SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
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BioMarin Pharmaceutical Inc.
(Exact name of Registrant as Specified in Its Charter)
Delaware 68-0397820
(State of Incorporation or Organization) (I.R.S. Employer Identification Number)
371 Bel Marin Keys Boulevard,
Suite 210
Novato, California 94949
(Address of Principal Executive Officers) (Zip Code)
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and effective pursuant to General Instruction
A.(c), please check the following box. |_|
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), please check the following box. |X|
Securities Act registration statement file number to which this form relates:
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
(Title of Class)
Item 1. Description of Registrant's Securities to be Registered.
On September 11, 2002 the Board of Directors of BioMarin Pharmaceutical
Inc. (the "Company") authorized a dividend of one preferred share purchase right
(a "Right") for each share of common stock, $.001 par value per share ("Common
Shares") of the Company outstanding at the close of business on September 23,
2002 (the "Record Date"). As long as the Rights are attached to the Common
Shares, the Company will issue one Right (subject to adjustment) with each new
Common Share so that all such shares will have attached Rights. When
exercisable, each Right will entitle the registered holder to purchase from the
Company one one-hundredth of a share of Series B Junior Participating Preferred
Stock (the "Preferred Shares") at a price of $35.00 per one-hundredth of a
Preferred Share, subject to adjustment (the "Purchase Price"). The description
and terms of the Rights are set forth in a Rights Agreement, dated as of
September 11, 2002, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and Mellon Investor Services LLC, a New Jersey
limited liability company, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock certificates
evidencing shares then outstanding, and no separate Rights certificates will be
distributed. Until the earlier to occur of (i) ten (10) days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the Common Shares (an "Acquiring Person") or (ii) ten (10) business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement or announcement of an intention to make a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the Common Shares
(the earlier of (i) and (ii) being called the "Distribution Date"), the Rights
will be represented, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate.
The Rights Agreement provides that until the Distribution Date (or earlier
redemption, exchange, termination or expiration of the Rights), the Rights will
be transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption, exchange, termination or expiration of the Rights), new
Common Share certificates issued after the close of business on the Record Date
upon transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption, exchange, termination or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares, with or without
such notation or a copy of this Summary of Rights, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates representing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will represent the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on September 23, 2012 subject to the Company's right to extend such date
(the "Final Expiration Date"), unless earlier redeemed or exchanged by the
Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights will be
entitled, when, as and if declared, to a minimum preferential quarterly dividend
payment of $0.01 per share but will be entitled to an aggregate dividend of 100
times the dividend, if any, declared per Common Share. In the event of
liquidation, dissolution or winding up of the Company, the holders of the
Preferred Shares will be entitled to a minimum preferential liquidation payment
of $10,000 per share (plus any accrued but unpaid dividends) but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes and will vote together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. Preferred Shares will
not be redeemable. These rights are protected by customary antidilution
provisions. Because of the nature of the Preferred Share's dividend, liquidation
and voting rights, the value of one one-hundredth of a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, cash, securities or assets or of subscription rights or warrants
(other than those referred to above).
In the event that a person becomes an Acquiring Person or if the Company is
the surviving corporation in a merger with an Acquiring Person or any affiliate
or associate of an Acquiring Person and the Common Shares were not changed or
exchanged, each holder of a Right, other than Rights that are or were acquired
or beneficially owned by the Acquiring Person (which Rights will be void), will
thereafter have the right to receive, upon exercise thereof, that number of
Common Shares having a market value of two times the then-current Purchase Price
of the Right. In the event that, after a person has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
more than 50% of its assets or earning power are sold, proper provision shall be
made so that each holder of a Right shall thereafter have the right to receive,
upon the exercise thereof at the then-current Purchase Price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction would have a market value of two times the then-current
Purchase Price of the Right.
For example, at an exercise price of $35.00 per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following a Trigger Event
would entitle its holder to purchase $70.00 worth of Common Stock (or other
consideration, as noted above) for $35.00. Assuming that the Common Stock had a
per share value of $10.00 at such time, the holder of each valid Right would be
entitled to purchase seven shares of Common Stock for $35.00.
At any time after a person becomes an Acquiring Person and prior to the
earlier of one of the events described in the last sentence of the previous
paragraph or the acquisition by such Acquiring Person of 50% or more of the
outstanding Common Shares, the Board of Directors may cause the Company to
exchange the Rights (other than Rights owned by an Acquiring Person, which will
be void), in whole or in part, for that number of Common Shares having an
aggregate value equal to the Spread (the excess of the value of the Common
Shares issuable upon the exercise of a Right over the Purchase Price) per Right
(subject to adjustment).
No adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in the Purchase Price. No
fractional Preferred Shares or Common Shares will be issued (other than
fractions of Preferred Shares which are integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Company, be represented
by depository receipts), and in lieu thereof, a payment in cash will be made
based on the market price of the Preferred Shares or Common Shares on the last
trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of $.001
per Right (the "Redemption Price") by the Board of Directors at any time prior
to the time that an Acquiring Person has become such. The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
Until a Right is exercised, it will not entitle its holder to any rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors for so long as the Rights are then redeemable, and after the Rights
are no longer redeemable, the Company may amend or supplement the Rights
Agreement in any manner that does not adversely affect the interests of the
holders of the Rights.
The Rights are designed to assure that all of the Company's stockholders
receive fair and equal treatment in the event of any proposed takeover of the
Company and to guard against partial tender offers, open market accumulations
and other abusive tactics to gain control of the Company without paying all
stockholders a control premium. The Rights will cause substantial dilution to a
person or group that acquires 15% or more of the Company's stock on terms not
approved by the Company's Board of Directors. The Rights should not interfere
with any merger or other business combination approved by the Board of Directors
at any time before a person or group has become an Acquiring Person.
Item 2. Exhibits
4.1 Rights Agreement, dated as of September 11, 2002, between BioMarin
Pharmaceutical Inc., a Delaware corporation and Mellon Investor
Services LLC, a New Jersey limited liability company as Rights Agent
(which includes the form of Certificate of Designation, Preferences
and Rights of the Series B Junior Participating Preferred Stock of
BioMarin Pharmaceutical Inc. as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Rights to Purchase
Preferred Shares as Exhibit C)
EXHIBIT INDEX
Exhibit No. Description
4.1 Rights Agreement, dated as of September 11, 2002, between
BioMarin Pharmaceutical Inc., a Delaware corporation and
Mellon Investor Services LLC, a New Jersey limited liability
company as Rights Agent (which includes the form of
Certificate of Designation, Preferences and Rights of the
Series B Junior Participating Preferred Stock of BioMarin
Pharmaceutical Inc. as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Shares as Exhibit C)
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
BIOMARIN PHARMACEUTICAL INC.
Date: September 12, 2002 By: /s/ Louis Drapeau
-------------------------------------
Louis Drapeau
Chief Financial Officer and Secretary
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Exhibit 4.1
BIOMARIN PHARMACEUTICAL INC.
a Delaware corporation
and
MELLON INVESTOR SERVICES LLC
a New Jersey limited liability company
as Rights Agent
RIGHTS AGREEMENT
Dated as of September 11, 2002
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Table of Contents
Page
Section 1. Certain Definitions........................................................................1
Section 2. Appointment of Rights Agent................................................................6
Section 3. Issuance of Right Certificates.............................................................7
3.1 Rights Represented by Share Certificates...................................................7
3.2 Summary of Rights..........................................................................7
3.3 New Certificates After Record Date.........................................................8
Section 4. Form of Right Certificates.................................................................9
Section 5. Countersignature and Registration.........................................................10
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates..............................................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............................11
7.1 Exercise of Rights........................................................................11
7.2 Purchase..................................................................................11
7.3 Payment Procedures........................................................................11
7.4 Partial Exercise..........................................................................12
7.5 Rights held by an Acquiring Person........................................................12
7.6 Full Information Concerning Ownership.....................................................13
Section 8. Cancellation and Destruction of Right Certificates........................................13
Section 9. Reservation and Availability of Stock.....................................................13
Section 10. Preferred Shares Record Date..............................................................14
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights........................15
11.1 Post-Execution Events.....................................................................15
11.2 Dilutive Rights Offering..................................................................18
11.3 Distributions.............................................................................18
11.4 Current Per Share Market Value............................................................19
11.5 Insignificant Changes.....................................................................20
11.6 Shares Other Than Preferred Shares........................................................21
11.7 Rights Issued Prior to Adjustment.........................................................21
11.8 Effect of Adjustments.....................................................................21
11.9 Adjustment in Number of Rights............................................................21
11.10 Right Certificates Unchanged..............................................................22
11.11 Par Value Limitations.....................................................................22
11.12 Deferred Issuance.........................................................................22
11.13 Reduction in Purchase Price...............................................................22
11.14 Company Not to Diminish Benefits of Rights................................................23
11.15 Adjustment of Rights Associated with Common Shares........................................23
11.16 Company Agreements........................................................................23
Section 12. Certificate of Adjusted Purchase Price or Number of Shares................................23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power......................24
13.1 Certain Transactions......................................................................24
13.3 Principal Party...........................................................................26
13.4 Approved Acquisitions.....................................................................27
Section 14. Fractional Rights and Fractional Shares...................................................27
14.1 Cash in Lieu of Fractional Rights.........................................................27
14.2 Cash in Lieu of Fractional Preferred Shares...............................................28
14.3 Cash in Lieu of Fractional Common Shares..................................................28
14.4 Waiver of Right to Receive Fractional Rights or Shares....................................28
Section 15. Rights of Action..........................................................................29
Section 16. Agreement of Right Holders................................................................29
Section 17. Right Certificate Holder Not Deemed a Stockholder.........................................29
Section 18. Concerning the Rights Agent...............................................................30
Section 19. Merger or Consolidation or Change of Name of Rights Agent.................................30
Section 20. Duties of Rights Agent....................................................................31
20.1 Legal Counsel.............................................................................31
20.2 Certificates as to Facts or Matters.......................................................31
20.3 Standard of Care..........................................................................31
20.4 Reliance on Agreement and Right Certificates..............................................32
20.5 No Responsibility as to Certain Matters...................................................32
20.6 Further Assurance by Company..............................................................32
20.7 Authorized Company Officers...............................................................32
20.8 Freedom to Trade in Company Securities....................................................32
20.9 Reliance on Attorneys and Agents..........................................................33
20.10 Incomplete Certificate....................................................................33
20.11 Rights Holders List.......................................................................33
20.12 Use of Funds..............................................................................33
Section 21. Change of Rights Agent....................................................................33
Section 22. Issuance of New Right Certificates........................................................34
Section 23. Redemption................................................................................35
23.1 Right to Redeem...........................................................................35
23.2 Redemption Procedures.....................................................................35
Section 24. Notice of Certain Events..................................................................35
Section 25. Notices...................................................................................36
Section 26. Supplements and Amendments................................................................37
Section 27. Exchange..................................................................................38
27.1 Exchange of Common Shares for Rights......................................................38
27.2 Exchange Procedures.......................................................................38
27.3 Insufficient Shares.......................................................................38
Section 28. Successors................................................................................39
Section 29. Beneficiaries of this Agreement...........................................................39
Section 30. Determination and Actions by the Board of Directors.......................................39
Section 31. Severability..............................................................................39
Section 32. Governing Law.............................................................................39
Section 33. Counterparts..............................................................................40
Section 34. Descriptive Heading.......................................................................40
BIOMARIN PHARMACEUTICAL INC.
a Delaware corporation
and
MELLON INVESTOR SERVICES LLC
a New Jersey limited liability company
as Rights Agent
RIGHTS AGREEMENT
Dated as of September 11, 2002
Rights Agreement, dated as of September 11, 2002, between BioMarin
Pharmaceutical Inc., a Delaware corporation (the "Company") and Mellon Investor
Services LLC, a New Jersey limited liability company as Rights Agent (the
"Rights Agent").
RECITALS
WHEREAS, on September 11, 2002, the Board of Directors adopted this
Agreement, and has authorized a dividend of one preferred share purchase right
(a "Right") for each Common Share (as defined in Section 1.7) outstanding at the
close of business on September 23, 2002 (the "Record Date") and has authorized
and directed the issuance of one Right (subject to adjustment as provided
herein) with respect to each Common Share that shall become outstanding between
the Record Date and the earliest of the Distribution Date and the Expiration
Date (as such terms are defined in Sections 3.1 and 7.1), each Right initially
representing the right to purchase one one-hundredth (subject to adjustment) of
a share of Series B Junior Participating Preferred Stock (the "Preferred
Shares") of the Company having the rights, powers and preferences set forth in
the form of Certificate of Designation, Preferences and Rights attached hereto
as Exhibit A, upon the terms and subject to the conditions hereinafter set
forth; provided, however, that Rights may be issued with respect to Common
Shares that shall become outstanding after the Distribution Date and prior to
the Expiration Date in accordance with Section 22.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding but shall not include an Exempt Person (as such term is
hereinafter defined). Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" due to such Person becoming the Beneficial Owner of 15% or
more of the Common Shares as a result of the issuance by the Company of Common
Shares to such Person in consideration for the sale, contribution, conveyance,
transfer, assignment or delivery of property, services or other assets by such
Person to the Company. Notwithstanding the first sentence of this Section 1.1,
1
(i) no Person shall become an "Acquiring Person" as the result of
an acquisition of Common Shares by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Shares of
the Company then outstanding,
(ii) no Person shall become an "Acquiring Person" as the result of
the acquisition of Common Shares from an individual who, on the date of
this Agreement, is the Beneficial Owner of 15% or more of the Common Shares
if such Common Shares are received upon that individual's death pursuant to
that individual's will or pursuant to a charitable trust created by that
individual for estate planning purposes, and
(iii) no Person shall become an "Acquiring Person" as the result of
the beneficial ownership of (A) Common Shares beneficially owned by such
Person on the date hereof unless such Person becomes, after the date
hereof, the Beneficial Owner of an additional 1% or more of the Common
Shares outstanding or (B) Common Shares beneficially owned as the result of
stock dividends, subdivisions or similar transactions with respect to
Common Shares;
provided, however, that if a Person shall become the Beneficial Owner
of 15% or more of the Common Shares of the Company then outstanding solely by
reason of share purchases by the Company or by reason of shares received upon an
individual's death as aforesaid and shall thereafter become the Beneficial Owner
of one or more additional Common Shares of the Company (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common
Shares in Common Shares or pursuant to a split or subdivision of the outstanding
Common Shares), then such Person shall be deemed to be an "Acquiring Person"
unless upon becoming the Beneficial Owner of such additional Common Shares such
Person does not beneficially own 15% or more of the Common Shares then
outstanding.
1.1.1 Notwithstanding the foregoing, if the Board of Directors
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this Section 1.1,
has become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of Common Shares that
would otherwise cause such Person to be an "Acquiring Person", (B) such Person
was aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement or (C) such Person became an "Acquiring Person" as the result of the
formation of a group (as that term is used in the definition of "Person" in this
Agreement) and such Person had no actual knowledge of the consequences of the
formation of such a group under this Agreement), and without any intention of
changing or influencing control of the Company, and such Person, if requested by
the Board of Directors, divests itself as promptly as reasonably practicable of
Beneficial Ownership of a sufficient number of Common Shares so that such Person
would no longer be an Acquiring Person, as defined pursuant to the foregoing
provisions of this Section 1.1, then such Person shall not be deemed to be or
have become an "Acquiring Person" at any time for any purposes of this
Agreement.
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1.1.2 For all purposes of this Agreement, any calculation of the number
of Common Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares 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
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date of this Agreement.
1.2 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.
1.3 A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement, subject to Section
1.1.2);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately, or only after the passage of time,
compliance with regulatory requirements, fulfillment of a condition or
otherwise) pursuant to any agreement, arrangement or understanding, whether
or not in writing (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (w) 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, (x) securities which such Person has a right to
acquire upon the exercise of Rights at any time prior to the time that any
Person becomes an Acquiring Person, (y) securities issuable upon the
exercise of Rights from and after the time that any Person becomes an
Acquiring Person if such Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or
pursuant to Sections 3.1 or Section 22 ("Original Rights") or pursuant to
Sections 11.9 or 11.15 with respect to an adjustment to Original Rights or
(z) securities which such Person or any of such Person's Affiliates or
Associates may acquire, does or do acquire or may be deemed to have the
right to acquire, pursuant to any merger or other acquisition agreement
between the Company and such Person (or one or more of his Affiliates or
Associates) if such agreement has been approved by the Board of Directors
prior to such Person's becoming an Acquiring Person; or (B) the right to
vote 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, any security under this clause
(B) if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
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(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) and with respect
to which such Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), whether or not in
writing, for the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy or consent as described in the proviso to Section
1.3(ii)(B)) or disposing of any securities of the Company; provided,
however, that no Person who is an officer, director, trustee or employee of
an Exempt Person shall be deemed, solely by reason of such Person's status
or authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are
"beneficially owned" (as defined in this Section 1.3), including, without
limitation, in a fiduciary capacity, by an Exempt Person or by any other
such officer, director, trustee or employee of an Exempt Person.
1.4 "Board of Directors" shall mean the Board of Directors of the
Company.
1.5 "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.
1.6 "Close of Business" on any given date shall mean 5:00 p.m.,
Pacific time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Pacific time, on the next succeeding
Business Day.
1.7 "Common Shares" shall mean the shares of common stock, $.001
par value per share, of the Company; provided, however, that "Common Shares"
when used with reference to any Person other than the Company shall mean the
capital stock with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such other
Person or, if such Person is a Subsidiary (as such term is hereinafter defined)
of another Person, the Person or Persons which ultimately control such
first-mentioned Person, and which has issued and outstanding such capital stock,
equity securities or equity interest.
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1.8 "Exempt Person" shall mean (A) the Company, (B) any Subsidiary
of the Company, or (C) any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity or trustee holding shares of stock of
the Company for or pursuant to the terms of any such plan, or for the purpose of
funding other employee benefits for employees of the Company or any Subsidiary
of the Company.
1.9 "Person" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, unincorporated
association, trust, group (as such term is used in Rule 13d-5 of the General
Rules and Regulations under the Exchange Act) or other entity, and shall include
any successor (by merger or otherwise) of such entity.
1.10 "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, the filing of a report pursuant to Section 13(d) of the Exchange Act
or pursuant to a comparable successor statute) by the Company or an Acquiring
Person that an Acquiring Person has become such or that discloses information
which reveals the existence of an Acquiring Person or any earlier date on which
a majority of the Board of Directors shall become aware of the existence of an
Acquiring Person.
1.11 "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, of record or beneficially, directly or indirectly,
by such Person.
1.12 "Transaction" shall mean (A) the company's consolidation with,
or merger with or into, any other Person, as a result of which the Company is
not the continuing or surviving corporation, (B) any Person's consolidation
with, or merger with or into the Company, as a result of which the Company is
the continuing or surviving corporation and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
is changed into or exchanged for stock or other securities of any other Person
or cash or any other property, or (C) the Company's sale or other transfer (or
one or more of its Subsidiaries' sale or other transfer), in one transaction or
a series of related transactions, of assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or one or
more wholly-owned Subsidiaries of the Company in one or more transactions each
of which complies with Section 11.14).
1.13 A "Trigger Event" shall be deemed to have occurred upon any
Person becoming an Acquiring Person.
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The following terms shall have the meanings defined for such
terms in the Sections set forth below:
Term Section
----------------------------------------------------- -----------------
Adjustment Shares 11.1.2
Beneficial Owner 1.3
Preferred Shares Recitals
Common Stock Equivalent 11.1.3
Company Recitals
Current Per Share Market Price 11.4.1
Current Value 11.1.3
Distribution Date 3.1
Equivalent Preferred Stock 11.2
Exchange Act 1.1.2
Exchange Consideration 27.1
Expiration Date 7.1
Final Expiration Date 7.1
Original Rights 1.3
Principal Party 13.2
Purchase Price 4.1
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4.1
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4.1
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents 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 shall in no event
be liable for, the acts or omissions of any such co-Rights Agent. In the event
the Company appoints one or more co-Rights Agents, the respective duties of the
Rights Agent and any co-Rights Agent shall be as the Company shall determine.
Contemporaneously with such appointment, if any, the Company shall notify the
Rights Agent thereof.
6
Section 3. Issuance of Right Certificates.
3.1 Rights Represented by Share Certificates. Until the earlier
of (i) the tenth day after the Shares Acquisition Date (or if the tenth day
after the Shares Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date) or (ii) the tenth Business Day after the date of
the commencement of, or first public announcement of the intent of any Person
(other than an Exempt Person) to commence, a tender or exchange offer the
consummation of which would result in any Person (other than an Exempt Person)
becoming the Beneficial Owner of Common Shares aggregating 15% or more of the
then outstanding Common Shares of the Company (the earlier of (i) and (ii) being
herein referred to as the "Distribution Date"), (x) the Rights (unless earlier
expired, redeemed or terminated) will be represented (subject to the provisions
of Section 3.2) by the certificates for Common Shares registered in the names of
the holders thereof (which certificates for Common Shares shall also be deemed
to be Right Certificates) and not by separate certificates, and (y) the Rights
(and the right to receive certificates therefor) will be transferable only in
connection with the transfer of the underlying Common Shares. The preceding
sentence notwithstanding, prior to the occurrence of a Distribution Date as a
result of an event described in clause (ii) (or such later Distribution Date as
the Board of Directors may select pursuant to this sentence), the Board of
Directors may postpone, one or more times, the Distribution Date which would
occur as a result of an event described in clause (ii) beyond the date set forth
in such clause (ii). Nothing herein shall permit such a postponement of a
Distribution Date after a Person becomes an Acquiring Person, except as a result
of the operation of Section 1.1.1. As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will countersign
and the Company (or, if requested and provided with a list of stockholders of
Common Stock, the Rights Agent) will send, by first-class, postage-prepaid mail,
to each record holder of Common Shares as of the close of business on the
Distribution Date (other than any Acquiring Person or any Associate or Affiliate
of an Acquiring Person), at the address of such holder shown on the records of
the Company, one or more certificates for Rights, in substantially the form of
Exhibit B hereto (a "Right Certificate"), representing one Right (subject to
adjustment as provided herein) for each Common Share. As of the Distribution
Date, the Rights will be represented solely by such Right Certificates. In the
event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11.15 hereof, at the time of distribution of the
Rights Certificates the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14.1 hereof) so that Rights
Certificates evidencing only whole numbers of Rights are distributed and cash is
paid in lieu of any fractional Rights.
3.2 Summary of Rights. On the Record Date or as soon as
practicable thereafter, the Company will send or cause to be sent a copy of a
Summary of Rights to Purchase Preferred Shares, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Record Date at the address of such holder shown on the records
of the Company. With respect to certificates for Common Shares outstanding as of
the close of business on the Record Date, until the Distribution Date (or the
earlier Expiration Date), the Rights will be represented by such certificates
for Common Shares registered in the names of the holders thereof and the
registered holders of the Common Shares shall also be registered holders of the
associated Rights. Until the Distribution Date (or the earlier Expiration Date),
the surrender for transfer of any certificate for Common Shares outstanding at
the close of business on the Record Date, with or without a copy of the Summary
of Rights, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
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3.3 New Certificates After Record Date. Certificates for Common
Shares which become outstanding (whether upon issuance out of authorized but
unissued Common Shares or transfer or exchange of outstanding Common Shares)
after the Record Date, but prior to the earlier of the Distribution Date or the
Expiration Date, shall have impressed, printed, stamped, written or otherwise
affixed onto them the following legend:
"This certificate also represents and entitles the holder hereof
to certain rights ("Rights") as set forth in an agreement between
BioMarin Pharmaceutical Inc. (the "Company") and Mellon Investor
Services LLC as Rights Agent, dated as of September 11, 2002, as
the same may be amended from time to time (the "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
Agreement, such Rights will be represented by separate
certificates and will no longer be represented by this
certificate. The Company will mail to the holder of this
certificate a copy of the Agreement without charge after receipt
of a written request therefor. As described in the Agreement,
Rights which are owned by, transferred to or have been owned by
Acquiring Persons or Associates or Affiliates thereof (as defined
in the Agreement) shall become null and void and will no longer
be transferable."
With respect to such certificates containing the foregoing
legend, until the Distribution Date (or the earlier Expiration Date), the Rights
associated with the Common Shares represented by such certificates shall be
represented by such certificates alone, and the surrender for transfer of any
such certificates, except as otherwise provided herein, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby. In the event that the Company purchases or acquires any Common Shares
after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Notwithstanding this Section 3.3, 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.
8
Section 4. Form of Right Certificates.
4.1 The Right Certificates (and the forms of election to
purchase shares, certification and assignment to be printed on the reverse
thereof) shall be substantially in the form of Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate, which do not
affect the rights, duties 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 or trading system
on which the Rights may from time to time be listed or quoted, or to conform to
usage. Subject to the terms and conditions hereof, the Right Certificates,
whenever issued, shall be dated as of the Record Date, and shall show the date
of countersignature by the Rights Agent, and on their face shall entitle the
holders thereof to purchase such number of one-hundredths of a Preferred Share
as shall be set forth therein at the price per one-hundredth of a Preferred
Share set forth therein (the "Purchase Price"), but the number of such
one-hundredths of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.
4.2 Any Rights Certificate issued pursuant to Sections 3.1 or
Section 22 hereof that evidences Rights beneficially owned by any Person known
to be (i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of any Person (or of any Associate or Affiliate of any
Person) who becomes a transferee after such Person becomes an Acquiring Person,
or (iii) a transferee of any Person (or of any Associate or Affiliate of any
Person) who becomes a transferee prior to or concurrently with such Person
becoming an Acquiring Person and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from such Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (B) a transfer that the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
that has as a primary purpose or effect avoidance of Section 7.5 hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
"The Rights evidenced by this Rights 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 between the
Company and the Rights Agent and its successors (the "Rights
Agreement")). Accordingly, this Rights Certificate and the Rights
evidenced hereby may become null and void in the circumstances
specified in Section 7.6 of the Rights Agreement."
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Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Company by its Chairman of the Board of Directors,
Chief Executive Officer or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary, or any Assistant Secretary, of
the Company, either manually or by facsimile signature. The Right Certificates
shall be countersigned, either manually or by facsimile signature, by an
authorized signatory of the Rights Agent, but it shall not be necessary for the
same signatory to countersign all of the Right Certificates hereunder. No Right
Certificate shall 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.
Following the Distribution Date and receipt by the Rights Agent of
all relevant information, the Rights Agent will keep or cause to be kept, at its
office, designated to the Company 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 represented on its face by each of the Right Certificates, the
certificate number of each of the Right Certificates and the date of each of the
Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Sections 7.6, 11.1.2 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 Expiration Date, any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have become void
pursuant to Section 11.1.2 or that have been exchanged pursuant to Section 27)
may be transferred, split up or combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase
the same number of one-hundredths of a Preferred Share as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up or combine or exchange any
Right Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender, together with any required form of assignment and
certificate duly completed, the Right Certificate or Right Certificates to be
transferred, split up or combined or exchanged 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 or Right Certificates 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 or Right Certificates
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 shall reasonably request. Thereupon the Rights Agent
shall 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 from the holders of Right Certificates of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up or combination or exchange of such Right Certificates. The
Rights Agent shall have no duty or obligation under this Section 6 unless and
until it is satisfied that all such taxes and/or charges have been paid in full.
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Subject to the provisions of Section 11.1.2, at any time after
the Distribution Date and prior to the Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security 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.
7.1 Exercise of Rights. Subject to Section 11.1.2 and except as
otherwise provided herein, the registered holder of any Right Certificate may
exercise the Rights represented thereby 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 certification 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 for the
total number of one-hundredths of a Preferred Share (or other securities, cash
or other assets) as to which the Rights are exercised, at or prior to the time
(the "Expiration Date") that is the earliest of (i) the Close of Business on
September 23, 2012 (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 (the "Redemption Date"), (iii) the
closing of any merger or other acquisition transaction involving the Company
pursuant to an agreement of the type described in Sections 1.3(ii)(A)(z) and
13.3, at which time the Rights are terminated, or (iv) the time at which the
Rights are exchanged as provided in Section 27.
7.2 Purchase. The Purchase Price for each one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall be initially $35.00,
shall be subject to adjustment from time to time as provided in Section 11,
Section 13 and Section 26 and shall be payable in lawful money of the United
States of America in accordance with Section 7.3.
7.3 Payment Procedures. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase and
certification duly executed, accompanied by payment of the aggregate Purchase
Price for the total number of one-hundredths of a Preferred Share to be
purchased and an amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with Section 9, in cash or
by certified or cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i)(A) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent)
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certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of Preferred Shares issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing interests in such number of one-hundredths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred Shares
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 all such requests, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with Section 11.14 or otherwise in accordance with Section 11.1.3,
(iii) promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Company is obligated to issue other securities of the Company,
pay cash and/or distribute other property pursuant to Section 11.1.3, 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.
7.4 Partial Exercise. In case the registered holder of any Right
Certificate shall exercise less than all the Rights represented thereby, a new
Right Certificate representing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 6 and Section 14.
7.5 Rights held by an Acquiring Person. Notwithstanding anything
in this Agreement to the contrary, from and after the first occurrence of a
Trigger Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of any Person
(or of any Associate or Affiliate of any Person) who becomes a transferee after
such Person becomes an Acquiring Person, or (iii) a transferee of any Person (or
of any Associate or Affiliate of any Person) who becomes a transferee prior to
or concurrently with such Person becoming an Acquiring Person and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
such Acquiring Person (or any Affiliate or Associate thereof) to holders of
equity interests in such Acquiring Person (or any Affiliate or Associate
thereof) or to any Person with whom such Acquiring Person (or any Affiliate or
Associate thereof) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the Board of Directors
of the Company has determined is part of a plan, agreement, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7.5, shall become 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
notify the Rights Agent when this Section 7.5 applies and shall use all
reasonable efforts to ensure that the provisions of Sections 7.5 and 4.2 hereof
are complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of Rights Certificates or other Person as a result of
the Company's failure to make any determinations with respect to an Acquiring
Person or any of its Affiliates, Associates or transferees hereunder.
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7.6 Full Information Concerning Ownership. 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 of Rights upon the occurrence of any purported exercise as set forth in
this Section 7 unless the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise shall have been duly completed and signed by the registered holder
thereof and the Company shall have been provided with such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
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.
Section 9. Reservation and Availability of Stock. The Company covenants and
agrees that from and after the Distribution Date it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares (and,
following the occurrence of a Trigger Event, out of its authorized and unissued
Common Shares or other securities) the number of Preferred Shares (and,
following the occurrence of a Trigger Event, Common Shares and/or other
securities) that will be sufficient to permit the exercise in full of all
outstanding Rights.
So long as the Preferred Shares (and, following the occurrence
of a Trigger Event, Common Shares and/or other securities) issuable upon the
exercise of Rights may be listed on any stock exchange or traded in the
over-the-counter market and quoted on Nasdaq, 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 or admitted to trading on such
exchange or quoted on Nasdaq upon official notice of issuance upon such
exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (and, following
the occurrence of a Trigger Event, Common Shares and/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 shares.
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From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
Preferred Shares upon the exercise of Rights, to register and qualify such
Preferred Shares under the Securities Act and any applicable state securities or
"Blue Sky" laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective until the earlier of the date as of which the Rights are no longer
exercisable for such securities and the Expiration Date. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall promptly notify the Rights Agent thereof and
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement (with prompt notice
thereof to the Rights Agent) at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, and a Trigger Event has
not occurred, the Company may temporarily suspend (and shall give the Rights
Agent prompt notice thereof) the exercisability of 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 unless the requisite qualification in such jurisdiction
shall have been obtained and until a registration statement under the Securities
Act (if required) shall have been declared effective.
The Company further covenants and agrees that it will pay when
due and payable any and all taxes and charges which may be payable in respect of
the issuance or delivery of the Right Certificates or of any Preferred Shares
(or Common Shares and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any tax or charge
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
for the Preferred Shares (or Common Shares and/or other securities, as the case
may be) in a name other than that of, the registered holder of the Right
Certificate representing Rights surrendered for exercise or to issue or deliver
any certificates for Preferred Shares (or Common Shares and/or other securities,
as the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until any such tax or charge shall have been paid (any
such tax or charge being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax or charge is due.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
representing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes or charges) was made; provided, however, that
if the date of such surrender and payment is a date upon which the Preferred
Shares (or Common Shares and/or other securities, as the case may be) transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares (fractional or otherwise) on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Shares
(or Common Shares and/or other securities, as the case may be) transfer books of
the Company are open. Prior to the exercise of the Rights represented thereby,
the holder of a Right Certificate shall not be entitled to any rights of a
holder of Preferred Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
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Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares or other securities
or property purchasable upon exercise of each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
11.1 Post-Execution Events.
11.1.1 Corporate Dividends, Reclassifications, Etc. In
--------------------------------------------
the event the Company shall at any time after the date of this Agreement (A)
declare and pay a dividend on the Preferred Shares payable in Preferred Shares,
(B) subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D) issue any
shares of its stock in a reclassification of the Preferred Shares (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 11.1, 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 stock
issuable on such date, shall be proportionately adjusted so that the holder of
any Right exercised after such time shall be entitled to receive the aggregate
number and kind of shares of stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares transfer
books of the Company were open, such person would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of stock of the Company issuable upon exercise
of one Right. If an event occurs which would require an adjustment under both
Sections 11.1.1 and 11.1.2, the adjustment provided for in this Section 11.1.1
shall be in addition to, and shall be made prior to, the adjustment required
pursuant to, Section 11.1.2.
11.1.2 Acquiring Person Events; Trigger Events. Subject
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to Sections 23.1 and Section 27, in the event that a Trigger Event occurs, then,
from and after the first occurrence of such event, each holder of a Right,
except as provided below, shall thereafter have a right to receive, upon
exercise thereof at a price per Right equal to the then-current Purchase Price
multiplied by the number of one-hundredths of a Preferred Share for which a
Right is then exercisable (without giving effect to this Section 11.1.2), in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares per Right as shall equal the result obtained by (x)
multiplying
15
the then-current Purchase Price by the number of one-hundredths of a Preferred
Share for which a Right is then exercisable (without giving effect to this
Section 11.1.2) and (y) dividing that product by 50% of the Current Per Share
Market Price of the Common Shares (determined pursuant to Section 11.4) on the
first of the date of the occurrence of, or the date of the first public
announcement of, a Trigger Event (the "Adjustment Shares"); provided that the
Purchase Price and the number of Adjustment Shares shall thereafter be subject
to further adjustment as appropriate in accordance with Section 11.6.
Notwithstanding the foregoing, upon the occurrence of a Trigger Event, any
Rights that are or have been acquired or beneficially owned by (1) any Acquiring
Person or any Associate or Affiliate thereof, (2) a transferee of any Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (3) a transferee of any Acquiring Person
(or of any such Associate or Affiliate) 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 to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors determines or has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of this Section 11.1.2, and subsequent transferees, shall become null and void
without any further action, and any holder (whether or not such holder is an
Acquiring Person or an Associate or Affiliate of an Acquiring Person) of such
Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement or otherwise. The Company shall not enter into any
transaction of the type described in this Section 11.1.2 if at the time of such
transaction there are any rights, warrants, instruments or securities
outstanding or any arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits intended to
be afforded by the Rights. From and after the Trigger Event, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 that represents
Rights that are or have become void pursuant to the provisions of this
paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this paragraph shall be cancelled.
The Company shall use all reasonable efforts
to ensure that the provisions of this Section 11.1.2 are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to any Acquiring
Person or its Affiliates, Associates or transferees hereunder.
From and after the occurrence of an event
specified in Section 13.1, any Rights that theretofore have not been exercised
pursuant to this Section 11.1.2 shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this Section 11.1.2.
11.1.3 Insufficient Shares. The Company may at its
---------------------
option substitute for a Common Share issuable upon the exercise of Rights in
accordance with the foregoing Section 11.1.2 a number of Preferred Shares or
fraction thereof such that the Current Per Share Market Price of one Preferred
Share multiplied by such number or fraction is equal to the Current Per Share
Market Price of one Common Share. In the event that upon the occurrence of one
or more of the events
16
listed in Section 11.1.2 above there shall not be sufficient Common Shares
authorized but unissued to permit the exercise in full of the Rights in
accordance with the foregoing Section 11.1.2, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exercise of the Rights, provided, however, that if the Company determines
that it is unable to cause the authorization of a sufficient number of
additional Common Shares, then, in the event the Rights become exercisable, the
Company, with respect to each Right and to the extent necessary and permitted by
applicable law and any agreements or instruments in effect on the date hereof to
which it is a party, shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current Value"),
over (2) the Purchase Price (such excess, the "Spread") and (B) with respect to
each Right (other than Rights which have become void pursuant to Section
11.1.2), make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Preferred Shares or other equity securities of the Company
(including, without limitation, shares, or fractions of shares, of preferred
stock which, by virtue of having dividend, voting and liquidation rights
substantially comparable to those of the Common Shares, the Board of Directors
has deemed in good faith to have substantially the same value as Common Shares)
(each such share of preferred stock or fractions of shares of preferred stock
constituting a "Common Stock Equivalent")), (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, where such aggregate value has been determined
by the Board of Directors based upon the advice of a nationally recognized
investment banking firm selected in good faith 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
first occurrence of a Trigger Event, then the Company shall be obligated to
deliver, to the extent necessary and permitted by applicable law and any
agreements or instruments in effect on the date hereof to which it is a party,
upon the surrender for exercise of a Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available) and then, if necessary,
such number or fractions of Preferred Shares (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
unlikely that sufficient additional Common Shares could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day period set
forth above may be extended and re-extended to the extent necessary, but not
more than ninety (90) days following the first occurrence of one of the events
listed in Section 11.1.2 above, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such period as may be
extended, the "Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the second and/or third sentences of
this Section 11.1.3, the Company (x) shall provide 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 promptly
notify the Rights Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended as well as a public
17
announcement (with prompt notice thereof to the Rights Agent) at such time as
the suspension is no longer in effect. For purposes of this Section 11.1.3, the
value of a Common Share shall be the Current Per Share Market Price (as
determined pursuant to Section 11.4) on the date of the occurrence of a Trigger
Event and the value of any "Common Stock Equivalent" shall be deemed to have the
same value as the Common Shares on such date. The Board of Directors may, but
shall not be required to, establish procedures to allocate the right to receive
Common Shares upon the exercise of the Rights among holders of Rights pursuant
to this Section 11.1.3.
11.2 Dilutive Rights Offering. In case the Company shall
fix a record date for the issuance of rights, options or warrants to all holders
of Preferred Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Preferred Shares (or
securities having the same rights, privileges and preferences as the Preferred
Shares ("Equivalent Preferred Stock")) or securities convertible into Preferred
Shares or Equivalent Preferred Stock at a price per Preferred Share or per share
of Equivalent Preferred Stock (or having a conversion or exercise price per
share, if a security convertible into or exercisable for Preferred Shares or
Equivalent Preferred Stock) less than the Current Per Share Market Price of the
Preferred Shares (as determined pursuant to Section 11.4) 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 Preferred Shares
and shares of Equivalent Preferred Stock outstanding on such record date plus
the number of Preferred Shares and shares of Equivalent Preferred Stock which
the aggregate offering price of the total number of Preferred Shares and/or
shares of Equivalent Preferred Stock to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Per Share Market Price and the denominator of which shall be the
number of Preferred Shares and shares of Equivalent Preferred Stock outstanding
on such record date plus the number of additional Preferred Shares and/or shares
of Equivalent Preferred Stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of stock of the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive and
binding on the Rights Agent and the holders of the Rights for all purposes.
Preferred Shares and shares of Equivalent Preferred Stock owned by or held for
the account of the Company or any Subsidiary of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustments 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 which would then be in effect if such record date had
not been fixed.
11.3 Distributions. In case the Company shall fix a
record date for the making of a distribution to all holders of the Preferred
Shares (including any such distribution made in connection with a consolidation
or merger in which the
18
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash, securities or assets or convertible securities, or
subscription rights or warrants (excluding those referred to in Section 11.2),
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 of the Preferred Shares (as determined pursuant to Section 11.4) 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 for all purposes) of the portion
of the cash, assets, securities or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such Current Per Share
Market Price of the Preferred Shares (as determined pursuant to Section 11.4);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
stock of the Company to be issued upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
11.4 Current Per Share Market Value.
11.4.1 General. For the purpose of any computation
hereunder, the "Current Per Share Market Price" of any security (a "Security"
for the purpose of this Section 11.4.1) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the thirty
(30) consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the Current Per
Share Market Price of the Security is determined during any period following the
announcement by the issuer of such Security of (i) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of thirty (30) consecutive Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the "Current Per Share Market Price" shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported 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 Security is 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 national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors. If on any
such date no such market maker is making a market in the Security, the fair
19
value of the Security 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 national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the Security
is not listed or admitted to trading on any national securities exchange, a
Business Day. If the Security is not publicly held or not so listed or traded,
or if on any such date the Security is not so quoted and no such market maker is
making a market in the Security, "Current Per Share Market Price" shall mean the
fair value per share as determined in good faith by the Board of Directors or,
if at the time of such determination there is an Acquiring Person, by a
nationally recognized investment banking firm selected by the Board of
Directors, which shall have the duty to make such determination in a reasonable
and objective manner, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
11.4.2 Preferred Shares. Notwithstanding Section 11.4.1,
for the purpose of any computation hereunder, the "Current Per Share Market
Price" of the Preferred Shares shall be determined in the same manner as set
forth above in Section 11.4.1 (other than the last sentence thereof). If the
Current Per Share Market Price of the Preferred Shares cannot be determined in
the manner described in Section 11.4.1, the "Current Per Share Market Price" of
the Preferred Shares shall be conclusively deemed to be an amount equal to 100
(as such number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common Shares
occurring after the date of this Agreement) multiplied by the Current Per Share
Market Price of the Common Shares (as determined pursuant to Section 11.4.1). If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, or if on any such date neither the Common Shares nor the
Preferred Shares are so quoted and no such market maker is making a market in
either the Common Shares or the Preferred Shares, "Current Per Share Market
Price" of the Preferred Shares shall mean the fair value per share as determined
in good faith by the Board of Directors, or, if at the time of such
determination there is an Acquiring Person, by a nationally recognized
investment banking firm selected by the Board of Directors, which shall have the
duty to make such determination in a reasonable and objective manner, which
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For purposes of this Agreement, the
"Current Per Share Market Price" of one one-hundredth of a Preferred Share shall
be equal to the "Current Per Share Market Price" of one Preferred Share divided
by 100.
11.5 Insignificant Changes. No adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price. Any adjustments which
by reason of this Section 11.5 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
one-millionth of a Preferred Share or the nearest one ten-thousandth of a Common
Share or other share or security, as the case may be. Notwithstanding the first
sentence of this Section 11.5, any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of the
transaction that mandate such adjustment, or (ii) the Expiration Date.
20
11.6 Shares Other Than Preferred Shares. If as a result
of an adjustment made pursuant to Section 11.1, the holder of any Right
thereafter exercised shall become entitled to receive any shares of stock of the
Company other than Preferred Shares, thereafter the number of such other shares
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in Sections 11.1,
11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the provisions of Section 7, Section
9, Section 10, Section 13 and Section 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
11.7 Rights Issued Prior to Adjustment. All Rights
originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall include the right to purchase, at the adjusted
Purchase Price, the number of one-hundredths of a Preferred Share purchasable
from time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
11.8 Effect of Adjustments. Unless the Company shall
have exercised its election as provided in Section 11.9, upon each adjustment of
the Purchase Price as a result of the calculations made in Sections 11.2 and
11.3, each Right outstanding immediately prior to the making of such adjustment
shall thereafter include the right to purchase, at the adjusted Purchase Price,
that number of one-hundredths of a Preferred Share (calculated to the nearest
one-hundred thousandth of a Preferred Share) obtained by (i) multiplying (x) the
number of one-hundredths of a Preferred 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.
11.9 Adjustment in Number of Rights. 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-hundredths of a Preferred Share issuable 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-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one-hundredth) 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 and promptly notify 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 number of Rights pursuant to this Section 11.9, the Company may, as promptly
as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates representing, subject to
Section 14, the additional Rights to which such holders shall be entitled as a
result of such
21
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
representing 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.
11.10 Right Certificates Unchanged. Irrespective of any
adjustment or change in the Purchase Price or the number of one-hundredths of a
Preferred Share issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price per
share and the number of one-hundredths of a Preferred Share which were expressed
in the initial Right Certificates issued hereunder.
11.11 Par Value Limitations. Before taking any action
that would cause an adjustment reducing the Purchase Price below one
one-hundredth of the then par value, if any, of the Preferred Shares or other
shares of stock issuable upon exercise of the Rights, the Company shall take any
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 Preferred
Shares or other such shares at such adjusted Purchase Price.
11.12 Deferred Issuance. 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 (and shall promptly notify the Rights Agent of any such election) until
the occurrence of such event the issuance to the holder of any Right exercised
after such record date of that number of Preferred Shares and shares of other
stock or securities of the Company, if any, issuable upon such exercise over and
above the Preferred Shares and shares of other stock or other securities, assets
or cash 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
representing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
11.13 Reduction in Purchase Price. 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 it in its sole
discretion shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Shares, issuance wholly for cash of any of the
Preferred Shares at less than the current market price, issuance wholly for cash
of Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or warrants referred to above in
this Section 11, hereafter made by the Company to holders of its Preferred
Shares, shall not be taxable to such stockholders.
22
11.14 Company Not to Diminish Benefits of Rights. The
Company covenants and agrees that after the earlier of the Shares Acquisition
Date or Distribution Date it will not, except as permitted by Section 23,
Section 26 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 substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
11.15 Adjustment of Rights Associated with Common
Shares. Notwithstanding anything contained in this Agreement to the contrary, in
the event that the Company shall at any time after the date hereof and prior to
the Distribution Date (i) declare or pay any dividend on the outstanding Common
Shares payable in Common Shares, (ii) effect a subdivision or consolidation of
the outstanding Common Shares (by reclassification or otherwise than by the
payment of dividends payable in Common Shares), or (iii) combine the outstanding
Common Shares into a greater or lesser number of Common Shares, then in any such
case, the number of Rights associated with each Common Share then outstanding,
or issued or delivered thereafter but prior to the Distribution Date or in
accordance with Section 22 shall be proportionately adjusted so that the number
of Rights thereafter associated with each Common Share following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction, the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event. The adjustment provided for in this Section 11.15
shall be made successively whenever a dividend referred to in this Section 11.15
is declared or paid or a subdivision, combination or consolidation referred to
in this Section 11.15 is effected.
11.16 Company Agreements. The Company covenants and
agrees that it shall not, at any time after the Distribution Date engage in a
Transaction if (x) at the time of or immediately after such Transaction there
are any rights, warrants or other instruments or securities outstanding or
agreements in effect that 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 Transaction, the stockholders of
the Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13.1 hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
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 and computations accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Common Shares or the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall have no duty
with respect to and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
13.1 Certain Transactions. In the event that, from and after
the first occurrence of a Trigger Event, directly or indirectly, the Company
consummates a Transaction, then, and in each such case, proper provision shall
be made so that
(i) each holder of a Right (other than Rights which
have become void pursuant to Section 11.1.2) shall thereafter have the
right to receive, upon the exercise thereof at a price per Right equal to
the then-current Purchase Price multiplied by the number of one-hundredths
of a Preferred Share for which a Right was exercisable immediately prior to
the first occurrence of a Trigger Event (as subsequently adjusted pursuant
to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12), in accordance with
the terms of this Agreement and in lieu of Preferred Shares or Common
Shares, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable Common Shares of the Principal Party (as
such term is hereinafter defined) not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (x) multiplying the then-current Purchase Price by the
number of one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Trigger Event
(as subsequently adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8,
11.9 and 11.12) and (y) dividing that product by 50% of the then Current
Per Share Market Price of the Common Shares of such Principal Party
(determined pursuant to Section 11.4) on the date of consummation of the
Transaction; provided, that the price per Right so payable and the number
of Common Shares of such Principal Party so receivable upon exercise of a
Right shall thereafter be subject to further adjustment as appropriate in
accordance with Section 11.6 to reflect any events covered thereby
occurring in respect of the Common Shares of such Principal Party after the
occurrence of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement;
(iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party; and
(iv) such Principal Party shall take such steps
(including, but not limited to, the authorization and reservation of a
sufficient number of its Common Shares in accordance with Section 9) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its Common Shares thereafter deliverable upon the
exercise of the Rights; provided that, upon the subsequent occurrence of
any consolidation, merger, sale or transfer of assets or other
24
extraordinary transaction in respect of such Principal Party, each holder
of a Right shall thereupon be entitled to receive, upon exercise of a Right
and payment of the Purchase Price as provided in this Section 13.1, such
cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party receivable upon
the exercise of a Right pursuant to this Section 13.1, and such Principal
Party shall take such steps (including, but not limited to, reservation of
shares of stock) as may be necessary to permit the subsequent exercise of
the Rights in accordance with the terms hereof for such cash, shares,
rights, warrants and other property.
13.2 The Company shall not consummate any Transaction unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that the
requirements of this Sections 13.1 and 13.2 shall promptly be performed in
accordance with their terms and that such Transaction shall not result in a
default by the Principal Party under this Agreement as the same shall have been
assumed by the Principal Party pursuant to this Section 13.1 and Section 13.2
and providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party, at its own expense, shall
(i) prepare and file a registration statement under
the Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form,
use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and use its best efforts
to cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the
Expiration Date and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Shares of
the Principal Party shall be listed or admitted to trading on the New York
Stock Exchange or on another national securities exchange, to list or admit
to trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on the New York Stock Exchange or
such securities exchange, or, if the Common Shares of the Principal Party
shall not be listed or admitted to trading on the New York Stock Exchange
or a national securities exchange, to cause the Rights and the securities
receivable upon exercise of the Rights to be authorized for quotation on
Nasdaq or on such other system then in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects
with the requirements for registration on Form 10 (or any successor form)
under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal
or preemptive rights in respect of the Common Shares of the Principal Party
subject to purchase upon exercise of outstanding Rights.
25
In case the Principal Party has provision in any of
its authorized securities or in its charter or bylaws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, Common Shares or
Common Stock Equivalents of such Principal Party at less than the then-current
market price per share thereof (determined pursuant to Section 11.4) or
securities exercisable for, or convertible into, Common Shares or Common Stock
Equivalents of such Principal Party at less than such then-current market price
(other than to holders of Rights pursuant to this Section 13), or (ii) providing
for any special payment, taxes or similar provision in connection with the
issuance of the Common Shares of such Principal Party pursuant to the provision
of Section 13, then, in such event, the Company hereby agrees with each holder
of Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision 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.
The Company covenants and agrees that it shall not,
at any time after the Trigger Event, enter into any Transaction if (i) at the
time of or immediately after such Transaction 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, (ii) prior to, simultaneously with or immediately after
such Transaction, the stockholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13.3 shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (iii) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights. The
provisions of this Section 13 shall similarly apply to successive Transactions.
13.3 Principal Party. "Principal Party" shall mean:
(i) in the case of any Transaction: (i) the Person
that is the issuer of the securities into which the Common Shares are
converted in such Transaction, or, if there is more than one such issuer,
the issuer the Common Shares of which have the greatest aggregate market
value of shares outstanding, or (ii) if no securities are so issued, (x)
the Person that is the other party to the merger, if such Person survives
said merger, or, if there is more than one such Person, the Person the
Common Shares of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger does
not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the
consolidation; and
26
(ii) in the case of any Transaction, the Person that
is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such Transaction receives the same portion of the
assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot be determined,
whichever of such Persons is the issuer of Common Shares having the
greatest aggregate market value of shares outstanding; provided, however,
that in any Transaction, if the Common Shares of such Person are not at
such time or have not been continuously over the preceding twelve month
period registered under Section 12 of the Exchange Act, then (1) if such
Person is a direct or indirect Subsidiary of another Person the Common
Shares of which are and have been so registered, the term "Principal Party"
shall refer to such other Person, or (2) if such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Shares of all
of which are and have been so registered, the term "Principal Party" shall
refer to whichever of such Persons is the issuer of Common Shares having
the greatest aggregate market value of shares outstanding, or (3) if 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 clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned
by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the
obligations set forth in this Section 13 in the same ratio as its interest
in such Person bears to the total of such interests.
13.4 Approved Acquisitions. Notwithstanding anything contained
herein to the contrary, in the event of any merger or other acquisition
transaction involving the Company pursuant to a merger or other acquisition
agreement between the Company and any Person (or one or more of such Person's
Affiliates or Associates) which agreement has been approved by the Board of
Directors prior to any Person becoming an Acquiring Person, this Agreement and
the rights of holders of Rights hereunder shall be terminated in accordance with
Section 7.1.
Section 14. Fractional Rights and Fractional Shares.
14.1 Cash in Lieu of Fractional Rights. The Company shall not be
required to issue fractions of Rights or to distribute Right Certificates which
represent fractional Rights (except prior to the Distribution Date in accordance
with Section 11.15). In lieu of such fractional Rights, there shall be paid to
the registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14.1, the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported 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 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
27
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use or, 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 current market value of the
Rights on such date shall be the fair value of the Rights as determined in good
faith by the Board of Directors, or, if at the time of such determination there
is an Acquiring Person, by a nationally recognized investment banking firm
selected by the Board of Directors, which shall have the duty to make such
determination in a reasonable and objective manner, which determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes.
14.2 Cash in Lieu of Fractional Preferred Shares. The Company
shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share) upon exercise or exchange of the Rights or to distribute certificates
which represent fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Interests in
fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be represented by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one one-hundredth
of a Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised or exchanged as herein
provided an amount in cash equal to the same fraction of the Current Per Share
Market Price of one Preferred Share (as determined in accordance with Section
11.4) for the Trading Day immediately prior to the date of such exercise or
exchange.
14.3 Cash in Lieu of Fractional Common Shares. The Company shall
not be required to issue fractions of Common Shares or to distribute
certificates which represent fractional Common Shares upon the exercise or
exchange of Rights. In lieu of such fractional Common Shares, the Company shall
pay to the registered holders of the Right Certificates with regard to which
such fractional Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole Common Share
(as determined in accordance with Section 14.1) for the Trading Day immediately
prior to the date of such exercise or exchange.
14.4 Waiver of Right to Receive Fractional Rights or Shares. The
holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise or exchange
of a Right, except as permitted by this Section 14.
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Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent hereunder, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce this Agreement, and may institute and maintain any suit, action
or proceeding against the Company to enforce this Agreement, or otherwise
enforce or act in respect of his right to exercise the Rights represented 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 under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person (including, without limitation, the Company) 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:
(i) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the Common Shares;
(ii) as of and 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 with all required certifications completed; and
(iii) the Company and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is registered
as the absolute owner thereof and of the Rights represented hereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary.
Section 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 Preferred Shares or any other
securities of the Company which 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 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights represented by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
29
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
in accordance with the fee schedule attached hereto as Exhibit D and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the preparation, execution, delivery,
administration and amendment 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, 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, directly
or indirectly. The costs and expenses incurred by the Rights Agent in enforcing
this right of indemnification shall be paid by the Company unless it is finally
determined by a court of competent jurisdiction that the Rights Agent is not
entitled to indemnification due to the Rights Agent's gross negligence, bad
faith or willful misconduct, in which event, the Rights Agent shall repay all
such costs and expenses. The indemnity and compensation provided herein shall
survive the termination of this Agreement, the termination and the expiration of
the Rights and the resignation or removal of the Rights Agent. Anything to the
contrary notwithstanding, in no event shall the Rights Agent be liable for
special, punitive, indirect, consequential or incidental loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage. Any liability
of the Rights Agent under this Rights Agreement will be limited to the amount of
fees paid by the Company to the Rights Agent pursuant to this Agreement.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or the Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction, 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.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation, limited liability company or other Person into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation, limited liability company or other Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation, limited liability
company or other Person succeeding to the 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
30
part of any of the parties hereto, provided that such corporation, limited
liability company or other 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 Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
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 expressly imposed by this Agreement (and no implied
duties or obligations) upon the terms and conditions set forth in this Section
20, by all of which the Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound.
20.1 Legal Counsel. The Rights Agent may consult with legal
counsel selected by it (who may be legal counsel for the Company), and the
written 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 the respect of any action taken, suffered, or omitted
by it in good faith and in accordance with such written advice or opinion.
20.2 Certificates as to Facts or Matters. Whenever in the
performance of its duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other representation in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of Directors, the
Chief Executive Officer, the Chief Financial Officer, any Vice President, the
Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization and protection to the Rights Agent, and the Rights Agent
shall incur no liability for or in respect of any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
20.3 Standard of Care. The Rights Agent shall be liable
hereunder only for its own gross negligence, bad faith or willful misconduct as
finally determined by a court of competent jurisdiction.
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20.4 Reliance on Agreement and Right Certificates. 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 as to
its countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
20.5 No Responsibility as to Certain Matters. The Rights Agent
shall not have any liability for, nor be under any responsibility 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 liable or 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 liable or responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11.1.2) or any
adjustment required under the provisions of Section 3, Section 11, Section 13,
Section 23 or Section 27 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 represented
by Right Certificates after actual notice of any such change or adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares or other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any Preferred Shares will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
20.6 Further Assurance by Company. 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.
20.7 Authorized Company Officers. The Rights Agent is hereby
authorized and directed to accept instructions with respect to the performance
of its duties hereunder from any one of the Chairman of the Board of Directors,
the Chief Executive Officer, the Chief Financial Officer, any Vice President,
the Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties under this Agreement, and such advice or instructions
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for or the respect of any action taken or
suffered to be taken or omitted by it in good faith in accordance with the
advice or instructions of any such officer or for any delay in acting while
waiting for these instructions.
20.8 Freedom to Trade in Company Securities. 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.
32
20.9 Reliance on Attorneys and Agents. 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, omission,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company, any holder of Rights or any other Person resulting from any such
act, omission, default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
20.10 Incomplete Certificate. If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or transfer, the
certificate contained in the form of assignment or the form of election to
purchase set forth on the reverse thereof, as the case may be, has not been
completed to certify the holder is not an Acquiring Person (or an Affiliate or
Associate thereof), the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company.
20.11 Rights Holders List. At any time and from time to time
after the Distribution Date, upon the request of the Company, the Rights Agent
shall promptly deliver to the Company a list, as of the most recent practicable
date (or as of such earlier date as may be specified by the Company), of the
holders of record of Rights.
20.12 Use of Funds. 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 it believes that repayment of such funds or adequate
indemnification against such risk or liability is not assured to it.
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 Shares and/or Preferred Shares, as applicable, by
registered or certified mail. Following the Distribution Date, the Company shall
promptly notify the holders of the Right Certificates by first-class mail of any
such resignation. 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 Shares and/or Preferred Shares, as applicable, 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 resigning, removed, or incapacitated Rights Agent shall
remit to the Company, or to any successor Rights Agent designated by the
Company, all books, records, funds, certificates or other documents or
instruments of any kind then in its possession which were acquired by such
resigning, removed or incapacitated Rights Agent in connection with its services
as Rights Agent hereunder, and shall thereafter be discharged from all duties
and obligations hereunder. Following notice of such removal, resignation or
incapacity, the
33
Company shall appoint a successor to such 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 for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a Person organized and doing
business under the laws of the United States or of the State of New York, the
State of California or the State of Delaware (or any other state of the United
States so long as such Person is authorized to do business in the State of New
York, California or Delaware) in good standing, having an office in the State of
New York, the State of California or the State of Delaware, which is authorized
under such laws to exercise stockholder services and is subject to supervision
or examination by Federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. 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 Shares
and/or Preferred Shares, as applicable, and, following the Distribution Date,
mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates representing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and prior to the
Expiration Date, the Company shall, with respect to Common Shares so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded, or upon exercise, conversion or exchange of
securities (other than Common Shares) hereinafter issued by the Company, in each
case existing prior to the Distribution Date, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; 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.
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Section 23. Redemption.
23.1 Right to Redeem. The Company may, at its option, at any
time prior to earlier of the Trigger Event and the Expiration Date, redeem all
but not less than all of the then outstanding Rights at a redemption price of
$.001 per Right, appropriately adjusted to reflect any stock split, stock
dividend, recapitalization or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"), and the Company may, at its option, pay the Redemption Price in Common
Shares (based on the "Current Per Share Market Price" determined pursuant to
Section 11.4 of the Common Shares at the time of redemption), cash or any other
form of consideration deemed appropriate by the Board of Directors. The
redemption of the Rights by the Company may be made effective at such time, on
such basis and subject to such conditions as the Board of Directors in its sole
discretion may establish.
23.2 Redemption Procedures. Immediately upon the action of the
Board of Directors ordering the redemption of the Rights (or at such later time
as the Board of Directors may establish for the effectiveness of such
redemption), and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held. The
Company shall promptly give the Rights Agent prompt notice thereof and public
notice of such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption. The
Company shall promptly give, or cause the Rights Agent to give, notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. 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 redemption shall state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 27, and other than in connection with the
purchase, acquisition or redemption of Common Shares prior to the Distribution
Date.
Section 24. Notice of Certain Events. In case the Company shall
propose at any time after the earlier of the Shares Acquisition Date and the
Distribution Date (a) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares, or (b) to offer to the holders of Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options, or (c)
to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect any consolidation or merger into or with, 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 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person (other than pursuant to a merger or other
acquisition agreement of the type described in Section 1.3(ii)(A)(z)), or (e) to
effect the liquidation,
35
dissolution or winding up of the Company, or (f) to declare or pay any dividend
on the Common Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then, in each such
case, the Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25, 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
Preferred Shares and/or Common Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (a) or (b)
above at least ten (10) days prior to the record date for determining holders of
the Preferred Shares for purposes of such action, and in the case of any such
other action, at least ten (10) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Preferred Shares and/or Common Shares, whichever shall be the earlier.
In case any event set forth in Section 11.1.2 or Section 13
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, in accordance with Section 25, a notice of the occurrence of such
event, which notice shall describe the event and the consequences of the event
to holders of Rights under Section 11.1.2 and Section 13, and (ii) all
references in this Section 24 to Preferred Shares shall be deemed thereafter to
refer to Common Shares and/or, if appropriate, other securities.
Notwithstanding anything in this Agreement to the contrary,
prior to the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given.
Section 25. 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, addressed (until another address is filed in writing with
the Rights Agent) as follows:
BioMarin Pharmaceutical Inc.
371 Bel Marin Keys Boulevard, Suite 210
Novato, California 94949
Attention: Secretary
36
Subject to the provisions of Section 21 and Section 24, 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,
addressed (until another address is filed in writing with the Company) as
follows:
Mellon Investor Services LLC
235 Montgomery Street, 23rd Floor
San Francisco, California 94104
Attention: William Dougherty
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
(or, prior to the Distribution Date, to the holder of any certificate
representing Common Shares) 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.
Any notices or demands given or made under this section shall
be deemed given or made five (5) Business Days after having been deposited in
the mail with postage prepaid. If a notice or demand is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.
Section 26. Supplements and Amendments. For so long as the Rights are
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement in any respect without the approval of any holders of Rights or
Common Shares. From and after the time that the Rights are no longer redeemable,
the Company may, and the Rights Agent shall, if the Company so directs, from
time to time supplement or amend this Agreement without the approval of any
holders of Rights (i) to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or (ii) to make any other changes or provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable, including but not limited to extending the Final Expiration Date;
provided, however, that no such supplement or amendment shall adversely affect
the interests of the holders of Rights as such (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person), and no such supplement or
amendment may cause the Rights again to become redeemable or cause this
Agreement again to become amendable other than in accordance with this sentence;
provided further, that the right of the Board of Directors to extend the
Distribution Date shall not require any amendment or supplement hereunder. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 26 and provided such supplement or amendment does not change or
increase the Rights Agent's duties, liabilities or obligations hereunder, the
Rights Agent shall execute such supplement or amendment. Without limiting the
foregoing, at any time prior to such time as any Person becomes an Acquiring
Person, the Company and the Rights Agent may amend this Agreement to lower the
thresholds set forth in Sections 1.1 and 3.1 to not less than the greater of (i)
any percentage greater than the largest percentage of the outstanding Common
Shares then known by the Company to be beneficially owned by any Person (other
than an Exempt Person) and (ii) 10%.
37
Section 27. Exchange.
27.1 Exchange of Common Shares for Rights. The Company may, at
its option, at any time after the occurrence of a Trigger Event, exchange Common
Shares for 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 11.1.2) at an exchange ratio of that number of Common Shares having an
aggregate value equal to the Spread (with such value being based on the Current
Per Share Market Price (as determined pursuant to Section 11.4) on the date of
the occurrence of a Trigger Event) per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such amount per Right being hereinafter referred to as the "Exchange
Consideration"). Notwithstanding the foregoing, the Company shall not be
empowered to effect such exchange at any time after any Acquiring Person shall
have become the Beneficial Owner of 50% or more of the Common Shares then
outstanding. From and after the occurrence of an event specified in Section
13.1, any Rights that theretofore have not been exchanged pursuant to this
Section 27.1 shall thereafter be exercisable only in accordance with Section 13
and may not be exchanged pursuant to this Section 27.1. The exchange of the
Rights by the Company 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.
27.2 Exchange Procedures. Immediately upon the action of the
Board of Directors ordering the exchange for any Rights pursuant to Section 27.1
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 Consideration. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company 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 shall state the method by which the
exchange of the Common Shares 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
the Rights that have become null and void pursuant to the provisions of Section
11.1.2) held by each holder of Rights.
27.3 Insufficient Shares. The Company may at its option
substitute, and, in the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit an exchange of
Rights for Common Shares as contemplated in accordance with this Section 27, the
Company shall substitute to the extent of such insufficiency, for each Common
Share that would otherwise be issuable upon exchange of a Right, a number of
Preferred Shares or fraction thereof (or Equivalent Preferred Stock, as such
term is defined in Section 11.2) such that the Current Per Share Market Price
(determined pursuant to Section 11.4) of one Preferred Share (or equivalent
preferred share) multiplied by such number or fraction is equal to the Current
Per Share Market Price of one Common Share (determined pursuant to Section 11.4)
as of the date of such exchange.
38
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. Beneficiaries of this Agreement. Nothing in this Agreement
shall be construed to give to any Person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares) 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, the
Common Shares).
Section 30. Determination and Actions by the Board of Directors. 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 shall have the exclusive power and
authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors or to the Company, or as may be
necessary or advisable in the administration of this 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, without limitation, a determination
to redeem or not redeem the Rights or amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) that are done or
made by the Board of Directors in good faith shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights, as such,
and all other parties, and (y) not subject the Board of Directors to any
liability to the holders of the Rights.
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.
Section 32. Governing Law. This Agreement and each Right and each Rights
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.
39
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 Heading. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
BioMarin Pharmaceutical Inc.
By: /s/ Fredric D. Price
-----------------------------------------------
Name: Fredric D. Price
Title: Chairman and Chief Executive Officer
Mellon Investor Services LLC
By: /s/ William A. Dougherty
-----------------------------------------------
Name: William A. Dougherty
Title: Assistant Vice President
40
Exhibit A
BIOMARIN PHARMACEUTICAL INC.
Form of
Certificate Of Designation, Preferences And Rights
of
Series B Junior Participating Preferred Stock
of
BioMarin Pharmaceutical Inc.
-----------------------------
The undersigned officer of BioMarin Pharmaceutical Inc. (the
"Corporation"), a corporation organized and existing under the Delaware General
Corporation Law (the "DGCL"), does hereby certify that, pursuant to the
authority conferred upon the Board of Directors of the Corporation (the "Board
of Directors") by Article IV of the Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation"), the Board of Directors on
September 11, 2002 adopted the following resolution creating a series of 750,000
shares of preferred stock designated as Series B Junior Participating Preferred
Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
by Article IV of the Restated Certificate of Incorporation of the Corporation, a
series of preferred stock of the Corporation be, and it hereby is, created, and
that the designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as Series B Junior Participating Preferred Stock, $.001 par value per
share (the "Series B Preferred Stock"), and the number of shares constituting
the Series B Preferred Stock shall be seven-hundred fifty thousand (750,000).
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of shares of
Series B Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series B
Preferred Stock.
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Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any class or series of stock of this Corporation ranking prior and
superior to the Series B Preferred Stock with respect to dividends, the holders
of shares of Series B Preferred Stock, in preference to the holders of Common
Stock, par value $.001 per share (the "Common Stock"), of the Corporation, and
of any other stock ranking junior to the Series B Preferred Stock, shall be
entitled to receive, when, as and if authorized by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the fifteenth day of January, April, July and October of each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series B Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $0.01 or (b) an
amount, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common Stock or
a subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series B Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision, combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per share on the
Series B Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of
A-2
Series B Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series B Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
(D) In determining whether a distribution (other than upon voluntary or
involuntary liquidation), by dividend, redemption or other acquisition of shares
of stock of the Corporation or otherwise, is permitted under the DGCL, amounts
that would be needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
the Series B Preferred Stock shall not be added to the Corporation's total
liabilities.
Section 3. Voting Rights. The holders of shares of Series B Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series B Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the holders of Common Stock. In the event
the Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series B Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, or in any other Certificate of Designation, Preferences and
Rights creating a series of Preferred Stock or any similar stock, the holders of
shares of Series B Preferred Stock and the holders of shares of Common Stock and
any other shares of stock of the Corporation having general voting rights shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders
of Series B Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
A-3
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series B Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B
Preferred Stock, except dividends paid ratably on the
Series B Preferred Stock and all such parity stock on
which dividends are payable or in arrears in
proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred
Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock
of the Corporation ranking junior (both as to
dividends and upon dissolution, liquidation or
winding up) to the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock,
or any shares of stock ranking on a parity with the
Series B Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of
Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes,
shall determine in good faith will result in fair and
equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other Certificate of Designation, Preferences and
Rights creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
A-4
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the Corporation,
voluntary or otherwise no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock unless, prior
thereto, the holders of shares of Series B Preferred Stock shall have received
an amount per share (the "Series B Liquidation Preference") equal to $10,000 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, provided that the
holders of shares of Series B Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be distributed per share
to holders of shares of Common Stock, or (2) to the holders of shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred Stock, except distributions made ratably
on the Series B Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series B Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series B Liquidation Preference and
the liquidation preferences of all other classes and series of stock of the
Corporation, if any, that rank on a parity with the Series B Preferred Stock in
respect thereof, then the assets available for such distribution shall be
distributed ratably to the holders of the Series B Preferred Stock and the
holders of such parity shares in proportion to their respective liquidation
preferences.
(C) Neither the merger or consolidation of the Corporation into or with
another corporation nor the merger or consolidation of any other corporation
into or with the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
A-5
cash and/or any other property, then in any such case each share of Series B
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision, combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series B
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B Preferred Stock shall not
be redeemable by the Company.
Section 9. Rank. The Series B Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, junior to the Series A Non-Voting Non-Convertible
Preferred Stock and all other series of any other class of the Corporation's
Preferred Stock, except to the extent that any such other series specifically
provides that it shall rank on a parity with or junior to the Series B Preferred
Stock.
Section 10. Amendment. At any time any shares of Series B Preferred Stock
are outstanding, neither the Certificate of Incorporation nor this Certificate
of Designation, Preferences and Rights shall be amended in any manner which
would materially alter or change the powers, preferences or special rights of
the Series B Preferred Stock, as set forth herein, so as to affect them
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Series B Preferred Stock, voting separately as a
single class.
Section 11. Fractional Shares. Series B Preferred Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Preferred Stock.
Second. The shares of Series B Preferred Stock have been classified and
designated by the Board of Directors under the authority contained in the
Certificate of Incorporation.
Third. This Certificate of Designation, Preferences and Rights has been
approved by the Board of Directors in the manner and by the vote required by
law.
A-6
Fourth. The undersigned officer acknowledges this Certificate of
Designation, Preferences and Rights to be the corporate act of the Corporation
and, as to all matters of fact required to be verified under oath, the
undersigned officer acknowledges that to the best of his knowledge, information
and belief, these matters and facts are true in all material respects and that
this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation, Preferences and Rights on September 12, 2002.
By:
---------------------------------
Fredric D. Price
Chairman and Chief Executive Officer of
BioMarin Pharmaceutical Inc.
Exhibit B
Form of Right Certificate
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER SEPTEMBER 23, 2012 OR EARLIER IF NOTICE OF REDEMPTION
OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED PURSUANT TO AN
AGREEMENT OF THE TYPE DESCRIBED IN SECTION 1.3(ii)(A)(z) OF THE AGREEMENT.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT, AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 11.1.2 OF THE AGREEMENT), RIGHTS BENEFICIALLY OWNED
BY OR TRANSFERRED TO AN ACQUIRING PERSON (AS DEFINED IN THE AGREEMENT), OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
Right Certificate
BIOMARIN PHARMACEUTICAL 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 September 11, 2002 as the same may be amended from time
to time (the "Agreement"), between BioMarin Pharmaceutical Inc., a Delaware
corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey
limited liability company, as Rights Agent (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date and prior to 5:00 p.m.
(Pacific time) on September 23, 2012, at the offices of the Rights Agent, or its
successors as Rights Agent, designated for such purpose, one one-hundredth of a
fully paid, nonassessable share of Series B Junior Participating Preferred
Stock, $.001 par value per share (the "Preferred Shares") of the Company, at a
purchase price of $35.00 per one-hundredth of a Preferred Share, subject to
adjustment (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and certification duly
executed. The number of Rights represented by this Right Certificate (and the
number of one-hundredths of a Preferred Share which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of September 11, 2002 based on the Preferred
Shares as constituted at such date. Capitalized terms used in this Right
Certificate without definition shall have the meanings ascribed to them in the
Agreement. As provided in the Agreement, the Purchase Price and the number of
Preferred Shares which may be purchased upon the exercise of the Rights
represented by this Right Certificate are subject to modification and adjustment
upon the happening of certain events. The Company reserves the right to require
prior to the occurrence of a Trigger Event (as such term is defined in the
Agreement) that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.
B-1
This Right Certificate is subject to all of the terms, provisions and
conditions of the Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which 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 Agreement are
on file at the principal offices of the Company and the office of the Rights
Agent designated to the Company for such purposes.
This Right Certificate, with or without other Right Certificates, upon
surrender at the offices of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date representing Rights entitling the holder to purchase the same aggregate
number of one-hundredths of a Preferred Share as the Rights represented 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 Agreement, the Board of Directors may, at
its option, (i) redeem the Rights represented by this Right Certificate at a
redemption price of $.001 per Right or (ii) exchange Common Shares for the
Rights represented by this Certificate, in whole or in part. Immediately upon
the action of the Board of Directors authorizing redemption, the Rights will
terminate and the only right of the holders of Rights will be to receive the
redemption price.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights represented hereby (other than fractions of Preferred Shares
which are integral multiples of one one-hundredth of a Preferred Share, which
may, at the election of the Company, be represented by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the 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 the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the 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
Agreement) or to receive dividends or subscription rights, or otherwise, until
the Right or Rights represented by this Right Certificate shall have been
exercised as provided in the Agreement.
If any term, provision, covenant or restriction of the 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 the Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
B-2
This Right Certificate shall not be valid or binding 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 ____________, 20__.
Attest: BIOMARIN PHARMACEUTICAL INC.
By:
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Title: Title:
Countersigned:
MELLON INVESTOR SERVICES LLC, as Rights Agent
By:
--------------------------------------------------
Authorized Signature
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
--------------------------------------------------------------
hereby sells, assigns and transfers unto _______________________________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated:
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Signature
Signature Guaranteed:
-------------------------------------------------------
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended.
The undersigned hereby certifies that:
(1) the Rights represented by this Right Certificate are
not beneficially owned by and are not being assigned to an Acquiring Person or
an Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights represented by this
Right Certificate from any person who is, was, had been or subsequently became
an Acquiring Person or an Affiliate or Associate thereof.
Dated:
----------------------------------- -----------------------------------
Signature
B-4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: BioMarin Pharmaceutical Inc.
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights (or such other
securities or property of the Company or of any other Person which may be
issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of:
------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------
If such number of Rights shall not be all the Rights represented by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to: Please insert social
security or other identifying number
------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------
Dated:
------------------------
-------------------------------------------
Signature
Signature Guaranteed:
------------------------------------
B-5
Signatures must be guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended. The undersigned hereby certifies that:
(1) the Rights represented by this Right Certificate are
not beneficially owned by and are not being assigned to an Acquiring Person or
an Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights represented by this
Right Certificate from any person who is, was, had been or subsequently became
an Acquiring Person or an Affiliate or Associate thereof.
Dated:
------------------------
--------------------------------------
Signature
NOTICE
The signature in the foregoing Form of Assignment and Form of
Election to Purchase must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of
Assignment or Form of Election to Purchase is not completed, the Company will
deem the beneficial owner of the Rights represented by this Right Certificate to
be an Acquiring Person or an Affiliate or Associate hereof and such Assignment
or Election to Purchase will not be honored.
B-6
Exhibit C
As described in the Rights Agreement, as defined below, Rights which are held by
or have been held by an Acquiring Person or Associates or Affiliates thereof (as
defined in the Rights Agreement) and certain transferees thereof are null and
void and are not transferable.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On September 11, 2002 the Board of Directors of BioMarin Pharmaceutical Inc.
(the "Company") authorized a dividend of one preferred share purchase right (a
"Right") for each share of common stock, $.001 par value per share ("Common
Shares") of the Company outstanding at the close of business on September 23,
2002 (the "Record Date"). As long as the Rights are attached to the Common
Shares, the Company will issue one Right (subject to adjustment) with each new
Common Share so that all such shares will have attached Rights. When
exercisable, each Right will entitle the registered holder to purchase from the
Company one one-hundredth of a share of Series B Junior Participating Preferred
Stock (the "Preferred Shares") at a price of $35.00 per one-hundredth of a
Preferred Share, subject to adjustment (the "Purchase Price"). The description
and terms of the Rights are set forth in a Rights Agreement, dated as of
September 11, 2002, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and Mellon Investor Services LLC, a New Jersey
limited liability company, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock certificates
evidencing shares then outstanding, and no separate Rights certificates will be
distributed. Until the earlier to occur of (i) ten (10) days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the Common Shares (an "Acquiring Person") or (ii) ten (10) business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement or announcement of an intention to make a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the Common Shares
(the earlier of (i) and (ii) being called the "Distribution Date"), the Rights
will be represented, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate.
The Rights Agreement provides that until the Distribution Date (or earlier
redemption, exchange, termination or expiration of the Rights), the Rights will
be transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption, exchange, termination or expiration of the Rights), new
Common Share certificates issued after the close of business on the Record Date
upon transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption, exchange, termination or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares, with or without
such notation or a copy of this Summary of Rights, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates representing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will represent the
Rights.
C-1
The Rights are not exercisable until the Distribution Date. The Rights will
expire on September 23, 2012 subject to the Company's right to extend such date
(the "Final Expiration Date"), unless earlier redeemed or exchanged by the
Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights will be entitled,
when, as and if declared, to a minimum preferential quarterly dividend payment
of $0.01 per share but will be entitled to an aggregate dividend of 100 times
the dividend, if any, declared per Common Share. In the event of liquidation,
dissolution or winding up of the Company, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of $10,000 per
share (plus any accrued but unpaid dividends) but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes and will vote together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
100 times the amount received per Common Share. Preferred Shares will not be
redeemable. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Share's dividend, liquidation and voting
rights, the value of one one-hundredth of a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common Share.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, cash, securities or assets or of subscription rights or warrants
(other than those referred to above).
In the event that a person becomes an Acquiring Person or if the Company is the
surviving corporation in a merger with an Acquiring Person or any affiliate or
associate of an Acquiring Person and the Common Shares were not changed or
exchanged, each holder of a Right, other than Rights that are or were acquired
or beneficially owned by the Acquiring Person (which Rights will be void), will
thereafter have the right to receive, upon exercise thereof, that number of
Common Shares having a market value of two times the then-current Purchase Price
of the Right. In the event that, after a person has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
more than 50% of its assets or earning power are sold, proper provision shall be
made so that each holder of a Right shall thereafter have the right to receive,
upon the exercise thereof at the then-current Purchase Price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction would have a market value of two times the then-current
Purchase Price of the Right.
C-2
For example, at an exercise price of $35.00 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following a Trigger Event
would entitle its holder to purchase $70.00 worth of Common Stock (or other
consideration, as noted above) for $35.00. Assuming that the Common Stock had a
per share value of $10.00 at such time, the holder of each valid Right would be
entitled to purchase seven shares of Common Stock for $35.00.
At any time after a person becomes an Acquiring Person and prior to the earlier
of one of the events described in the last sentence of the previous paragraph or
the acquisition by such Acquiring Person of 50% or more of the outstanding
Common Shares, the Board of Directors may cause the Company to exchange the
Rights (other than Rights owned by an Acquiring Person, which will be void), in
whole or in part, for that number of Common Shares having an aggregate value
equal to the Spread (the excess of the value of the Common Shares issuable upon
the exercise of a Right over the Purchase Price) per Right (subject to
adjustment).
No adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in the Purchase Price. No
fractional Preferred Shares or Common Shares will be issued (other than
fractions of Preferred Shares which are integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Company, be represented
by depository receipts), and in lieu thereof, a payment in cash will be made
based on the market price of the Preferred Shares or Common Shares on the last
trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of $.001 per
Right (the "Redemption Price") by the Board of Directors at any time prior to
the time that an Acquiring Person has become such. The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, it will not entitle its holder to any rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the Board of
Directors for so long as the Rights are then redeemable, and after the Rights
are no longer redeemable, the Company may amend or supplement the Rights
Agreement in any manner that does not adversely affect the interests of the
holders of the Rights.
The Rights are designed to assure that all of the Company's stockholders receive
fair and equal treatment in the event of any proposed takeover of the Company
and to guard against partial tender offers, open market accumulations and other
abusive tactics to gain control of the Company without paying all stockholders a
control premium. The Rights will cause substantial dilution to a person or group
that acquires 15% or more of the Company's stock on terms not approved by the
Company's Board of Directors. The Rights should not interfere with any merger or
other business combination approved by the Board of Directors at any time before
a person or group has become an Acquiring Person.
C-3
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Current Report on Form 8-K. A copy of the Rights
Agreement is available free of charge from the Company. This summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is incorporated herein by reference.
C-4
Exhibit D
RIGHTS AGENCY FEES
Item Fee
---- ---
Acceptance Fee $2,500
Annual Administration Fee $2,500
Legal Out-of-Pocket Expenses *
Fee for reviewing the Agreement $1,500
Fee for reviewing an Amendment $750
* All rights agreements will be reviewed by outside counsel. The expenses
associated with the review by outside counsel will be passed on to the client as
an out-of-pocket expense. The amounts quoted above represent approximate billing
amounts for the work described. The amount charged to the client could be more,
or less, depending on the complexity of the work done by the outside counsel.
D-1