thousandth of a share of Preferred
Stock or share of Common Stock or other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Sections 11(a) or
13(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than the Preferred
Stock, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11(a),
11(b), 11(c), 11(e), 11(h), 11(i), 11(k), 11(l) and 11(m) hereof and the
provisions of Sections 7, 9, 10, 12, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten- thousandth of a share of Preferred Stock) obtained by (i) multiplying (x)
the number of one one-thousandths of a share of Preferred Stock purchasable upon
the exercise of a Right immediately prior to such adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price pursuant to Sections 11(b) or 11(c) hereof to adjust the number
of Rights, in substitution for any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
16
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company may, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled as a result of
such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-thousandths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-thousandths
of a share of Preferred Stock that were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Preferred
Stock or other shares of capital stock issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of Preferred Stock or other such shares at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the
Preferred Stock, Common Stock or other capital stock or securities of the
Company, if any, issuable upon such exercise in addition to Preferred Stock,
Common Stock or other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Notwithstanding anything in this Section 11 to the contrary, the
Company shall be entitled to make such adjustments in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Board of Directors in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance (wholly for cash) of any shares of Preferred Stock at less than
the current market price, issuance (wholly for cash) of Preferred Stock or
securities that by their terms are convertible into or exchangeable for
17
Preferred Stock, dividends on Preferred Stock payable in shares of Preferred
Stock or issuance of rights, options or warrants referred to hereinabove in
Section 11(b) hereof, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such stockholders.
(n) Notwithstanding anything in this Rights Agreement to the contrary, in
the event that at any time after the date of this Rights Agreement and prior to
the Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a subdivision, combination
or consolidation of the Common Stock (by reclassification or otherwise than by
payment of a dividend payable in Common Stock) into a greater or lesser number
of shares of Common Stock, then in any such case, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(o) The Company agrees that, after the earlier of the Distribution Date or
the Stock Acquisition Date, it will not, except as permitted by Sections 23, 24
or 27 hereof, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by the Rights.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Stock or the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof (if
so required under Section 25 hereof). The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS. (a) In
the event that, at any time after any Person has become an Acquiring Person,
directly or indirectly, (i) the Company shall merge with and into any other
Person (other than one or more of its wholly-owned Subsidiaries), (ii) any
Person (other than one or more of its wholly-owned Subsidiaries), shall
consolidate with the Company, or any Person (other than one or more of its
wholly-owned Subsidiaries), shall merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more related or series of related transactions (including
by way of capital stock or other securities), assets and/or earning power
aggregating to 50% or more
18
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company or one or more of
its wholly-owned Subsidiaries), then, and in each such case, except as part of
a Permitted Transaction, proper provision shall be made so that:
(A) each holder of record of a Right (other than Rights that have become
void pursuant to Section 11(a)(ii)) shall thereafter have the right to receive,
upon the exercise thereof at a price equal to the then-current Purchase Price
multiplied by the number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable (whether or not such Right was then
exercisable) immediately prior to the time that any Person first became an
Acquiring Person (each as subsequently adjusted thereafter pursuant to Sections
11(a)(i), 11(b), 11(c), 11(f), 11(h), 11(i) and 11(m)) hereof, in accordance
with the terms of this Rights Agreement and in lieu of Preferred Stock, such
number of validly issued, fully paid and non-assessable and freely tradeable
shares of Common Stock of the Principal Party (as defined below) not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then-current
Purchase Price by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the time that any
Person first became an Acquiring Person (as subsequently adjusted thereafter
pursuant to Sections 11(a)(i), 11(b), 11(c), 11(f), 11(h), 11(i), 11(k) and
11(m)) hereof and (2) dividing that product by 50% of the then-current per share
market price of the Common Stock of such Principal Party (determined pursuant to
Section 11(d)(i) hereof) on the date of consummation of such consolidation,
merger, sale or transfer; PROVIDED, HOWEVER, that the Purchase Price and the
number of shares of Common Stock of such Principal Party issuable upon exercise
of each Right shall be further adjusted as provided in Section 11(f) of this
Rights Agreement to reflect any events occurring in respect of such Principal
Party (as if the Principal Party were the Company) after the date of such
consolidation, merger, sale or transfer;
(B) such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company under this Rights Agreement;
(C) the term "Company" as used herein shall thereafter be deemed to refer
to such Principal Party; and
(D) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its shares of its Common Stock) in
connection with such consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; PROVIDED, HOWEVER, that, upon the
subsequent occurrence of any consolidation, merger, sale or transfer of assets
or other extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property that such holder would have
been entitled to receive had such holder, at the time of such transaction, owned
the Common Stock of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take all steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property.
19
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (i) or (ii)
of the first sentence of Section 13(a) hereof: (A) the Person that is the issuer
of the securities into which the shares of Common Stock of the Company are
converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer of the securities of which have the greatest aggregate market
value of shares outstanding, or (B) if no securities are so issued, (x) the
Person that is the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person the shares of
Common Stock of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger does not
survive the merger, the Person that does survive the merger (including the
Company if it survives) or (z) the Person resulting from the consolidation; and
(ii) in the case of any transaction described in clause (iii) of the
first sentence in Section 13(a) hereof, the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons is the
issuer of Common Stock having the greatest aggregate market value of shares
outstanding;
PROVIDED, HOWEVER, that in any such case described in the foregoing
clause (b)(i) or (b)(ii), if the Common Stock of such Person is not at such time
or has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person, the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a direct or indirect Subsidiary of more than one Person, and
the Common Stock of all of such persons have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint venture or
similar arrangement formed by two or more Persons that are not owned, directly
or indirectly, by the same Person, the rules set forth in clauses (1) and (2)
above shall apply to each of the owners having an interest in the venture or
similar arrangement as if the Person owned by the joint venture was a Subsidiary
of both or all of such joint venturers or other Persons and the Principal Party
in each such case shall bear the obligations set forth in this Section 13 in the
same ratio as its interest in such Person bears to the total of such interests.
(c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Rights Agreement as the same shall
have been assumed by the Principal Party pursuant to Sections 13(a) and (b)
20
hereof and providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date, and similarly comply with
applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the NYSE or on another national
securities exchange, to list or admit to trading (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on the
NYSE or such securities exchange, or, if the Common Stock of the Principal Party
shall not be listed or admitted to trading on the NYSE or a national securities
exchange, to cause the Rights and the securities receivable upon exercise of the
Rights to be reported by such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal, preemptive or
similar rights in respect of the Common Stock of the Principal Party subject to
purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has a provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its affairs, which provision would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to this
Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock or Common
Stock equivalents of such Principal Party at less than the then-current market
price per share thereof (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock or Common Stock
equivalents of such Principal Party at less than such then-current market price,
or (ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any such
transaction unless, prior thereto, the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision(s) in question of such Principal Party shall have
been canceled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time after
a Person first becomes an Acquiring Person enter into any transaction of the
type contemplated by Sections 13(a)(i)-(iii) hereof if (x) at the time of or
21
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that could materially diminish or
effectively eliminate the benefits intended to be afforded by the Rights, (y)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(b) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (z) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights.
(f) The provisions of this Section 13 shall similarly apply to successive
share exchanges, mergers or consolidations or sales or other transfers.
(g) In the event that the Rights become exercisable under Section 13(a),
the Company, by majority vote of the entire Board of Directors, may agree with
the Principal Party that the Principal Party shall permit the Rights to be
exercised for 50% of the Common Stock of the Principal Party that otherwise
would be purchasable under Section 13(a), in consideration of the surrender to
the Principal Party, as the successor to the Company under Section 13(a)(ii), of
the Rights so exercised and without other payment of the Purchase Price. Rights
exercised under this Section 13(g) shall be deemed to have been exercised in
full and shall be canceled.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company shall
not be required to issue fractions of Rights (except prior to the Distribution
Date in accordance with Section 11(n) hereof) or to distribute Right
Certificates that evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right Certificates with
regard to which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole Right.
For the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported by (w) the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NYSE or (x) if the Rights are not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or (y) if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use or (z) if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by an independent professional market maker
making a market in the Rights selected by the Board of Directors. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors
shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
22
distribute certificates that evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Interests in fractions of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
PROVIDED, HOWEVER, that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred Stock represented
by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share of Preferred
Stock, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised for shares of Preferred Stock as herein
provided an amount in cash equal to the same fraction of the current market
value of one share of Preferred Stock. For the purposes of this Section 14(b),
the current market value of a share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant to Sections 11(d)(i)
and (ii) hereof) for the Trading Day immediately prior to the date of such
exercise of the Rights.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates that evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates at the time such Rights are exercised or exchanged for shares
of Common Stock, as herein provided, an amount in cash equal to the same
fraction of the current market value of a whole share of Common Stock (as
determined in accordance with Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise or exchange of the Rights.
(d) The holder of a Right by the acceptance of the Right expressly waives
the right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right (except as provided above).
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Rights Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right 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 Right Certificate (or, prior to the
Distribution Date, of the holders of any other Common Stock), on such holder's
own behalf and for such holder's own benefit, may enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Right Certificate (or, prior to the Distribution Date, such
Common Stock) in the manner provided in such Right Certificate and in this
Rights Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this Rights
Agreement and will be entitled to specific performance of the obligations under,
and injunctive relief against actual or threatened violations of the obligations
of any Person subject to, this Rights Agreement.
23
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(i) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Stock;
(ii) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office or
agency of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer; and
(iii) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the 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
Right Certificates or the 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, subject to Section 7(e) hereof, shall be affected
by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any other purpose the holder of the Preferred Stock or any
other securities of the Company or any cash or other property that may at any
time be issuable on the exercise or exchange of the Rights represented thereby,
nor shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in this Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by such Right Certificate shall
have been exercised or exchanged in accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay to
the Rights Agent the compensation set forth on Annex I hereto for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Rights Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without gross negligence, bad faith, willful misconduct or
breach of this Rights Agreement on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Rights Agreement in reliance upon any Right
Certificate or certificate for the Preferred Stock or Common Stock or for other
24
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document reasonably believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20(a) hereof.
Section 19. MERGER, 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 stock transfer or corporate
trust powers of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Rights Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; PROVIDED, HOWEVER, that such Person would be eligible for appointment as
a successor Rights Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency created by this
Rights Agreement, any of the Right Certificates shall have been countersigned
but not delivered, such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of such successor Rights Agent; and in all such cases such Right Certificates
shall have the full force and effect provided in the Right Certificates and in
this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes to preform
the duties and obligations imposed by this Rights Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and any written opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chief Executive Officer,
25
President or any Vice President of the Company (each, an "Authorized Officer")
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith, willful misconduct or
breach of this Rights Agreement by it or its agents.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3, 11,
13, 22, 23 and 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of a certificate, furnished
pursuant to Section 12, describing such change or adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock or other securities
will, when issued, be validly authorized and issued, fully paid and
non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be one of the Authorized
Officers, and to apply to such Authorized Officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of any such
Authorized Officer or for any delay in acting while waiting for those
instructions. Any written application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent under
this Rights Agreement and the date on and/or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such written application on or after the date specified
26
in such application (which date shall not be less than five Business Days after
the date any Authorized Officer of the Company actually receives such
application, unless any such Authorized Officer shall have consented in writing
to an earlier date) unless, prior to taking any such action (or the effective
date in the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may, subject to applicable law, buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; PROVIDED, HOWEVER, that reasonable care was exercised by
it in the selection and continued engagement thereof.
(j) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof) or a transferee of any
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon at least 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock or the Preferred Stock by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon at least 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 Stock by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (A) a Person organized and doing business under the laws of the United
States or any State thereof, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
27
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million or (B) an affiliate of a Person described in clause (A) of this
sentence. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall promptly deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Stock or the Preferred Stock, and, following the Distribution Date, mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such forms as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Rights Agreement. In addition, in
connection with the issuance or sale of Common Stock following the Distribution
Date and prior to the Expiration Date, the Company may with respect to shares of
Common Stock so issued or sold pursuant to (i) the exercise of stock options,
(ii) under any employee plan or arrangement, (iii) the exercise, conversion or
exchange of securities, notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale.
Section 23. REDEMPTION. (a) On behalf of the Company, the Board of
Directors by majority of the entire Board of Directors may, at (and only at) any
time prior to the earlier of (i) the close of business on the tenth (10th)
calendar day following the Stock Acquisition Date (or, if the Stock Acquisition
Date shall have occurred prior to the Record Date, the close of the business on
the tenth (10th) calendar day following the Record Date) or (ii) the Final
Expiration Date, redeem all but not less than all the then-outstanding Rights at
a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (the "Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the majority
of the entire Board of Directors in its sole discretion may establish. The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the current market price of the Common Stock at the time of
redemption as determined pursuant to Section 11(d)(i) hereof) or any other form
of consideration deemed appropriate by the Board of Directors. Notwithstanding
anything to the contrary contained in this Rights Agreement, the Rights shall
not be exercisable until such time as the Company's right of redemption
hereunder has expired.
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 23(a) hereof (or at such later time
as the Board of Directors may establish for the effectiveness of such
28
redemption), and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; PROVIDED, HOWEVER, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights (or such later time as the Board of Directors may
establish for the effectiveness of such redemption), the Company shall mail a
notice of redemption to all the holders of the then-outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock. Any notice that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of redemption shall state the method by which the payment of the Redemption
Price will be made.
Section 24. EXCHANGE. (a) The Board of Directors may, at its option, by
action of a majority of the entire Board of Directors, at any time after any
Person first becomes an Acquiring Person, exchange all or part of the
then-outstanding and exercisable Rights (which shall not include Rights that
have not become effective or that have become void pursuant to the provisions of
Section 11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such amount per Right being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after an Acquiring Person becomes the
Beneficial Owner of shares of Common Stock aggregating 50% or more of the shares
of Common Stock then-outstanding, other than pursuant to a Permitted
Transaction. From and after the occurrence of an event specified in Section
13(a) hereof, any Rights that theretofore shall have not been exchanged pursuant
to this Section 24(a) shall thereafter be exercisable only in accordance with
Section 13 and may not be exchanged pursuant to this Section 24(a). The exchange
of the Rights by the Board of Directors may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish.
(b) Immediately upon the effectiveness of the action of the Board of
Directors ordering the exchange of any Rights pursuant to Section 24(a) hereof
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly mail a notice
of any such exchange to all of the holders of the Rights so exchanged at their
last addresses as they appear upon the registry books of the Rights Agent. Any
notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
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 have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
29
(c) The Company may at its option substitute and, in the event that there
shall not be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued (and unreserved) to permit an exchange of Rights as
contemplated in accordance with this Section 24, the Company shall substitute to
the extent of such insufficiency, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of shares of Preferred
Stock or fraction thereof (or equivalent preferred shares as such term is
defined in Section 11(b)) such that the current per share market price
(determined pursuant to Section 11(d) hereof) of one share of Preferred Stock
(or equivalent preferred share) multiplied by such number or fraction is equal
to the current per share market price of one share of Common Stock (determined
pursuant to Section 11(d)) as of the date of such exchange.
Section 25. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall at any
time after the earlier of the Distribution Date or the Stock Acquisition Date
propose to (i) pay any dividend payable in stock of any class to the holders of
its Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) offer to
the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision or combination of outstanding Preferred Stock), (iv) effect
the liquidation, dissolution or winding up of the Company or (v) declare or pay
any dividend on the Common Stock payable in Common Stock or to effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution or offering of rights or warrants, or the date on
which such liquidation, dissolution, reclassification, subdivision, combination,
consolidation or winding up is to take place and the date of participation
therein by the holders of the Common Stock and/or Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Stock and/or Preferred Stock, whichever shall be the
earlier. The failure to give notice as required by this Section 24 or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the approval of any such action.
(b) In case any event described in Section 11(a)(ii) or Section 13 shall
occur then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate (or if occurring prior to the Distribution Date,
the holders of the Common Stock), in accordance with Section 26 hereof, a notice
of the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) and
Section 13 hereof.
Section 26. NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
30
Par Pharmaceutical Companies, Inc.
One Ram Ridge Road
Spring Valley, NJ 10977
Attn: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
Attn: General Counsel
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Except as otherwise provided in
this Section 27, for so long as the Rights are then redeemable, the Company may,
in its sole and absolute discretion, and the Rights Agent shall if the Company
so directs, supplement or amend any provision of this Rights Agreement in any
respect without the approval of any holders of the Rights. At any time when the
Rights are no longer redeemable, except as otherwise provided in this Section
27, the Company may, and the Rights Agent shall, if the Company so directs,
supplement or amend this Rights Agreement without the approval of any holders of
Rights in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein that may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder or (iv)
change or supplement the provisions hereunder in any manner which the Company
deems necessary or desirable; PROVIDED, HOWEVER, that no such supplement or
amendment shall adversely affect the interests of the holders of Rights as such
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person), and no such amendment may cause the Rights again to become redeemable
or cause this Rights Agreement again to become amendable other than in
accordance with this sentence. Notwithstanding anything contained in this Rights
Agreement to the contrary, no supplement or amendment shall be made that
decreases the Redemption Price. Upon the delivery of a certificate from an
appropriate officer of the Company that states that the supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment; PROVIDED, HOWEVER, that any supplement or
amendment that does not amend Sections 18, 19, 20 or 21 hereof in a manner
adverse to the Rights Agent shall become effective immediately upon its
execution by the Company, whether or not also executed by the Rights Agent.
Section 28. SUCCESSORS. All the covenants and provisions of this Rights
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
31
Section 29. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, of the Common Stock) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, of the
Common Stock).
Section 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. The
Board of Directors shall have the exclusive power and authority to administer
this Rights Agreement and to exercise the rights and powers specifically granted
to the Board of Directors or to the Company, or as may be necessary or advisable
in the administration of this Rights Agreement, including the right and power to
(i) interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including, a determination to redeem or not redeem the Rights
or to amend this Rights Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
of Directors in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights, as such, and all other
parties, and (y) not subject the Board of Directors to any liability to the
holders of the Rights or Common Stock.
Section 31. SEVERABILITY. If any term, provision, covenant or restriction
of this Rights Agreement or applicable to 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; PROVIDED, HOWEVER, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated (with prompt notice to the Rights
Agent) and shall not expire until the close of business on the tenth Business
Day following the date of such determination by the Board. Without limiting the
foregoing, if any provision requiring a specific group of directors of the
Company to act is held to by any court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determination shall then be
made by the entire Board of Directors in accordance with applicable law and the
Company's Certificate of Incorporation and Bylaws.
Section 32. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. COUNTERPARTS. This Rights Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
32
Section 34. 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
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement
to be duly executed and attested, all as of the day and year first above
written.
PAR PHARMACEUTICAL COMPANIES, INC.
Attest: /s/ Sabrina Greensea By: /s/ Dennis J. O'Connor
--------------------- ---------------------------
Name: Dennis J. O'Connor
Title: CFO
AMERICAN STOCK TRANSFER & TRUST COMPANY
Attest: /s/ Susan Silber By: /s/ Herbert J. Lemmer
------------------ ---------------------------
Name: Herbert J. Lemmer
Title: Vice President
33
EXHIBIT A
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
PAR PHARMACEUTICAL COMPANIES, INC.
(PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
-------------------------------------------------
Par Pharmaceutical Companies, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Company"),
hereby certifies that the following resolution was duly adopted by the Board of
Directors of the Company as required by Section 151 of the General Corporation
Law of the State of Delaware on October __, 2004:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Company (hereinafter being referred to as the "Board of Directors" or the
"Board") in accordance with the provisions of the Company's Certificate of
Incorporation, as amended (hereinafter being referred to as the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of Preferred
Stock, par value $0.0001 per share, of the Company, to be designated the "Series
A Junior Participating Preferred Stock" and hereby adopts the resolution
establishing the designations, number of shares, preferences, voting powers and
other rights and the restrictions and limitations thereof, of the shares of such
series as set forth below:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 1,000,000. Such number of shares may be increased or 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 Company convertible
into Series A Preferred Stock.
A-1
Section 2. DIVIDENDS AND DISTRIBUTIONS.
---------------------------
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock of the Company (the "Preferred Stock") (or any similar stock)
ranking prior and superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, par value $0.01 per share, of the Company (the
"Common Stock") and of any other stock of the Company ranking junior to the
Series A Preferred Stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of January, April, July, and
October in each year (each such date being referred to herein as a "Dividend
Payment Date"), commencing on the first Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock (the
"Issue Date"), in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions (other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise)), declared on the Common Stock since the
immediately preceding Dividend Payment Date or, with respect to the first
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. In the event that the Company shall at any
time after the Issue Date declare and pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Series A
Preferred Stock as provided in Section 2(A) hereof immediately after it declares
a dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); PROVIDED, HOWEVER, that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Dividend Payment Date and the next subsequent Dividend Payment Date,
a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless
be payable, when, as and if declared, on such subsequent Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series A Preferred Stock from the
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
A-2
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Certificate of Incorporation or required by
law, each share of Series A Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters upon which the holders of the Common Stock of the
Company are entitled to vote. In the event that the Company shall at any time
after the Issue Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by 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 Company having general voting
rights shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. CERTAIN RESTRICTIONS.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not earned or declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
A-3
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; PROVIDED, that the
Company may at any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company ranking junior
(as to dividends and upon dissolution, liquidation or winding up) to the Series
A Preferred Stock or rights, warrants or options to acquire such junior 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 (either
as to dividends or upon liquidation, dissolution or winding up) with the Series
A Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company unless
the Company could, under subsection (iv) above, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their retirement become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject to any
conditions and restrictions on issuance set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (A) to
the holders of the Common Stock or of shares of any other stock of the Company
ranking junior, 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 $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment; PROVIDED, that, in any event, the holders
of shares of Series A Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount to be distributed per share to holders
of shares of Common Stock, or (B) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
A-4
the event, however, that there are not sufficient assets available to permit
payment in full of the Series A Preferred Stock liquidation preference and the
liquidation preferences of all other classes and series of stock of the Company,
if any, that rank on a parity with the Series A Preferred Stock in respect
thereof, then the assets available for such distribution shall be distributed
ratably to the holders of the Series A Preferred Stock and the holders of such
parity shares in the proportion to their respective liquidation preferences. In
the event the Company shall at any time after the Issue Date declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (A) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Neither the merger or consolidation of the Company into or with another
entity nor the merger or consolidation of any other entity into or with the
Company (nor the sale of all or substantially all of the assets of the Company)
shall be deemed to be a liquidation, dissolution or winding up of the Company
within the meaning of this Section 6.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are converted into, exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case each
share of Series A Preferred Stock shall at the same time be similarly converted
into, exchanged for or changed into an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
could be converted, exchanged or converted. In the event the Company shall at
any time after the Issue Date declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the conversion,
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series A Preferred Stock shall not
be redeemable by any holder.
Section 9. RANK. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Company, junior to all other classes or series
of Preferred Stock and senior to the Common Stock.
A-5
Section 10. AMENDMENT. If any proposed amendment to the Certificate of
Incorporation (including this Certificate of Designations) would alter, change
or repeal any of the preferences, powers or special rights given to the Series A
Preferred Stock so as to affect the Series A Preferred Stock adversely, then the
holders of the Series A Preferred Stock shall be entitled to vote separately as
a class upon such amendment, and the affirmative vote of the holders of at least
two-thirds of the outstanding shares of the Series A Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
[SIGNATURE PAGE TO FOLLOW]
A-6
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Company by the Vice President and General Counsel of the Company on
October __, 2004.
-------------------------------
Name:
Title:
A-7
EXHIBIT B
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
Shares of Preferred Stock
On October __, 2004 the Board of Directors (the "Board of Directors") of
Par Pharmaceutical Companies, Inc., a Delaware corporation (the "Company"),
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $0.01 per share, of the Company
(the "Common Stock"). The dividend is payable on November __, 2004 to the
stockholders of record as of the close of business on that date (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $0.0001 per share (the "Preferred Stock"), of the Company at a price
of $225.00 per one one-thousandth of a share of Preferred Stock (as the same may
be adjusted, the "Purchase Price"). The description and terms of the Rights are
set forth in a Rights Agreement, dated as of October __, 2004 (as the same may
be amended from time to time, the "Rights Agreement"), between the Company and
American Stock Transfer & Trust Company, a New York corporation, as Rights Agent
(the "Rights Agent").
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors because the Board of Directors have the ability to redeem the
Rights, as discussed below.
Until the close of business on the earlier of (i) the tenth day after the
first date of a public announcement that a person (other than an Exempted Entity
(as defined below)) or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 15% or more of the shares of
Common Stock then outstanding or (ii) the tenth business day (or such later date
as may be determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person) after the
date of commencement of a tender offer or exchange offer the consummation of
that would result in the beneficial ownership by a person (other than an
Exempted Entity) or group of 15% or more of the shares of Common Stock then
outstanding (the earlier of such dates being herein referred to as the
"Distribution Date"), the Rights will be evidenced by the shares of Common Stock
represented by certificates for Common Stock outstanding as of the Record Date,
together with a copy of the summary of rights disseminated in connection with
the original dividend of Rights.
"Exempted Entity" shall mean (1) the Company, (2) any Subsidiary (as
defined below) of the Company (in the case of subclauses (1) and (2) including
in its fiduciary capacity), (3) any employee benefit plan of the Company or of
B-1
any Subsidiary of the Company and (4) any entity or trustee holding Common Stock
for or pursuant to the terms of any such plan or for the purpose of funding any
such plan or funding other employee benefits for employees of the Company or of
any Subsidiary of the Company.
The Rights Agreement provides that, until the Distribution Date (or the
earlier redemption, exchange or expiration of the Rights), the Rights will be
transferable only in connection with the transfer of Common Stock. Until the
Distribution Date (or the earlier redemption, exchange or expiration of the
Rights), the surrender for transfer of any certificates for shares of Common
Stock outstanding as of the Record Date, even without a notation incorporating
the Rights Agreement by reference or a copy of this Summary of Rights, will also
constitute the transfer of the Rights associated with the shares of Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on October __, 2014, subject to (i) the extension of
the Rights Agreement by the Board of Directors by the amendment of the Rights
Agreement or (ii) the redemption or exchange of the Rights by the Company as
described below.
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than
the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The Rights are also subject to adjustment in the event of a stock dividend
on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Each share of Preferred Stock will be entitled, when, as and if declared,
to a minimum preferential quarterly dividend payment of the greater of (a) $1.00
per share and (b) an amount equal to 1,000 times the dividend declared per share
of Common Stock. In the event of liquidation, dissolution or winding up of the
Company, the holders of the Preferred Stock will be entitled to a minimum
preferential liquidation payment of $1,000 per share (plus any accrued but
unpaid dividends) but will be entitled to an aggregate 1,000 times the payment
made per share of Common Stock. Each share of Preferred Stock will have 1,000
votes, voting together with the Common Stock, with specified exceptions.
Finally, in the event of any merger, consolidation or other transaction in which
shares of Common Stock are converted or exchanged, each share of Preferred Stock
will be entitled to receive 1,000 times the amount received per share of Common
Stock. These rights are protected by anti-dilution provisions.
B-2
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated persons
shall become an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right, subject to the Company's right to redeem or
exchange the Rights, to receive upon exercise of a Right and payment of the
Purchase Price, that number of shares of Common Stock having a market value of
two times the Purchase Price.
In the event that, after a person or group shall become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock
of the entity with which the Company has engaged in the foregoing transaction
(or its parent), which number of shares at the time of such transaction will
have a market value of two times the Purchase Price.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock or the occurrence of an event described in
the prior paragraph, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group that shall have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or a fractional share of Preferred Stock (or of a share of a similar class or
series of the Company's preferred stock having similar rights, preferences and
privileges) of equivalent value, per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the earlier of (i) the close of business on the tenth
(10th) calendar day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the close of the
business on the tenth (10th) calendar day following the Record Date) or (ii) the
Final Expiration Date, a majority of the entire Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
B-3
For so long as the Rights are then redeemable, the Company may, except
with respect to the Redemption Price, amend the Rights Agreement in any manner.
After the Rights are no longer redeemable, the Company may, except with respect
to the Redemption Price, amend the Rights Agreement in any manner that does not
adversely affect the interests of holders of the Rights.
Until a Right is exercised or exchanged, the holder thereof, as such, will
have no rights as a stockholder of the Company, including the right to vote or
to receive dividends.
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, dated
__________, 2004. A copy of the Rights Agreement is available, upon request,
free of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, as the same may be amended from time to time, which is hereby
incorporated herein by reference.
B-4
EXHIBIT C
Certificate No. R- ___ ___ Rights
NOT EXERCISABLE AFTER _____________, 2014 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT $.01 PER RIGHT, AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON
WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.
Form of Right Certificate
PAR PHARMACEUTICAL COMPANIES, INC.
This certifies that ___________ or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of _________, 2004 as the same may be amended from time to
time (the "Rights Agreement"), between Par Pharmaceutical Companies, Inc., a
Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company, a New York corporation (the "Rights Agent"), unless notice of
redemption or exchange shall have been previously given by the Company, to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., New York City time,
on __________, 2014 at the office or agency of the Rights Agent designated for
such purpose, or of its successor as Rights Agent, one one-thousandth of a fully
paid non-assessable share of Series A Junior Participating Preferred Stock, par
value $0.0001 per share (the "Preferred Stock"), of the Company, at a purchase
price of $225.00 per one one-thousandth of a share of Preferred Stock (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The Purchase Price may be
paid in cash or by certified bank check or bank draft payable to the order of
the Company. The number of Rights evidenced by this Right Certificate (and the
number of one one-thousandths of a share of Preferred Stock which may be
purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of ___________, 2004, based on
the Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price, the number of one one-thousandths of a share of
Preferred Stock (or other securities or property) which may be purchased upon
the exercise of the Rights and the number of Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company. The Company will mail to the holder of this Right Certificate a copy of
the Rights Agreement without charge upon receipt of a written request therefor.
C-1
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive, upon surrender hereof, another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company, at a redemption price of
$0.01 per Right, payable, at the election of the Company in cash or shares of
Common Stock or such other consideration as the Board of Directors may
determine, or (ii) may be exchanged by the Board of Directors, at its option, in
whole or in part for shares of Preferred Stock or shares of the Company's Common
Stock, par value $0.01 per share.
No fractional shares of Preferred Stock or Common Stock will be issued
upon the exercise or exchange of any Right or Rights evidenced hereby (other
than fractions of Preferred Stock which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose to be the holder of the Preferred
Stock or of any other securities of the Company that may at any time be issuable
on the exercise or exchange hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
certificate shall have been exercised or exchanged as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
[SIGNATURE PAGE TO FOLLOW]
C-2
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________ __, ____ .
ATTEST: PAR PHARMACEUTICAL COMPANIES, INC.
By: By:
--------------------- --------------------------------
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
- ------------------------
as Rights Agent
By:
---------------------
Authorized Signatory
C-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfer unto ___________________________
------------------------------------------------------
Please print name and address of transferee)
Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
___________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.
Dated: ______________, ____
-------------------------
Signature
SIGNATURE GUARANTEED:
Signatures must be guaranteed by a bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program.
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, were not acquired by the undersigned
from, and are not being sold, assigned or transferred to, an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement).
-------------------------
Signature
C-4
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock (or other securities or property) issuable upon the exercise of such
Rights and requests that certificates for such shares of Preferred Stock (or
such other securities) be issued in the name of:
---------------------------------------
(Please print name and address)
---------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
---------------------------------------
(Please print name and address)
---------------------------------------
Dated:
----------------, --- ------------------------
Signature
(Signature must conform to holder
specified on Right Certificate)
SIGNATURE GUARANTEED:
Signatures must be guaranteed by a bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program.
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, were not acquired by the undersigned
from, and are not being sold, assigned or transferred to, an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement).
------------------------
Signature
C-5
Form of Reverse Side of Right 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 upon the face of this
Right 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, such
Assignment or Election to Purchase will not be honored.
------------------------------------------------------
C-6
ANNEX I
Par Pharmaceutical Resources, Inc. (the "Company") has agreed to pay
American Stock Transfer & Trust Company (the "Rights Agent") $200 per month to
act as the Rights Agent in connection with that certain Rights Agreement, dated
as of October __, 2004, by and between the Company and the Rights Agent.
C-7