UNIGENE LABORATORIES, INC.
and
REGISTRAR AND TRANSFER COMPANY
RIGHTS AGREEMENT
Dated as of December 20, 2002
TABLE OF CONTENTS
Page
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SECTION 1. CERTAIN DEFINITIONS....................................................... 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT............................................... 5
SECTION 3. ISSUE OF RIGHT CERTIFICATES............................................... 5
SECTION 4. FORM OF RIGHT CERTIFICATES................................................ 7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION......................................... 8
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES.............................................................. 9
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS............. 9
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES........................ 11
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK.................... 12
SECTION 10. COMMON STOCK RECORD DATE.................................................. 13
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF AND KIND OF SHARES OR
NUMBER OF RIGHTS.......................................................... 14
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES................ 21
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS, CASH FLOW
OR EARNING POWER.......................................................... 21
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES................................... 24
SECTION 15. RIGHTS OF ACTION.......................................................... 25
SECTION 16. AGREEMENT OF RIGHT HOLDERS................................................ 25
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER......................... 26
SECTION 18. CONCERNING THE RIGHTS AGENT............................................... 26
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT................. 27
SECTION 20. DUTIES OF RIGHTS AGENT.................................................... 27
SECTION 21. CHANGE OF RIGHTS AGENT.................................................... 29
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES........................................ 30
SECTION 23. REDEMPTION AND TERMINATION................................................ 31
SECTION 24. EXCHANGE.................................................................. 31
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SECTION 25. NOTICE OF CERTAIN EVENTS................................................... 33
SECTION 26. NOTICES.................................................................... 33
SECTION 27. SUPPLEMENTS AND AMENDMENTS. ............................................... 34
SECTION 28. SUCCESSORS................................................................. 35
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.................. 35
SECTION 30. BENEFITS OF THIS AGREEMENT................................................. 36
SECTION 31. SEVERABILITY............................................................... 36
SECTION 32. GOVERNING LAW.............................................................. 36
SECTION 33. COUNTERPARTS............................................................... 36
SECTION 34. DESCRIPTIVE HEADINGS....................................................... 36
EXHIBIT A FORM OF RIGHT CERTIFICATE
ii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 20, 2002 (the "Agreement"),
between UNIGENE LABORATORIES, INC., a Delaware corporation (the "Company"), and
REGISTRAR AND TRANSFER COMPANY, a New Jersey corporation (the "Rights Agent").
BACKGROUND
On December 11, 2002 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company (the "Board of Directors") authorized and
declared a dividend distribution of one right (each, a "Right") for each share
of Common Stock, par value $.01 per share, of the Company (the "Common Stock")
outstanding at the Close of Business (as hereinafter defined) on December 30,
2002 (the "Record Date"), and has authorized (i) the issuance of one Right (as
such number may hereinafter be adjusted pursuant to the provisions of Section
11(p)) for each share of Common Stock of the Company issued between the Record
Date (whether originally issued or delivered from the Company's treasury) and
the earliest of the Distribution Date (as defined in Section 3), the Redemption
Date and the Final Expiration Date (as such terms are defined in Section 7) and
(ii) in certain circumstances as provided in Section 22, the issuance of one
Right with respect to each share of Common Stock that shall become outstanding
between the Distribution Date and the earlier of the Redemption Date and the
Final Expiration Date, each Right initially representing the right to purchase
one ten-thousandth of a share of Common Stock of the Company, upon the terms and
subject to the conditions hereinafter set forth;
TERMS
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth and intending to be legally bound hereby, the
parties agree as follows:
SECTION 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(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 fifteen percent (15%) or more of the shares of the Common
Stock then outstanding, but shall not include any Exempt Person (as hereinafter
defined). Notwithstanding the foregoing, no Person shall become an Acquiring
Person as the result of an acquisition of Beneficial Ownership of Common Stock
by the Company that, by reducing the number of shares of Common Stock (or
securities convertible into or exchangeable for Common Stock) outstanding,
increases the percentage of Common Stock beneficially owned by such Person
(together with all Affiliates and Associates of such Person) to fifteen percent
(15%) or more of the shares of Common Stock then outstanding; provided, however,
that if any Person (other than Exempt Persons) shall become the Beneficial Owner
of fifteen percent (15%) or more of the shares of Common Stock then outstanding
by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional shares
of Common Stock, then such Person shall be an Acquiring Person. Notwithstanding
the foregoing, if the Board of Directors determines in good faith that a Person
who would otherwise be an Acquiring Person has become
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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, then such Person shall not, solely as a result of such
inadvertent acquisition, be deemed to be an Acquiring Person for any purpose of
this Agreement.
(b) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as such rule is in effect on the Record Date.
(d) "Agreement" shall have the meaning as set forth in the
introductory paragraph.
(e) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," and shall be deemed to have "Beneficial
Ownership" of, any securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, owns or has
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) 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 (1) 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, (2) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or (3)
securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event, if such Rights were acquired by such Person or such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 or pursuant to Section 11(a)(i) in connection with an
adjustment made with respect to any of the Rights heretofore specified in this
clause (3); or
(B) the right to vote or otherwise has Beneficial
Ownership (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations promulgated under the Exchange Act), including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, pursuant to this subparagraph (B), any security as a result of
any agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (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 of the Exchange Act and (2) is not also
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then reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(ii) that are beneficially owned, including pursuant to
subparagraphs (i)(A) and (B) of this Subsection (d) directly or indirectly, by
any other Person (or 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 pursuant to a revocable proxy as described in the proviso in
subparagraph (i)(B) of this subsection (d)) or disposing of any voting
securities of the Company;
provided, however, that nothing in this subsection (d) shall cause a Person
engaged in business as an underwriter of securities to be the Beneficial Owner
of, or to beneficially own, any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(f) "Board of Directors" shall have the meaning set forth in
the recital clause at the beginning of this Agreement.
(g) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(h) "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.
(i) "Common Stock" when used with reference to the Company
shall mean the Common Stock, par value $.01 per share, of the Company, and when
used with reference to any Person other than the Company shall mean the capital
stock (or equity interest) with the greatest voting power of such Person or, if
such Person is a Subsidiary of another Person, the Person or Persons that
ultimately control such first-mentioned Person.
(j) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii).
(k) Company" shall have the meaning as set forth in the
introductory paragraph.
(l) "Current Per Share Market Price" shall have the meaning
set forth in Section 11(d).
(m) "Current Value" shall have the meaning set forth in
Section 11(a)(iii).
(n) "Distribution Date" shall have the meaning set forth in
Section 3(a).
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(o) "Equivalent Common Stock" shall have the meaning set
forth in Section 11(b).
(p) "Exchange Act Regulations" shall mean the General Rules
and Regulations under the Exchange Act.
(q) "Exchange Shares" shall have the meaning set forth in
Section 24(a).
(r) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company or, (iv) any entity holding Common Stock for the
benefit of present or future participants (e.g., a trustee or plan fiduciary)
pursuant to the terms of any such plan.
(s) "Final Expiration Date" shall have the meaning set forth
in Section 7(a).
(t) "Nasdaq" shall have the meaning set forth in Section 11
(d).
(u) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity or organization, and
shall include any successor (by merger or otherwise) of such entity.
(v) "Principal Party" shall have the meaning set forth in
Section 13(b).
(w) "Purchase Price" shall have the meaning set forth in
Section 4(a).
(x) "Record Date" shall have the meaning set forth in the
recital clause at the beginning of this Agreement.
(y) "Redemption Date" shall have the meaning set forth in
Section 7(a).
(z) "Right" shall have the meaning set forth in the recital
clause at the beginning of this Agreement.
(aa) "Right Certificate" shall have the meaning set forth in
Section 3(a).
(bb) "Rights Agent" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(cc) "Rights Dividend Declaration Date" shall have the meaning
set forth in the recital clause at the beginning of this Agreement.
(dd) "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii).
(ee) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii).
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(ff) "Section 13 Event" shall have the meaning set forth in
Section 13(a).
(gg) "Securities Act" shall have the meaning set forth in
Section 9(c).
(hh) "Spread" shall have the meaning set forth in Section
11(a)(iii).
(ii) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed or amended pursuant to Section 13(d) under
the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
(jj) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such Person.
(kk) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii).
(ll) "Surviving Corporation" shall have the meaning set forth
in Section 11(q).
(mm) "Trading Day" shall have the meaning set forth in Section
11(d).
(nn) "Triggering Event" shall mean any Section 11(a)(ii) Event
or Section 13 Event.
SECTION 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the 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 a co-Rights Agent as it may deem necessary
or desirable, upon ten (10) days prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and in no event shall be liable
for, the acts or omissions of any such co-Rights Agents.
SECTION 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the
tenth calendar day after the Stock Acquisition Date (or, if the tenth day after
the Stock Acquisition Date occurs before the Record Date, the Close of Business
on the Record Date), or (ii) the Close of Business on 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 becomes an Acquiring Person), after the date that a
tender or exchange offer by any Person (other than an Exempt Person) is first
published or sent or given within the meaning of Rule 14d- 2 of the Exchange Act
Regulations, the consummation of which would result in Beneficial Ownership by a
Person (other than an Exempt Person) of fifteen percent (15%) or more of the
outstanding Common Stock (including any such date that is after the date of this
Agreement and prior to the issuance of the Rights) (the earlier of (i) and (ii)
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being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for shares of Common Stock registered in the names of the holders
of the Common Stock thereof (which certificates for Common Stock shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of the underlying shares of Common Stock (including a transfer
to the Company). The Company will notify the Rights Agent as soon as practicable
of the occurrence of a Distribution Date. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class mail, insured,
postage-prepaid, to each record holder of shares of Common Stock as of the Close
of Business on the Distribution Date, or, with respect to Common Stock so issued
on or after the Distribution Date (unless otherwise provided with respect
thereto as aforesaid), to the record holder of such Common Stock on the date of
issuance, at the address of such holder shown on the records of the Company, a
Right Certificate, in substantially the form attached as Exhibit A (the "Right
Certificate"), evidencing one Right for each share of Common Stock so held,
subject to adjustments as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to Section
11(i) or Section 11(p), at the time of distribution of the Right Certificates,
the Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a)) so that Right Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights (calculated in accordance with Section 14(a)). As of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) With respect to certificates for shares of Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates for shares of Common Stock registered in the
names of the holders thereof. Until the earlier of the Distribution Date or the
Final Expiration Date, the surrender for transfer of any certificate for Common
Stock outstanding on the Record Date shall also constitute the transfer of the
Rights associated with such shares of Common Stock represented thereby.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date, or in
certain circumstances as provided in Section 22, after the Distribution Date.
Certificates of Common Stock issued after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date (including, without limitation, reacquired shares of Common Stock referred
to in the second to last sentence of this paragraph (c)) 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 as set forth in the Rights Agreement between Unigene
Laboratories, Inc. (the "Company") and Registrar and Transfer
Company (the "Rights Agent"), dated as of December 20, 2002 (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 the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights
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will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder
of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge, promptly following receipt of a
written request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates bearing the foregoing legend, until the
earlier of the Distribution Date or the Final Expiration Date, the Rights
associated with the shares of Common Stock represented by such certificates
shall be evidenced by such certificates alone and registered holders of the
shares of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the shares of Common Stock represented by
such certificates. In the event that the Company purchases or acquires any
shares of Common Stock after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration 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 which are no longer outstanding. The
omission of a legend shall not affect the enforceability of any part of this
Agreement or the rights of any holder of the Rights.
SECTION 4. Form of Right Certificates.
(a) 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 attached as Exhibit A, and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate, but which do not affect the
duties, rights or responsibilities of the Rights Agent, and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed or any securities association on whose
interdealer quotation system the Rights may from time to time be authorized for
quotation, or to conform to usage. Subject to the provisions of Section 11 and
Section 22, the Right Certificates that are issued in respect of Common Stock
that were issued and outstanding as of the Record Date, shall be dated as of the
Record Date, and all Right Certificates that are issued in respect of other
Common Stock shall be dated as of the respective dates of issuance of such
Common Stock, and in either case on their faces shall entitle the holders
thereof to purchase such number of one ten-thousandths of a share of Common
Stock as shall be set forth therein at the price set forth therein (such
purchase price per one ten-thousandth of a share, the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
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(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights beneficially owned by: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate of an Acquiring Person)
which becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate of an
Acquiring Person) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or of such Associate or Affiliate) or to any Person
with whom the Acquiring Person has any agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the Board of Directors
has determined is part of a plan, agreement, arrangement or understanding which
has as a primary purpose or effect the avoidance of Section 7(e) or Section 11,
and any Right Certificate issued pursuant to Section 6 or Section 11 upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement). Accordingly, this Right
Certificate and the Rights represented hereby may become null and
void in the circumstances specified in Section 7(e) of the Rights
Agreement.
The absence of the foregoing legend on any Right Certificate shall
in no way affect any of the other provisions of this Agreement, including,
without limitation, the provisions of Section 7(e). The Company shall instruct
the Rights Agent in writing of the Rights which should be so legended and shall
supply the Rights Agent with such legended Right Certificates.
SECTION 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its chairman of the Board of Directors, its president or any vice
president, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof that shall be attested by the
secretary or an assistant secretary or treasurer 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 Agreement any such person was not such an officer.
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(b) Following the Distribution Date and written notice
thereof to the Rights Agent, the Rights Agent will keep, or cause to be kept, at
the office of the Rights Agent designated for such purposes, 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 as evidenced on its face by each of the Right
Certificates and the date and certificate number 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 Section 4(b), Section 7(e),
Section 11 and Section 14, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the earlier of
the Redemption Date or the Final 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 ten-thousandths of a share of Common Stock (or
other securities, cash or other assets, as the case may be) as the Right
Certificate or Certificates surrendered then entitles 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, with the
form of assignment and certificate appropriately executed, at the office of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company and the
Rights Agent shall reasonably request. Thereupon the Rights Agent shall, subject
to Section 4(b), Section 7(e), Section 11 and Section 14, countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence 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 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 countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e), the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section
9
11(a)(iii) and Section 23(a)), in whole or in part at any time after the
Distribution Date, upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price with respect
to the total number of one ten-thousandths of a share of Common Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earlier of (i) the
Close of Business on the tenth anniversary hereof (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section 23 (the
"Redemption Date"), or (iii) the time at which such Rights are exchanged as
provided in Section 24.
(b) The Purchase Price for each one ten-thousandth of a share
of Common Stock pursuant to the exercise of a Right shall initially be $4.00,
and shall be subject to adjustment from time to time as provided in Sections 11
and 13(a) and shall be payable in lawful money of the United States of America,
subject to paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate on
the reverse side thereof duly and properly executed, accompanied by payment of
the Purchase Price per one ten-thousandth of a share of Common Stock (or other
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax or charge required to be paid by the
holder of such Right Certificate in accordance with Section 9(e), the Rights
Agent shall, subject to Section 20(k), thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Common Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one ten-thousandths of a share of Common Stock to be purchased, and
the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the total
number of shares of Common Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one ten-thousandths of a share of Common
Stock as are to be purchased (in which case certificates for the shares of
Common Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs 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
interests in shares in accordance with Section 14, (iii) 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) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Right Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii)) may be made in cash or by
certified or bank check or money order payable to the order of the Company. In
the event the Company is obligated to issue other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a), the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
necessary to comply with this Agreement. The Company reserves the right to
require, prior to the occurrence of a Triggering Event, that upon any exercise
of Rights, a number of Rights be exercised so that only whole shares of Common
Stock would be issued.
10
(d) 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 Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the order of the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 6 and Section 14.
(e) Notwithstanding anything to the contrary in this
Agreement, from and after the first occurrence of any Triggering Event, any
Rights beneficially owned by (i) any Acquiring Person (or any Associate or
Affiliate of an Acquiring Person), (ii) a transferee of an Acquiring Person (or
any Associate or Affiliate of an Acquiring Person) which becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or any Associate or Affiliate of an Acquiring Person) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) to holders of equity interests in such Acquiring Person (or of
such Associate or Affiliate) or to any Person with whom the Acquiring Person has
any agreement, arrangement or understanding regarding the transferred Rights, or
(B) a transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall be null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of Rights or any other Person as a result of the
Company's failure to make any determination under this Section 7(e) or such
Section 4(b) with respect to any Acquiring Person or its Affiliates, Associates
or transferees.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported transfer or exercise unless such registered holder shall have (i)
properly completed and signed the certificate following the form of assignment
or election to purchase set forth on the reverse side of the Right Certificate
surrendered for such assignment or exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company and the Rights Agent shall
reasonably request.
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 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 such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
11
SECTION 9. Reservation and Availability of Shares of Common Stock.
(a) Subject to the Company's rights under Section 11(a)(iii)
to otherwise fulfill its obligations hereunder, the Company covenants and agrees
that it will cause to be reserved and kept available out of its authorized and
unissued shares of Common Stock (or out of its authorized and issued shares of
Common Stock held in its treasury), the number of shares of Common Stock that
will be sufficient to permit the exercise in full of all outstanding Rights
pursuant to the terms of this Agreement; provided, however, that such action
need not be taken with respect to shares of Common Stock (or other securities)
issuable upon exercise of the Rights until after such time as the Rights become
exercisable, and with respect to shares of Common Stock and/or other securities
issuable upon the occurrence of a Triggering Event, until the occurrence of such
event.
(b) So long as the shares of Common Stock issuable and
deliverable upon the exercise of Rights may be listed on any United States
national securities exchange or authorized for quotation on any interdealer
quotation system of any securities association or reported on any
over-the-counter market system, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange or quoted or reported on such
system upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as is practicable following the earliest date after the first occurrence of
a Triggering Event in which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance with Section
11(a)(ii) (or Sections 11(a)(iii) and 13), or as soon as is required by law
following the Distribution Date, as the case may be, a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities that may be acquired upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, or (B) the
earlier of the Redemption Date or the Final Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states and other appropriate
jurisdictions in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective and to take such
actions under such other securities or blue sky laws and permit them 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, each time with prompt notice thereof to the Rights Agent. In
addition, if the Company shall determine that a registration statement is
required following the Distribution Date, the Company may temporarily suspend,
with prompt notice thereof to the Rights Agent, the exercisability of the Rights
until such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite
12
qualification in such jurisdiction shall not have been obtained or the exercise
thereof shall not be permitted under applicable law, or a registration statement
shall not 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 Common Stock or
other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that, subject
to Sections 6 and 7(c), it will pay when due and payable, any and all transfer
taxes and charges that may be payable in respect of the issuance or delivery of
the Right Certificates and of any certificates for shares of Common Stock (or
other securities or property) 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 the issuance or delivery of shares of Common Stock or depositary
receipts for shares of Common Stock (or other securities or property) in respect
of a name other than that of the registered holder of the Right Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for shares of Common Stock or depositary receipts for shares of
Common Stock (or other securities or property) in a name other than that of the
registered holder upon the exercise of any Rights until any such transfer tax or
charge shall have been paid (any such transfer tax or charge being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such transfer tax or
charge is due.
SECTION 10. Common Stock Record Date. Each Person in whose name any
certificate for a number of shares of Common Stock (or other securities) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such shares of Common Stock (or other securities)
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 Common Stock (or other securities) transfer books of the Company are
closed or a date on which the exercisability of the Rights is suspended pursuant
to Section 9(c), such Person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, as applicable, the next
succeeding Business Day on which the Common Stock (or other securities) transfer
books of the Company are open or the next succeeding Business Day on which such
suspension is no longer in effect. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate, as such, shall not be entitled to
any rights of a stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
13
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of shares covered
by 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 shares of Common Stock
payable in shares of Common Stock, (B) subdivide the outstanding shares of
Common Stock, (C) combine the outstanding shares of Common Stock into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the shares of Common 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) and Section 7(e), 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, and the number and kind of shares
of Common Stock or other capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of Common
Stock or other capital stock, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Common Stock
transfer books of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs that would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person (other than an Exempt
Person), at any time after the date of this Agreement is or becomes an Acquiring
Person, then, promptly following the occurrence of such event (a "Section
11(a)(ii) Event"), proper provision shall be made so that each holder of a
Right, except as provided below and in Section 7(e), shall thereafter have a
right to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one
ten-thousandths of a share of Common Stock for which a Right was theretofore
exercisable, such number of shares of Common Stock as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the number of one
ten-thousandths of a share of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of the Section 11(a)(ii) Event, and
(y) dividing that product (which, following such first occurrence shall
thereafter be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by fifty percent (50%) of the Current Per Share
Market Price (determined pursuant to Section 11(d)) of the Common Stock on the
date of the occurrence of the Section 11(a)(ii) Event (such number of shares is
herein called the "Adjustment Shares"); provided, however, that the Purchase
Price and number of Adjustment Shares shall be further adjusted as provided in
this Agreement to reflect any event occurring after the date of such first
occurrence.
(iii) In the event that after the Distribution Date or
the occurrence of a Section 11(a)(ii) Triggering Event, the number of shares of
Common Stock which are authorized by the Company's certificate of incorporation,
but which are not outstanding or reserved for issuance for purposes other than
upon exercise of the Rights, are not
14
sufficient to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company by vote of a
majority of its Board of Directors shall: (A) determine the excess of (1) the
value of the shares of Common Stock, or Adjustment Shares in accordance with
Section 11(a)(ii), as the case may be, issuable upon the exercise of a Right
(the "Current Value"), over (2) the Purchase Price (such excess being the
"Spread") and (B) with respect to each Right, make adequate provision to
substitute for such shares of Common Stock or Adjustment Shares, as the case may
be, upon exercise of the Rights, (1) cash, (2) a reduction in the Purchase
Price, (3) shares of Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of other securities,
which the Board of Directors has deemed to have substantially the same value and
economic rights as shares of Common Stock (such shares or units of shares of
other securities being referred to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value (less the amount
of any reduction in the Purchase Price), where such aggregate value has been
determined by the Board of Directors based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors; provided,
however, that if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the
Distribution Date, or in the case of a Section 11(a)(ii) Event the later of (x)
the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later of
(x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If 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, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than one hundred twenty (120)
days after the Distribution Date or the Section 11(a)(ii) Trigger Date, as the
case may be, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines that some
action is to be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e), 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 first 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, each time with prompt notice thereof to
the Rights Agent. For purposes of this Section 11(a)(iii), the value of each
Adjustment Share shall be the Current Per Share Market Price of the Common Stock
on the Distribution Date or the Section 11(a)(ii) Trigger Date and the per share
or per unit value of any Common Stock Equivalent shall be deemed to equal the
Current Per Share Market Price of the Common Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights (other than Rights), options or warrants to all holders of
Common Stock entitling them to subscribe for or purchase (for a period expiring
within forty-five (45) calendar days after such
15
record date) Common Stock (or shares having the same rights, privileges and
preferences as the Common Stock ("Equivalent Common Stock")) or securities
convertible into Common Stock or Equivalent Common Stock at a price per share of
Common Stock or per share of Equivalent Common Stock (or having a conversion
price per share, if a security convertible into Common Stock or Equivalent
Common Stock) less than the Current Per Share Market Price (as determined
pursuant to Section 11(d)) of the Common Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of shares of Common Stock which
the aggregate offering price of the total number of shares of Common Stock
and/or Equivalent Common Stock 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 Common Stock outstanding on such record date, plus the number of
additional shares of Common Stock and/or Equivalent Common Stock to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in 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 shall be conclusive and binding on the Rights Agent and the
holders of the Rights. Shares of Common Stock owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price that 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 Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Common Stock, but including
any dividend payable in stock other than Common Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Per Share Market Price (as
determined pursuant to Section 11(d)) of the Common Stock 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 conclusive and binding on the Rights Agent and the
holders of the Rights) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Common Stock, and the denominator of which shall be
such Current Per Share Market Price (as determined pursuant to Section 11(d)) of
the Common Stock. 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 that would
then be in effect if such record date had not been fixed.
16
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "Current Per Share Market
Price" of the shares of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
twenty (20) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to, but not including, such date, and for purposes of
computations made pursuant to Section 11(a)(iii), the "Current Per Share Market
Price" of the shares of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the ten
(10) consecutive Trading Days immediately following, but not including, such
date; provided, however, that in the event that the Current Per Share Market
Price of the shares of Common Stock is determined during a period following the
announcement by the issuer of such shares of Common Stock of (A) a dividend or
distribution on such shares of Common Stock payable in shares of such Common
Stock or securities convertible into shares of such Common Stock (other than the
Rights), or (B) any subdivision, combination or reclassification of such shares
of Common Stock, and prior to the expiration of twenty (20) Trading Days, or ten
(10) Trading Days, as set forth above, 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 take into account ex-dividend trading.
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 in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal United States national securities exchange
on which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any United
States national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the United States
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq") or such other system then in
use, or, if on any such date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a United States professional market maker making a market in the shares of
Common Stock selected by the Board of Directors. If on any such date no such
market maker is making a market in the shares of Common Stock, the fair value of
such shares on such date as determined in good faith by the Board of Directors
shall be used. The term "Trading Day" shall mean a day on which the principal
United States national securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of business or, if
the shares of Common Stock are not listed or admitted to trading on any United
States national securities exchange, a Business Day. If the shares of Common
Stock are not publicly held or not so listed or traded, "Current Per Share
Market Price" shall mean the fair value per share 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 conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments that by reason of this Section 11(e) are
not required to be made shall be carried
17
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 Common Stock or other share. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years from the date of
the transaction which mandates such adjustment or (ii) the Final Expiration
Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of securities of the Company other than Common
Stock, thereafter the number of such other shares receivable upon exercise of
any Right and the Purchase Price thereof 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 Common Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 with respect to the Common 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 ten-thousandths of a
share of Common 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), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one ten-thousandths of
a share of Common Stock (calculated to the nearest ten-thousandth) obtained by
(i) multiplying (x) the number of one ten-thousandths of a share covered by a
Right immediately prior to this 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 to adjust the number of Rights, in substitution for any
adjustment in the number of one ten-thousandths of a share of Common 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 ten-thousandths of a share of Common 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 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 public announcement, with prompt notice thereof to the
Rights Agent, 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 (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the
18
number of Rights pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of Rights on such
record date Right Certificates evidencing, subject to Section 14, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the 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 after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
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 ten-thousandths of a share of Common Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per one ten-thousandths of a share
and the number of one ten-thousandths of a share which 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 stated par value, if any, of the number of one
ten-thousandths of a share of Common Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of one ten-thousandths of a share of
Common Stock 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 issuing to the holder of any Right exercised after such record date
the number of one ten-thousandths of a share of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one ten-thousandths of a share of Common Stock and 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 (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Common Stock, (ii) issuance wholly for cash of any shares of Common Stock at
less than the current market price, (iii) issuance wholly for cash of shares of
Common Stock or other securities that by their terms are convertible into or
exchangeable for shares of Common Stock, (iv) dividends on shares of Common
Stock payable in shares of Common Stock or (v) issuance of rights, options or
warrants referred to in this Section 11,
19
hereafter made by the Company to holders of its shares of Common Stock shall not
be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
(ii) merge with or into or engage in a share exchange with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets, cash
flow or earning power aggregating more than fifty percent (50%) of the assets,
cash flow or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)), if (x) at the time of or immediately after such consolidation, merger,
share exchange or sale there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger, share exchange or sale, the stockholders of the Person
who constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it shall not, except as permitted by Section 23, Section 24 or Section 27,
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 otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each then outstanding share of Common Stock, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each such share of Common Stock outstanding immediately 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.
(q) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date consolidate with, or merge
with or into, any other Person for the primary purpose of a change of domicile
of the Company, and, in connection with such consolidation or merger, all of the
outstanding shares of Common Stock shall be changed into or exchanged for
20
shares of Common Stock of the surviving corporation of such consolidation or
merger (the "Surviving Corporation"), then proper provision shall be made so
that Rights shall be associated with each share of Common Stock of the Surviving
Corporation, except as provided in Section 7(e), such that the number of Rights
associated with each share of Common Stock of the Surviving Corporation
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 of the Surviving Corporation which the shares of Common Stock were changed
into or exchanged for pursuant to the consolidation or merger. Following such a
consolidation or merger, this Agreement shall remain in effect and all
references to the Company shall be deemed to be references to the Surviving
Corporation.
SECTION 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment and
(b) promptly file with the Rights Agent, and with each transfer agent for the
shares of Common Stock, a copy of such certificate. The Rights Agent shall be
fully protected in relying on such certificate and on any adjustment contained
therein and shall have no duty with respect to and shall not be deemed to have
knowledge of any adjustment unless and until it shall have received such a
certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets,
Cash Flow or Earning Power.
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)) shall engage in a share exchange with or shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such share exchange, consolidation or
merger and, in connection with such share exchange, consolidation or merger, all
or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets, cash flow or earning power aggregating
fifty percent (50%) or more of the assets, cash flow or earning power of the
Company and its Subsidiaries, taken as a whole to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o)) (any such event described in clause
(x), (y) or (z) being a "Section 13 Event"), then, and in each such case proper
provision shall be made so that:
(i) each holder of a Right, except as provided in
Section 7(e), shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal
21
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of call, 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 ten-thousandths of a share of Common Stock
for which a Right was exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such one
ten-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such first occurrence), and (2) dividing that
product (which product, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by fifty percent (50%) of the Current Per Share Market Price
(determined pursuant to Section 11(d)(i)) of the shares of Common Stock of such
Principal Party on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that the
provisions of Section 11 shall apply only to such Principal Party following the
first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock) in connection with the 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 its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) shall be of
no effect following the first occurrence of any Section 13 Event.
If, in the case of a transaction of the kind described in clause
(z) of the first sentence of this Section 13(a), the Person or Persons to whom
assets or earning power are sold or otherwise transferred are individuals, then
the preceding sentences of this Section 13(a) shall be inapplicable, and the
Company shall require as a condition to such sale of transfer that such Person
or Persons pay to each holder of a Right Certificate, upon its surrender to the
Rights Agent and in exchange therefor (without requiring payment by such
holder), cash in the amount determined by multiplying the then current Purchase
Price by the number of shares of Common Stock for which a Right is then
exercisable.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities for or into which shares of Common Stock of the Company
are converted in such share exchange, merger or consolidation, and if no
securities are so issued, the Person that is the other party to such merger or
consolidation; and
22
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets, cash flow or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the shares of Common Stock of
such Person are not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another Person the
shares of Common Stock of which are and have been so registered, "Principal
Party" shall refer to such other Person; (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the shares of
Common Stock of two or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of the shares of
Common Stock having the greatest aggregate market value; and (3) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint ventures and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any Section 13 Event,
the Principal Party will:
(i) prepare and file a registration statement under
the Securities Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the Final Expiration
Date; and
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the
securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate; and
(iii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 under
the Exchange Act.
(d) In case the Principal Party that is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its certificate of incorporation or bylaws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of
23
Common Stock of such Principal Party at less than the Current Per Share Market
Price (determined pursuant to Section 11(d)) or securities exercisable for, or
convertible into, shares of Common Stock of such Principal Party at less than
such Current Per Share Market Price (other than to holders of Rights pursuant to
this Section 13) or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the shares of Common Stock of such
Principal Party pursuant to the provisions of this Section 13, then, in such
event, the Company 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 in
question of such Principal Party shall have been cancelled, 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 provisions of this Section 13 shall similarly apply
to successive share exchanges, mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall occur at any time after
the occurrence of a Section 11(a)(ii) Event, the Rights which have not
theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).
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 as provided in Section 11(p), 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 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 of the Rights 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 in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal United States national
securities exchange on which the Rights are listed or admitted to trading, or,
if the Rights are not listed or admitted to trading on any United States
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the United States
over-the-counter market, as reported by Nasdaq or such other system then in use
or, 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 a 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 Common Stock upon the exercise of the Rights or to distribute
certificates which evidence
24
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised, as herein provided, an amount in cash equal to the
same fraction of the current market value of one share of Common Stock. For
purposes of this Section 14(b), the current market value of one share of Common
Stock shall be the closing price of a share of Common Stock (as determined
pursuant to Section 11(d)) for the Trading Day immediately prior to the date of
such exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares (except as provided by this Section 14) upon exercise of a Right.
(d) The Rights Agent shall have no duty or obligation with
respect to this Section 14 and Section 24(e) unless and until it has received
specific instructions (and sufficient cash, if required) from the Company with
respect to its duties and obligations under such Sections.
SECTION 15. Rights of Action. All rights of action in respect of
this Agreement, other than rights of action vested in the Rights Agent under
Section 18 of this Agreement, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the shares of Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the shares of 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 shares of Common Stock),
may, in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
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:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully completed and executed;
(c) subject to Section 6(a) and Section 7(f), 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 associated Common Stock
certificate) is registered as the absolute owner
25
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e), shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, judgment or ruling (whether
interlocutory or final) issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as soon as possible.
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 purpose the holder of the number of one
ten-thousandths of a share of Common Stock or any other securities of the
Company that may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained 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 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 Section 25), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
SECTION 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration, preparation, delivery,
amendment and execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, damage, judgment, fine,
penalty, claim, demand, settlement, cost or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent
(each as finally determined by a court of competent jurisdiction), for any
action taken, suffered or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including, the costs and
expenses of defending against any claim of liability arising therefrom.
(b) The Rights Agent shall be authorized to rely on, shall
be protected and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or
26
certificate for shares of Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
(c) The indemnity provided in this Section 18 shall survive
the expiration of the Rights and the termination of this Agreement.
SECTION 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust, stock transfer or shareholder services business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Right Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this 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 Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent undertakes only
the duties and obligations imposed by this 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 the legal advice or opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent and the Rights Agent shall incur no liability for or in respect of any
action taken, suffered or omitted by it in good faith and in accordance with
such legal advice or opinion.
27
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of Current Per Share Market Price) be proved or established by
the Company prior to taking, suffering or omitting 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 the chairman of the Board of Directors, the president, any
vice president, the secretary, any assistant secretary, the treasurer or any
assistant treasurer of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent for
any action taken, suffered or omitted in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this 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 liability in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of,
Section 11 or Section 13, or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt by the Rights Agent of the certificate
describing any such adjustment contemplated by Section 12); 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 Common Stock or other securities
to be issued pursuant to this Agreement or any Right Certificate or as to
whether any shares of Common Stock or other securities will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the chairman of the Board of Directors, the president, any vice president, the
secretary, any assistant secretary, the treasurer or any assistant treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken,
suffered or omitted by it in good faith in accordance with instructions of any
such officer or for any delay in acting while awaiting instructions. Any
application by the Rights Agent for written
28
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken, suffered or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken, suffered or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, suffered by or omission of, the Rights Agent
in accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five (5)
Business Days after the date any officer of the Company actually receives such
application, unless any such 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.
(h) The Rights Agent and any stockholder, Affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be 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 Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
SECTION 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock, by registered or certified mail, and to
the registered holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock, by
registered or certified mail, and 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
29
to the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate or certificate for Common Stock,
as the case may be, for inspection by the Company), then the holder of record of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a Person organized and doing
business under the laws of the United States or any state of the United States
and in good standing, shall be authorized under such laws to exercise the
shareholder services business, exercise corporate trust, stock transfer or
shareholder services powers, shall be subject to supervision or examination by
federal or state authorities and shall have at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the holders of record of the Right Certificates (or
certificates for Common Stock prior to the Distribution Date). 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 Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by a majority of the 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 Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the exchange, redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold (i) pursuant to the exercise of stock options or
under any employee plan or arrangement, or (ii) upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by a majority of the Board of
Directors, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Right Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
30
SECTION 23. Redemption and Termination.
(a) The Company may, at its option, by action of a majority of
the Board of Directors, at any time prior to the earlier of (i) the Close of
Business on the tenth calendar day following the Stock Acquisition Date (or, if
the Stock Acquisition Date shall have occurred prior to the Record Date, the
Close of Business on the tenth calendar day following the Record Date), or (ii)
the Close of Business on the Final Expiration Date, redeem all but not less than
all of the then outstanding Rights at a redemption price of $.00001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The Company may, at its
option, by action of a majority of the Board of Directors, pay the Redemption
Price either in shares of Common Stock (based on the Current Per Share Market
Price of the Common Stock, determined in accordance with Section 11(d), at the
time of redemption), cash (whether in United States dollars or in such other
currency or currencies as the Board of Directors may determine) or any other
form of consideration deemed appropriate by the Board of Directors.
Notwithstanding the foregoing, in the event payment of the Redemption Price to a
holder of Rights would result in the payment of an amount not equal to $.01 or
an integral multiple of $.01, the amount to be paid shall be rounded upward to
the next $.01. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event 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 subsection (a) of this Section
23, 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 for each Right so held. Within ten (10)
days after action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the shares of 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 will state the method by which the
payment of the Redemption Price will be made and in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become null and void pursuant to the provisions of Section 7(e)) held
by each holder of Rights.
SECTION 24. Exchange.
(a) The Company may, at its option, by action of a majority of
the Board of Directors, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become null and void pursuant to the
provisions of Section 7(e)) for shares of Common Stock, each Right being
exchangeable for one one-hundredth of a share of Common Stock, appropriately
adjusted to reflect any transaction specified in Section 11(a)(i) occurring
after the date hereof (such number of shares of Common Stock issuable in
exchange for one Right being
31
referred to herein as the "Exchange Shares"). Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such exchange at any time
after any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of fifty percent (50%)
or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of a majority of the Board of
Directors ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 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 the Exchange Shares. The Company shall
promptly give public notice of any such exchange, with prompt notice thereof to
the Rights Agent; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange 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
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become null and void
pursuant to the provisions of Section 7(e)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute shares of Equivalent Common Stock, as such term is
defined in paragraph (b) of Section 11 for shares of Common Stock exchangeable
for Rights, at the initial rate of one one-hundredth of a share of Equivalent
Common Stock for each share of Common Stock, as appropriately adjusted to
reflect stock splits, stock dividends and other similar transactions after the
date hereof.
(d) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights or shall take
such other action specified in Section 11(a)(iii).
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, there
shall be paid to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this subsection (e), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second and third sentences
of Section 11(d)(i)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
32
SECTION 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of shares of Common Stock or to make any other distribution to the
holders of shares of Common Stock (other than a regular quarterly cash
dividend), or (ii) to offer to the holders of shares of Common Stock rights or
warrants to subscribe for or to purchase any additional shares of Common Stock
or shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its shares of Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of Common
Stock), or (iv) to effect any share exchange, consolidation or merger into or
with any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o)), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one or more transactions, of fifty percent (50%) or more of the assets, cash
flow or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)) or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Right Certificate, to the extent feasible, in accordance with Section 26, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common 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 twenty (20) days prior to the
record date for determining holders of the shares of Common Stock for purposes
of such action, and in the case of any such other action, at least twenty (20)
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock whichever
shall be the earlier, provided, however, that no such notice shall be required
pursuant to this Section 25 if any Subsidiary of the Company effects a
consolidation or merger with or into, or effects a sale or transfer of assets or
earning power to, any other Subsidiary of the Company.
(b) In case a Triggering Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to the Rights
Agent and to each holder of a Right Certificate, to the extent feasible and in
accordance with Section 26, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under Section 11(a)(ii) or Section 13.
(c) The failure to give notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote on any such action.
SECTION 26. Notices. Notices or demands authorized by this 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, or delivered (including by facsimile
transmission) at its address (until another address is filed in writing with the
Rights Agent) at:
33
Unigene Laboratories, Inc.
110 Little Falls Road
Fairfield, NJ 07004
Attention: Chief Executive Officer
Facsimile No: 973-227-6088
with a copy to:
Dechert
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Attention: Christopher G. Karras, Esq.
Facsimile No: 215-655-2412
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage-prepaid, or delivered (including by facsimile
transmission) at its address (until another address is filed in writing with the
Company) at:
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
Attention: Florence Bogaenko, Account Executive
Facsimile No: 908-497-2310
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Right Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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. Prior to the earlier of
(i) the Distribution Date or (ii) the occurrence of a Triggering Event, and
subject to the penultimate sentence of this Section 27, the Company may, and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement (including supplements or amendments that may be deemed to
affect the interests of the holders of Right Certificates adversely) without the
approval of any holders of certificates representing shares of Common Stock and
associated Rights. From and after the earlier of (i) the Distribution Date or
(ii) the occurrence of a Triggering Event, and subject to the penultimate
sentence, the Company may, and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Right Certificates (x) in any manner that will not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person), (y) to cure any
ambiguity or to correct or supplement any provision contained herein which, in
the good faith determination of a majority of the Board of Directors, may be
defective or inconsistent with the other provisions
34
contained herein or (z) to shorten or lengthen any time period hereunder;
provided, however, that from and after the earlier of (i) the Distribution Date
or (ii) the occurrence of a Triggering Event, this Agreement shall not be
supplemented or amended to (x) shorten the Final Expiration Date or (y) lengthen
(1) a time period relating to when the Rights may be redeemed, or to modify the
ability (or inability) of the Board of Directors to redeem the Rights, in either
case at such time as the Rights are not then redeemable or (2) any other time
period unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or, the benefits to, the holders of Rights (other
than an Acquiring Person or any Affiliate or Associate of an Acquiring Person).
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 27 (and such supplement or amendment does not change or
increase the Rights Agent's duties, liabilities, rights or obligations), the
Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, but subject to the next
succeeding paragraph, no supplement or amendment shall be made that changes the
(i) Redemption Price, (ii) Purchase Price or (iii) the number of one
ten-thousandths of a share of Common Stock for which a Right is exercisable, and
no such supplement or amendment that changes the rights, duties, liabilities or
obligations of the Rights Agent under this Agreement shall be effective without
the execution of such supplement or amendment by the Rights Agent. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Notwithstanding anything contained in this Agreement to the
contrary, in the event that at any time after the date of this Agreement the
Company authorizes one or more series of preferred stock, then this Agreement
may be amended or supplemented as the Board of Directors shall deem necessary or
advisable, without the approval of any holders of Right Certificates, to provide
for the issuance of shares (or fractional shares) of preferred stock of the
Company in place of Common Stock which may be received upon exercise of Rights
hereunder prior to the occurrence of any Triggering Event, and to modify or
amend this Agreement in any respect to take into account the use of such
preferred stock (or fractional shares of preferred stock) in place of such
Common Stock.
SECTION 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d- 3(d)(1)(i) of the Exchange Act Regulations as in
effect on the date hereof. Except as otherwise specifically provided herein, the
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights
35
or to amend the Agreement and any determination as to whether actions of any
Person shall be such as to cause such Person to beneficially own shares held by
another Person). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board of Directors or any of the directors on the Board of Directors
to any liability to the holders of the Rights.
SECTION 30. Benefits of this Agreement. Nothing in this 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, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this 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, registered holders of the Common Stock).
SECTION 31. Severability. If any term, provision, covenant or
restriction of this 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 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 of
Directors 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 shall be
reinstated and shall not expire until the Close of Business on the tenth day
following the date of such determination by the Board of Directors.
SECTION 32. Governing Law. This Agreement, each Right 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; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
State.
SECTION 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
UNIGENE LABORATORIES, INC.
By /s/ Ronald S. Levy
------------------------------------
Name: Ronald S. Levy
Title: Executive Vice President
REGISTRAR AND TRANSFER COMPANY, as
Rights Agent
By /s/ William P. Tatler
------------------------------------
Name: William P. Tatler
Title: Vice President
37
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER DECEMBER 30, 2012 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.00001
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY
THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Right Certificate
Unigene Laboratories, 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 December 20, 2002 (the "Rights
Agreement"), between Unigene Laboratories, Inc., a Delaware corporation (the
"Company"), and Registrar and Transfer Company, a New Jersey corporation (the
"Rights Agent"), 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, New York time) on December 30, 2012, at the office of the Rights
Agent designated for such purpose, or at the office of its successors as Rights
Agent, one ten-thousandth of one share of Common Stock, par value $0.01 per
share (the "Common Stock"), of the Company, fully paid and nonassessable (or in
certain circumstances, cash, property or other securities of the Company), at a
purchase price of $4.00 per one ten-thousandth of one share of Common Stock (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and
the number of shares of Common Stock which may be purchased upon exercise
thereof) set forth above, and
_________________
* The portion of the legend shall be modified to apply to an Acquiring
Person as applicable, and shall replace the preceding sentence.
A-1
the Purchase Price set forth above, are the number and Purchase Price as of
December 30, 2002 based on the share of Common Stock as constituted at such
date.
As provided in the Rights Agreement, the Purchase Price and
the number of shares of Common Stock or other securities that may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement). The Company
reserves the right to require, prior to the occurrence of a Triggering Event,
that a number of Rights be exercised so that only whole shares of Common Stock
will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any rights whatsoever with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
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 and the offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office 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 Common 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 may, but are not required to, be redeemed by the
Company at a redemption price of $.00001 per Right, payable in cash, Common
Stock Equivalents or any other form of consideration deemed appropriate by the
Company's Board of Directors at any time prior to the earlier of the Close of
Business (as such term is defined in the Rights Agreement) on (i) the tenth
calendar day following the Stock Acquisition Date (as such time period may be
extended or
A-2
shortened pursuant to the Rights Agreement) or (ii) the Final Expiration Date.
Immediately upon the action by the Board of Directors of the Company authorizing
any such exchange, and without any further action or notice, the Rights (other
than Rights which are not subject to such exchange) will terminate and the
Rights will only enable holders to receive the shares issuable upon such
exchange.
No fractional share of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, 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 the holder of
Common Stock or of any other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions 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 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.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _______________________________.
Unigene Laboratories, Inc.
By:____________________________
Name:_____________________
Title:____________________
Attest:
By:_______________________________
Countersigned:
Registrar and Transfer Company
By:_______________________________
Name:_______________________
Title:______________________
A-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 Certificates)
FOR VALUE RECEIVED ____________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________, _____
___________________________
Signature
Signature Guaranteed: ________________________
Signatures must be guaranteed by a member firm of a registered United
States national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
A-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person.
Dated: _______________, _____
___________________________
Signature
Signature Guaranteed: ___________________________
Signatures must be guaranteed by a member firm of a registered United
States national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To: Unigene Laboratories, Inc.
The undersigned hereby irrevocably elects to exercise
_________________________ Rights represented by this Right Certificate to
purchase the shares of Common Stock issuable upon the exercise of such Rights
(or such other securities of the Company or of any other person which may be
issuable upon exercise of the Rights) and requests that certificates for such
securities be issued in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
(Please insert social security or other identifying number)
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 print name and address)
________________________________________________________________________________
(Please insert social security or other identifying number)
Dated: _______________, _____
_____________________________
Signature
Signature Guaranteed: _____________________________
Signatures must be guaranteed by a member firm of a registered
United States national securities exchange, a member of the National Association
of Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
A-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) Rights evidenced by this Rights Certificate [ ] are [ ] are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person.
Dated: _______________, _____
_____________________________
Signature
Signature Guaranteed: ____________________________
Signatures must be guaranteed by a member firm of a registered
United States national securities exchange, a member of the National Association
of Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
NOTICE
The signatures in the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
WARNING
In the event the Certificate set forth above in the Assignment and
Election to Purchase is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate of such Acquiring Person (as defined in the
Rights Agreement), and such Assignment or Election to Purchase will not be
honored.
A-7