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EXHIBIT 99.1
AMENDMENT TO RIGHTS AGREEMENT
This Amendment (this "AMENDMENT") to Rights Agreement (the "RIGHTS
AGREEMENT") is effective as of July 21, 2000 by and between La Jolla
Pharmaceutical Company, a Delaware corporation (the "CORPORATION") and American
Stock Transfer & Trust Company, a New York corporation (the "RIGHTS AGENT").
Capitalized terms used herein but not defined herein shall have their defined
meanings set forth in the Rights Agreement.
BACKGROUND
A. The Corporation and the Rights Agent entered into the Rights
Agreement effective as of December 3, 1998.
B. The Rights Agreement provides that the Continuing Directors have
certain powers to the exclusion of other directors.
C. In response to a ruling by the Delaware Supreme Court, the parties
wish to amend the terms of the Rights Agreement to eliminate the concept and
powers of the Continuing Directors.
D. The parties also wish to amend the definition of "Acquiring Person"
to permit State of Wisconsin Investment Board to invest up to a level of just
under 20% beneficial ownership without triggering the Rights Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. Section 1(a) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(a) "ACQUIRING PERSON" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, without the prior approval of
the Board of Directors of the Corporation, shall become, after the date hereof,
the Beneficial Owner of 15% or more (or, in the case of State of Wisconsin
Investment Board, 20% or more) of the shares of Common Stock then outstanding,
but shall not include an Exempt Person, or a Person who or which, together with
its Affiliates and Associates, shall become the Beneficial Owner of 15% or more
(or, in the case of State of Wisconsin Investment Board, 20% or more) of the
shares of Common Stock then outstanding solely as a result of a reduction in the
number of shares of Common Stock outstanding due to a repurchase of Common Stock
by the Corporation, unless such Person shall thereafter purchase or otherwise
become the Beneficial Owner of additional shares of Common Stock representing 1%
of the shares of Common Stock then outstanding. Notwithstanding the foregoing,
if the Board of Directors of the Corporation determines in good faith that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer
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be an "Acquiring Person," as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement. Furthermore, notwithstanding the
foregoing, no stockholder of the Corporation beneficially owning as of the
Rights Dividend Declaration Date (together with such stockholder's Affiliates
and Associates) 15% or more of the shares of Common Stock outstanding as of the
date of this Agreement (an "ORIGINAL 15% STOCKHOLDER") shall be an Acquiring
Person unless and until such Original 15% Stockholder or any of such
stockholder's Associates or Affiliates shall, after the Rights Declaration Date,
acquire any additional shares of Common Stock without the prior approval of the
Board of Directors of the Corporation (set forth in a resolution of the Board),
at which point such stockholder shall be an Acquiring Person if, immediately
following and giving effect to such acquisition, such Original 15% Stockholder,
together with all such stockholder's Affiliates and Associates, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding."
2. Section 1(j) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"[This Section intentionally left blank.]"
3. Section 1(g)(g) is hereby deleted in its entirety and the following
is inserted in lieu thereof:
"[This Section intentionally left blank.]"
4. Section 3(a) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(a) Until the earlier of (i) the Close of Business on the tenth (10th)
day after the Stock Acquisition Date (or, if the tenth (10th) 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 (10th) day 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(a)
of the General Rules and Regulations under the Exchange Act, if, upon
consummation thereof, such Person, together with its Affiliates and Associates,
would be the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, or, in the case of State of Wisconsin Investment Board, if State of
Wisconsin Investment Board, together with its Affiliates and Associates, would
be the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding (irrespective of whether any shares are actually purchased pursuant
to any such offer) (each of the time periods in (i) and (ii) being subject to
extension as provided in Section 27 and the earliest of (i) and (ii) 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 the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) each Right
will be transferable only in connection with the transfer of the underlying
share of Common Stock (including a transfer to the Corporation). As soon as
practicable after the Distribution Date, the Rights Agent will send to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such
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holder shown on the records of the Corporation, one or more rights certificates
in substantially the form of Exhibit B hereto (the "RIGHTS CERTIFICATES"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment 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(p), at the
time of distribution of the Rights Certificates, the Corporation shall make the
necessary and appropriate rounding adjustments (in accordance with Section
14(a)) so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates."
5. Section 11(a)(ii) is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"(ii) Subject to Section 23(a) and Section 24, in the event any Person
(other than an Exempt Person), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration Date,
become an Acquiring Person, unless the event causing the 15% threshold (or in
the case of State of Wisconsin Investment Board, 20% threshold) to be crossed is
a transaction set forth in Section 13(a), or is an acquisition of shares of
Common Stock pursuant to a tender offer or an exchange offer for all outstanding
shares of Common Stock at a price and on terms determined by the Board of
Directors of the Corporation, after receiving advice from one or more investment
banking firms, to be (a) at a price which is fair to stockholders of the
Corporation (taking into account all factors which such members of the Board
deem relevant including, without limitation, prices which could reasonably be
achieved if the Corporation or its assets were sold on an orderly basis designed
to realize maximum value) and (b) otherwise in the best interests of the
Corporation and its stockholders, then, proper provision shall be made so that
each holder of a Right (except as provided below and in Section 7(e)) shall
thereafter have the 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 one-thousandths of a share of Preferred Stock, such number of
shares of Common Stock of the Corporation as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the occurrence of a Section 11(a)(ii) Event, and (y)
dividing that product (which, following such occurrence, shall thereafter be
referred to as the "PURCHASE PRICE" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined pursuant to Section
11(d)) per share of Common Stock on the date of such occurrence (such number of
shares is herein called the "ADJUSTMENT SHARES"); provided that the Purchase
Price and the number of Adjustment Shares shall be further adjusted as provided
in this Agreement to reflect any events occurring after the date of such
occurrence; and provided, further, that if the transaction that would otherwise
give rise to the foregoing adjustment is also subject to the provisions of
Section 13, then only the provisions of Section 13 shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii)."
6. Section 23(a) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(a) The Board of Directors of the Corporation may, at its option, at
any time prior to the earlier of (i) the Close of Business on the tenth (10th)
day following the Stock Acquisition
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Date (or, if the Stock Acquisition Date shall have occurred prior to the Record
Date, the Close of Business on the tenth (10th) day following the Record Date),
subject to extension as provided in Section 27 or (ii) the Close of Business on
the Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.001 per Right, as such amount may be
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"). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
after the occurrence of an event described in Section 11(a)(ii) until such time
as the Corporation's right of redemption hereunder has expired. The Corporation
may, at its option, pay the Redemption Price in cash, shares of Common Stock
(based on the Current Market Price, as defined in Section 11(d)(i), of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors. Such redemption of the Rights by
the Corporation may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish."
7. Section 24(a) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(a) Subject to applicable laws, rules and regulations, and subject to
subsection (c) below, at any time after the occurrence of a Triggering Event,
the Board of Directors of the Corporation may cause the Corporation to exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e))
for Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "RATIO OF EXCHANGE"). 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 50% or
more of the Common Stock then outstanding."
8. Section 24(c) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(c) In the event that there shall not be sufficient Common Stock
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with Section 24(a), the Corporation shall either take such action as
may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights or alternatively, at the option of the Board of
Directors, with respect to each Right (i) pay cash in an amount equal to the
Current Value (as hereinafter defined), in lieu of issuing Common Stock in
exchange therefor, or (ii) issue debt or equity securities or a combination
thereof, having a value equal to the Current Value, in lieu of issuing Common
Stock in exchange for each such Right, where the value of such securities shall
be determined by a nationally recognized investment banking firm selected by the
Board of Directors, or (iii) deliver any combination of cash, property, Common
Stock and/or other securities having a value equal to the Current Value in
exchange for each Right. For purposes of this Section 24(c) only, the "CURRENT
VALUE" shall mean the product of the current per share market price of Common
Stock (determined pursuant to Section 11(d) on the date of the occurrence of the
event described above in subparagraph (a)) multiplied by the number of
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shares of Common Stock for which the Right otherwise would be exchangeable if
there were sufficient shares available. To the extent that the Corporation
determines that some action need be taken pursuant to clauses (i), (ii), or
(iii) of this Section 24(c), the Board of Directors may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order
to seek any authorization of additional Common Stock and/or to determine the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof. In the event of any such suspension, the
Corporation shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended."
9. Section 24(e) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(e) The Corporation may, at the option of the Board of Directors, at
any time before any Person has become an Acquiring Person, exchange all or part
of the then outstanding Rights for rights of substantially equivalent value, as
determined reasonably and with good faith by the Board of Directors, based upon
the advice of one or more nationally recognized investment banking firms."
10. Section 24(f) is hereby deleted in its entirety and the following
is inserted in lieu thereof:
"(f) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (e) 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 that number of rights in exchange therefore as has been determined
by the Board of Directors in accordance with subsection (e) above. The
Corporation shall give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Corporation 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 transfer agent for the Common Stock of the
Corporation. 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 Rights will be
effected."
11. Section 27 is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"27. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date and subject to the penultimate sentence
of this Section 27, the Board of Directors of the Corporation may, in its sole
and absolute discretion and the Rights Agent shall, if the Board of Directors so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock,
whether or not such supplement or amendment is adverse to any holders of Rights.
From and after the Distribution Date, and subject to the penultimate sentence of
this Section 27, the Board of Directors may, and the Rights Agent shall, if the
Board of Directors so directs,
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supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions hereunder, (iii) shorten or lengthen any time period hereunder, or
(iv) otherwise change or supplement the provisions hereunder in any manner which
the Board of Directors may deem necessary or desirable and which shall not
materially and adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of any
such Person); provided, however, this Agreement may not be supplemented or
amended after the Distribution Date to (A) make the Rights again redeemable
after the Rights have ceased to be redeemable, or (B) change any other time
period unless such change is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to the holders of Rights (other
than any Acquiring Person and its Associates or Affiliates). Upon the delivery
of a certificate from an appropriate officer of the Corporation which states
that the proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. 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."
12. Section 29 is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"29. DETERMINATION 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 General Rules
and Regulations under the Exchange Act. The Board of Directors of the
Corporation 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 of the Corporation or to the Corporation, 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, but not limited to, a
determination to redeem or not redeem the Rights, or to amend this Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors of the Corporation in good
faith, shall (x) be final, conclusive and binding on the Corporation, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject any
member of the Board of Directors to any liability to the holders of the Rights
or to any other Person."
13. Section 31 is hereby deleted in its entirety and the following is
inserted in lieu thereof:
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"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 of the Corporation
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, if lapsed, shall be reinstated
and shall not expire until the Close of Business on the tenth (10th) Business
Day following the date of such determination by the Board of Directors of the
Corporation."
14. Exhibit C is hereby deleted in its entirety and Exhibit C attached
hereto and incorporated by reference herein is inserted in lieu thereof.
15. Except as expressly set forth in this Amendment all other terms of
the Rights Agreement shall remain in full force and effect.
16. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed entirely within such State.
17. This Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the Corporation and the Rights Agent have executed
this Amendment effective as of the date first above written.
THE CORPORATION:
LA JOLLA PHARMACEUTICAL COMPANY,
A DELAWARE CORPORATION
By: /s/ Steven B. Engle
--------------------------------
Steven B. Engle
Chief Executive Officer
THE RIGHTS AGENT:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
A NEW YORK CORPORATION
By: /s/ H. Lemmer
--------------------------------
Name: Herbert Lemmer
Title: Vice President
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
OF
LA JOLLA PHARMACEUTICAL COMPANY
On November 19, 1998 (the "RIGHTS DIVIDEND DECLARATION DATE") the Board
of Directors of La Jolla Pharmaceutical Company (the "CORPORATION") declared a
dividend of one Right (a "RIGHT") for each outstanding share of Corporation
Common Stock to be distributed to stockholders of record at the close of
business on December 18, 1998 (the "RECORD DATE"). Each Right entitles the
registered holder to purchase from the Corporation one one-thousandth of a share
(a "UNIT") of Series A Junior Participating Preferred Stock (the "PREFERRED
STOCK") at a "PURCHASE PRICE" of $30, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (as amended from time to
time, the "RIGHTS AGREEMENT") dated December 3, 1998, between the Corporation
and American Stock Transfer & Trust Company, as Rights Agent. Effective as of
July 21, 2000, the Corporation and the Rights Agent entered into an Amendment to
the Rights Agreement which (a) eliminated the concept and powers of the
"Continuing Directors"; and (b) amended the definition of "Acquiring Person" to
permit State of Wisconsin Investment Board to invest up to a level of just under
20% beneficial ownership without triggering the Rights Agreement.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
December 4, 1998, and a copy of the Amendment to the Rights Agreement has been
filed with the Securities and Exchange Commission as an Exhibit to a Current
Report on Form 8-K filed January 26, 2001. A copy of the Rights Agreement and
the Amendment to the Rights Agreement are available free of charge from the
Corporation. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
and the Amendment to the Rights Agreement, which are incorporated herein by
reference. A more detailed summary is also attached to the Post-Effective
Amendment No. 1 to Form 8-A filed on January 26, 2001 with the Securities and
Exchange Commission in connection with the amendment of the rights plan, and can
be viewed on the Securities and Exchange Commission's web site at www.sec.gov or
obtained from the Corporation upon request.
Each share of Common Stock of the Corporation outstanding at the close
of business on the Record Date received one Right. In addition, prior to the
earliest of the Distribution Date, a Section 13 Event or the Expiration Date (as
each is described below), one additional Right (as such number may be adjusted
pursuant to the provisions of the Rights Agreement) shall be issued with each
share of Common Stock issued after the Record Date. Following the Distribution
Date and prior to the expiration or redemption of the Rights, the Corporation
will issue one Right (as such number may be adjusted pursuant to the provisions
of the Rights Agreement) for each share of Common Stock issued pursuant to the
exercise of stock options or under employee plans or upon the exercise,
conversion or exchange of securities issued by the Corporation prior to the
Distribution Date.
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Until the Distribution Date (as described below), (i) the Rights will
attach to and be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after December 18, 1998 will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the earliest of (i) the close of business on December 2, 2008; the
date of redemption of the Rights; (iii) the date the Board of Directors of the
Corporation orders the exchange of Rights; or (iv) the date of consummation of a
tender offer approved as fair to and in the best interests of the Corporation
and its stockholders and adequately priced with each stockholder receiving the
same consideration per share in the same manner (the "EXPIRATION DATE").
The Rights will separate from the Common Stock and a Distribution Date
will occur (the "DISTRIBUTION DATE") upon the earlier of 10 days (or such longer
time as may be determined by the Corporation's Board of Directors following (i)
a public announcement (or determination by the Corporation's Board of Directors)
that a person or group of affiliated or associated persons (an "ACQUIRING
PERSON") has acquired, or obtained the right to acquire, beneficial ownership of
15% or more (or, in the case of State of Wisconsin Investment Board, one of the
Corporation's stockholders, 20% or more) of the outstanding shares of Common
Stock (the "STOCK ACQUISITION DATE"), or (ii) the commencement of a tender offer
or exchange offer that would result in a person or group beneficially owning 15%
or more (or, in the case of State of Wisconsin Investment Board, 20% or more) of
such outstanding shares of Common Stock. Notwithstanding the foregoing, however,
the trigger percentage expressed in clauses (i) and (ii) above will not be
triggered with respect to Abbott Laboratories unless and until Abbott
Laboratories (or its affiliated and associated persons) acquires, after the
Rights Dividend Declaration Date, any additional shares of Common Stock without
the prior approval of the Board of Directors of the Corporation and if,
immediately following and giving effect to such acquisition, Abbott Laboratories
(together with its affiliated and associated persons) is the beneficial owner of
15% or more of the shares of Common Stock then outstanding.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
At any time after the Distribution Date but prior to the Expiration
Date of the Rights, each right may be exercised at the stated purchase price of
$30 (subject to adjustment, the "EXERCISE PRICE") for one one-thousandth of a
share of the Preferred Stock; provided, however, that upon the occurrence of any
of the events described below, the Rights may no longer be exercised for
Preferred Stock and may only be exercised for certain other securities described
below.
In the event that on or at any time following the Rights Dividend
Declaration Date, either (i) a person (other than Abbott Laboratories) becomes
the beneficial owner of more than 15% (or, in the case of State of Wisconsin
Investment Board, more than 20%) of the then outstanding shares of Common Stock,
or (ii) Abbott Laboratories acquires any additional shares of Common
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Stock without the prior approval of the Board of Directors, and if, immediately
following and giving effect to such acquisition, Abbott Laboratories
beneficially owns 15% or more of the then outstanding shares of Common Stock (in
either case except pursuant to an offer for all outstanding shares of Common
Stock which the Board of Directors determines to be fair to and otherwise in the
best interests of the Corporation and its stockholders), then each holder of a
Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Corporation) having a value equal to two times the Purchase Price of the Right.
Rights are exercisable following the occurrence of the foregoing only after such
time as the Rights are no longer redeemable by the Corporation, as set forth
below. Notwithstanding any of the foregoing, following the occurrence of the
event set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Corporation is acquired in a merger or other business combination
transaction in which the Corporation is not the surviving corporation or in
which the Corporation's outstanding Common Stock is exchanged for cash, stock or
other property (other than a merger which follows an offer for all outstanding
shares described in the preceding paragraph), or (ii) 50% or more of the
Corporation's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the Purchase Price of the
Right. (An event described in this paragraph is a "SECTION 13 EVENT.").
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution, as set forth in the
Rights Agreement. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Rights, fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share), or fractional shares of Common Stock will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Rights, Preferred Stock, or Common Stock, respectively, on the last trading date
prior to the date of exercise.
In general, the Corporation may redeem the Rights in whole, but not in
part, at a price of $.001 per Right, at any time until ten days following the
Stock Acquisition Date (or such later date as may be determined by the
Corporation's Board of Directors). Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the $.001 redemption
price.
At any time after a person becomes beneficial owner of 15% or more (or,
in the case of State of Wisconsin Investment Board, 20% or more) of the Common
Stock then outstanding, and prior to the first date upon which that person
becomes the beneficial owner of at least 50% of the outstanding Common Stock,
the Corporation may, by majority vote of the Board of Directors, exchange some
or all of the outstanding Rights (other than those that have become void) for
shares of Common Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted for splits, dividends, and similar transactions
(the "RATIO OF EXCHANGE"). Immediately upon the action of the Board of Directors
ordering the exchange of the Rights, the
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Rights will terminate and the only right of the holders of Rights will be to
receive the number of Common Shares equal to the Ratio of Exchange.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends.
Other than those provisions relating to the redemption price of the
Rights, any of the provisions of the Rights Agreement may be supplemented or
amended by the Board of Directors prior to the Distribution Date, without
approval of the Rights holders, whether or not a supplement or amendment is
adverse to the Rights holders. After the Distribution Date, the provisions of
the Rights Agreement (other than the provisions relating to the redemption price
or the final expiration date of the Rights) may be amended by the Board of
Directors in order to make changes which do not materially and adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring
Person), provided, however, that the Rights Agreement may not be amended to (i)
make the Rights again redeemable after the Rights have ceased to be redeemable,
or (ii) change any other time period unless such change is for the benefit of
the holders (excluding any Acquiring Person).
C-4