Exhibit 4.2
FIRST AMENDMENT TO RIGHTS AGREEMENT
-----------------------------------
AMENDMENT, dated as of September 21, 1999 (the "Amendment"), to the
Rights Agreement, dated as of April 15, 1996 (the "Rights Agreement"), between
Bone Care International, Inc., a Wisconsin corporation (the "Company"), and
Norwest Bank Minnesota, N.A. (the "Rights Agent").
Pursuant to and in compliance with Section 27 of the Rights Agreement,
the Company and the Rights Agent desire to amend the Rights Agreement as set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and in the Rights Agreement, the parties hereto
hereby agree as follows:
1. Section 1(a) of the Rights Agreement is hereby amended by deleting
such Section in its entirety and by adding the following in lieu thereof:
"(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the shares of Common Stock of the
Company then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan or other
compensation program or arrangement of the Company or of any such
Subsidiary, (iv) any Person holding such shares of Common Stock for or
pursuant to the terms of any such plan, program or arrangement, or (v) Dr.
Richard B. Mazess, any Affiliate of Dr. Richard B. Mazess or, in the event
of the incompetence or death of Dr. Richard B. Mazess, the estate or any
executor, administrator, conservator or beneficiaries of Dr. Richard B.
Mazess (the Persons in clauses (i) through (v) being hereinafter
collectively called
"Exempt Persons"). Notwithstanding the preceding sentence, no Person shall
become an "Acquiring Person" as the result of an acquisition by the Company
of shares of its Common Stock which, by reason of reducing the number of
its then outstanding shares of Common Stock, increases the percentage of
its then outstanding shares of Common Stock Beneficially Owned by such
Person to 20% or more; provided, however, that if such Person shall, after
the purchase by the Company, become the Beneficial Owner of any additional
shares of Common Stock of the Company, then such Person shall be deemed to
be an "Acquiring Person." Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring Person,"
as defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring Person" for any purpose
of this Agreement."
2. Sections 1(i) and 1(t) of the Rights Agreement are hereby deleted
in their entirety and the remaining Sections 1(j) through 1(hh) are hereby
redesignated as Sections 1(i) through 1(ll).
3. Section 3(a) of the Rights Agreement is hereby amended by deleting
"15%" in line 13 thereof and inserting "20%" in lieu thereof.
4. Section 3(c) of the Rights Agreement is hereby amended by
inserting ", as amended," following "April 15, 1996" in line 3 of the legend set
forth therein.
5. Section 7(b) of the Rights Agreement is hereby amended to read in
its entirety as follows:
-2-
"(b) The price (the "Exercise Price") for each one two-hundredth of a
Preferred Share purchased upon exercise of the Rights shall be $50.00
as of September 21, 1999, shall be subject to adjustment from time to
time as provided in Sections 11 and 13 and shall be payable in lawful
money of the United States of America in accordance with subsection
(c) of this Section 7."
6. Section 11(a)(iii) of the Rights Agreement is hereby amended to
read in its entirety as follows:
"(iii) In the event that there shall not be sufficient authorized and
unissued or treasury shares of Common Stock to permit the exercise in
full of the Rights in accordance with paragraph (ii) of this
subsection (a), the Company shall take all necessary action to
authorize and reserve for issuance such number of additional shares of
Common Stock as may from time to time be required to be issued upon
the exercise in full of all outstanding Rights and, if necessary,
shall use its best efforts to obtain stockholder approval thereof.
Notwithstanding the preceding sentence, if the Board shall determine
that such action is necessary or appropriate and is not contrary to
the best interests of the holders of the Rights, the Board may cause
the Company, in lieu of issuing shares of Common Stock in accordance
with such paragraph (ii), to distribute, or if a sufficient number of
shares of Common Stock cannot be issued for such purpose in accordance
with the provisions hereof, the Company shall distribute, upon the
exercise of each Right, cash, debt securities, Preferred Shares, other
shares of Preferred Stock, other property or any combination thereof
having an aggregate Fair Market Value (determined as provided in
subsection (d) of this Section 11) equal to the Fair Market Value (as
so determined) of the number of shares of Common Stock which otherwise
would have been issuable pursuant to such paragraph (ii). Any such
decision by the Board must be made and publicly announced within 30
days after the occurrence of any Section 11(a)(ii) Event."
7. Section 13(d) of the Rights Agreement is hereby deleted in its
entirety, and Sections 13(e) through 13(h) are hereby redesignated as Sections
13(d) through 13(g).
-3-
8. Sections 23(a) and (b) of the Rights Agreement are hereby amended
to read in their entirety as follows:
"(a) The Board may, at its option, at any time prior to the earliest
of (i) the Close of Business on the 10th Business Day after the Share
Acquisition Date (or, if the Share Acquisition Date shall have occurred
prior to the Record Date, the Close of Business on the 10th Business Day
after the Record Date), (ii) the occurrence of any Section 13 Event and
(iii) the Final Expiration Date, redeem all, but not less than all, of the
then outstanding Rights at a redemption price of $.005 per Right, adjusted
as provided in subsection (g) of this Section 23 (such redemption price
being hereinafter called the "Redemption Price").
(b) In addition to the right of redemption reserved in the first
sentence of subsection (a) of this Section 23, the Board may redeem all,
but not less than all, of the then outstanding Rights at the Redemption
Price after the Share Acquisition Date, but prior to the occurrence of any
Section 13 Event, if either (i) the Person who is an Acquiring Person shall
have transferred or otherwise disposed of (either alone or together with
its Affiliates and Associates) such number of shares of Common Stock of the
Company, in one or a series of related transactions not directly or
indirectly involving the Company or any of its Subsidiaries or the
occurrence of any Section 13 Event, as shall result in such Person
thereafter being a Beneficial Owner of less than 10% of the then
outstanding shares of Common Stock of the Company, and after such transfer
or other disposition there is no other Acquiring Person, or (ii) in
connection with any Section 13 Event which shall not involve an Interested
Stockholder and in which all holders of the Common Stock of the Company are
treated the same."
9. Section 23(d) of the Rights Agreement is hereby amended to strike
and remove the words "and the Disinterested Directors" from the first sentence
thereof.
10. Section 27 of the Rights Agreement is hereby amended in its
entirety to read as follows:
"Section 27. Supplements and Amendments. Prior to the Distribution
Date, but subject to the last sentence of this Section 27, the Company and
the Rights Agent, if
-4-
so directed in writing by the Company, shall supplement or amend any term,
provision or condition of this Agreement (including, without limitation,
the Exercise Price), without the approval of the registered holders of the
stock certificates representing the Common Stock and the Rights. From and
after the Distribution Date, but subject to the last sentence of this
Section 27, the Company and the Rights Agent, if so directed in writing by
the Company, shall supplement or amend this Agreement, without the approval
of the registered holders of the Rights (however represented), in order:
(a) to cure any ambiguity, (b) to correct or supplement any term, provision
or condition of this Agreement which may be defective or inconsistent with
any other term, provision or condition hereof, (c) to shorten or lengthen
any time period specified herein or (d) to change or supplement one or more
of the terms, provisions or conditions hereof in any manner which the
Company may deem necessary or desirable and which shall not adversely
affect, as determined by the Board, the interests of the holders (other
than any Restricted Person or the transferees therefrom specified in
Section 7(d) of the Rights (however represented); provided, however, that
this Agreement may not be supplemented or amended pursuant to clause (c) of
this sentence (i) to lengthen any time period (except as permitted by
Section 3(a)(ii)) unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders
(other than any Restricted Person or the transferees therefrom specified in
Section 7(d)) of the Rights or (ii) to lengthen any time period relating to
when the Rights may be redeemed if at such time the Rights are not then
redeemable. Upon the delivery of a certificate from an appropriate officer
of the Company stating that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment; provided, however, that the Rights
Agent shall not be required to execute any supplement or amendment which
affects any of the Rights Agent's rights, powers, obligations, duties or
immunities under this Agreement without its consent. On and after the
Distribution Date, no supplement or amendment shall be made which changes
the Exercise Price, the number of one one-hundredths of a Preferred Share
for which a Right is exercisable, the Redemption Price or the Final
Expiration Date. Prior to the Distribution Date, the interests of the
holders of the Rights shall be deemed coincident with the interests of the
holders of the Common Stock of the Company."
11. Section 29 of the Rights Agreement is hereby amended to strike
and remove the parenthetical phrase "(or, as and when set forth herein, the
Disinterested Directors)" from the second sentence thereof and to strike and
remove the parenthetical phrases "(or the Disinterested Directors)" and
"(including any Disinterested Director)" from the third sentence thereof.
-5-
12. Section 31 of the Rights Agreement is hereby amended to strike
and remove the parenthetical phrase "(with the concurrence of at least a
majority of the Disinterested Directors then in office)" from the proviso
thereof.
13. Exhibit B to the Rights Agreements is hereby amended and restated
in its entirety in the form attached hereto.
14. Exhibit C to the Rights Agreement is hereby amended and restated
in its entirety in the form attached hereto.
15. This Amendment shall be governed by and construed in accordance
with the laws of the State of Wisconsin.
16. This Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
17. Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the day and year first above written.
Attest: BONE CARE INTERNATIONAL, INC.
By /s/ Paul V. Peterson By /s/ Dale W. Gutman
------------------------------- --------------------------------------
Name: Paul V. Peterson Name: Dale W. Gutman
Title: Vice President - Sales Title: Vice President - Finance
and Marketing
Attest: NORWEST BANK MINNESOTA, N.A.
By /s/ Kenneth P. Swanson By /s/ Karri L. VanDell
------------------------------- --------------------------------------
Name: Kenneth P. Swanson Name: Karri L. VanDell
Title: Assistant Secretary Title: Assistant Vice President
-7-
Exhibit B
---------
FORM
of
RIGHTS CERTIFICATE
Certificate No. R- Rights
_______ Aggregate Number of ---------
Shares of Series A Junior
Participated Preferred Stock
Initially
Purchasable
NOT EXERCISABLE AFTER APRIL 13, 2006 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF BONE CARE INTERNATIONAL, INC., AT $.005 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE STOCKHAREHOLDERS RIGHTS AGREEMENT
HEREINAFTER MENTIONED. UNDER CERTAIN CIRCUMSTANCES DESCRIBED IN SUCH
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY A RESTRICTED PERSON (AS SUCH
TERM IS DEFINED IN SUCH AGREEMENT), OR BY SPECIFIED TRANSFEREES FROM A
RESTRICTED PERSON, SHALL BE OR BECOME VOID.
RIGHTS CERTIFICATE
BONE CARE INTERNATIONAL, 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, subject to the terms, provisions and conditions of the
Shareholders Rights Agreement dated as of April 15, 1996, as amended (the
"Rights Agreement"), between Bone Care International, Inc., a Wisconsin
corporation (the "Company"), and Norwest Bank Minnesota, N.A. (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
and prior to the Close of Business on April 13, 2006, at the principal office of
the Rights Agent or its successor as Rights Agent, one two-hundredth of a fully
paid and nonassessable share of Series A Junior Participating Preferred Stock,
$.001 par value (the "Preferred Shares"), of the Company at a price (the
"Exercise Price") of $50.00 per one two-hundredth of a Preferred Share, upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and the related Form of Certification of Status duly executed,
together with such signature guarantees and other documentation as the Rights
Agent may reasonably request. The number of Rights evidenced by this Rights
Certificate (as well as the number of one two-hundredths of a Preferred Share
which may be purchased upon the exercise of each Right) set forth above, and the
Exercise Price set forth above, are the numbers and the Exercise Price as of
September __, 1999, based on the Preferred Shares as constituted on such date.
As provided in the Rights Agreement, such number of Rights (and/or such number
of one two-hundredths of a Preferred Share) and such Exercise Price are subject
to change and adjustment upon the happening of certain events specified in the
Rights Agreement. Capitalized terms not defined herein have the respective
meanings specified in the Rights Agreement.
From and after the first occurrence of any Section 11(a)(ii) Event, if
the Rights evidenced by this Rights Certificate are Beneficially Owned by (i) a
Restricted Person, (ii) a transferee from a Restricted Person who becomes a
transferee after the Acquiring Person becomes such or (iii) under certain
circumstances specified in the Rights Agreement, a transferee from a Restricted
Person who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such, such Rights shall be or become void, and no holder hereof
shall have any rights whatsoever with respect to such Rights.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof, to which Rights
Agreement reference is hereby made for a full description of the rights, powers,
obligations, duties and immunities hereunder of the Company, the Rights Agent
and the holders of the Rights Certificates. Under the circumstances set forth
in the Rights Agreement, the exercisability of the Rights represented hereby may
be temporarily suspended. The Rights Agreement is on file at the principal
office of the Company and at the principal office of the Rights Agent, and a
copy will be provided upon written request to the Secretary of the Company.
Upon surrender at the principal office of the Rights Agent, this
Rights Certificate, with or without other Rights Certificates, may be exchanged
for one or more Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase the same aggregate number of one two-hundredths
of a Preferred Share as the Rights evidenced by the Rights Certificates so
surrendered. If this Rights Certificate shall be exercised in part, the holder
hereof shall be entitled to receive, upon surrender hereof, one or more Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Rights Certificate (i) may be redeemed, at the direction of
the Board, at a redemption price (subject to adjustment) of $.005 per Right
(payable in cash, shares of Common Stock of the Company or any other form of
consideration deemed appropriate by the Board) or (ii) under certain
circumstances, may be exchanged, in whole or in part, at the direction of the
Board, for shares of Common Stock of the Company or Preferred Shares at an
exchange rate (subject to adjustment) of one share of Common Stock or one two-
hundredth of a Preferred Share per Right.
No fractional Preferred Share will be issued upon the exercise of any
Rights represented hereby (other than fractions which are a multiple of one two-
hundredth of a Preferred Share), but in lieu thereof a cash payment will be made
as provided in the Rights Agreement.
No holder, as such, of this Rights Certificate shall be entitled to
vote, to receive dividends or other distributions on or to exercise any
preemptive rights with respect to, or shall be deemed for any other purpose to
be the holder of, the Preferred Shares or other shares of capital stock of any
class of the Company which may at any time be issuable upon exercise hereof; nor
shall anything contained herein or in the Rights Agreement be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Company, or any right to vote for the election of directors or upon any
other matter submitted to shareholders at any meeting thereof, to give or
withhold consent to any corporate action, to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement) or
to receive dividends, subscription rights or other distributions, until the
Rights evidenced by this Rights Certificate shall have been exercised, in whole
or in part, in accordance with the provisions of the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
IN WITNESS WHEREOF, this Rights Certificate has been executed by the
Company by the duly authorized facsimile signature of a proper officer of the
Company and duly attested by the duly authorized facsimile signature of a proper
officer of the Company.
Dated as of _______________, ____.
BONE CARE INTERNATIONAL, INC.
By:
-------------------------------------
Name:
Title:
ATTEST:
- ----------------------------------
Name:
Title:
Countersigned:
- ---------------------------------,
as Rights Agent
NORWEST BANK MINNESOTA, N.A.
By
-------------------------------
Authorized Signature
[Reverse Side of Rights Certificate]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by this Rights Certificate)
To Bone Care International, Inc.:
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the Preferred Shares
(or other securities, cash or property) issuable upon the exercise of such
Rights and requests that certificates for such Preferred Shares be issued in the
name of:
Please insert social security
or other identifying number:
-------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights represented by this Rights
Certificate, a new Rights Certificate for the remaining unexercised 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: _______________, 19__
-----------------------------------------
Signature
Signature Guaranteed:
--------------------------
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate
[_] is
[_] is not
being exercised by or on behalf of a Person who is or was a Restricted Person
(as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[_] did
[_] did not
acquire, directly or indirectly, the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
-----------------------------------------
Signature
Date: _______________, 19__
NOTICE
------
The signature(s) on the foregoing Form of Election to Purchase and
Certification of Status must correspond to the name written upon the face of
this Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the Certification of Status set forth above is not
completed, the Company will deem the Beneficial Owner of the Rights represented
by this Rights Certificate to be a Restricted Person (as such term is defined in
the Rights Agreement), will not honor the Election to Purchase and will affix a
legend to such effect on this Rights Certificate and on any Rights Certificates
issued in exchange for this Rights Certificate.
[Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto ________________________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated: _______________, 19__
-----------------------------------------
Signature
Signature Guaranteed:
--------------------------
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate
[_] is
[_] is not
being sold, assigned or transferred by or on behalf of a Person who is or was a
Restricted Person (as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it
[_] did
[_] did not
acquire, directly or indirectly the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
-----------------------------------------
Signature
Date: _______________, 19__
NOTICE
------
The signature(s) on the foregoing Form of Assignment and Certification
of Status must correspond to the name written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the Certification of Status set forth above is not
completed, the Company will deem the Beneficial Owner of the Rights represented
by this Rights Certificate to be a Restricted Person (as such term is defined in
the Rights Agreement), will not honor the Assignment and will affix a legend to
such effect on this Rights Certificate and any Rights Certificates issued in
exchange for this Rights Certificate.
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On April 13, 1996, the Board of Directors (the "Board") of Bone Care
International, Inc., a Wisconsin corporation (the "Company"), declared a
dividend of one preferred stock purchase right (a "Right") for each outstanding
share of Common Stock, no par value (the "Common Stock"), of the Company. The
dividend was paid on April 13, 1996 (the "Record Date") to the holders of record
of the Common Stock at the Close of Business on such date. Each Right entitles
the holder thereof (except as described below) to purchase from the Company one
two-hundredth of a share of the Series A Junior Participating Preferred Stock,
$.001 par value (the "Preferred Shares"), of the Company at a price (the
"Exercise Price") of $50.00 per one two-hundredth of a Preferred Share, subject
to adjustment. The terms of the Rights are set forth in the Shareholders Rights
Agreement dated as of April 15, 1996, as amended (the "Rights Agreement")
between the Company and Norwest Bank Minnesota, N.A., as Rights Agent (the
"Rights Agent"). Capitalized terms not defined herein have the respective
meanings specified in the Rights Agreement.
Distribution Date; Transfer of Rights
Initially, the Rights associated with the Common Stock outstanding as
of the Record Date will be evidenced solely by the stock certificates for such
Common Stock, with a copy of this Summary of Rights attached thereto. The
Rights will separate from the Common Stock upon the earliest to occur of (i) 10
Business Days after the first public announcement that any Person (other than an
Exempt Person (as hereinafter defined)) has become an Acquiring Person (as
hereinafter defined) and (ii) 10 Business Days (or such other Business Day as
may be determined by action of the Board prior to the time that any Person shall
become an Acquiring Person (as hereinafter defined) after the commencement by
any Person (other than an Exempt Person) of, or the first public announcement of
its intention to commence, a tender or exchange offer if, upon the consummation
thereof, such Person would be the Beneficial Owner of 20% or more of the
outstanding shares of Common Stock (the earliest of the dates specified in
clauses (i) and (ii) being hereinafter called the "Distribution Date"). After
the Distribution Date, the Rights will be evidenced solely by separate
certificates and will trade independently from the Common Stock.
An "Acquiring Person" is any Person who or which, together with its
Affiliates and Associates, has acquired 20% or more of the shares of Common
Stock then outstanding, but does not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan or other compensation
program or arrangement of the Company or of any such Subsidiary, (iv) any Person
holding shares of Common Stock for or pursuant to the terms of any such plan,
program or arrangement or (v) Dr. Richard B. Mazess, any Affiliate of Dr.
Richard B. Mazess or, in the event of the incompetence or death of Dr. Richard
B. Mazess, the estate or any executor, administrator, conservator or
beneficiaries of Dr. Richard B. Mazess (the Persons specified in clauses (i)
through (v) being herein collectively called "Exempt Persons"). Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an
"Acquiring Person," has become so inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person," then such Person shall not
be deemed to be an "Acquiring Person."
A "Restricted Person" is an Acquiring Person or any Affiliate or
Associate thereof.
The Rights Agreement provides that, until the Distribution Date (or
the earlier redemption or expiration of the Rights), the Rights may be
transferred only with the associated shares of Common Stock. Until the
Distribution Date (or the earlier redemption or expiration of the Rights), stock
certificates for Common Stock issued after the Record Date, either upon transfer
of outstanding shares or original issuance of additional shares of Common Stock,
will contain a legend incorporating the Rights Agreement by reference. Until
the Distribution Date (or the earlier redemption or expiration of the Rights),
the surrender for transfer of any stock certificate for shares of Common Stock,
with or without such legend and whether or not a copy of this Summary of Rights
is attached thereto, will also constitute the transfer of the Rights associated
with the shares of Common Stock represented by such stock certificate.
As soon as practicable after the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to the
holders of record of the Common Stock as of the Close of Business on the
Distribution Date, which thereafter will constitute the sole evidence of the
Rights. Each share of Common Stock issued by the Company after the Record Date
and prior to the earlier redemption or expiration of the Rights, including any
shares of Common Stock issued by reason of the exercise of any option, warrant,
right (other than the Rights) or conversion or exchange privilege (however
evidenced) issued by the Company prior to the Distribution Date, will be
accompanied by a Right (unless the Board expressly provides to the contrary at
the time of issuance of any such option, warrant, right or privilege), and
Rights Certificates evidencing such Rights will be issued at the same time as
the stock certificates for the associated shares of Common Stock.
The Rights are not exercisable until the Distribution Date. Moreover,
the time when the Rights may be exercised is restricted as described in the next
paragraph. The Rights will expire on the tenth anniversary of the Record Date
(the "Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each case
as described below.
Exercise of Rights Under Certain Circumstances
In the event that any Person becomes an Acquiring Person, proper
provision will be made so that the registered holder of each Right (other than
Rights Beneficially Owned as described in the next sentence) will thereafter
have the right to receive, upon exercise thereof, the number of shares of Common
Stock which, at the time of the occurrence of such event, will have a market
value equal to two times the product of the then current Exercise Price
multiplied by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable. After the first occurrence of either of the events
described in the preceding sentence, all Rights which are, or (under certain
circumstances specified in the Rights Agreement) were, Beneficially Owned by a
Restricted Person or specified transferees therefrom will be or become void.
Under no circumstances may a Right be
-2-
exercised after the occurrence of either such event unless the Company's right
to redeem the Rights (as described below) has expired.
If, on or after the date on which any Person has become an Acquiring
Person, any of the following transactions occur: (i) the Company merges into or
consolidates with an Interested Shareholder (as hereinafter defined) or, unless
all holders of the Company's outstanding shares of Common Stock are treated the
same, another Person (with limited designated exceptions); (ii) an Interested
Shareholder or, unless all holders of the Company's outstanding shares of Common
Stock are treated the same, another Person (with limited designated exceptions)
merges into the Company and either (A) all or part of the outstanding shares of
Common Stock of the Company are converted into capital stock or other securities
of any other Person (or the Company), cash and/or other property or (B) such
shares remain outstanding, unconverted and unchanged; or (iii) the Company sells
or transfers 50% or more of its consolidated assets or earning power to an
Interested Shareholder (as hereinafter defined) or, unless all holders of the
Company's outstanding shares of Common Stock are treated the same, another
Person (with limited designated exceptions); proper provision will be made so
that the registered holder of each Right (other than Rights which have become
void) will thereafter have the right (the "Flip-Over Right") to receive, upon
exercise thereof, the number of common shares of the acquiror (or of another
Person affiliated therewith) which, at the time of consummation of such
transaction, will have a market value equal to two times the product of the then
current Exercise Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable. An "Interested
Shareholder" is any Restricted Person or any Affiliate or Associate of any other
Person in which such Restricted Person has an interest, or any Person acting,
directly or indirectly, on behalf of or in concert with any such Restricted
Person.
Adjustments to Exercise Price and Stock Purchasable Upon Exercise
The Exercise Price payable, the number and kind of shares of capital
stock issuable upon exercise of the Rights and the number of Rights outstanding
are subject to adjustment from time to time to prevent dilution (i) in the event
of a dividend payable in Preferred Shares on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to the holders of
the Preferred Shares of certain options, warrants or rights to subscribe for or
purchase Preferred Shares at a price, or securities convertible into or
exchangeable for Preferred Shares with a conversion or exchange price, less than
the then Fair Market Value of the Preferred Shares or (iii) upon the
distribution to the holders of the Preferred Shares of cash, securities,
evidences of indebtedness or other property (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or options, warrants or
rights (other than those referred to in clause (ii) above).
The number of outstanding Rights and the number of one two-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a dividend on the Common Stock payable in shares of
Common Stock or a subdivision, combination or reclassification of the Common
Stock occurring, in any such case, prior to the Distribution Date.
With certain specified exceptions, no adjustment in the Exercise Price
will be made until the cumulative adjustments required equal at least 1% of the
Exercise Price. The Company is
-3-
not required to issue fractional Preferred Shares (other than fractions which
are multiples of one two-hundredth of a Preferred Share), but in lieu thereof
the Company would be required to make a cash payment based on the Fair Market
Value of the Preferred Shares on the trading day immediately preceding the date
of exercise.
Terms of Preferred Shares
The Preferred Shares receivable upon exercise of the Rights will not
be redeemable. Each Preferred Share will entitle the holder thereof to receive a
preferential quarterly dividend equal to 200 times the aggregate per share
amount of all cash dividends, plus 200 times the aggregate per share amount
(payable in kind) of all non-cash dividends and other distributions (other than
in shares of Common Stock), declared on the Common Stock during such quarter,
adjusted to give effect to any dividend on the Common Stock payable in shares of
Common Stock or any subdivision, combination or reclassification of the Common
Stock (a "Dilution Event"). Each Preferred Share will entitle the holder
thereof to 200 votes on all matters submitted to a vote of the shareholders of
the Company, voting together as a single class with the holders of the Common
Stock and the holders of any other class of capital stock having general voting
rights, adjusted to give effect to any Dilution Event. In the event of
liquidation of the Company, the holder of each Preferred Share will be entitled
to receive a preferential liquidation payment equal to 200 times the aggregate
per share amount to be distributed to the holders of the Common Stock, adjusted
to give effect to any Dilution Event, plus an amount equal to accrued and unpaid
dividends and distributions on such Preferred Share, whether or not declared, to
the date of such payment. In the event of any merger, consolidation or other
transaction in which the outstanding shares of Common Stock of the Company are
exchanged for or converted into other capital stock, securities, cash and/or
other property, each Preferred Share will be similarly exchanged or converted
into 200 times the per share amount applicable to the Common Stock, adjusted to
give effect to any Dilution Event.
Because of the nature of the dividend, voting, liquidation and other
rights accorded to each Preferred Share, the value of the one two-hundredth of a
Preferred Share receivable upon the exercise of each Right should approximate
the value of one share of Common Stock.
Redemption of Rights
At any time prior to the earliest of (i) 10 Business Days after the
first public announcement that any Person (other than an Exempt Person) has
become an Acquiring Person, (ii) the occurrence of any transaction which permits
the exercise of the Flip-Over Right and (iii) the Final Expiration Date, the
Board may redeem the Rights in whole, but not in part, at the redemption price
of $.005 per Right, adjusted to give effect to any Dilution Event (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, in its sole
discretion, may establish. After the redemption period has expired, the
Company's right of redemption may be reinstated, under the circumstances
specified in the Rights Agreement, if either (i) the Person who became an
Acquiring Person shall reduce, in one or a series of related transactions not
involving the Company or any Subsidiary or the occurrence of any transaction
which permits the exercise of the Flip-Over Right, its Beneficial Ownership of
the outstanding shares of Common Stock to less than 10% of such outstanding
shares or (ii) in
-4-
connection with any transaction which permits the exercise of the Flip-Over
Right, which does not involve an Interested Shareholder and in which all holders
of the Common Stock are treated the same. Immediately after action by the Board
directing the redemption of the Rights, the option to exercise the Rights will
terminate, and thereafter each registered holder of the Rights will only be
entitled to receive the Redemption Price therefor.
Exchange of Rights
At any time after any Person has become an Acquiring Person and prior
to the time that any Person (other than an Exempt Person), together with its
Affiliates and Associates, has become the Beneficial Owner of 50% or more of the
outstanding shares of Common Stock, the Board may direct that all or any part of
the outstanding Rights (other than Rights which have become void) be exchanged
for shares of Common Stock at the exchange rate of one share of Common Stock (or
one two-hundredth of a Preferred Share or of another share of capital stock of
the Company having equivalent rights, preferences and privileges) per Right,
adjusted to give effect to any Dilution Event.
Amendment of the Rights and the Rights Agreement
Prior to the Distribution Date, the terms of the Rights and the Rights
Agreement may be supplemented or amended by the Board in any manner. From and
after the Distribution Date, the Rights may be supplemented or amended by the
Board, without the approval of the holders of the Rights, in certain respects
which do not adversely affect, as determined by the Board, the interests of such
holders; provided, however, that the Rights Agreement cannot be amended to
lengthen (i) any time period unless such lengthening is for the benefit of the
holders of the Rights or (ii) any time period relating to when the Rights may be
redeemed if at such time the Rights are not then redeemable.
Miscellaneous
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement is available 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, which is
hereby incorporated herein by reference.
-5-