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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ChiRex Inc.
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(Exact name of registrant as specified in its charter)
Delaware 04-3296309
- ---------------------------------------- ----------------
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
65 William Street, Wellesley, Massachusetts 02181
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
----------------
(Title of Class)
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. |_|
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instructions A.(c)(2), please check the following box. |_|
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Rights to Purchase Series A
Participating Cumulative Preferred Stock Nasdaq National Market
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Item 1. Description of Securities To Be Registered.
On March 31, 1997, the Board of Directors of ChiRex Inc. (the "Company")
declared a dividend of one Right for each outstanding share of Common Stock, par
value $.01 per share, of the Company (the "Common Stock"). The Rights will be
issued to the holders of record of Common Stock outstanding at the close of
business on March 31, 1997 (the "Record Date"), and with respect to Common Stock
issued thereafter until the Distribution Date (as defined below) and in certain
circumstances with respect to Common Stock issued after the Distribution Date.
Each Right, when it becomes exercisable as described below, will entitle the
registered holder to purchase from the Company one one-thousandths (1/1000ths)
of a share of Series A Participating Cumulative Preferred Stock, $.01 par value,
of the Company (the "Preferred Shares") at a price of $50 (the "Purchase
Price"). The description and terms of the Rights are set forth in a Rights
Agreement dated as of March 31, 1997 (the "Rights Agreement"), between the
Company and The First National Bank of Boston, as Rights Agent (the "Rights
Agent").
Until the earlier of (i) such time as the Company learns that a person or
group (including any affiliate or associate of such person or group) has
acquired, or has obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding Common Stock (such person or group being an "Acquiring
Person"), unless provisions preventing accidental triggering of the Rights
apply, and (ii) the close of business on such date, if any, as may be designated
by the Board of Directors of the Company following the commencement of, or first
public disclosure of an intent to commence, a tender or exchange offer for 15%
or more of the outstanding Common Stock (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced by the certificates for
Common Stock registered in the names of the holders thereof (which certificates
for Common Stock shall also be deemed to be Right Certificates, as defined
below) and not by separate Right Certificates. Therefore, on and after the
Record Date and until the Distribution Date, the Rights will be transferred with
and only with the Common Stock and each transfer of Common Stock also will
transfer the associated Rights.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Stock
originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
on March 31, 2007 (the "Expiration Date"), unless earlier redeemed by the
Company as described below.
The number of Preferred Shares or other securities issuable upon exercise
of the Rights is subject to adjustment from time to time in the event of any
change in the Common Stock or the Preferred Shares, whether by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Stock or Preferred Shares.
The Preferred Shares are authorized to be issued in fractions which are an
integral multiple of one one-thousandths (1/1000ths) of a Preferred Share. The
Company may, but is not required to, issue fractions of shares upon the exercise
of Rights, and in lieu of fractional shares, the Company may issue certificates
or utilize a depository arrangement as provided by the terms of the Preferred
Shares and, in the case of fractions other than one one-thousandths (1/1000ths)
of a Preferred Share or integral multiples thereof, may make a cash payment
based on the market price of such shares.
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At such time as there is an Acquiring Person, the Rights will entitle each
holder (other than such Acquiring Person (or any affiliate or associate of such
Acquiring Person)) of a Right to purchase, for the Purchase Price, that number
of one one-thousandths (1/1000ths) of a Preferred Share equivalent to the number
of shares of Common Stock which at the time of such event would have a market
value of twice the Purchase Price.
In the event the Company is acquired in a merger or other business
combination by an Acquiring Person or an associate or affiliate of an Acquiring
Person that is a publicly traded corporation or 50% or more of the Company's
assets or assets representing 50% or more of the Company's revenues or cash flow
are sold, leased, exchanged or otherwise transferred (in one or more
transactions) to an Acquiring Person or an associate or affiliate of an
Acquiring Person that is a publicly traded corporation, each Right will entitle
its holder (subject to the next paragraph) to purchase, for the Purchase Price,
that number of shares of common stock of such corporation which at the time of
the transaction would have a market value of twice the Purchase Price. In the
event the Company is acquired in a merger or other business combination by an
Acquiring Person or an associate or affiliate of an Acquiring Person that is not
a publicly traded entity or 50% or more of the Company's assets or assets
representing 50% or more of the Company's revenues or cash flow are sold,
leased, exchanged or otherwise transferred (in one or more transactions) to an
Acquiring Person or an associate or affiliate of an Acquiring Person that is not
a publicly traded entity, each Right will entitle its holder (subject to the
next paragraph) to purchase, for the Purchase Price, at such holder's option,
(i) that number of shares of the surviving corporation in the transaction with
such entity (which surviving corporation could be the Company) which at the time
of the transaction would have a book value of twice the Purchase Price, (ii)
that number of shares of such entity which at the time of the transaction would
have a book value of twice the Purchase Price or (iii) if such entity has an
affiliate which has publicly traded common shares, that number of common shares
of such affiliate which at the time of the transaction would have a market value
of twice the Purchase Price.
Any Rights that are at any time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring Person) will be null and void and
nontransferable and any holder of any such Right (including any purported
transferee or subsequent holder) will be unable to exercise or transfer any such
Right.
At any time prior to the earlier of (i) such time as a person or group
becomes an Acquiring Person and (ii) the Expiration Date (as defined in the
Rights Agreement), the Board of Directors of the Company may redeem the Rights
in whole, but not in part, at a price (in cash or Common Stock or other
securities of the Company deemed by the Board of Directors to be at least
equivalent in value) of $.01 per Right (which amount shall be subject to
adjustment as provided in the Rights Agreement) (the "Redemption Price").
Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price. Within
10 business days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders of the then outstanding Rights by mail. Each such notice of
redemption will state the method by which payment of the Redemption Price will
be made.
After there is an Acquiring Person, the Board of Directors may elect to
exchange each Right (other than Rights that shall have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the securities that would be issuable at such time upon
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the exercise of one Right pursuant to the terms of the Rights Agreement (or, in
certain cases, for cash consideration).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
At any time prior to the Distribution Date, the Company may, without the
approval of any holder of the Rights, supplement or amend any provision of the
Rights Agreement (including, without limitation, the date on which the
Distribution Date shall occur, the definition of Acquiring Person, the time
during which the Rights may be redeemed or the terms of the Preferred Shares),
except that no supplement or amendment shall be made which reduces the
Redemption Price (other than pursuant to certain adjustments therein) or
provides for an earlier Expiration Date. From and after the Distribution Date
and subject to applicable law, the Company may amend the Rights Agreement
without the approval of any holders of Right Certificates (i) to cure any
ambiguity or to correct or supplement any provision contained in the Rights
Agreement which may be defective or inconsistent with any other provision of the
Rights Agreement or (ii) to make any other provisions which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an affiliate or
associate of an Acquiring Person). Any supplement or amendment adopted during
any period after any person or group has become an Acquiring Person but prior to
the Distribution Date shall be null and void unless such supplement or amendment
could have been adopted under the prior sentence from and after the Distribution
Date.
The Rights Agreement between the Company and the Rights Agent specifying
the terms of the Rights, the Certificate of Designation of the Preferred Shares
specifying the terms of the Preferred Shares (Exhibit A to the Rights Agreement)
and the form of Right Certificate (Exhibit B to the Rights Agreement) are filed
herewith as exhibits and are incorporated herein by reference. The foregoing
description of the Rights and the Preferred Shares is qualified by reference to
such exhibits.
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Item 2. Exhibits.
1. Rights Agreement dated as of March 31, 1997, between ChiRex Inc. and
The First National Bank of Boston, as Rights Agent.
2. Form of Certificate of the Voting Powers, Designations, Preferences
and Relative Participating, Optional and Other Special Rights and
Qualifications, Limitations or Restrictions of Series A
Participating Cumulative Preferred Stock of ChiRex Inc. (attached as
Exhibit A to the Rights Agreement filed as Exhibit 1 hereto).
3. Form of Right Certificate (attached as Exhibit B to the Rights
Agreement filed as Exhibit 1 hereto).
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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.
Dated: March 31, 1997 CHIREX INC.,
By: /s/ Michael A. Griffith
____________________________________
Name: Michael A. Griffith
Title: Chief Financial Officer and Secretary
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INDEX OF EXHIBITS
Sequentially
Exhibit Numbered Page
Number Title at Which Located
------ ----- ----------------
1. Rights Agreement dated as of March 31, 1997, between
ChiRex Inc. and The First National Bank of Boston, as
Rights Agent.
2. Form of Certificate of the Voting Powers, Preferences
and Relative Participating, Optional and Other Special
Rights and Qualifications, Limitations or Restrictions
of Series A Participating Cumulative Preferred Stock
of ChiRex Inc. (attached as Exhibit A to the Rights
Agreement filed as Exhibit 1 hereto).
3. Form of Right Certificate (attached as Exhibit B to
the Rights Agreement filed as Exhibit 1 hereto).
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================================================================================
RIGHTS AGREEMENT
Dated as of March 31, 1997
between
CHIREX INC.
and
THE FIRST NATIONAL BANK OF BOSTON,
as Rights Agent
================================================================================
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Table of Contents
Section Page
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1. Certain Definitions............................................... 1
2. Appointment of Rights Agent....................................... 9
3. Issue of Rights and Right Certificates............................ 10
4. Form of Right Certificates........................................ 12
5. Execution, Countersignature and
Registration.................................................... 12
6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates; Uncertificated
Rights.......................................................... 13
7. Exercise of Rights; Expiration Date of
Rights.......................................................... 14
8. Cancelation and Destruction of Right
Certificates.................................................... 17
9. Reservation and Availability of
Preferred Shares................................................ 17
10. Preferred Shares Record Date...................................... 19
11. Adjustments in Rights After There Is an
Acquiring Person; Exchange of Rights
for Shares; Business Combinations............................... 19
12. Certain Adjustments............................................... 25
13. Certificate of Adjustment......................................... 27
14. Additional Covenants.............................................. 27
15. Fractional Rights and Fractional Shares........................... 28
16. Rights of Action.................................................. 29
17. Transfer and Ownership of Rights and
Right Certificates.............................................. 29
18. Right Certificate Holder Not Deemed a
Stockholder..................................................... 30
19. Concerning the Rights Agent....................................... 30
20. Merger or Consolidation or Change of
Rights Agent.................................................... 31
21. Duties of Rights Agent............................................ 32
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Section Page
------- ----
22. Change of Rights Agent............................................ 36
23. Issuance of Additional Rights and Right
Certificates.................................................... 37
24. Redemption and Termination........................................ 38
25. Notices........................................................... 39
26. Supplements and Amendments........................................ 40
27. Successors........................................................ 41
28. Benefits of Rights Agreement;
Determinations and Actions by the
Board of Directors, etc......................................... 41
29. Severability...................................................... 42
30. Governing Law..................................................... 42
31. Counterparts; Effectiveness....................................... 42
32. Descriptive Headings.............................................. 42
Exhibits
A Certificate of Designation
B Form of Right Certificate
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RIGHTS AGREEMENT dated as of March 31, 1997, between
ChiRex Inc., a Delaware corporation (the "Company"), and The
First National Bank of Boston, as Rights Agent (the
"Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as hereinafter defined) for each share of Common Stock,
$.01 par value per share, of the Company (the "Common Stock") outstanding at the
Close of Business (as hereinafter defined) on the day of closing of the pending
underwritten secondary offering of Common Stock by Sepracor Inc. (the "Record
Date") and has authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of this Rights Agreement) with
respect to each share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date or
the Expiration Date (as such terms are hereinafter defined); provided, however,
that Rights may be issued with respect to shares of Common Stock that shall
become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date or the Expiration Date in accordance with the provisions of
Section 23. Each Right shall initially represent the right to purchase one
one-thousandths (1/1,000ths) of a share of Series A Participating Cumulative
Preferred Stock, $.01 par value, of the Company (the "Preferred Shares"), having
the powers, rights and preferences set forth in the Certificate of Designation
attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of more than 15% of the Common Shares then outstanding but
shall not include (a) the Company, any Subsidiary of the Company, any employee
benefit or compensation plan of the Company or of any of its Subsidiaries, or
any Person holding Common Shares
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for or pursuant to the terms of any such employee benefit or compensation plan
or (b) any such Person who has become and is such a Beneficial Owner solely
because (i) of a change in the aggregate number of Common Shares outstanding
since the last date on which such Person acquired Beneficial Ownership of any
Common Shares or (ii) it acquired such Beneficial Ownership inadvertently or in
the good faith belief that such acquisition would not (x) cause such Beneficial
Ownership to exceed 15% of the Common Shares then outstanding and such Person
relied in good faith in computing the percentage of its Beneficial Ownership on
publicly filed reports or documents of the Company which are inaccurate or
out-of-date or (y) otherwise cause a Distribution Date or the adjustment
provided for in Section 11(a) to occur. Notwithstanding clause (b)(ii) of the
prior sentence, if any Person that is not an Acquiring Person due to such clause
(b)(ii) does not reduce its percentage of Beneficial Ownership of Common Shares
to 15% or less by the Close of Business on the fifth Business Day after notice
from the Company (the date of notice being the first day) that such Person's
Beneficial Ownership of Common Shares so exceeds 15%, such Person shall, at the
end of such five Business Day period, become an Acquiring Person (and such
clause (b)(ii) shall no longer apply to such Person). For purposes of this
definition, the determination whether any Person acted "inadvertently" or in
"good faith" shall be conclusively determined by the Board of Directors of the
Company, acting by a vote of those directors of the Company whose approval would
be required to redeem the Rights under Section 24.
"Affiliate" and "Associate", when used with reference to any Person,
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 Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own", and shall be deemed to have "Beneficial Ownership"
of, any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Rights Agreement;
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3
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, or to have
Beneficial Ownership of, 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 thereunder or cease to be subject to withdrawal by
the tendering security holder, or (B) the right to vote pursuant to any
agreement, arrangement or understanding (written or oral); provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if (1) the agreement, arrangement or
understanding (written or oral) to vote such security arises solely from a
revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made generally to all holders of Common
Stock pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act and (2) the beneficial ownership of
such security is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (written or
oral) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (ii)(B) of this definition) or
disposing of any securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own", any securities acquired in
a bona fide firm commitment underwriting pursuant to an underwriting agreement
with the Company.
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"Book Value", when used with reference to Common Shares issued by
any Person, shall mean the amount of equity of such Person applicable to each
Common Share, determined (i) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (ii) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (iii) after giving
effect to (A) the exercise of all rights, options and warrants to purchase such
Common Shares (other than the Rights), and the conversion of all securities
convertible into such Common Shares, at an exercise or conversion price, per
Common Share, which is less than such Book Value before giving effect to such
exercise or conversion (whether or not exercisability or convertibility is
conditioned upon occurrence of a future event), (B) all dividends and other
distributions on the capital stock of such Person declared prior to the date as
of which such Book Value is to be determined and to be paid or made after such
date, and (C) any other agreement, arrangement or understanding (written or
oral), or transaction or other action contemplated prior to the date as of which
such Book Value is to be determined which would have the effect of thereafter
reducing such Book Value.
"Business Combination" shall have the meaning set forth in Section
11(d)(I).
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the Borough of
Manhattan, The City of New York, are authorized or obligated by law or executive
order to close.
"Certificate of Designation" shall mean the Certificate of
Designation of Series A Participating Cumulative Preferred Stock setting forth
the powers, preferences, rights, qualifications, limitations and restrictions of
such series of Preferred Stock of the Company, a copy of which is attached as
Exhibit A.
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5
"Close of Business" on any given date shall mean 5:00 p.m., New York
City time, on such date; provided, however, that, if such date is not a Business
Day, "Close of Business" shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
"Common Shares", when used with reference to the Company prior to a
Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares", when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as a
maximum amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that, if at any
time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Common Shares" of such Person shall include
all such classes and series substantially in the proportion of the total number
of shares or other units of each such class or series outstanding at such time
unless any such class or series is identical to another such class except for
voting power, in which case "Common Shares" shall include such higher voting
class in place of such lower voting class.
"Common Stock" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of this
Rights Agreement; provided, however, that if there is a Business Combination,
"Company" shall have the meaning set forth in Section 11(d)(III).
The term "control" with respect to any Person shall mean the power
to direct the management and policies of such Person, directly or indirectly, by
or through stock
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6
ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more other
Persons by or through stock ownership, agency or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
"Distribution Date" shall have the meaning set forth in Section
3(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect on the date in question, unless otherwise specifically provided.
"Exchange Consideration" shall have the meaning set forth in Section
11(b)(I).
"Expiration Date" shall have the meaning set forth in Section 7(a).
"Major Part", when used with reference to the assets of the Company
and its Subsidiaries as of any date, shall mean assets (i) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (ii) accounting for 50% or more of the total value (net of
depreciation and amortization) of all the assets of the Company and its
Subsidiaries (taken as a whole) as would be shown on a consolidated or combined
balance sheet of the Company and its Subsidiaries as of the date in question,
prepared in accordance with generally accepted accounting principles then in
effect, or (iii) accounting for 50% or more of the total amount of earnings
before interest, taxes, depreciation and amortization or of the revenues of the
Company and its Subsidiaries (taken as a whole) as would be shown on, or derived
from, a consolidated or combined statement of income or operations of the
Company and its Subsidiaries for the period of 12 months ending on the last day
of the Company's monthly accounting period next preceding the date in question,
prepared in accordance with generally accepted accounting principles then in
effect.
"Market Value", when used with reference to Common Shares on any
date, shall be deemed to be the average of the daily closing prices, per share,
of such Common Shares for the period which is the shorter of (1) 30 consecutive
Trading Days immediately prior to the date in question or
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7
(2) the number of consecutive Trading Days beginning on the Trading Day
immediately after the date of the first public announcement of the event
requiring a determination of the Market Value and ending on the Trading Day
immediately prior to the record date of such event; provided, however, that, in
the event that the Market Value of such Common Shares is to be determined in
whole or in part during a period following the announcement by the issuer of
such Common Shares of any action of the type described in Section 12(a) that
would require an adjustment thereunder, then, and in each such case, the Market
Value of such Common Shares shall be appropriately adjusted to reflect the
effect of such action on the market price of such Common Shares. The closing
price for each Trading Day shall be the closing price quoted on the principal
United States securities exchange registered under the Exchange Act (or any
recognized foreign stock exchange) on which such securities are listed, or, if
such securities are not listed on any such exchange, the closing price quoted on
The Nasdaq Stock Market or, if such securities are not so quoted, the average of
the closing bid and asked quotations with respect to a share of such securities
on any National Association of Securities Dealers, Inc. quotations system, or if
no such quotations are available, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in such
securities selected by the Board of Directors of the Company. If on any such
Trading Day no market maker is making a market in such securities, the closing
price of such securities on such Trading Day shall be deemed to be the fair
value of such securities as determined in good faith by the Board of Directors
of the Company acting by a vote of those directors whose approval would be
required to redeem the Rights under Section 24 (whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent, the holders of Rights and all other Persons); provided, however,
that for the purpose of determining the closing price of the Preferred Shares
for any Trading Day on which there is no such market maker for the Preferred
Shares the closing price on such Trading Day shall be deemed to be the Formula
Number (as defined in the Certificate of Designation) times the closing price of
the Common Shares of the Company on such Trading Day.
"Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
<PAGE> 11
8
"Preferred Shares" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement. Any reference in this Rights
Agreement to Preferred Shares shall be deemed to include any authorized fraction
of a Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person in a Business
Combination; provided, however, that, if such Surviving Person is a direct or
indirect Subsidiary of any other Person, "Principal Party" shall mean the Person
which is the ultimate parent of such Surviving Person and which is not itself a
Subsidiary of another Person. In the event ultimate control of such Surviving
Person is shared by two or more Persons, "Principal Party" shall mean that
Person that is immediately controlled by such two or more Persons.
"Purchase Price" with respect to each Right shall mean $50, as such
amount may from time to time be adjusted as provided herein, and shall be
payable in lawful money of the United States of America. All references herein
to the Purchase Price shall mean the Purchase Price as in effect at the time in
question.
"Record Date" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
"Redemption Price" with respect to each Right shall mean $.01, as
such amount may from time to time be adjusted in accordance with Section 12. All
references herein to the Redemption Price shall mean the Redemption Price as in
effect at the time in question.
"Registered Common Shares" shall mean Common Shares which are, as of
the date of consummation of a Business Combination, and have continuously been
for the 12 months immediately preceding such date, registered under Section 12
of the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a Right in
substantially the form attached as Exhibit B.
<PAGE> 12
9
"Rights" shall mean the rights to purchase Preferred Shares (or
other securities) as provided in this Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as in effect
on the date in question, unless otherwise specifically provided.
"Subsidiary" shall mean a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one or more
other Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"Surviving Person" shall mean (1) the Person which is the continuing
or surviving Person in a consolidation or merger specified in Section
11(d)(I)(i) or 11(d)(I)(ii) or (2) the Person to which the Major Part of the
assets of the Company and its Subsidiaries is sold, leased, exchanged or
otherwise transferred or disposed of in a transaction specified in Section
11(d)(I)(iii); provided, however, that, if the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in one or more related transactions specified in Section
11(d)(I)(iii) to more than one Person, the "Surviving Person" in such case shall
mean the Person that acquired assets of the Company and/or its Subsidiaries with
the greatest fair market value in such transaction or transactions.
"Trading Day" shall mean a day on which the principal national
securities exchange (or principal recognized foreign stock exchange, as the case
may be) on which any securities or Rights, as the case may be, are listed or
admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
SECTION 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for
<PAGE> 13
10
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
one or more 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 (the term "Rights Agent" being used herein to refer,
collectively, to the Rights Agent together with any such co-Rights Agents). In
the event the Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agent and any co-Rights Agents shall be as the Company
shall determine.
SECTION 3. Issue of Rights and Right Certificates. (a) One Right
shall be associated with each Common Share outstanding on the Record Date, each
additional Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date or the Expiration
Date and each additional Common Share with which Rights are issued after the
Distribution Date but prior to the earlier of the Redemption Date or the
Expiration Date as provided in Section 23; provided, however, that, if the
number of outstanding Rights are combined into a smaller number of outstanding
Rights pursuant to Section 12(a), the appropriate fractional Right determined
pursuant to such Section shall thereafter be associated with each such Common
Share.
(b) Until the earlier of (i) such time as the Company learns that a
Person has become an Acquiring Person or (ii) the Close of Business on such
date, if any, as may be designated by the Board of Directors of the Company
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit or compensation plan of the
Company or of any of its Subsidiaries, or any Person holding Common Shares for
or pursuant to the terms of any such employee benefit or compensation plan) for
outstanding Common Shares, if upon consummation of such tender or exchange offer
such Person could be the Beneficial Owner of more than 15% of the outstanding
Common Shares (the Close of Business on the earlier of such dates being the
"Distribution Date"), (x) the Rights will be evidenced by the certificates for
Common Shares registered in the names of the holders thereof and not by separate
Right Certificates and (y) the Rights, including the right to
<PAGE> 14
11
receive Right Certificates, will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the Distribution Date,
the Rights Agent will send, by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the Distribution Date, at the address of such
holder shown on the records of the Company, a Right Certificate evidencing one
whole Right for each Common Share (or for the number of Common Shares with which
one whole Right is then associated if the number of Rights per Common Share held
by such record holder has been adjusted in accordance with the proviso in
Section 3(a)). If the number of Rights associated with each Common Share has
been adjusted in accordance with the proviso in Section 3(a), at the time of
distribution of the Right Certificates the Company may make any necessary and
appropriate rounding adjustments so that Right Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Right in accordance with Section 15(a). As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(c) With respect to any certificate for Common Shares, until the
earliest of the Distribution Date, the Redemption Date or the Expiration Date,
the Rights associated with the Common Shares represented by any such certificate
shall be evidenced by such certificate alone, the registered holders of the
Common Shares shall also be the registered holders of the associated Rights and
the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(d) Certificates issued for Common Shares after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Shares), but prior to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date, shall have printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of March 31,
1997, as it may be amended from time to time (the "Rights Agreement"),
between ChiRex Inc. (the "Company") and The First National Bank of Boston,
as Rights Agent (the "Rights Agent"), the terms of which are hereby
incorporated
<PAGE> 15
12
herein by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Rights Agent will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written request
therefor. Rights beneficially owned by Acquiring Persons or their
Affiliates or Associates (as such terms are defined in the Rights
Agreement) and by any subsequent holder of such Rights are null and void
and nontransferable.
Notwithstanding this paragraph (d), the omission of a legend shall
not affect the enforceability of any part of this Rights Agreement or the rights
of any holder of Rights.
SECTION 4. Form of Right Certificates. The Right Certificates (and
the form of election to purchase and form of assignment to be printed on the
reverse side thereof) shall be in substantially the form set forth as Exhibit B
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Rights Agreement, or as
may be required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 7, 11 and 23, the Right Certificates,
whenever issued, shall be dated as of the Distribution Date, and on their face
shall entitle the holders thereof to purchase such number of Preferred Shares as
shall be set forth therein for the Purchase Price set forth therein, subject to
adjustment from time to time as herein provided.
SECTION 5. Execution, Countersignature and Registration. (a) The
Right Certificates shall be executed on behalf of the Company by the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Treasurer or a Vice President (whether preceded by any additional
title) of the Company, either manually or by facsimile signature, and have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary, an Assistant Secretary or a Vice
<PAGE> 16
13
President (whether preceded by any additional title, provided that such Vice
President shall not have also executed the Right Certificates) of the Company,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid or obligatory
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 an
officer of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Right Certificates may nevertheless 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 an 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 execution of such Right Certificate, shall be a proper officer of
the Company to sign such Right Certificate, although at the date of execution of
this Rights Agreement any such person was not such an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Right Certificates upon exercise or transfer,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced 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;
Uncertificated Rights. (a) Subject to the provisions of Sections 7(e) and 15, at
any time after the Distribution Date, and at or prior to the Close of Business
on the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split-up, combined or
exchanged for another Right Certificate or Right Certificates representing, in
the aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent and shall surrender the Right
<PAGE> 17
14
Certificate or Right Certificates to be transferred, split-up, combined or
exchanged at the designated office of the Rights Agent; provided, however, that
neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have completed and signed the
certification contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 7(e) and 15, 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 by the holders of
Rights of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split-up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company or the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancelation of the Right Certificate if mutilated, the Company will make a new
Right Certificate of like tenor and deliver such new Right Certificate to the
Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company and the
Rights Agent may amend this Rights Agreement to provide for uncertificated
Rights in addition to or in place of Rights evidenced by Right Certificates.
SECTION 7. Exercise of Rights; Expiration Date of Rights. (a)
Subject to Section 7(e) and except as otherwise provided herein (including
Section 11), each Right shall entitle the registered holder thereof, upon
exercise thereof as provided herein, to purchase for the Purchase Price, at any
time after the Distribution Date and at or prior to the earlier of (i) the Close
of Business on the 10th anniversary of the date of this Rights Agreement (the
<PAGE> 18
15
Close of Business on such date being the "Expiration Date"), or (ii) the
Redemption Date, one one-thousandths (1/1,000ths) of a Preferred Share, subject
to adjustment from time to time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) 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 on the reverse side thereof
duly executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each one one-thousandths (1/1,000ths) of a Preferred Share as to which
the Rights are exercised, at or prior to the earlier of (i) the Expiration Date
or (ii) the Redemption Date.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares to be purchased together
with an amount equal to any applicable transfer tax, in lawful money of the
United States of America, in cash or by certified check or money order payable
to the order of the Company, the Rights Agent shall thereupon (i) either (A)
promptly requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent) 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 Preferred Shares with a depositary
agent under a depositary arrangement, promptly requisition from the depositary
agent depositary receipts representing the number of one one-thousandths
(1/1,000ths) of a Preferred Share to be purchased (in which case certificates
for the Preferred Shares to be represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with all such requests, (ii) when appropriate,
promptly requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 15, (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
<PAGE> 19
16
receipt promptly deliver such cash to or upon the order of the registered holder
of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 15.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, any Rights that are at any time beneficially owned by an Acquiring
Person or any Affiliate or Associate of an Acquiring Person shall be null and
void and nontransferable, and any holder of any such Right (including any
purported transferee or subsequent holder) shall not have any right to exercise
or transfer any such Right.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificates upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue
<PAGE> 20
17
a further public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision herein to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite qualification under the
blue sky or securities laws of such jurisdiction shall not have been obtained or
the exercise of the Rights shall not be permitted under applicable law.
SECTION 8. Cancelation and Destruction of Right Certificates. All
Right Certificates surrendered or presented for the purpose of exercise,
transfer, split-up, combination or exchange shall, and any Right Certificate
representing Rights that have become null and void and nontransferable pursuant
to Section 7(e) surrendered or presented for any purpose shall, if surrendered
or presented to the Company or to any of its agents, be delivered to the Rights
Agent for cancelation or in canceled form, or, if surrendered or presented to
the Rights Agent, shall be canceled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by this Rights Agreement.
The Company shall deliver to the Rights Agent for cancelation and retirement,
and the Rights Agent shall so cancel and retire, any Right Certificate purchased
or acquired by the Company. The Rights Agent shall deliver all canceled Right
Certificates to the Company.
SECTION 9. Reservation and Availability of Preferred Shares. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or any authorized
and issued Preferred Shares held in its treasury, free from preemptive rights or
any right of first refusal, a number of Preferred Shares sufficient to permit
the exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares
issued but not outstanding or authorized but unissued to permit the exercise or
exchange of Rights in accordance with Section 11, the Company covenants and
agrees that it will take all such action as may be necessary to authorize
additional Preferred Shares for issuance upon the exercise or exchange of Rights
pursuant to Section 11; provided, however, that if the Company is unable to
cause the authorization of additional Preferred Shares, then the Company shall,
or in lieu of seeking any such authorization, the Company may, to the extent
necessary and permitted by applicable law and any agreements or instruments in
effect prior to the
<PAGE> 21
18
Distribution Date to which it is a party, (A) upon surrender of a Right, pay
cash equal to the Purchase Price in lieu of issuing Preferred Shares and
requiring payment therefor, (B) upon due exercise of a Right and payment of the
Purchase Price for each Preferred Share as to which such Right is exercised,
issue equity securities having a value equal to the value of the Preferred
Shares which otherwise would have been issuable pursuant to Section 11, which
value shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors of the Company or (C) upon due exercise of a
Right and payment of the Purchase Price for each Preferred Share as to which
such Right is exercised, distribute a combination of Preferred Shares, cash
and/or other equity and/or debt securities having an aggregate value equal to
the value of the Preferred Shares which otherwise would have been issuable
pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company. To the extent that any legal or contractual restrictions (pursuant to
agreements or instruments in effect prior to the Distribution Date to which it
is party) prevent the Company from paying the full amount payable in accordance
with the foregoing sentence, the Company shall pay to holders of the Rights as
to which such payments are being made all amounts which are not then restricted
on a pro rata basis as such payments become permissible under such legal or
contractual restrictions until such payments have been paid in full.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise or exchange of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are to be listed on any national securities exchange, the
Company covenants and agrees to use its best efforts to cause, from and after
such time as the Rights become exercisable or exchangeable, all Preferred Shares
reserved for such issuance to be listed on such securities exchange upon
official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all Federal and
<PAGE> 22
19
state transfer taxes and charges which may be payable in respect of the issuance
or delivery of Right Certificates or of any Preferred Shares or Common Shares or
other securities upon the exercise or exchange of the Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or in respect of the issuance or delivery of certificates for the
Preferred Shares or Common Shares or other securities, as the case may be, in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or exchange or to issue or deliver
any certificates for Preferred Shares or Common Shares or other securities, as
the case may be, upon the exercise or exchange of any Rights until any such tax
shall have been paid (any such tax 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 is due.
SECTION 10. Preferred Shares Record Date. Each Person in whose name
any certificate for Preferred Shares or Common Shares or other securities is
issued upon the exercise or exchange of Rights shall for all purposes be deemed
to have become the holder of record of the Preferred Shares or Common Shares or
other securities, as the case may be, represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of any Purchase Price (and any
applicable transfer taxes) was made; provided, however, that, if the date of
such surrender and payment is a date upon which the transfer books of the
Company for the Preferred Shares or Common Shares or other securities, as the
case may be, are closed, such Person shall be deemed to have become the record
holder of such Preferred Shares or Common Shares or other securities, as the
case may be, on, and such certificate shall be dated, the next succeeding
Business Day on which the transfer books of the Company for the Preferred Shares
or Common Shares or other securities, as the case may be, are open.
SECTION 11. Adjustments in Rights After There Is an Acquiring
Person; Exchange of Rights for Shares; Business Combinations. (a) Upon a Person
becoming an Acquiring Person, proper provision shall be made so that each holder
of a Right, except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this
<PAGE> 23
20
Rights Agreement, such number of one one-thousandths (1/1,000ths) of a Preferred
Share as shall equal the result obtained by multiplying the Purchase Price by a
fraction, the numerator of which is the number of one one-thousandths
(1/1,000ths) of a Preferred Share for which a Right is then exercisable and the
denominator of which is 50% of the Market Value of the Common Shares on the date
on which a Person becomes an Acquiring Person. As soon as practicable after a
Person becomes an Acquiring Person (provided the Company shall not have elected
to make the exchange permitted by Section 11(b)(I) for all outstanding Rights),
the Company covenants and agrees to use its best efforts to:
(I) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights;
(II) cause such registration statement to become effective as soon
as practicable after such filing;
(III) 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
(IV) qualify or register the Preferred Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b)(I) The Board of Directors of the Company may, at its option, at
any time after a Person becomes an Acquiring Person, mandatorily exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that shall have become null and void and nontransferable pursuant to the
provisions of Section 7(e)) for consideration per Right consisting, at the
election of the Board of Directors, of either one-half of the securities that
would be issuable at such time upon the exercise of one Right in accordance with
Section 11(a) or, if applicable, Section 9(b)(B) or (C) or, if applicable, the
cash consideration specified in Section 9(b)(A) (the consideration issuable per
Right pursuant to this Section 11(b)(I) being the "Exchange Consideration"). If
the Board of Directors of the Company elects to exchange all the Rights for
Exchange Consideration pursuant to this Section 11(b)(I) prior to the physical
distribution of the
<PAGE> 24
21
Rights Certificates, the Company may distribute the Exchange Consideration in
lieu of distributing Right Certificates, in which case for purposes of this
Rights Agreement holders of Rights shall be deemed to have simultaneously
received and surrendered for exchange Right Certificates on the date of such
distribution.
(II) Any action of the Board of Directors of the Company ordering
the exchange of any Rights pursuant to Section 11(b)(I) shall be irrevocable
and, immediately upon the taking of such action and without any further action
and without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such Right
held by such holder or, if the Exchange Consideration shall not have been paid
or issued, to exercise any such Right pursuant to Section 11(d)(I). 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 holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Rights for the Exchange Consideration will be effected and, in the event
of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which shall have become null and void and nontransferable pursuant
to the provisions of Section 7(e)) held by each holder of Rights.
(c) In all cases where the Company is to deliver Preferred Shares
pursuant to an exercise of a Right pursuant to this Agreement, the Board of
Directors of the Company may, at its option, issue, in substitution for
Preferred Shares, Common Shares in an amount per Preferred Share equal to the
Formula Number (as defined in the Certificate of Designation) if there are
sufficient Common Shares issued but not outstanding or authorized but unissued.
(d)(I) In the event that, following a Distribution Date, directly or
indirectly, any transactions specified in the following clause (i), (ii) or
(iii) of this
<PAGE> 25
22
Section 11(d) (each such transaction being a "Business Combination") shall be
consummated:
(i) the Company shall consolidate with, or merge with and into, any
Acquiring Person or any Affiliate or Associate of an Acquiring Person;
(ii) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into the Company and, in connection
with such merger, all or part of the Common Shares shall be changed into
or exchanged for capital stock or other securities of the Company or of
any Acquiring Person or Affiliate or Associate of an Acquiring Person or
cash or any other property; or
(iii) the Company shall sell, lease, exchange or otherwise transfer
or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange or otherwise transfer or dispose of), in one or more
transactions, the Major Part of the assets of the Company and its
Subsidiaries (taken as a whole) to any Acquiring Person or any Affiliate
or Associate of an Acquiring Person,
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a)):
(A) If the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the Purchase
Price in accordance with the terms of this Rights Agreement, such number
of Registered Common Shares of such Principal Party, free and clear of all
liens, encumbrances or other adverse claims, as shall have an aggregate
Market Value equal to the result obtained by multiplying the Purchase
Price by two;
(B) If the Principal Party involved in such Business Combination
does not have Registered Common Shares outstanding, each Right shall
thereafter represent the right to receive, upon the exercise thereof for
the Purchase Price in accordance with the
<PAGE> 26
23
terms of this Rights Agreement, at the election of the holder of such
Right at the time of the exercise thereof, any of:
(1) such number of Common Shares of the Surviving Person in
such Business Combination as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal
to the result obtained by multiplying the
Purchase Price by two;
(2) such number of Common Shares of the Principal Party in
such Business Combination (if the Principal Party is not also the
Surviving Person in such Business Combination) as shall have an
aggregate Book Value immediately after giving effect to such
Business Combination equal to the result obtained by multiplying the
Purchase Price by two; or
(3) if the Principal Party in such Business Combination is an
Affiliate of one or more Persons which has Registered Common Shares
outstanding, such number of Registered Common Shares of whichever of
such Affiliates of the Principal Party has Registered Common Shares
with the greatest aggregate Market Value on the date of consummation
of such Business Combination as shall have an aggregate Market Value
on the date of such Business Combination equal to the result
obtained by multiplying the Purchase Price by two.
(II) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised, as set
forth in this Section 11(d), shall have sufficient authorized Common Shares that
have not been issued or reserved for issuance (and which shall, when issued upon
exercise thereof in accordance with this Rights Agreement, be validly issued,
fully paid and nonassessable and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof) to permit the exercise in full of the Rights in accordance with this
Section 11(d) and unless prior thereto:
(i) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon
<PAGE> 27
24
exercise of the Rights, shall be effective under the
Securities Act; and
(ii) the Company and each such issuer shall have:
(A) executed and delivered to the Rights Agent a supplemental
agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(d) (including the
obligation of such issuer to issue Common Shares upon the exercise
of Rights in accordance with the terms set forth in Sections
11(d)(I) and 11(d)(III)) and further providing that such issuer, at
its own expense, will use its best efforts to:
(1) cause a registration statement under the Securities
Act on an appropriate form, with respect to the Rights and the
Common Shares of such issuer purchasable upon exercise of the
Rights, to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the
Expiration Date;
(2) qualify or register the Rights and the Common Shares
of such issuer purchasable upon exercise of the Rights under
the blue sky or securities laws of such jurisdictions as may
be necessary or appropriate; and
(3) list the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights on each national
securities exchange on which the Common Shares were listed
prior to the consummation of the Business Combination or, if
the Common Shares were not listed on a national securities
exchange prior to the consummation of the Business
Combination, on a national securities exchange;
(B) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a
valid, binding and enforceable agreement of such issuer; and
<PAGE> 28
25
(C) filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number
of Common Shares of such issuer which may be purchased upon the
exercise of each Right after the consummation of such Business
Combination.
(III) After consummation of any Business Combination and subject to
the provisions of Section 11(d)(II), (i) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11(d) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (ii) the term
"Company" shall thereafter be deemed to refer to such issuer, (iii) each such
issuer shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including the provisions of
Sections 11(a) and 11(d)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, and (iv) the number of Common Shares of each such
issuer thereafter 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 of Sections 11 and 12 and the provisions of
Section 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
SECTION 12. Certain Adjustments. (a) To preserve the actual or
potential economic value of the Rights, if at any time after the date of this
Rights Agreement there shall be any change in the Common Shares or the Preferred
Shares, whether by reason of stock dividends, stock splits, recapitalizations,
mergers, consolidations, combinations or exchanges of securities, split-ups,
split-offs, spin-offs, liquidations, other similar changes in capitalization,
any distribution or issuance of cash, assets, evidences of indebtedness or
subscription rights, options or warrants to holders of Common Shares or
Preferred Shares, as the case may be (other than distribution of the Rights or
regular quarterly cash dividends) or otherwise, then, in each such event the
Board of Directors of the Company shall make such appropriate adjustments in the
number of Preferred Shares (or the number and kind of other securities) issuable
upon exercise of each Right, the Purchase Price and Redemption Price in effect
at such time
<PAGE> 29
26
and the number of Rights outstanding at such time (including the number of
Rights or fractional Rights associated with each Common Share) such that
following such adjustment such event shall not have had the effect of reducing
or limiting the benefits the holders of the Rights would have had absent such
event.
(b) If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Preferred Shares, thereafter the number of such
securities 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 of Sections 11 and 12 and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(d) Irrespective of any adjustment or change in the Purchase Price
or the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms which were expressed in the
initial Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Shares and/or other securities, if any, issuable upon such
exercise over and above the Preferred Shares and/or other securities, if any,
issuable before giving effect to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional securities upon the
occurrence of the event requiring such adjustment.
<PAGE> 30
27
SECTION 13. Certificate of Adjustment. Whenever an adjustment is
made as provided in Section 11 or 12, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
SECTION 14. Additional Covenants. (a) Notwithstanding any other
provision of this Rights Agreement, no adjustment to the number of Preferred
Shares (or fractions of a share) or other securities for which a Right is
exercisable or the number of Rights outstanding or associated with each Common
Share or any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 12, unless the terms of this
Rights Agreement are amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the Distribution
Date, except as permitted by Section 26, it will not take (or permit any
Subsidiary of the Company to take) any action if at the time such action is
taken it is intended or reasonably foreseeable that such action will reduce or
otherwise limit the benefits the holders of the Rights would have had absent
such action, including, without limitation, the benefits under Sections 11 and
12. Any action taken by the Company during any period after any Person becomes
an Acquiring Person but prior to the Distribution Date shall be null and void
unless such action could be taken under this Section 14(b) from and after the
Distribution Date. The Company shall not consummate any Business Combination if
any issuer of Common Shares for which Rights may be exercised after such
Business Combination in accordance with Section 11(d) shall have taken or
contemplated taking any action that reduces or otherwise limits the benefits the
holders of the Rights would have had absent such action, including, without
limitation, the benefits under Sections 11 and 12.
<PAGE> 31
28
SECTION 15. Fractional Rights and Fractional Shares. (a) The Company
may, but shall not be required to, issue fractions of Rights or distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company may pay to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 15(a), the current market value of a whole
Right shall be the closing price of the Rights (as determined pursuant to the
second and third sentences of the definition of Market Value contained in
Section 1) for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractions
of Preferred Shares upon exercise of the Rights or distribute certificates which
evidence fractional Preferred Shares. In lieu of fractional Preferred Shares,
the Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Preferred Shares or (ii) in the case of a fraction of a Preferred
Share (other than one one-thousandths (1/1,000ths) of a Preferred Share or any
integral multiple thereof), pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one Preferred Share, if any
are outstanding and publicly traded (or the Formula Number times the current
market value of one Common Share if the Preferred Shares are not outstanding and
publicly traded). For purposes of this Section 15(b), the current market value
of a Preferred Share (or Common Share) shall be the closing price of a Preferred
Share (or Common Share) (as determined pursuant to the second and third
sentences of the definition of Market Value contained in Section 1) for the
Trading Day immediately prior to the date of such exercise. If, as a result of
an adjustment made pursuant to Section 12(a), the holder of any Right thereafter
exercised shall become entitled to receive any securities other than Preferred
Shares, the provisions of this Section 15(b) shall apply, as nearly as
reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractions
of Common Shares upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates which evidence fractional Common Shares. In lieu of such
<PAGE> 32
29
fractional Common Shares, the Company may 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 one Common Share as of the date on which a Person became
an Acquiring Person.
(d) The holder of Rights by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as provided in this Section 15.
SECTION 16. Rights of Action. (a) All rights of action in respect of
this Rights Agreement 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, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Rights Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Rights Agreement and shall be entitled to
specific performance of the obligations of any Person under, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
SECTION 17. Transfer and Ownership of Rights and Right Certificates.
(a) Prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares and the Rights associated with
the Common Shares shall be automatically transferred upon the transfer of the
Common Shares.
<PAGE> 33
30
(b) After the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the Person
in whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated certificate for
Common Shares 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 18. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate 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 of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company,
including, without limitation, 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, or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
SECTION 19. Concerning the Rights Agent. (a) The Company agrees to
pay to the Rights Agent, as shall be agreed to in writing between the Company
and the Rights Agent, compensation for all services rendered by it hereunder
from time to time and its reasonable expenses and counsel fees and expenses and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The
provisions of this Section 19(a) shall survive the expiration of the Rights and
the termination of this Agreement.
<PAGE> 34
31
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Rights Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, opinion, instruction, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed and executed by the proper Person or Persons.
SECTION 20. Merger or Consolidation or Change of Rights Agent. (a)
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Rights Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 22. In
case, at the time such successor Rights Agent shall succeed to the agency
created by this Rights Agreement, any of the Right Certificates shall have been
countersigned but not delivered, 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 Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and, in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such
<PAGE> 35
32
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
SECTION 21. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates (or, prior to the Distribution Date, of the Common Shares), by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel satisfactory to
it (who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken, suffered or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, refraining from taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, a Vice President (whether
preceded by any additional title), the Treasurer or the Secretary of the Company
and delivered to the Rights Agent or by the directors of the Company whose vote
would be sufficient to redeem the Rights under Section 24. Such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate. In the event any such certificate signed by such
directors is inconsistent with any other such certificate, the certificate
signed by such directors shall control.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certifi-
<PAGE> 36
33
cates (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.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 12 or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such 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 Common Shares
to be issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares or Common Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
the Chief Operating Officer, a Vice President (whether preceded by any
additional title), the Secretary or the Treasurer of the Company or from the
directors of the Company whose vote would be sufficient to redeem the Rights
under Section 24, and to apply to such officers or directors for advice and
instructions in connection with its duties and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
<PAGE> 37
34
instructions of any such officers or directors or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent under
this Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective. The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer,
employee or affiliate 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
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct provided reasonable care was exercised in the selection
thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent
harmless against any loss, liability, damage or expense (including reasonable
fees and expenses of legal counsel) which the Rights Agent may incur in
connection with this Rights Agreement; provided, however, that the Rights Agent
shall not be indemnified or held harmless with respect to any such loss,
liability, damage or
<PAGE> 38
35
expense incurred by the Rights Agent as a result of, or arising out of, its own
gross negligence, bad faith or wilful misconduct. If any action, proceeding
(including, but not limited to, any governmental investigation), claim or
dispute (collectively, a "Proceeding") in respect of which indemnity may be
sought is brought or asserted against the Rights Agent, the Rights Agent shall
promptly (and in no event more than ten (10) days after receipt of written
notice of such Proceeding) notify the Company of such Proceeding. The failure of
the Rights Agent to so notify the Company shall not impair the Rights Agent's
ability to seek indemnification from the Company (but only for costs, expenses
and liabilities incurred after such notice) unless such failure adversely
affects the Company's ability to adequately oppose or defend such Proceeding.
Upon receipt of such notice from the Rights Agent, the Company shall be entitled
to participate in such Proceeding and, to the extent that it shall so desire and
provided no conflict of interest exists as specified in (b) below or there are
no other defenses available to the Rights Agent as specified in (d) below, to
assume the defense thereof with counsel reasonably satisfactory to the Rights
Agent (in which case all attorney's fees and expenses shall be borne by the
Company and the Company shall in good faith defend the Rights Agent). The Rights
Agent shall have the right to employ separate counsel in any such Proceeding and
to participate in the defense thereof, but the fees and expenses of such counsel
shall be borne by the Rights Agent unless (a) the Company agrees in writing to
pay such fees and expenses, (b) the Rights Agent shall have reasonably and in
good faith concluded that there is a conflict of interest between the Company
and the Rights Agent in the conduct of the defense of such action, (c) the
Company fails, within ten (10) days prior to the date the first response or
appearance is required to be made in such Proceeding, to assume the defense of
such Proceeding with counsel reasonably satisfactory to the Rights Agent or (d)
there are legal defenses available to the Rights Agent that are different from
or are in addition to those available to the Company. No compromise or
settlement of such Proceeding may be effected by either party without the other
party's consent unless (i) there is no finding or admission of any violation of
law and no effect on any other claims that may be made against such other party
and (ii) the sole relief provided is monetary damages that are paid in full by
the party seeking the settlement. Neither party shall have any liability with
respect to any compromise or settlement effected without its consent, which
consent shall not be
<PAGE> 39
36
unreasonably withheld. The Company shall have no obligation to indemnify and
hold harmless the Rights Agent from any loss, expense or liability incurred by
the Rights Agent as a result of a default judgment entered against the Rights
Agent unless such judgment was entered after the Company agreed, in writing, to
assume the defense of such Proceeding.
The provisions of this Section 21(j) shall survive expiration of the
Rights and the termination of this Agreement.
(k) The Rights Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Right
Certificates shall furnish the Rights Agent with security and indemnity to its
satisfaction for any costs and expenses which may be incurred.
(l) The Rights Agent shall not be liable for failure to perform any
duties except as specifically set forth herein and no implied covenants or
obligations shall be read into this Agreement against the Rights Agent, whose
duties and obligations are ministerial and shall be determined solely by the
express provisions hereof.
SECTION 22. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and the Preferred Shares by registered
or certified mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 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 the Preferred Shares by registered or certified mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (or, prior to the Distribution Date, of the
Common Shares) (who shall, with such notice, submit his Right Certificate or,
prior to the Distribution Date, the certificate representing his Common
<PAGE> 40
37
Shares, for inspection by the Company), then the Rights Agent or the registered
holder of any Right Certificate (or, prior to the Distribution Date, of the
Common Shares) 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 corporation organized and doing
business under the laws of the United States or of the State of New York (or of
any other state of the United States so long as such corporation is authorized
to conduct a stock transfer or corporate trust business in the State of New
York), in good standing, having a principal office in the State of New York,
which is authorized under such laws to exercise stock transfer or corporate
trust powers 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 $50,000,000; provided that the
principal transfer agent for the Common Shares shall in any event be qualified
to be the Rights Agent. 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 the Preferred Shares, and mail a notice thereof in writing
to the registered holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Shares). Failure to give any notice provided
for in this Section 22, 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 23. Issuance of Additional Rights and Right Certificates.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to
<PAGE> 41
38
the earlier of the Redemption Date and the Expiration Date, the Company (a)
shall, with respect to Common Shares so issued or sold pursuant to the exercise
of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company, and (b) may, in any other case, if deemed necessary or appropriate
by the Board of Directors of the Company, 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.
SECTION 24. Redemption and Termination. (a) The Board of Directors
of the Company may, at its option, at any time prior to the earlier of (i) such
time as a Person becomes an Acquiring Person (whether or not the Company is
aware of such event) and (ii) the Expiration Date, order the redemption of all,
but not fewer than all, the then outstanding Rights at the Redemption Price (the
date of such redemption being the "Redemption Date"), and the Company, at its
option, may pay the Redemption Price either in cash or Common Shares or other
securities of the Company deemed by the Board of Directors of the Company, in
the exercise of its sole discretion, to be at least equivalent in value to the
Redemption Price.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights during the time it may do so, 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. Within 10 Business Days after the
action of the Board of Directors of the Company ordering the redemption of the
Rights during the time it may do so, the Company shall 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. Each such notice of
redemption will
<PAGE> 42
39
state the method by which payment of the Redemption Price will be made. The
notice, if mailed in the manner herein provided, shall be conclusively presumed
to have been duly given, whether or not the holder of Rights receives such
notice. In any case, failure to give such notice by mail, or any defect in the
notice, to any particular holder of Rights shall not affect the sufficiency of
the notice to other holders of Rights.
SECTION 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of a Right Certificate
(or, prior to the Distribution Date, of the Common Shares) 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:
ChiRex Inc.
33 Locke Drive
Marlborough, MA 01752
Attn: Secretary
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) 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:
The First National Bank of Boston
c/o Boston EquiServe Limited Partnership
150 Royall Street
Canton, Massachusetts 02021
Attn: Client Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the 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 Rights Agent
or, prior to the Distri-
<PAGE> 43
40
bution Date, on the registry books of the transfer agent for the Common Shares.
SECTION 26. Supplements and Amendments. At any time prior to the
Distribution Date and subject to the last sentence of this Section 26, the
Company may, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Rights Agreement (including, without limitation, the
date on which the Distribution Date shall occur, the definition of "Acquiring
Person", the time during which the Rights may be redeemed pursuant to Section 24
or any provision of the Certificate of Designation) without the approval of any
holder of the Rights. From and after the Distribution Date and subject to
applicable law, the Company may, and the Rights Agent shall if the Company so
directs, amend this Rights Agreement without the approval of any holders of
Right Certificates (i) to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision of this Rights Agreement in a manner that preserves or enhances the
interests of holders of Rights Certificates (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person) or (ii) to make any other
provisions in regard to matters or questions arising hereunder which the Company
may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person). Any supplement or
amendment adopted during any period after any Person has become an Acquiring
Person but prior to the Distribution Date shall be null and void unless such
supplement or amendment could have been adopted under the prior sentence from
and after the Distribution Date. Any supplement or amendment to this Rights
Agreement duly approved by the Company that does not amend Sections 19, 20, 21
or 22 in a manner adverse to the Rights Agent shall become effective immediately
upon execution by the Company, whether or not also executed by the Rights Agent.
The Rights Agent shall receive prompt written notice from the Company of any
amendment hereunder. In addition, notwithstanding anything to the contrary
contained in this Rights Agreement, no supplement or amendment to this Rights
Agreement shall be made which (a) reduces the Redemption Price (except as
required by Section 12(a)) or (b) provides for an earlier Expiration Date. 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, the Rights Agent
<PAGE> 44
41
shall execute such supplement or amendment. Notwithstanding any other provision
hereof, the Rights Agent's consent must be obtained regarding any amendment or
supplement pursuant to this Section 26 which alters the Rights Agent's rights or
duties.
SECTION 27. Successors. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 28. Benefits of Rights Agreement; Determinations and Actions
by the Board of Directors, etc. (a) Nothing in this Rights Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, of the Common Shares) any legal or equitable right, remedy or claim under
this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Shares).
(b) Except as explicitly otherwise provided in this Rights
Agreement, the Board of Directors of the Company shall have the exclusive power
and authority to administer this Rights Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend this Rights Agreement and whether there is an
Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be deemed to be
in derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer, or to recommend that holders of
Common Shares reject any tender offer or other acquisition proposal, or to take
any other action (including, without limitation, the
<PAGE> 45
42
commencement, prosecution, defense or settlement of any litigation and the
submission of additional or alternative offers or other proposals) with respect
to any tender offer or other acquisition proposal that the Board of Directors
believes is necessary or appropriate in the exercise of such fiduciary duty.
SECTION 29. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 30. GOVERNING LAW. THIS RIGHTS AGREEMENT AND EACH RIGHT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAW
OF THE STATE OF DELAWARE AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND
PERFORMED ENTIRELY WITHIN SUCH STATE, PROVIDED, HOWEVER, THAT THE RIGHTS AND
OBLIGATIONS OF THE RIGHTS AGENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE.
SECTION 31. Counterparts; Effectiveness. This Rights 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. This Rights Agreement shall
be effective as of the Close of Business on the date hereof.
SECTION 32. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement
<PAGE> 46
43
are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
ChiRex Inc.
by ___________________________________
Name:
Title:
The First National Bank of
Boston, as Rights Agent,
by ___________________________________
Name:
Title:
<PAGE> 47
EXHIBIT A
CERTIFICATE OF THE DESIGNATIONS, VOTING POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER
SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SERIES A PARTICIPATING CUMULATIVE PREFERRED
STOCK OF CHIREX INC.
Pursuant to Section 151 of the General Corporation Law of the State
of Delaware, ChiRex Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of
Directors of the Corporation by ARTICLE FOURTH of the Certificate of
Incorporation of the Corporation (the "Certificate of Incorporation"), the Board
of Directors of the Corporation on March 31, 1997, adopted the following
resolution amending the Certificate of Incorporation to create a series of
Preferred Stock designated as Series A Participating Cumulative Preferred Stock:
RESOLVED that pursuant to the authority vested in the Board of
Directors of the Corporation in ARTICLE FOURTH of the Certificate of
Incorporation, the designations, voting powers, preferences and relative,
participating, optional and other special rights and qualifications,
limitations or restrictions of a series of Preferred Stock be, and they
hereby are, fixed as follows:
SECTION 1. Designation and Number of Shares. The shares of such
series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), $.01 par value. The number of shares
initially constituting the Series A Preferred Stock shall be 140,000; provided,
however, that, if more than a total of 140,000 shares of Series A Preferred
Stock shall be issuable upon the exercise of Rights (the "Rights") issued
pursuant to that Rights Agreement between the Corporation and The First National
Bank of Boston, as Rights Agent (the "Rights Agreement"), the Board of Directors
of the Corporation, pursuant to Section 151(g) of the General Corporation Law of
the State of Delaware, shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged, filed and recorded in accordance
with the
<PAGE> 48
2
provisions of Section 103 thereof, providing for the total number of shares of
Series A Preferred Stock authorized to be issued to be increased (to the extent
that the Certificate of Incorporation then permits) to the largest number of
whole shares (rounded up to the nearest whole number) issuable upon exercise of
such Rights.
SECTION 2. Dividends or Distributions. (a) Subject to the prior and
superior rights of the holders of shares of any other series of Preferred Stock
or other class of capital stock of the Corporation ranking prior and superior to
the shares of Series A Preferred Stock with respect to dividends, the holders of
shares of the Series A Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors, out of the assets of the Corporation
legally available therefor, (1) quarterly dividends payable in cash on the last
day of each fiscal quarter in each year, or such other dates as the Board of
Directors of the Corporation shall approve (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 a
fraction of a share of Series A Preferred Stock, in the amount of $.01 per whole
share (rounded to the nearest cent) less the amount of all cash dividends
declared on the Series A Preferred Stock pursuant to the following clause (2)
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 A Preferred Stock (the total of which
shall not, in any event, be less than zero) and (2) dividends payable in cash on
the payment date for each cash dividend declared on the Common Stock in an
amount per whole share (rounded to the nearest cent) equal to the Formula Number
(as hereinafter defined) then in effect times the cash dividends then to be paid
on each share of Common Stock. In addition, if the Corporation shall pay any
dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each such case, the
Corporation shall simultaneously pay or make on each outstanding whole share of
Series A Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each share
of the Common Stock. As used herein, the "Formula Number" shall be 1,000;
provided, however, that, if at any time after the Record Date, the Corporation
shall (i) declare or pay any dividend on the
<PAGE> 49
3
Common Stock payable in shares of Common Stock or make any distribution on the
Common Stock in shares of Common Stock, (ii) subdivide (by a stock split or
otherwise) the outstanding shares of Common Stock into a larger number of shares
of Common Stock or (iii) combine (by a reverse stock split or otherwise) the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then in each such event the Formula Number shall be adjusted to a number
determined by multiplying the Formula Number in effect immediately prior to such
event by a fraction, the numerator of which is the number of shares of Common
Stock that are 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 (and rounding the result to the nearest whole number); and
provided further, that, if at any time after the Record Date, the Corporation
shall issue any shares of its capital stock in a merger, reclassification, or
change of the outstanding shares of Common Stock, then in each such event the
Formula Number shall be appropriately adjusted to reflect such merger,
reclassification or change so that each share of Preferred Stock continues to be
the economic equivalent of a Formula Number of shares of Common Stock prior to
such merger, reclassification or change.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in Section 2(a) immediately prior to or at
the same time it declares a dividend or distribution on the Common Stock (other
than a dividend or distribution solely in shares of Common Stock); provided,
however, that, in the event no dividend or distribution (other than a dividend
or distribution in shares of Common Stock) 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 $.01 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a dividend or distribution declared thereon, which
record date shall be the same as the record date for any corresponding dividend
or distribution on the Common Stock.
<PAGE> 50
4
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from and after the Quarterly Dividend Payment
Date next preceding the date of original issue of such shares of Series A
Preferred Stock; provided, however, that dividends on such shares which are
originally issued after the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a quarterly dividend and
on or prior to the next succeeding Quarterly Dividend Payment Date shall begin
to accrue and be cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series A Preferred Stock
which are originally issued prior to the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend on the first Quarterly Dividend Payment Date shall be calculated as if
cumulative from and after the last day of the fiscal quarter next preceding the
date of original issuance of such shares. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
(d) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.
(e) The holders of the shares of Series A Preferred Stock shall not
be entitled to receive any dividends or other distributions except as provided
herein.
SECTION 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share of
Series A Preferred Stock held of record on each matter on which holders of the
Common Stock or stockholders generally are entitled to vote, multiplied by the
maximum number of votes per share which any holder of the Common Stock or
stockholders generally then
<PAGE> 51
5
have with respect to such matter (assuming any holding period or other
requirement to vote a greater number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class for the election of directors of
the Corporation and on all other matters submitted to a vote of stockholders of
the Corporation.
(c) If, at the time of any annual meeting of stockholders for the
election of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series A Preferred Stock are in
default, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting together with the
holders of Common Stock for the election of other directors of the Corporation,
the holders of record of the Series A Preferred Stock, voting separately as a
class to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of stockholders (and at each subsequent annual meeting of stockholders),
unless all dividends in arrears have been paid or declared and set apart for
payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series A Preferred Stock being entitled to cast
a number of votes per share of Series A Preferred Stock equal to the Formula
Number. Until the default in payments of all dividends which permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of the shares of Series A Preferred Stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any such director
at a special meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If and when such
default shall cease to exist, the holders of the Series A Preferred Stock shall
be divested of the foregoing special voting rights, subject to revesting in the
event of each and every subsequent like default in payments of dividends. Upon
the termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The
<PAGE> 52
6
voting rights granted by this Section 3(c) shall be in addition to any other
voting rights granted to the holders of the Series A Preferred Stock in this
Section 3.
(d) Except as provided herein, in Section 11 or by applicable law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for authorizing or taking
any corporate action.
SECTION 4. Certain Restrictions. (a) Whenever quarterly dividends or
other dividends or distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full, the Corporation
shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock;
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred
Stock; or
<PAGE> 53
7
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The 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. Liquidation Rights. Upon the liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, 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 A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (x) $.01 per whole share or
(y) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (2) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
other 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.
SECTION 6. 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, cash or any other property, then in any such case the then
outstanding shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed
<PAGE> 54
8
into an amount per share equal to the Formula Number then in effect times the
aggregate amount of stock, securities, cash or any other property (payable in
kind), as the case may be, into which or for which each share of Common Stock is
exchanged or changed. In the event both this Section 6 and Section 2 appear to
apply to a transaction, this Section 6 will control.
SECTION 7. No Redemption; No Sinking Fund. (a) The shares of Series
A Preferred Stock shall not be subject to redemption by the Corporation or at
the option of any holder of Series A Preferred Stock; provided, however, that
the Corporation may purchase or otherwise acquire outstanding shares of Series A
Preferred Stock in the open market or by offer to any holder or holders of
shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be subject to
or entitled to the operation of a retirement or sinking fund.
SECTION 8. Ranking. The Series A Preferred Stock shall rank junior
to all other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series and the qualifications, limitations or restrictions
thereof.
SECTION 9. Fractional Shares. The Series A Preferred Stock shall be
issuable upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one one-thousandths
(1/1,000ths) of a share or any integral multiple of such fraction which shall
entitle the holder, in proportion to such holder's fractional shares, to receive
dividends, exercise voting rights, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Stock. In lieu of
fractional shares, the Corporation, prior to the first issuance of a share or a
fraction of a share of Series A Preferred Stock, may elect (1) to make a cash
payment as provided in the Rights Agreement for fractions of a share other than
one one-thousandths (1/1,000ths) of a share or any integral multiple thereof or
(2) to issue depository receipts evidencing such authorized fraction of a share
of Series A Preferred Stock pursuant to an appropriate agreement between the
Corporation and a depository selected by the
<PAGE> 55
9
Corporation; provided that such agreement shall provide that the holders of such
depository receipts shall have all the rights, privileges and preferences to
which they are entitled as holders of the Series A Preferred Stock.
SECTION 10. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancelation become authorized but unissued
shares of Preferred Stock, without designation as to series until such shares
are once more designated as part of a particular series by the Board of
Directors pursuant to the provisions of ARTICLE FOURTH of the Certificate of
Incorporation.
SECTION 11. Amendment. None of the powers, preferences and relative,
participating, optional and other special rights of the Series A Preferred Stock
as provided herein or in the Certificate of Incorporation shall be amended in
any manner which would alter or change the powers, preferences, rights or
privileges of the holders of Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least 66- 2/3% of
the outstanding shares of Series A Preferred Stock, voting as a separate class;
provided, however, that no such amendment approved by the holders of at least
66-2/3% of the outstanding shares of Series A Preferred Stock shall be deemed to
apply to the powers, preferences, rights or privileges of any holder of shares
of Series A Preferred Stock originally issued upon exercise of a Right after the
time of such approval without the approval of such holder.
<PAGE> 56
10
IN WITNESS WHEREOF, the Corporation has caused this Certificate to
be duly executed in its corporate name on this day of March, 1997.
CHIREX INC.
by _________________________________
Name:
Title:
Attest:
________________________________
Name:
Title:
<PAGE> 57
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]-
___________ Rights
NOT EXERCISABLE AFTER MARCH 31, 2007, OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
Right Certificate
CHIREX 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 March 31, 1997 (the "Rights Agreement"), between ChiRex Inc., a
Delaware corporation (the "Company"), and The First National Bank of Boston, as
Rights Agent (the "Rights Agent"), unless the Rights evidenced hereby shall have
been previously redeemed by the Company, to purchase from the Company at any
time after the Distribution Date (as defined in the Rights Agreement) and prior
to 5:00 p.m., New York City time, on the 10th anniversary of the date of the
Rights Agreement (the "Expiration Date"), at the principal office or offices of
the Rights Agent designated for such purpose, or its successors as Rights Agent,
one one-thousandths (1/1,000ths) of a fully paid, nonassessable share of Series
A Participating Cumulative Preferred Stock, $.01 par value, of the Company (the
"Preferred Shares"), at a purchase price per one one-thousandths (1/1,000ths) of
a share equal to $50 (the "Purchase Price") payable in cash, upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed.
<PAGE> 58
2
The Purchase Price and the number and kind of shares which may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of . As provided in the Rights Agreement, the Purchase
Price and the number and kind of shares which may be purchased upon the exercise
of each Right evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
reference to the Rights Agreement is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates. Copies
of the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number and kind of shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price
<PAGE> 59
3
(in cash or shares of Common Stock or other securities of the Company deemed by
the Board of Directors to be at least equivalent in value) of $.01 per Right
(which amount shall be subject to adjustment as provided in the Rights
Agreement) at any time prior to the earlier of (i) such time as a Person becomes
an Acquiring Person and (ii) the Expiration Date.
The Company may, but shall not be required to, issue fractions of
Preferred Shares or distribute certificates which evidence fractions of
Preferred Shares upon the exercise of any Right or Rights evidenced hereby. In
lieu of issuing fractional shares, the Company may elect to make a cash payment
as provided in the Rights Agreement for fractions of a share other than one
one-thousandths (1/1,000ths) of a share or any integral multiple thereof or to
issue certificates or utilize a depository arrangement as provided in the terms
of the Rights Agreement and the Preferred Shares.
No holder of this Right Certificate 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 Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company, including, without limitation,
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or other distributions or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as
provided in accordance with the provisions of the Rights Agreement.
<PAGE> 60
4
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by an authorized signatory of the
Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of:
ChiRex Inc.,
by ______________________________
Name:
Title:
Attest:
______________________________
Name:
Title:
Date of countersignature:
Countersigned:
The First National Bank of Boston,
as Rights Agent,
by __________________________
Authorized Signatory
<PAGE> 61
5
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise _______ Rights
represented by this Right Certificate to purchase the Preferred Shares (or other
shares) issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
<PAGE> 62
6
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _______________, 19
________________________________________
Signature
Signature Guaranteed:
<PAGE> 63
7
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________________________________
hereby sells, assigns and transfer unto ________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
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
Corporation, with full power of substitution.
Dated: ____________, 19__
________________________________________
Signature
Signature Guaranteed:
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), (2) this
Rights Certificate is not being sold, assigned or transferred to or on behalf of
any such Acquiring Person, Affiliate or Associate and (3) after inquiry and to
the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement).
________________________________________
Signature
<PAGE> 64
8
NOTICE
The signature on the foregoing Form of Election to Purchase or Form
of Assignment must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
