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Registration No. 0-27854
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 4
TO
FORM 10/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
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BONE CARE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1527471
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Science Court
Madison, Wisconsin 53711
(Address of principal executive offices) (Zip code)
Registrant's telephone number including area code: (608) 274-2663
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Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
Preferred Stock Purchase Rights
(Title of class to be registered)
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ITEM 11. Description of Registrant's Securities to be Registered.
This amendment to Bone Care's Registration Statement on Form 10 is being
filed for the purpose of amending the description of the Shareholders Rights
Plan as amended by the First Amendment thereto which is filed as an Exhibit
hereto. The following amends and restates the "Description of Bone Care Capital
Stock" included in Bone Care's Registration Statement on Form 10.
DESCRIPTION OF CAPITAL STOCK
We are authorized to issue up to 28,000,000 shares of common stock, no par
value, and 2,000,000 shares of preferred stock, par value $.001 per share. Our
board of directors has designated 140,000 shares of the preferred stock as
Series A Junior Participating Preferred Stock in connection with the rights
described below.
Common stock
Holders of common stock are entitled to one vote for each share held on all
matters submitted to our shareholders. All outstanding shares of common stock
are validly issued, fully paid and nonassessable, except for certain statutory
liabilities which may be imposed by Wisconsin law for unpaid employee wages.
Wisconsin law provides that shareholders are personally liable to an amount
equal to the par value of the shares owned by them, if the shares have a par
value, and up to the price for which the shares without par value were issued,
for all debts owing to employees for services performed for the corporation.
Shareholders are not liable for wages to employees in excess of six months'
service for any individual employee. The common stock has no par value. Holders
of common stock are entitled to any dividends as our board of directors may
declare, so long as our funds are legally sufficient.
If we liquidate, dissolve or wind-up our business, our assets will be
distributed ratably to shareholders after satisfying our obligations to
creditors.
Holders of common stock do not have cumulative voting rights in the
election of directors and do not have any preemptive, subscription or redemption
rights.
Preferred stock
Our board of directors is authorized, subject to limitations prescribed by
law or the rules of the Nasdaq Stock Market, to issue, without shareholder
approval, up to 2,000,000 shares of preferred stock and to determine the
preferences, limitations and relative rights of the preferred stock or any
series of preferred stock. In connection with the adoption of our shareholders
rights plan, our board of directors designated 140,000 shares as the Series A
Junior Participating Preferred Stock. See "--Rights Agreement."
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Rights agreement
Our board of directors has adopted a shareholders rights plan. Under the
shareholders rights plan, as amended, each share of common stock has associated
with it one preferred share purchase right. The terms of the rights are set
forth in a rights agreement between us and Norwest Bank Minnesota, N.A. The plan
may have an anti-takeover effect by discouraging any person or group from
acquiring in excess of 20% of our common stock.
Under certain circumstances described below, each right would entitle its
holder to purchase one two-hundredth of a share of Series A Junior Participating
Preferred Stock for a price of $50.00 per one two-hundredth of a share, subject
to adjustment. The rights are not presently exercisable and are transferable
only with the related shares of common stock. The rights will not become
exercisable or be evidenced by separate certificates or trade separately from
the common stock prior to the occurrence of certain triggering events described
below. In such an event, separate rights certificates would be issued and
distributed representing one right for each share of common stock. There is no
present market for the rights separate from the common stock and we cannot
predict whether a trading market would develop with respect to the rights if the
rights ever become exercisable.
The rights would become exercisable at the specified exercise price upon
the earlier to occur of:
. 10 business days after the first public announcement that any person or
group (other than Bone Care, Dr. Mazess and their respective affiliates)
has acquired beneficial ownership of 20% or more of our outstanding
common stock; and
. 10 business days (unless delayed by our board of directors) after any
person or group (other than Bone Care, Dr. Mazess and their respective
affiliates) has commenced, or announced the intention to commence, a
tender or exchange offer which would, upon its consummation, result in
such person or group being the beneficial owner of 20% or more of our
common stock.
Rights certificates will be distributed as soon as practicable after the rights
become exercisable. Rights may not be exercised, however, following the
occurrence of an event described below under the caption "Flip-In" prior to the
expiration of our right to redeem the rights.
Flip-In
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After the rights become exercisable, the holders of the rights (other than
the person who has triggered the exercisability of the rights and certain
transferees of such person whose rights are voided) would be entitled to
purchase common stock at a 50% discount.
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Flip-Over
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In the event that, on or after the date the rights become exercisable:
. we merge into or consolidate with the person who has triggered the
exercisability of the rights, or its affiliates, or, unless all holders
of the outstanding shares of common stock are treated the same, we merge
into or consolidate with any other person,
. the person who has triggered the exercisability of the rights or its
affiliates merges into us or, unless all holders of the outstanding
shares of common stock are treated the same, any other person merges
into us, or
. we sell or transfer 50% or more of our consolidated assets or earning
power to the person who has triggered the exercisability of the rights
or its affiliates or, unless all holders of the outstanding shares of
common stock are treated the same, we sell or transfer 50% or more of
our consolidated assets or earning power to any other person (with
limited designated exceptions),
the holders of the rights (other than rights which have become void) would be
entitled to purchase our common stock or the common stock of the person which
acquires our business or assets at a 50% discount.
Redemption of rights
We may redeem the rights, in whole but not in part,
at a redemption price of $.005 per right, subject to adjustment, at the
direction of the board of directors, at any time prior to the earliest of:
. 10 business days after the first public announcement that any person or
group has triggered exercisability of the rights,
. the occurrence of any transaction described under the caption "Flip-
Over," or
. April 13, 2006.
Exchange of shares for rights
At any time after any person or group has triggered exercisability of the
rights and before any person (other than Bone Care, Dr. Mazess and their
respective affiliates), together with its affiliates and associates, has become
the beneficial owner of 50% or more of the outstanding shares of common stock,
our board of directors may, at its option, exchange all or any part of the
rights (other than rights which have become void) for shares of common stock at
the exchange rate of one share of common stock (or one two-hundredth of a
preferred share) per right, subject to adjustment.
Terms of Series A Junior Participating Preferred Stock
The Series A Junior Participating Preferred Stock which would be issuable
upon exercise of the rights (should the rights become exercisable) would not be
redeemable and would have the following terms which were designated by our board
of directors:
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. Each holder of a preferred share would be entitled to receive a
preferential quarterly dividend equal to 200 times the aggregate per
share amount of all cash dividends, plus 200 times the aggregate per
share amount (payable in kind) of all non-cash dividends and other
distributions (other than in shares of common stock), declared on the
common stock during the quarter, adjusted to give effect to any dilution
event, such as a dividend on the common stock payable in shares of
common stock or any subdivision, combination or reclassification of the
common stock.
. Each holder of a preferred share would be entitled to 200 votes on all
matters submitted to a vote of our shareholders, voting together as a
single class with the holders of our common stock and the holders of any
other class of our capital stock having general voting rights, adjusted
to give effect to any dilution event.
. In the event we liquidate, each holder of a preferred share would be
entitled to receive a preferential liquidation payment equal to 200
times the aggregate per share amount to be distributed to the holders of
our common stock, adjusted to give effect to any dilution event, plus an
amount equal to accrued and unpaid dividends and distributions on such
preferred share, whether or not declared, to the date of such payment.
. In the event of any merger, consolidation or other transaction in which
the outstanding shares of common stock are exchanged for or converted
into other capital stock, securities, cash and/or other property, each
preferred share would be similarly exchanged or converted into 200 times
the per share amount applicable to the common stock, adjusted to give
effect to any dilution event.
Articles of incorporation and by-laws
Our articles of incorporation and by-laws contain terms which could have
the effect of delaying, deferring or preventing a takeover attempt that you
might consider to be in your best interest. These provisions are intended to
enhance the likelihood of continuity and stability in the composition of and in
the policies formulated by our board of directors. In addition, these provisions
are also intended to ensure that our board of directors will have sufficient
time to act in what it believes to be in our best interests and the best
interests of our shareholders.
Classified board of directors
Our board of directors is divided into three classes of directors serving
staggered three-year terms. The classification of directors has the effect of
making it more difficult for shareholders to change the composition of our board
of directors in a short period of time. At least two annual meetings of
shareholders, instead of one, will generally be required to effect a change in a
majority of our board of directors.
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Number of directors; filling vacancies; removal
Our board of directors is designed to consist of at least five and no more
than twelve members as fixed by the by-laws. The by-laws currently fix the
number of directors at five. The by-laws provide that our board of directors,
acting by majority vote of the directors then in office, may fill any newly
created directorships or vacancies on our board of directors. The articles of
incorporation and the by-laws provide that a director may be removed upon the
affirmative vote of 80% of the outstanding shares entitled to vote for the
election of such directors, and any vacancy so created may be filled by the
affirmative vote of 80% of such shares.
Super-majority vote
In voting on a merger or consolidation by us with or into any other
corporation, or sale, lease or exchange of all or substantially all of our
property and assets, our articles of incorporation require the approval by an
affirmative vote of 60% of the shares of common stock then entitled to vote.
Shareholder advance notice requirements
Our by-laws provide that for nominations for our board of directors or for
other business to be properly brought by a shareholder before an annual or
special meeting of shareholders, the shareholder must first have given notice
thereof in writing to our Secretary. To be timely, a shareholder's notice
generally must be delivered not more than 90 days nor less than 60 days prior to
the date of the meeting. In addition, the notice must contain, among other
things, certain information about the shareholder delivering the notice and, as
applicable, background information about each nominee or a description of the
proposed business to be brought before the meeting.
Preferred stock
Although our board of directors has no intention at the present time of
doing so, we could issue a series of preferred stock that could, depending on
the terms of such series, impede the completion of a merger, tender offer or
other takeover attempt. Our board of directors will make any determination to
issue such shares based on its judgment as to our best interests and the best
interests of our shareholders. Our board of directors, in so acting, could issue
preferred stock having terms that could discourage an acquisition attempt
through which an acquiror may be able to change the composition of our board of
directors, including a tender offer or other transaction that some, or a
majority, of our shareholders might believe to be in their best interests or in
which shareholders might receive a premium over the then-current market price of
our common stock.
Certain effects of the rights plan
The rights plan is designed to protect our shareholders in the event of
unsolicited offers to acquire all of our common stock and other coercive
takeover tactics which, in the opinion of our board of directors, could impair
its ability to represent shareholder interests. The provisions of the
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rights agreement may render an unsolicited takeover more difficult or less
likely to occur or might prevent such a takeover, even though such takeover may
offer our shareholders the opportunity to sell their stock at a price above the
then prevailing market rate and may be favored by a majority of our
shareholders. See "--Rights Agreement."
Certain Wisconsin Business Corporation Law provisions
We are incorporated under the laws of the state of Wisconsin and conduct
business from our corporate headquarters in Madison, Wisconsin. Accordingly, we
are subject to several provisions of Wisconsin law which could have an anti-
takeover effect.
Restrictions on business combinations
Wisconsin law provides that a resident domestic corporation, may not engage
in a business combination with a person beneficially owning 10% of the voting
power of the outstanding voting stock for three years after the date the person
acquired its 10% or greater interest, unless the business combination, or the
acquisition of 10% or greater interest, received prior approval by the
corporation's board of directors. After the three-year period, a business
combination that was not so approved by the corporation's board of directors can
be consummated only if it is approved by the affirmative vote of a majority of
the outstanding voting shares not beneficially owned by the 10% shareholder or
is made at a specified formula price intended to provide a fair price for the
shares held by noninterested shareholders.
In addition, Wisconsin law provides that business combinations involving a
person who beneficially owns, directly or indirectly, 10% or more of the voting
stock of the corporation, or an affiliate of the corporation which beneficially
owned, directly or indirectly, 10% or more of the voting stock of the
corporation within the last two years and a Wisconsin corporation with total
assets exceeding $1,000,000, a class of equity securities held of record by 500
or more persons, and with at least 100 shareholders of record with unlimited
voting rights who are Wisconsin residents are subject to a supermajority vote of
shareholders, in addition to any approval otherwise required. Under Wisconsin
law, a business combination described above must be approved by 80% of the
voting power of the corporation's stock and at least two-thirds of the voting
power of the corporation's stock not beneficially held by the 10% shareholder
who is party to the transaction or any of its affiliates or associates, in each
case voting together as a single group, unless the following fair price
standards have been met:
. the aggregate value of the per share consideration is equal to the
higher of:
. the highest price paid for any common stock of the corporation by the
10% shareholder in the transaction in which it became a 10%
shareholder or within two years before the date of the business
combination,
. the market value of the corporation's shares on the date of
commencement of any tender offer by the 10% shareholder, the date on
which the person
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became a 10% shareholder or the date of the first public announcement
of the proposed business combination, whichever is highest, or
. the highest liquidation or dissolution distribution to which holders
of shares would be entitled, and
. either cash, or the form of consideration used by the 10% shareholder to
acquire the largest number of shares, is offered.
Our articles of incorporation provide that neither Dr. Mazess, any affiliate of
Dr. Mazess nor the estate, executor, administrator, conservator or beneficiaries
of Dr. Mazess shall be subject to the fair price restrictions described above.
Stock purchase restrictions
Wisconsin law provides that, in addition to the vote otherwise required by
law or the articles of incorporation of a Wisconsin corporation with total
assets exceeding $1,000,000, a class of equity securities held of record by 500
or more persons, and with at least 100 shareholders of record with unlimited
voting rights who are Wisconsin residents, the approval of the holders of a
majority of the shares entitled to vote is required before such corporation can
take certain action while a takeover offer is being made or after a takeover
offer has been publicly announced and before it is concluded. Shareholder
approval is required for the corporation to:
. acquire more than 5% of its outstanding voting shares at a price above
the market price from any individual or organization that owns more than
3% of the outstanding voting shares and has held such shares for less
than two years, unless a similar offer is made to acquire all voting
shares, or
. sell or option assets of the corporation which amount to at least 10% of
the market value of the corporation unless at least a majority of at
least three independent directors vote not to have this provision apply
to the corporation.
The restrictions described above may have the effect of deterring a shareholder
from acquiring our shares with the goal of seeking to have us repurchase such
shares at a premium over the market price or, alternatively, may deter a person
from embarking on an acquisition in which shareholders might receive a premium
for their stock over the then-current market price.
Control share voting restrictions
Wisconsin law provides that, absent a contrary provision in the articles of
incorporation, the voting power of shares (including shares issuable upon
conversion of convertible securities or upon exercise of options or warrants) of
a Wisconsin corporation with total assets exceeding $1,000,000, a class of
equity securities held of record by 500 or more persons, and with at least 100
shareholders of record with unlimited voting rights who are Wisconsin residents
held by any person in excess of 20% of the voting power in the election of
directors is limited to 10% of the
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full voting power of such excess shares unless, at a special meeting of
shareholders, the affirmative vote of a majority of the voting power represented
at the meeting and entitled to vote on the subject matter approve a resolution
restoring full voting power to such shares. Shares of the corporation held or
acquired from the corporation or acquired under an agreement entered into at a
time when the corporation did not qualify for the specified treatment are
excluded from the application of these provisions. The articles of incorporation
provide that this provision of Wisconsin law should not in any way limit the
voting power of any shares of capital stock owned by Dr. Mazess, any affiliate
of Dr. Mazess or the estate, administrator, conservator or beneficiaries of Dr.
Mazess.
Transfer agent and registrar
The Transfer Agent and Registrar for the common stock is Norwest Bank
Minnesota, N.A.
Item 15. Financial Statements and Exhibits
The following amends and restates the Exhibit Index which was included
in Bone Care's Registration Statement on Form 10 for purposes of Item 15(b).
(b) Exhibits
Exhibit Number
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3.1(a) Restated Articles of Incorporation of Bone Care*
3.1(b) Articles of Amendment of Bone Care (incorporated by reference to
exhibit 3.1(b) of Bone Care's Form S-1 Registration Statement
(Registration No. 333-43923) (the "Form S-1"))
3.2 By-Laws of Bone Care (incorporated by reference to exhibit 3.2 of
Bone Care's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1996 (File No. 0-27854))
4.1 Shareholders Rights Agreement between Bone
Care and Norwest Bank Minnesota, N.A.*
4.2 First Amendment to Shareholders Rights Agreement
between Bone Care and Norwest Bank Minnesota, N.A.
5.1 Opinion of KPMG (formerly KPMG Peat Marwick LLP) LLP*
10.1 Distribution Agreement between Lunar and Bone Care*
10.2 Tax Disaffiliation Agreement between Lunar and Bone Care*
10.3 Transition Agreement between Lunar and Bone Care*
10.4 Incentive Stock Option Plan of Bone Care*
10.5 Bone Care International, Inc. 1996 Stock Option Plan (incorporated
by reference to exhibit 10.5 of the Form S-1).
10.6 Amended and Restated License Agreement effective as of June 8,
1998 between Bone Care and Draxis Health Inc. (incorporated by
reference to exhibit 10.6 of the Form S-1).
10.7 Form of Stock Option Agreement (incorporated by reference to
exhibit 10.7 of the Form S-1).
10.8 Agreement, effective as of May 1, 1987, between the Wisconsin
Alumni Research Foundation and Bone Care (confidential
information appearing in this document has been omitted and
filed separately with the Securities and Exchange Commission in
accordance with the Securities Act of 1933, as amended, and 17
C.F.R. 230.406 and 200.80 promulgated thereunder. Omitted
information has been replaced with asterisks) (incorporated by
reference to exhibit 10.8 of the Form S-1).
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* Previously filed.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
BONE CARE INTERNATIONAL, INC.
September 22, 1999 By /s/ Dale W. Gutman
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Name: Dale W. Gutman
Title: Vice President - Finance
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EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON
FORM 10
FOR BONE CARE INTERNATIONAL, INC.
<TABLE>
<CAPTION>
Exhibit Number
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<S> <C>
3.1(a) Restated Articles of Incorporation of Bone Care*
3.1(b) Articles of Amendment of Bone Care (incorporated by reference to
exhibit 3.1(b) of Bone Care's Form S-1 Registration Statement
(Registration No. 333-43923) (the "Form S-1"))
3.2 By-Laws of Bone Care (incorporated by reference to exhibit 3.2 of
Bone Care's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1996 (File No. 0-27854))
4.1 Shareholders Rights Agreement between Bone
Care and Norwest Bank Minnesota, N.A.*
4.2 First Amendment to Shareholders Rights Agreement
between Bone Care and Norwest Bank Minnesota, N.A.
5.1 Opinion of KPMG (formerly KPMG Peat Marwick LLP) LLP*
10.1 Distribution Agreement between Lunar and Bone Care*
10.2 Tax Disaffiliation Agreement between Lunar and Bone Care*
10.3 Transition Agreement between Lunar and Bone Care*
10.4 Incentive Stock Option Plan of Bone Care*
10.5 Bone Care International, Inc. 1996 Stock Option Plan (incorporated
by reference to exhibit 10.5 of the Form S-1).
10.6 Amended and Restated License Agreement effective as of June 8,
1998 between Bone Care and Draxis Health Inc. (incorporated by
reference to exhibit 10.6 of the Form S-1).
10.7 Form of Stock Option Agreement (incorporated by reference to
exhibit 10.7 of the Form S-1).
10.8 Agreement, effective as of May 1, 1987, between the Wisconsin
Alumni Research Foundation and Bone Care (confidential
information appearing in this document has been omitted and
filed separately with the Securities and Exchange Commission in
accordance with the Securities Act of 1933, as amended, and 17
C.F.R. 230.406 and 200.80 promulgated thereunder. Omitted
information has been replaced with asterisks) (incorporated by
reference to exhibit 10.8 of the Form S-1).
</TABLE>
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* Previously filed.
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Exhibit 4.2
FIRST AMENDMENT TO RIGHTS AGREEMENT
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AMENDMENT, dated as of September 21, 1999 (the "Amendment"), to the
Rights Agreement, dated as of April 15, 1996 (the "Rights Agreement"), between
Bone Care International, Inc., a Wisconsin corporation (the "Company"), and
Norwest Bank Minnesota, N.A. (the "Rights Agent").
Pursuant to and in compliance with Section 27 of the Rights Agreement,
the Company and the Rights Agent desire to amend the Rights Agreement as set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and in the Rights Agreement, the parties hereto
hereby agree as follows:
1. Section 1(a) of the Rights Agreement is hereby amended by deleting
such Section in its entirety and by adding the following in lieu thereof:
"(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the shares of Common Stock of the
Company then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan or other
compensation program or arrangement of the Company or of any such
Subsidiary, (iv) any Person holding such shares of Common Stock for or
pursuant to the terms of any such plan, program or arrangement, or (v) Dr.
Richard B. Mazess, any Affiliate of Dr. Richard B. Mazess or, in the event
of the incompetence or death of Dr. Richard B. Mazess, the estate or any
executor, administrator, conservator or beneficiaries of Dr. Richard B.
Mazess (the Persons in clauses (i) through (v) being hereinafter
collectively called
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"Exempt Persons"). Notwithstanding the preceding sentence, no Person shall
become an "Acquiring Person" as the result of an acquisition by the Company
of shares of its Common Stock which, by reason of reducing the number of
its then outstanding shares of Common Stock, increases the percentage of
its then outstanding shares of Common Stock Beneficially Owned by such
Person to 20% or more; provided, however, that if such Person shall, after
the purchase by the Company, become the Beneficial Owner of any additional
shares of Common Stock of the Company, then such Person shall be deemed to
be an "Acquiring Person." Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring Person,"
as defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring Person" for any purpose
of this Agreement."
2. Sections 1(i) and 1(t) of the Rights Agreement are hereby deleted
in their entirety and the remaining Sections 1(j) through 1(hh) are hereby
redesignated as Sections 1(i) through 1(ll).
3. Section 3(a) of the Rights Agreement is hereby amended by deleting
"15%" in line 13 thereof and inserting "20%" in lieu thereof.
4. Section 3(c) of the Rights Agreement is hereby amended by
inserting ", as amended," following "April 15, 1996" in line 3 of the legend set
forth therein.
5. Section 7(b) of the Rights Agreement is hereby amended to read in
its entirety as follows:
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"(b) The price (the "Exercise Price") for each one two-hundredth of a
Preferred Share purchased upon exercise of the Rights shall be $50.00
as of September 21, 1999, shall be subject to adjustment from time to
time as provided in Sections 11 and 13 and shall be payable in lawful
money of the United States of America in accordance with subsection
(c) of this Section 7."
6. Section 11(a)(iii) of the Rights Agreement is hereby amended to
read in its entirety as follows:
"(iii) In the event that there shall not be sufficient authorized and
unissued or treasury shares of Common Stock to permit the exercise in
full of the Rights in accordance with paragraph (ii) of this
subsection (a), the Company shall take all necessary action to
authorize and reserve for issuance such number of additional shares of
Common Stock as may from time to time be required to be issued upon
the exercise in full of all outstanding Rights and, if necessary,
shall use its best efforts to obtain stockholder approval thereof.
Notwithstanding the preceding sentence, if the Board shall determine
that such action is necessary or appropriate and is not contrary to
the best interests of the holders of the Rights, the Board may cause
the Company, in lieu of issuing shares of Common Stock in accordance
with such paragraph (ii), to distribute, or if a sufficient number of
shares of Common Stock cannot be issued for such purpose in accordance
with the provisions hereof, the Company shall distribute, upon the
exercise of each Right, cash, debt securities, Preferred Shares, other
shares of Preferred Stock, other property or any combination thereof
having an aggregate Fair Market Value (determined as provided in
subsection (d) of this Section 11) equal to the Fair Market Value (as
so determined) of the number of shares of Common Stock which otherwise
would have been issuable pursuant to such paragraph (ii). Any such
decision by the Board must be made and publicly announced within 30
days after the occurrence of any Section 11(a)(ii) Event."
7. Section 13(d) of the Rights Agreement is hereby deleted in its
entirety, and Sections 13(e) through 13(h) are hereby redesignated as Sections
13(d) through 13(g).
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8. Sections 23(a) and (b) of the Rights Agreement are hereby amended
to read in their entirety as follows:
"(a) The Board may, at its option, at any time prior to the earliest
of (i) the Close of Business on the 10th Business Day after the Share
Acquisition Date (or, if the Share Acquisition Date shall have occurred
prior to the Record Date, the Close of Business on the 10th Business Day
after the Record Date), (ii) the occurrence of any Section 13 Event and
(iii) the Final Expiration Date, redeem all, but not less than all, of the
then outstanding Rights at a redemption price of $.005 per Right, adjusted
as provided in subsection (g) of this Section 23 (such redemption price
being hereinafter called the "Redemption Price").
(b) In addition to the right of redemption reserved in the first
sentence of subsection (a) of this Section 23, the Board may redeem all,
but not less than all, of the then outstanding Rights at the Redemption
Price after the Share Acquisition Date, but prior to the occurrence of any
Section 13 Event, if either (i) the Person who is an Acquiring Person shall
have transferred or otherwise disposed of (either alone or together with
its Affiliates and Associates) such number of shares of Common Stock of the
Company, in one or a series of related transactions not directly or
indirectly involving the Company or any of its Subsidiaries or the
occurrence of any Section 13 Event, as shall result in such Person
thereafter being a Beneficial Owner of less than 10% of the then
outstanding shares of Common Stock of the Company, and after such transfer
or other disposition there is no other Acquiring Person, or (ii) in
connection with any Section 13 Event which shall not involve an Interested
Stockholder and in which all holders of the Common Stock of the Company are
treated the same."
9. Section 23(d) of the Rights Agreement is hereby amended to strike
and remove the words "and the Disinterested Directors" from the first sentence
thereof.
10. Section 27 of the Rights Agreement is hereby amended in its
entirety to read as follows:
"Section 27. Supplements and Amendments. Prior to the Distribution
Date, but subject to the last sentence of this Section 27, the Company and
the Rights Agent, if
-4-
<PAGE>
so directed in writing by the Company, shall supplement or amend any term,
provision or condition of this Agreement (including, without limitation,
the Exercise Price), without the approval of the registered holders of the
stock certificates representing the Common Stock and the Rights. From and
after the Distribution Date, but subject to the last sentence of this
Section 27, the Company and the Rights Agent, if so directed in writing by
the Company, shall supplement or amend this Agreement, without the approval
of the registered holders of the Rights (however represented), in order:
(a) to cure any ambiguity, (b) to correct or supplement any term, provision
or condition of this Agreement which may be defective or inconsistent with
any other term, provision or condition hereof, (c) to shorten or lengthen
any time period specified herein or (d) to change or supplement one or more
of the terms, provisions or conditions hereof in any manner which the
Company may deem necessary or desirable and which shall not adversely
affect, as determined by the Board, the interests of the holders (other
than any Restricted Person or the transferees therefrom specified in
Section 7(d) of the Rights (however represented); provided, however, that
this Agreement may not be supplemented or amended pursuant to clause (c) of
this sentence (i) to lengthen any time period (except as permitted by
Section 3(a)(ii)) unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders
(other than any Restricted Person or the transferees therefrom specified in
Section 7(d)) of the Rights or (ii) to lengthen any time period relating to
when the Rights may be redeemed if at such time the Rights are not then
redeemable. Upon the delivery of a certificate from an appropriate officer
of the Company stating that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment; provided, however, that the Rights
Agent shall not be required to execute any supplement or amendment which
affects any of the Rights Agent's rights, powers, obligations, duties or
immunities under this Agreement without its consent. On and after the
Distribution Date, no supplement or amendment shall be made which changes
the Exercise Price, the number of one one-hundredths of a Preferred Share
for which a Right is exercisable, the Redemption Price or the Final
Expiration Date. Prior to the Distribution Date, the interests of the
holders of the Rights shall be deemed coincident with the interests of the
holders of the Common Stock of the Company."
11. Section 29 of the Rights Agreement is hereby amended to strike
and remove the parenthetical phrase "(or, as and when set forth herein, the
Disinterested Directors)" from the second sentence thereof and to strike and
remove the parenthetical phrases "(or the Disinterested Directors)" and
"(including any Disinterested Director)" from the third sentence thereof.
-5-
<PAGE>
12. Section 31 of the Rights Agreement is hereby amended to strike
and remove the parenthetical phrase "(with the concurrence of at least a
majority of the Disinterested Directors then in office)" from the proviso
thereof.
13. Exhibit B to the Rights Agreements is hereby amended and restated
in its entirety in the form attached hereto.
14. Exhibit C to the Rights Agreement is hereby amended and restated
in its entirety in the form attached hereto.
15. This Amendment shall be governed by and construed in accordance
with the laws of the State of Wisconsin.
16. This Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
17. Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the day and year first above written.
Attest: BONE CARE INTERNATIONAL, INC.
By /s/ Paul V. Peterson By /s/ Dale W. Gutman
------------------------------- --------------------------------------
Name: Paul V. Peterson Name: Dale W. Gutman
Title: Vice President - Sales Title: Vice President - Finance
and Marketing
Attest: NORWEST BANK MINNESOTA, N.A.
By /s/ Kenneth P. Swanson By /s/ Karri L. VanDell
------------------------------- --------------------------------------
Name: Kenneth P. Swanson Name: Karri L. VanDell
Title: Assistant Secretary Title: Assistant Vice President
-7-
<PAGE>
Exhibit B
---------
FORM
of
RIGHTS CERTIFICATE
Certificate No. R- Rights
_______ Aggregate Number of ---------
Shares of Series A Junior
Participated Preferred Stock
Initially
Purchasable
NOT EXERCISABLE AFTER APRIL 13, 2006 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF BONE CARE INTERNATIONAL, INC., AT $.005 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE STOCKHAREHOLDERS RIGHTS AGREEMENT
HEREINAFTER MENTIONED. UNDER CERTAIN CIRCUMSTANCES DESCRIBED IN SUCH
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY A RESTRICTED PERSON (AS SUCH
TERM IS DEFINED IN SUCH AGREEMENT), OR BY SPECIFIED TRANSFEREES FROM A
RESTRICTED PERSON, SHALL BE OR BECOME VOID.
<PAGE>
RIGHTS CERTIFICATE
BONE CARE INTERNATIONAL, INC.
This certifies that _________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner, subject to the terms, provisions and conditions of the
Shareholders Rights Agreement dated as of April 15, 1996, as amended (the
"Rights Agreement"), between Bone Care International, Inc., a Wisconsin
corporation (the "Company"), and Norwest Bank Minnesota, N.A. (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
and prior to the Close of Business on April 13, 2006, at the principal office of
the Rights Agent or its successor as Rights Agent, one two-hundredth of a fully
paid and nonassessable share of Series A Junior Participating Preferred Stock,
$.001 par value (the "Preferred Shares"), of the Company at a price (the
"Exercise Price") of $50.00 per one two-hundredth of a Preferred Share, upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and the related Form of Certification of Status duly executed,
together with such signature guarantees and other documentation as the Rights
Agent may reasonably request. The number of Rights evidenced by this Rights
Certificate (as well as the number of one two-hundredths of a Preferred Share
which may be purchased upon the exercise of each Right) set forth above, and the
Exercise Price set forth above, are the numbers and the Exercise Price as of
September __, 1999, based on the Preferred Shares as constituted on such date.
As provided in the Rights Agreement, such number of Rights (and/or such number
of one two-hundredths of a Preferred Share) and such Exercise Price are subject
to change and adjustment upon the happening of certain events specified in the
Rights Agreement. Capitalized terms not defined herein have the respective
meanings specified in the Rights Agreement.
From and after the first occurrence of any Section 11(a)(ii) Event, if
the Rights evidenced by this Rights Certificate are Beneficially Owned by (i) a
Restricted Person, (ii) a transferee from a Restricted Person who becomes a
transferee after the Acquiring Person becomes such or (iii) under certain
circumstances specified in the Rights Agreement, a transferee from a Restricted
Person who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such, such Rights shall be or become void, and no holder hereof
shall have any rights whatsoever with respect to such Rights.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof, to which Rights
Agreement reference is hereby made for a full description of the rights, powers,
obligations, duties and immunities hereunder of the Company, the Rights Agent
and the holders of the Rights Certificates. Under the circumstances set forth
in the Rights Agreement, the exercisability of the Rights represented hereby may
be temporarily suspended. The Rights Agreement is on file at the principal
office of the Company and at the principal office of the Rights Agent, and a
copy will be provided upon written request to the Secretary of the Company.
<PAGE>
Upon surrender at the principal office of the Rights Agent, this
Rights Certificate, with or without other Rights Certificates, may be exchanged
for one or more Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase the same aggregate number of one two-hundredths
of a Preferred Share as the Rights evidenced by the Rights Certificates so
surrendered. If this Rights Certificate shall be exercised in part, the holder
hereof shall be entitled to receive, upon surrender hereof, one or more Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Rights Certificate (i) may be redeemed, at the direction of
the Board, at a redemption price (subject to adjustment) of $.005 per Right
(payable in cash, shares of Common Stock of the Company or any other form of
consideration deemed appropriate by the Board) or (ii) under certain
circumstances, may be exchanged, in whole or in part, at the direction of the
Board, for shares of Common Stock of the Company or Preferred Shares at an
exchange rate (subject to adjustment) of one share of Common Stock or one two-
hundredth of a Preferred Share per Right.
No fractional Preferred Share will be issued upon the exercise of any
Rights represented hereby (other than fractions which are a multiple of one two-
hundredth of a Preferred Share), but in lieu thereof a cash payment will be made
as provided in the Rights Agreement.
No holder, as such, of this Rights Certificate shall be entitled to
vote, to receive dividends or other distributions on or to exercise any
preemptive rights with respect to, or shall be deemed for any other purpose to
be the holder of, the Preferred Shares or other shares of capital stock of any
class of the Company which may at any time be issuable upon exercise hereof; nor
shall anything contained herein or in the Rights Agreement be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Company, or any right to vote for the election of directors or upon any
other matter submitted to shareholders at any meeting thereof, to give or
withhold consent to any corporate action, to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement) or
to receive dividends, subscription rights or other distributions, until the
Rights evidenced by this Rights Certificate shall have been exercised, in whole
or in part, in accordance with the provisions of the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
<PAGE>
IN WITNESS WHEREOF, this Rights Certificate has been executed by the
Company by the duly authorized facsimile signature of a proper officer of the
Company and duly attested by the duly authorized facsimile signature of a proper
officer of the Company.
Dated as of _______________, ____.
BONE CARE INTERNATIONAL, INC.
By:
-------------------------------------
Name:
Title:
ATTEST:
- ----------------------------------
Name:
Title:
Countersigned:
- ---------------------------------,
as Rights Agent
NORWEST BANK MINNESOTA, N.A.
By
-------------------------------
Authorized Signature
<PAGE>
[Reverse Side of Rights Certificate]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by this Rights Certificate)
To Bone Care International, Inc.:
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the Preferred Shares
(or other securities, cash or property) issuable upon the exercise of such
Rights and requests that certificates for such Preferred Shares be issued in the
name of:
Please insert social security
or other identifying number:
-------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights represented by this Rights
Certificate, a new Rights Certificate for the remaining unexercised Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number:
-------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: _______________, 19__
-----------------------------------------
Signature
<PAGE>
Signature Guaranteed:
--------------------------
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate
[_] is
[_] is not
being exercised by or on behalf of a Person who is or was a Restricted Person
(as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[_] did
[_] did not
acquire, directly or indirectly, the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
-----------------------------------------
Signature
Date: _______________, 19__
<PAGE>
NOTICE
------
The signature(s) on the foregoing Form of Election to Purchase and
Certification of Status must correspond to the name written upon the face of
this Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the Certification of Status set forth above is not
completed, the Company will deem the Beneficial Owner of the Rights represented
by this Rights Certificate to be a Restricted Person (as such term is defined in
the Rights Agreement), will not honor the Election to Purchase and will affix a
legend to such effect on this Rights Certificate and on any Rights Certificates
issued in exchange for this Rights Certificate.
<PAGE>
[Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto ________________________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated: _______________, 19__
-----------------------------------------
Signature
Signature Guaranteed:
--------------------------
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
<PAGE>
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate
[_] is
[_] is not
being sold, assigned or transferred by or on behalf of a Person who is or was a
Restricted Person (as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it
[_] did
[_] did not
acquire, directly or indirectly the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
-----------------------------------------
Signature
Date: _______________, 19__
<PAGE>
NOTICE
------
The signature(s) on the foregoing Form of Assignment and Certification
of Status must correspond to the name written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the Certification of Status set forth above is not
completed, the Company will deem the Beneficial Owner of the Rights represented
by this Rights Certificate to be a Restricted Person (as such term is defined in
the Rights Agreement), will not honor the Assignment and will affix a legend to
such effect on this Rights Certificate and any Rights Certificates issued in
exchange for this Rights Certificate.
<PAGE>
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On April 13, 1996, the Board of Directors (the "Board") of Bone Care
International, Inc., a Wisconsin corporation (the "Company"), declared a
dividend of one preferred stock purchase right (a "Right") for each outstanding
share of Common Stock, no par value (the "Common Stock"), of the Company. The
dividend was paid on April 13, 1996 (the "Record Date") to the holders of record
of the Common Stock at the Close of Business on such date. Each Right entitles
the holder thereof (except as described below) to purchase from the Company one
two-hundredth of a share of the Series A Junior Participating Preferred Stock,
$.001 par value (the "Preferred Shares"), of the Company at a price (the
"Exercise Price") of $50.00 per one two-hundredth of a Preferred Share, subject
to adjustment. The terms of the Rights are set forth in the Shareholders Rights
Agreement dated as of April 15, 1996, as amended (the "Rights Agreement")
between the Company and Norwest Bank Minnesota, N.A., as Rights Agent (the
"Rights Agent"). Capitalized terms not defined herein have the respective
meanings specified in the Rights Agreement.
Distribution Date; Transfer of Rights
Initially, the Rights associated with the Common Stock outstanding as
of the Record Date will be evidenced solely by the stock certificates for such
Common Stock, with a copy of this Summary of Rights attached thereto. The
Rights will separate from the Common Stock upon the earliest to occur of (i) 10
Business Days after the first public announcement that any Person (other than an
Exempt Person (as hereinafter defined)) has become an Acquiring Person (as
hereinafter defined) and (ii) 10 Business Days (or such other Business Day as
may be determined by action of the Board prior to the time that any Person shall
become an Acquiring Person (as hereinafter defined) after the commencement by
any Person (other than an Exempt Person) of, or the first public announcement of
its intention to commence, a tender or exchange offer if, upon the consummation
thereof, such Person would be the Beneficial Owner of 20% or more of the
outstanding shares of Common Stock (the earliest of the dates specified in
clauses (i) and (ii) being hereinafter called the "Distribution Date"). After
the Distribution Date, the Rights will be evidenced solely by separate
certificates and will trade independently from the Common Stock.
An "Acquiring Person" is any Person who or which, together with its
Affiliates and Associates, has acquired 20% or more of the shares of Common
Stock then outstanding, but does not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan or other compensation
program or arrangement of the Company or of any such Subsidiary, (iv) any Person
holding shares of Common Stock for or pursuant to the terms of any such plan,
program or arrangement or (v) Dr. Richard B. Mazess, any Affiliate of Dr.
Richard B. Mazess or, in the event of the incompetence or death of Dr. Richard
B. Mazess, the estate or any executor, administrator, conservator or
beneficiaries of Dr. Richard B. Mazess (the Persons specified in clauses (i)
through (v) being herein collectively called "Exempt Persons"). Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an
<PAGE>
"Acquiring Person," has become so inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person," then such Person shall not
be deemed to be an "Acquiring Person."
A "Restricted Person" is an Acquiring Person or any Affiliate or
Associate thereof.
The Rights Agreement provides that, until the Distribution Date (or
the earlier redemption or expiration of the Rights), the Rights may be
transferred only with the associated shares of Common Stock. Until the
Distribution Date (or the earlier redemption or expiration of the Rights), stock
certificates for Common Stock issued after the Record Date, either upon transfer
of outstanding shares or original issuance of additional shares of Common Stock,
will contain a legend incorporating the Rights Agreement by reference. Until
the Distribution Date (or the earlier redemption or expiration of the Rights),
the surrender for transfer of any stock certificate for shares of Common Stock,
with or without such legend and whether or not a copy of this Summary of Rights
is attached thereto, will also constitute the transfer of the Rights associated
with the shares of Common Stock represented by such stock certificate.
As soon as practicable after the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to the
holders of record of the Common Stock as of the Close of Business on the
Distribution Date, which thereafter will constitute the sole evidence of the
Rights. Each share of Common Stock issued by the Company after the Record Date
and prior to the earlier redemption or expiration of the Rights, including any
shares of Common Stock issued by reason of the exercise of any option, warrant,
right (other than the Rights) or conversion or exchange privilege (however
evidenced) issued by the Company prior to the Distribution Date, will be
accompanied by a Right (unless the Board expressly provides to the contrary at
the time of issuance of any such option, warrant, right or privilege), and
Rights Certificates evidencing such Rights will be issued at the same time as
the stock certificates for the associated shares of Common Stock.
The Rights are not exercisable until the Distribution Date. Moreover,
the time when the Rights may be exercised is restricted as described in the next
paragraph. The Rights will expire on the tenth anniversary of the Record Date
(the "Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each case
as described below.
Exercise of Rights Under Certain Circumstances
In the event that any Person becomes an Acquiring Person, proper
provision will be made so that the registered holder of each Right (other than
Rights Beneficially Owned as described in the next sentence) will thereafter
have the right to receive, upon exercise thereof, the number of shares of Common
Stock which, at the time of the occurrence of such event, will have a market
value equal to two times the product of the then current Exercise Price
multiplied by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable. After the first occurrence of either of the events
described in the preceding sentence, all Rights which are, or (under certain
circumstances specified in the Rights Agreement) were, Beneficially Owned by a
Restricted Person or specified transferees therefrom will be or become void.
Under no circumstances may a Right be
-2-
<PAGE>
exercised after the occurrence of either such event unless the Company's right
to redeem the Rights (as described below) has expired.
If, on or after the date on which any Person has become an Acquiring
Person, any of the following transactions occur: (i) the Company merges into or
consolidates with an Interested Shareholder (as hereinafter defined) or, unless
all holders of the Company's outstanding shares of Common Stock are treated the
same, another Person (with limited designated exceptions); (ii) an Interested
Shareholder or, unless all holders of the Company's outstanding shares of Common
Stock are treated the same, another Person (with limited designated exceptions)
merges into the Company and either (A) all or part of the outstanding shares of
Common Stock of the Company are converted into capital stock or other securities
of any other Person (or the Company), cash and/or other property or (B) such
shares remain outstanding, unconverted and unchanged; or (iii) the Company sells
or transfers 50% or more of its consolidated assets or earning power to an
Interested Shareholder (as hereinafter defined) or, unless all holders of the
Company's outstanding shares of Common Stock are treated the same, another
Person (with limited designated exceptions); proper provision will be made so
that the registered holder of each Right (other than Rights which have become
void) will thereafter have the right (the "Flip-Over Right") to receive, upon
exercise thereof, the number of common shares of the acquiror (or of another
Person affiliated therewith) which, at the time of consummation of such
transaction, will have a market value equal to two times the product of the then
current Exercise Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable. An "Interested
Shareholder" is any Restricted Person or any Affiliate or Associate of any other
Person in which such Restricted Person has an interest, or any Person acting,
directly or indirectly, on behalf of or in concert with any such Restricted
Person.
Adjustments to Exercise Price and Stock Purchasable Upon Exercise
The Exercise Price payable, the number and kind of shares of capital
stock issuable upon exercise of the Rights and the number of Rights outstanding
are subject to adjustment from time to time to prevent dilution (i) in the event
of a dividend payable in Preferred Shares on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to the holders of
the Preferred Shares of certain options, warrants or rights to subscribe for or
purchase Preferred Shares at a price, or securities convertible into or
exchangeable for Preferred Shares with a conversion or exchange price, less than
the then Fair Market Value of the Preferred Shares or (iii) upon the
distribution to the holders of the Preferred Shares of cash, securities,
evidences of indebtedness or other property (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or options, warrants or
rights (other than those referred to in clause (ii) above).
The number of outstanding Rights and the number of one two-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a dividend on the Common Stock payable in shares of
Common Stock or a subdivision, combination or reclassification of the Common
Stock occurring, in any such case, prior to the Distribution Date.
With certain specified exceptions, no adjustment in the Exercise Price
will be made until the cumulative adjustments required equal at least 1% of the
Exercise Price. The Company is
-3-
<PAGE>
not required to issue fractional Preferred Shares (other than fractions which
are multiples of one two-hundredth of a Preferred Share), but in lieu thereof
the Company would be required to make a cash payment based on the Fair Market
Value of the Preferred Shares on the trading day immediately preceding the date
of exercise.
Terms of Preferred Shares
The Preferred Shares receivable upon exercise of the Rights will not
be redeemable. Each Preferred Share will entitle the holder thereof to receive a
preferential quarterly dividend equal to 200 times the aggregate per share
amount of all cash dividends, plus 200 times the aggregate per share amount
(payable in kind) of all non-cash dividends and other distributions (other than
in shares of Common Stock), declared on the Common Stock during such quarter,
adjusted to give effect to any dividend on the Common Stock payable in shares of
Common Stock or any subdivision, combination or reclassification of the Common
Stock (a "Dilution Event"). Each Preferred Share will entitle the holder
thereof to 200 votes on all matters submitted to a vote of the shareholders of
the Company, voting together as a single class with the holders of the Common
Stock and the holders of any other class of capital stock having general voting
rights, adjusted to give effect to any Dilution Event. In the event of
liquidation of the Company, the holder of each Preferred Share will be entitled
to receive a preferential liquidation payment equal to 200 times the aggregate
per share amount to be distributed to the holders of the Common Stock, adjusted
to give effect to any Dilution Event, plus an amount equal to accrued and unpaid
dividends and distributions on such Preferred Share, whether or not declared, to
the date of such payment. In the event of any merger, consolidation or other
transaction in which the outstanding shares of Common Stock of the Company are
exchanged for or converted into other capital stock, securities, cash and/or
other property, each Preferred Share will be similarly exchanged or converted
into 200 times the per share amount applicable to the Common Stock, adjusted to
give effect to any Dilution Event.
Because of the nature of the dividend, voting, liquidation and other
rights accorded to each Preferred Share, the value of the one two-hundredth of a
Preferred Share receivable upon the exercise of each Right should approximate
the value of one share of Common Stock.
Redemption of Rights
At any time prior to the earliest of (i) 10 Business Days after the
first public announcement that any Person (other than an Exempt Person) has
become an Acquiring Person, (ii) the occurrence of any transaction which permits
the exercise of the Flip-Over Right and (iii) the Final Expiration Date, the
Board may redeem the Rights in whole, but not in part, at the redemption price
of $.005 per Right, adjusted to give effect to any Dilution Event (the
"Redemption Price"). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board, in its sole
discretion, may establish. After the redemption period has expired, the
Company's right of redemption may be reinstated, under the circumstances
specified in the Rights Agreement, if either (i) the Person who became an
Acquiring Person shall reduce, in one or a series of related transactions not
involving the Company or any Subsidiary or the occurrence of any transaction
which permits the exercise of the Flip-Over Right, its Beneficial Ownership of
the outstanding shares of Common Stock to less than 10% of such outstanding
shares or (ii) in
-4-
<PAGE>
connection with any transaction which permits the exercise of the Flip-Over
Right, which does not involve an Interested Shareholder and in which all holders
of the Common Stock are treated the same. Immediately after action by the Board
directing the redemption of the Rights, the option to exercise the Rights will
terminate, and thereafter each registered holder of the Rights will only be
entitled to receive the Redemption Price therefor.
Exchange of Rights
At any time after any Person has become an Acquiring Person and prior
to the time that any Person (other than an Exempt Person), together with its
Affiliates and Associates, has become the Beneficial Owner of 50% or more of the
outstanding shares of Common Stock, the Board may direct that all or any part of
the outstanding Rights (other than Rights which have become void) be exchanged
for shares of Common Stock at the exchange rate of one share of Common Stock (or
one two-hundredth of a Preferred Share or of another share of capital stock of
the Company having equivalent rights, preferences and privileges) per Right,
adjusted to give effect to any Dilution Event.
Amendment of the Rights and the Rights Agreement
Prior to the Distribution Date, the terms of the Rights and the Rights
Agreement may be supplemented or amended by the Board in any manner. From and
after the Distribution Date, the Rights may be supplemented or amended by the
Board, without the approval of the holders of the Rights, in certain respects
which do not adversely affect, as determined by the Board, the interests of such
holders; provided, however, that the Rights Agreement cannot be amended to
lengthen (i) any time period unless such lengthening is for the benefit of the
holders of the Rights or (ii) any time period relating to when the Rights may be
redeemed if at such time the Rights are not then redeemable.
Miscellaneous
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
-5-
