SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
NEXMED, INC.
(Exact name of registrant as specified in its charter)
Nevada 870449967
(State of incorporation or organization) (I.R.S. Employer Identification No.)
350 Corporate Boulevard, Robbinsville, New Jersey 08691
(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act: None
If this Form relates to If this Form relates
the registration of a to the registration of
class of securities a class of securities
pursuant to Section pursuant to Section
12(b) of the Exchange 12(g) of the Exchange
Act and is effective Act and is effective
pursuant to General pursuant to General
Instruction A.(c), Instruction A.(d),
check the following check the following
box. |_| box. [X]
Securities Act registration statement file number to which this form relates:
Not Applicable
Securities to be registered pursuant to Section 12(g) of the Act: Preferred
Share Purchase Rights
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Item 1. Description of Registrant's Securities to be Registered.
On April 3, 2000, the Board of Directors of NexMed, Inc., a Nevada
corporation (the "Company"), declared a dividend distribution of one
preferred share purchase right (the "Right") for each outstanding share of
the Company's common stock, $.001 par value per share (the "Common
Stock"), to shareholders of record at the close of business on April 21,
2000. One Right will also be distributed for each share of Common Stock
issued after April 21, 2000, until the Distribution Date (which is
described in the next paragraph). Each Right entitles the registered
holder to purchase from the Company a unit consisting of one
one-hundredths of a share (a "Unit") of Series A Junior Participating
Preferred Stock, $.001 par value per share (the "Preferred Stock"), at a
Purchase Price of $100.00 per Unit, subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of
April 3, 2000 (the "Rights Agreement") between the Company and Norwest
Bank Minnesota, N.A., as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock and a Distribution Date will occur upon the earlier of (i) ten (10)
business days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"), or (ii)
ten (10) business days following the public announcement of a tender offer
or exchange offer that would, if consummated, result in a person or group
beneficially owning 15% or more of such outstanding shares of Common
Stock, subject to certain limitations.
Under the terms of the Rights Agreement, Dr. Y. Joseph Mo ("Dr.
Mo"), who beneficially owns approximately 12.12% of the outstanding shares
of the Company's Common Stock as of the date hereof, and certain of his
affiliates and associates (collectively, with Dr. Mo, the "Mo Entities"),
will be permitted to continue to own such shares, and to increase such
ownership to up to 25% of the outstanding shares of Common Stock, without
becoming an Acquiring Person and triggering a Distribution Date.
Until the Distribution Date (or earlier redemption or expiration of
the Rights), (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after April 21,
2000 will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for
Common Stock outstanding, even without such notation, will also constitute
the transfer of the Rights associated with the Common Stock represented by
such certificate. As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
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thereafter, the separate Rights Certificates alone will represent the
Rights. The Rights are not exercisable until the Distribution Date and
will expire at the close of business on April 3, 2010, subject to
extension by the Board of Directors, unless earlier redeemed by the
Company as described below.
In the event that any person becomes an Acquiring Person, each
holder of a Right will thereafter have the right (the "Flip-In Right") to
receive, at the time specified in the Rights Agreement, (x) upon exercise
and payment of the Purchase Price, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
value equal to two times the Purchase Price of the Right or (y) at the
discretion of the Board of Directors, upon exercise and without payment of
the Purchase Price, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to the
difference between the Purchase Price of the Right and the value of the
consideration which would be payable under clause (x). Notwithstanding any
of the foregoing, following the occurrence of any of the events set forth
in this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. Rights are not exercisable
following the occurrence of the event set forth above until such time as
the Rights are no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger, statutory share exchange or other
business combination in which the Company is not the surviving
corporation, (ii) the Company is the surviving party in a merger,
statutory share exchange or other business combination and all or part of
the Company's Common Stock is exchanged for stock or other securities of
another corporation, or (iii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over Right") to receive, upon
exercise, common stock of the acquiring corporation having a value equal
to two times the Purchase Price of the Right. The holders of a Right will
continue to have the Flip-Over Right whether or not such holder exercises
or surrenders the Flip-In Right. The events set forth in this paragraph
and in the second preceding paragraph are referred to as the "Triggering
Events."
The Purchase Price payable, and the number of Units of Preferred
Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred
Stock are granted certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current market price of
the Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other
than those
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referred to above). The number of outstanding Rights and the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of
each Right are also subject to adjustment in the event of a stock split of
the Common Stock or a stock dividend on the Common Stock payable in Common
Stock or subdivisions, consolidations or combinations of the Common Stock
occurring, in each such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Units will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise.
At any time after any person becomes an Acquiring Person, the
Company may exchange all or part of the Rights for shares of Common Stock
at an exchange ratio of one share per Right, as appropriately adjusted to
reflect any stock dividend, stock split or similar transaction.
In general, the Company may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right, at any time until 10 business days
following the Stock Acquisition Date. After the redemption period has
expired, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to less than 15% (or, in
the case of the Mo Entities, 25% or less) of the outstanding shares of
Common Stock in a transaction or series of transactions not involving the
Company and there are no other Acquiring Persons. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be
to receive the $0.001 redemption price.
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. While the distribution of the
Rights will not be taxable to shareholders or to the Company, shareholders
may, depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for stock (or other
consideration) of the Company or for common stock of the acquiring company
as set forth above.
Prior to the Distribution Date, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company. After
the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time
period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made when the Rights
are not redeemable.
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The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes the Form of the Rights
Certificate, the Summary of Rights and the Form of Certificate of
Designation of Series A Junior Participating Preferred Stock, is attached
as an exhibit to this Form 8-A and incorporated herein by reference. The
foregoing is qualified in its entirety by reference thereto.
Item 2. Exhibits
The following exhibits are filed as a part of this Form 8-A:
Exhibit Document
------- --------
4 Shareholder Rights Agreement, dated as of April 3,
2000, between NexMed, Inc. and Norwest Minnesota
Bank, N.A., as Rights Agent (including the Form of
Rights Certificate as Exhibit A thereto, the
Summary of Rights as Exhibit B thereto and the
Form of Certificate of Designation of Series A
Junior Participating Preferred Stock as Exhibit C
thereto).
20 Press Release of NexMed, Inc. dated April 3, 2000.
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.
Date: April 7, 2000
NEXMED, INC.
By: /s/ Vivian H. Liu
-------------------------------
Vivian H. Liu
Vice President and Secretary
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EXHIBIT INDEX
Exhibit Document
------- --------
4 Shareholder Rights Agreement, dated as of April 3,
2000, between NexMed, Inc. and Norwest Minnesota
Bank, N.A., as Rights Agent (including the Form of
Rights Certificate as Exhibit A thereto, the
Summary of Rights as Exhibit B thereto, and the
Form of Certificate of Designation of Series A
Junior Participating Preferred Stock as Exhibit C
thereto).
20 Press Release of NexMed, Inc. dated April 3, 2000.
Exhibit 4
NEXMED, INC.
and
NORWEST BANK MINNESOTA, N.A., as Rights Agent
SHAREHOLDER RIGHTS AGREEMENT
Dated as of
April 3, 2000
<PAGE>
TABLE OF CONTENTS
Section
1. Certain Definitions.....................................................1
2. Appointment of Rights Agent.............................................5
3. Issuance of Rights Certificates.........................................5
4. Form of Rights Certificates.............................................7
5. Countersignature and Registration.......................................8
6. Transfer, Splitup, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates..............8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights...........9
8. Cancellation and Destruction of Rights Certificates....................11
9. Reservation and Availability of Capital Stock..........................11
10. Preferred Stock Record Date............................................12
11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights............................................................13
12. Certificate of Adjusted Purchase Price or Number of Shares.............21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...21
14. Fractional Rights and Fractional Shares................................23
15. Rights of Action.......................................................24
16. Agreement of Rights Holders............................................25
17. Rights Certificate Holder Not Deemed a Shareholder.....................25
18. Concerning the Rights Agent............................................26
19. Merger or Consolidation or Change of Name of Rights Agent..............26
20. Duties of Rights Agent.................................................27
21. Change of Rights Agent.................................................29
22. Issuance of New Rights Certificates....................................30
23. Redemption and Termination.............................................30
24. Exchange...............................................................31
25. Notice of Certain Events...............................................32
26. Notices................................................................33
27. Supplements and Amendments.............................................34
28. Successors.............................................................34
29. Determinations and Actions by the Board of Directors, etc..............35
30. Benefits of This Agreement.............................................35
31. Severability...........................................................35
32. Governing Law..........................................................36
33. Counterparts...........................................................36
34. Descriptive Headings...................................................36
<PAGE>
EXHIBITS
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
Exhibit C -- Form of Certificate of Designations
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT, dated as of April 3, 2000 (the "Agreement"),
between NexMed, Inc., a Nevada corporation (the "Company"), and Norwest Bank
Minnesota, N.A. (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on April 3, 2000 the Board of Directors of the Company authorized
and declared a dividend of one preferred share purchase right (each, a "Right"
and, collectively, the "Rights") for each share of Common Stock of the Company
outstanding at the close of business on April 21, 2000 (the "Record Date"), each
Right representing the right to purchase one one-hundredth (1/100) of a share of
Preferred Stock, upon the terms and subject to the conditions set forth in this
Agreement, and further authorized and directed the issuance of one Right with
respect to each share of Common Stock that shall become outstanding between the
Record Date and the earlier of the Distribution Date and the Expiration Date.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, (iv) any Person
organized, appointed or established by the Company for or pursuant to the terms
of any such plan, or (v) the Grandfathered Stockholder. Notwithstanding the
foregoing, no person shall be deemed to be an "Acquiring Person" as a result of
the acquisition of shares of Common Stock by the Company which, by reducing the
number of shares of Common Stock outstanding, increases the proportional number
of shares beneficially owned by such Person together with all Affiliates and
Associates of such Person; provided, however, that if a Person becomes the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
or the Grandfathered Stockholder becomes the Beneficial Owner of more than 25%
of the shares of Common Stock then outstanding, by reason of the Company's
acquisition of shares of Common Stock, and thereafter becomes the Beneficial
Owner of additional shares of Common Stock, then such Person shall be deemed an
"Acquiring Person." Notwithstanding the first sentence of this Section 1(a), no
person shall be deemed to be an "Acquiring Person" if the Board of Directors of
the Company determines in good faith that such Person became the Beneficial
Owner of 15% or more (or, in the case of the Grandfathered Stockholder, more
than 25%) of the shares of Common Stock then outstanding inadvertently and such
Person divests, as promptly as practicable after receipt of a written notice
from the Company, a sufficient number of shares of Common Stock so that such
Person is no longer the Beneficial Owner of 15% or more (or, in the case of the
Grandfathered Stockholder, more than
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25%) of the shares of Common Stock then outstanding.
(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(1) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(2) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange;
(3) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(4) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company; provided, however, that nothing in this paragraph (d)
shall cause a person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
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Notwithstanding anything in this definition of Beneficial Owner to
the contrary, the phrase "then outstanding," when used with reference to a
Person's beneficial ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
Notwithstanding the foregoing, none of the Company's directors or
officers shall be deemed to be the Beneficial Owner of, or to beneficially own,
any Common Stock owned by any other director or officer of the Company solely by
virtue of such Persons acting in their capacities as such, including, without
limitation, in connection with any formulation and publication of the Board of
Directors' recommendation of a position, and any actions taken in furtherance
thereof, with respect to any acquisition proposal relating to the Company, a
tender or exchange offer for any Common Stock or any solicitation of proxies
with respect to any Common Stock.
(e) "Agreement" shall mean this Rights Agreement.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or
United States federal holiday.
(g) "Close of Business" on any given date shall mean 5:00 P.M., eastern
standard time on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., eastern standard time on the next
succeeding Business Day.
(h) "Common Stock" shall mean the common stock, $.001 par value, of the
Company, except that "Common Stock" when used with reference to any Person other
than the Company shall mean the capital stock of such Person with the greatest
aggregate voting power, or the equity securities or other equity interests
having power to control or direct the management, of such Person.
(i) "Company" shall mean NexMed, Inc., a Nevada corporation.
(j) "Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Current Market Price" shall have the meaning set forth in Section
11(d)(i) hereof.
(l) "Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(m) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(n) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
(o) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and
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as in effect on the date of this Agreement.
(p) "Exchange Ratio" shall have the meaning set forth in Section 24
hereof.
(q) "Expiration Date" shall mean the earlier of (i) the Final Expiration
Date or (ii) the Redemption Date.
(r) "Final Expiration Date" shall mean the Close of Business on April 3,
2010, unless extended by the Board of Directors of the Company as provided in
Section 27 hereof.
(s) "Grandfathered Stockholder" shall mean Dr. Y. Joseph Mo ("Dr. Mo"),
who is the Beneficial Owner of approximately 12.12% of the outstanding shares of
the Common Stock as of the date of this Agreement, and his executors,
administrators or the legal representatives of his estate, his heirs,
distributees and beneficiaries (but solely in their capacities as such), any
trust as to which he is a settlor or co-settlor or established for the primary
benefit of any of the foregoing, any foundation to which any of the foregoing
has transferred or may transfer securities of the Company, and any other
Affiliate or Associate of any of Dr. Mo (collectively with Dr. Mo, the "Mo
Entities"); provided, however, that the Mo Entities shall not be a Grandfathered
Stockholder if any of them becomes the beneficial owner of shares of Common
Stock that would increase the aggregate beneficial ownership of the Mo Entities
to more than 25% of the shares of Common Stock then outstanding.
(t) "Person" shall mean any individual, firm, corporation, partnership,
company or other entity.
(u) "Preferred Stock" shall mean shares of the Company's Series A Junior
Participating Preferred Stock, having the relative rights, powers, privileges,
preferences and limitations set forth in the Certificate of Designations
attached as Exhibit C hereto, and, to the extent that there is not a sufficient
number of shares of Preferred Stock authorized to permit the full exercise of
the Rights, any other series of the Preferred Stock of the Company designated
for such purpose containing terms substantially similar to the terms of the
Series A Junior Participating Preferred Stock.
(u) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(v) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(w) "Record Date" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(x) "Redemption Date" shall mean the time at which the Rights are redeemed
as provided in Section 23 of this Agreement.
(y) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(z) "Rights" shall have the meaning set forth in the WHEREAS clause at the
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beginning of this Agreement.
(aa) "Rights Agent" shall mean Norwest Bank Minnesota, N.A. or any Person
that succeeds or replaces it in accordance with the provisions of Section 21 of
this Agreement.
(bb) "Rights Certificate" shall have the meaning set forth in Section 3(a)
hereof.
(cc) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(dd) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ee) "Section 13 Event" shall mean any event described in clause (x), (y)
or (z) of Section 13(a) hereof.
(ff) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(gg) "Stock Acquisition Date" shall mean the first date of a public
announcement which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act, by
the Company or an Acquiring Person that an Acquiring Person has become such.
(hh) "Subsidiary" shall mean, with reference to any Person, any firm,
corporation, partnership, company or other entity of which an amount of voting
securities sufficient to elect at least a majority of the directors, managers,
trustees or similar persons of such entity is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such Person.
(ii) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(jj) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
(kk) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
2. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall, prior to the Distribution Date, also be
the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
3. Issuance of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth Business
Day after the
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Stock Acquisition Date and (ii) the Close of Business on the tenth Business Day
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any Person organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof such Person would be an Acquiring Person (the earlier of (i) and (ii)
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company); provided, however,
that if a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender or exchange offer. As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a certificate in substantially the form of Exhibit A attached hereto (a
"Rights Certificate"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Common Stock has been made pursuant to
Section 11(o) hereof, at the time of distribution of the Right Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of the Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit B, by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common Stock outstanding as
of the Record Date, until the earlier of the Distribution Date or the Expiration
Date, the Rights will be evidenced by such certificates for the Common Stock and
the registered holders of the Common Stock shall also be the registered holders
of the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights, and certificates
issued after the Record Date shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between NexMed, Inc. (the "Company")
and
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Norwest Bank Minnesota, N.A. (the "Rights Agent") dated as of April 3, 2000 (the
"Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal office 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 Company will mail to the holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such Certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto 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 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 Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-hundredths of a share, the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by any Person known to be: (i)
an Acquiring Person or any Associate or Affiliate of an Acquiring Person; (ii) a
transferee of an Acquiring Person or of any Associate or Affiliate of an
Acquiring Person who becomes a transferee after the Acquiring Person becomes
such; or (iii) a transferee of an Acquiring Person or of any Associate or
Affiliate of an Acquiring Person who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person or any Associate of Affiliate of an Acquiring Person to holders
of equity interests in such Acquiring Person or any Associate or
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Affiliate of an Acquiring Person or to any Person with whom such Acquiring
Person or any Associate or Affiliate of an Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
when issued contain (to the extent feasible in the circumstances) the following
legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights represented
hereby may become null and void in the circumstances specified in Section 7(e)
of the Rights Agreement.
5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company by
its President or any Vice President, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile thereof which
shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be
countersigned by the Rights Agent, manually or by facsimile signature, and shall
not be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office designated as the appropriate place for surrender of
such Rights Certificates or transfer, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the
certificate number and the date of each of the Rights Certificates.
6. Transfer, Splitup, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the Expiration Date, any Rights Certificate
or Certificates may be transferred, split
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up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a share of Preferred Stock (or, following a Triggering Event, Common Stock,
other securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights 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 Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, splitup, combination or exchange
of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
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 Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price with respect to the total number of
one one-hundredths of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each one one-hundredths of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $100.00 and shall
be subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the
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form of election to purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per one
one-hundredths of a share of Preferred Stock (or other shares, securities, cash
or other assets, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall, subject to
Section 20(k) hereof, thereupon promptly (i)(A) requisition from any transfer
agent of the shares of Preferred Stock (or make available, if the Rights Agent
is the transfer agent for such shares) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company, in its sole discretion, shall have elected to
deposit the total number of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-hundredths of a
share of Preferred Stock as are to be purchased (in which case certificates for
the shares of Preferred Stock 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 such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) may be made in cash or by certified bank
check or money order payable to the order of the Company. In the event that the
Company is obligated to issue other securities (including Common Stock) of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by or on
behalf of the Rights Agent, if and when appropriate. In the case of an exercise
of the Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent shall
return such Rights Certificate to the registered holder thereof after
imprinting, stamping or otherwise indicating thereon that the rights represented
by such Rights Certificate no longer include the rights provided by Section
11(a)(ii) of the Rights Agreement and, if less than all the Rights represented
by such Rights Certificate were so exercised, the Rights Agent shall indicate on
the Rights Certificate the number of Rights represented thereby which continue
to include the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof, or the Rights
Agent shall place an appropriate notation on the Rights Certificate with respect
to those Rights exercised.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any Associate or
Affiliate of an Acquiring Person) who becomes a transferee after
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the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any Associate or Affiliate of an Acquiring Person) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or from any Associate or Affiliate of
an Acquiring Person) to holders of equity interests in such Acquiring Person or
in any Associate or Affiliate of any Acquiring Person or to any Person with whom
the Acquiring Person or any Associate or Affiliate of an Acquiring Person has
any continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined (whether before or after such transfer) is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or any other Person
as a result of its failure to make any determinations with respect to an
Acquiring Person or any Affiliate, Associate or transferee of an Acquiring
Person hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported 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 Rights 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.
8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, splitup,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company and after any retention period required by the Securities
Exchange Commission, destroy such cancelled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Capital Stock.
(a) Subject to Section 11(a)(iii), the Company covenants and agrees that
it will cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock (and, following the occurrence of a Section
11(a)(ii) Event, out of its authorized and unissued shares of Common Stock
and/or other securities, or out of its authorized and issued shares held
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in its treasury if the corporation law of the Company's domicile provides for
treasury shares), the number of shares of Preferred Stock (and, following the
occurrence of a Section 11(a)(ii) Event, Common Stock and/or other securities)
that, as provided in this Agreement, including Section 11(a)(iii) hereof, will
be sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Section 11(a)(ii) Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on any
national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction, unless
the requisite qualification in such jurisdiction shall have been obtained and
until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all one one-hundredths of a share of Preferred
Stock (and, following the occurrence of a Section 11(a)(ii) Event, Common Stock
and/or other securities) delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of one one-hundredths of a share of Preferred
Stock (or Common stock and/or other securities, as the case may be) upon the
exercise of 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
Rights Certificates to a Person other than, or the issuance or delivery of any
certificate for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise, or to issue or deliver any certificates or
depository
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receipts for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights, until such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
10. Preferred Stock Record Date. Each person in whose name any certificate
for a number of one one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such shares (fractional or otherwise) of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate, as such, shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation,
statutory share exchange or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the
Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii)
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hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) In the event (A) any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person organized, appointed or established by the Company
for or pursuant to the terms of any such plan), alone or together with its
Affiliates and Associates, shall, at any time after the date of this Agreement,
become an Acquiring Person, proper provision shall be made so that each holder
of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of a
number of one one-hundredths of a share of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then-current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right would have been
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event assuming the Distribution Date had already occurred, and (y) dividing that
product (which, following such first occurrence, shall thereafter be referred to
as the "Purchase Price" for each Right and for all purposes of this Agreement)
by 50% of the Current Market Price (determined pursuant to Section 11(d) hereof)
per share of Common Stock on the date of such first occurrence (such number of
shares, the "Adjustment Shares"); provided, however, that if the transaction
that would otherwise give rise to the foregoing adjustment is also subject to
the provision of Section 13(a) hereof, then only the provisions of Section 13(a)
hereof shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii).
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's Articles of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), the Company, by
resolution of its Board of Directors, shall: (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (2) the Purchase Price (such excess, the "Spread"), and
(B) with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon the exercise of a Right and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common
Stock or other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock which the Board of Directors of
the Company has deemed to have substantially the same value as shares of Common
Stock (such shares of preferred stock, "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of one or more investment or financial advisors selected
by the Board of Directors of the Company; provided, however, if the Company
shall not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days after the date on which the Company's right of
redemption pursuant to Section 23(a) expires following the occurrence of a
Section 11(a)(ii) Event (the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary,
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cash, which shares and/or cash shall have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, or that additional
time is required for the Board of Directors to decide the appropriate form of
distribution to be made and to determine the value thereof, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek shareholder approval for the authorization of such
additional shares or to make such decision and determination, as the case may be
(such period, as it may be extended, the "Substitution Period"). To the extent
that the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to the first sentence of this Section
11(a)(iii) and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the Current
Market Price (as determined pursuant to Section 11(d) hereof) per share of the
Common Stock on the Section 11(a)(ii) Trigger Date and the value of any "Common
Stock Equivalent" shall be deemed to have the same value as the Common Stock on
such date.
(iv) In lieu of issuing shares of Common Stock in accordance with
subparagraph (ii) of this Section 11(a), the Company, by resolution of the Board
of Directors (which shall reflect a determination by the Board that the action
described below is in the best interests of the Company and not contrary to the
interests of the holders of Rights), may make adequate provision to substitute
for the Adjustment Shares, (x) upon the surrender for exercise of a Right and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock, or other equity securities of the Company
(including without limitation Common Stock Equivalents), (4) debt securities of
the Company, (5) other assets or (6) any combination of the foregoing having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the advice of one
or more investment or financial advisors selected by the Board of Directors of
the Company or (y) upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, (1) cash, (2) Common Stock or other
equity securities of the Company including, without limitation, Common Stock
Equivalents), (3) debt securities of the Company, (4) other assets or (5) any
combination of the foregoing, having an aggregate value equal to the Spread,
where such aggregate value has been determined by the Board of Directors of the
Company based upon the advice of one or more investment or financial advisors
selected by the Board of Directors of the Company.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock
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("Equivalent Preferred Stock")) or securities convertible into Preferred Stock
or Equivalent Preferred Stock at a price per share of Preferred Stock or per
share of Equivalent Preferred Stock (or having a conversion price per share, if
a security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Preferred Stock (including any such distribution made in connection
with a consolidation, statutory share exchange or merger in which the Company is
the continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current Market
Price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock and the
denominator of which shall be such Current Market Price (as determined pursuant
to Section 11(d) hereof) per share of Preferred Stock. Such adjustments shall be
made successively whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d)(i) For the purpose of any computation hereunder, other than
computations made
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pursuant to Section 11(a)(iii) and Section 11(a)(iv) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to Section
11(a)(iii) and Section 11(a)(iv) hereof, the "Current Market Price" per share of
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that in the event that the
Current Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the "Current Market Price"
shall be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or
such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "Current Market Price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "Current Market
Price" per share of Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in clause (i) of this Section 11(d) (other
than the last sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in
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clause (i) of this Section 11(d), the "Current Market Price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "Current Market Price" per share of the
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the "Current Market Price" of one
one-hundredth of a share of Preferred Stock shall be equal to the "Current
Market Price" of one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment, or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j) and (l), and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the Preferred Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
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(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date of the
number of one one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
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(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the Current Market Price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such shareholders.
(m) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(n)
hereof), (ii) merge with or into or enter into a statutory share exchange with
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(n) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(n) hereof),
if (x) at the time of or immediately after such consolidation, merger, statutory
share exchange, sale or transfer there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, share exchange, sale or transfer, the shareholders
of the Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time on or after the date of this Agreement
and prior to the Distribution Date (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, then in any such case (x) the
number of one one-hundredths of a share of Preferred Stock purchasable after
such event upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a share of Preferred Stock purchasable
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately following the occurrence of
such event, and (y) each share of Common Stock outstanding immediately after
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such event shall have issued with respect to that number of Rights which each
share of Common Stock of the Corporation immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(o)
shall be made successively whenever such a dividend is declared or paid or such
subdivision, combination or consolidation is effected.
(p) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Common Stock issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock at
such adjusted Purchase Price.
(q) The exercise of Rights under Section 11(a)(ii) shall only result in
the loss of Rights under Section 11(a)(ii) to the extent so exercised and shall
not otherwise affect the rights represented by the Rights under this Agreement,
including the rights represented by Section 13.
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever
an adjustment is made as provided in Section 11 and Section 13 hereof, 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 Stock
and the Common Stock, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
accordance with Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of such adjustment unless and until it
shall have received such certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, on or following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, enter into a
statutory share exchange or merge with and into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(n)
hereof), and the Company shall not be the continuing or surviving corporation of
such consolidation, statutory share exchange or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(n) hereof) shall consolidate with, enter into a statutory share exchange
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation, statutory share
exchange or merger and, in connection with such consolidation, statutory share
exchange or merger, all or part of the outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other Person
or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(n) hereof), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except holders
described in Section 7(e) hereof, shall
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thereafter have the right to receive, upon the exercise thereof at the
then-current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then-current Purchase Price by the number of one one-hundredths
of a share of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of such one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of
a Section 13 Event, shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by (2) 50% of the Current Market Price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock
of such Principal Party on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(1) in the case of any transaction described in clause (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted in such merger,
statutory share exchange or consolidation, and if no securities are so issued,
the Person that is the other party to such merger, statutory share exchange or
consolidation; and
(2) in the case of any transaction described in clause (z) of the first
sentence of Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions; provided, however, that in any such case, (1) if the Common
Stock of such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, "Principal Party" shall
refer to such other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Stocks of two or
more of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest
aggregate market value.
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(c) The Company shall not consummate any such consolidation, statutory
share exchange, merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, statutory share exchange, merger, sale or
transfer mentioned in paragraph (a) of this Section 13, the Principal Party
will:
(i) prepare and file a registration statement under the Act, with respect
to the Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky laws of
such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial statements for
the Principal Party and each of its Affiliates which comply in all respects with
the requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers, statutory share exchanges or consolidations or sales or other
transfers. The rights under this Section 13 shall be in addition to the rights
to exercise Rights under Section 11(a)(ii) and shall survive any exercise
thereof.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(o) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there may be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Current Market
Value of a whole Right. For purposes of this Section 14(a), the Current Market
Value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
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exchange on which the Rights are listed or admitted to trading, or, if the
Rights are not listed or admitted to trading, on any national securities
exchange, the last quoted price or if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by Nasdaq or
such other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Board of Directors of the Company shall
be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredths of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredths of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Current Market Value of one one-hundredths of a share of
Preferred Stock. For purposes of this Section 14(b), the Current Market Value of
one one-hundredths of a share of Preferred Stock shall be one one-hundredths of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates which evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the Current
Market Value of one (1) share of Common Stock. For purposes of this Section
14(c), the Current Market Value of one share of Common Stock shall be the
closing price of one share of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
15. Rights of Action. All rights of action in respect of this Agreement,
other than rights of action vested in the Rights Agent pursuant to Section 18
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner
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<PAGE>
provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
16. Agreement of Rights Holders. Every holder of a Right by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of one one-hundredths of a
share of Preferred Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, 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 matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section
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25 hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent, its directors, officers, employees
and agents for, and to hold each of them harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for anything done or omitted by the Rights
Agent or such other indemnified party in connection with the acceptance and
administration of this Agreement or the performance of the Rights Agent's duties
hereunder, including the costs and expenses of defending against any claim of
liability in the premises.
(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 Agreement or the performance of the Rights Agent's
duties hereunder in reliance upon any Rights Certificate or certificate for
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
(c) The indemnity provided in this Section 18 shall survive the expiration
of the Rights and the termination of this Agreement.
19. Merger or Consolidation or Change of Name 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
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all
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such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Current Market Price") be proved or established by the Company
prior to 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 the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and 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
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), 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 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 Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof
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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 Rights Certificates
after receipt of the certificate described in Section 12 hereof setting forth
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 shares
of Common Stock or Preferred Stock to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with the instructions of any such officer or for any delay in
acting while awaiting instructions.
(h) 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 Rights 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
any such application on or after the date specified in such application (which
date shall not be less than five Business Days after the date the President, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(i) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(j) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, the Rights Agent was not grossly
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<PAGE>
negligent in the selection or continued employment thereof.
(k) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(l) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(m) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
(n) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits).
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and thereby be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company, and to each transfer
agent of the Common Stock and Preferred Stock, by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation or financial institution organized and doing business under the
laws of the United States or any state of the United States (so long as such
corporation is authorized to do business as a banking institution under said
laws), and in good standing, which is authorized under such laws to exercise
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 $10,000,000 or (b) an affiliate of a
corporation or financial institution described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had
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been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock 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 hereinafter 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 Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights 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 Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. Redemption and Termination.
(a)(i) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (x) the Close of Business on the tenth Business Day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth
Business Day following the Record Date), or (y) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price of $0.001 per Right, as such amount may be appropriately adjusted, as
determined by the Board of Directors, to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price").
(ii) If, following the occurrence of a Stock Acquisition Date and the
expiration of the right of redemption set forth in Section 23(a)(i) but prior to
any Section 13 Event, (x) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock in one
transaction or series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, such that such Person is thereafter a
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Beneficial Owner of less than 15% (or, in the case of the Grandfathered
Stockholder, 25% or less) of the outstanding shares of Common Stock, and (y)
there are no other Persons, immediately following the occurrence of the event
described in clause (x), who are Acquiring Persons, then the right of redemption
shall be reinstated and thereafter be subject to the provisions of this Section
.
(iii) Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of an
event described in Section 11(a)(ii) until such time as the Company's right of
redemption hereunder has expired.
(iv) The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the "Current Market Price," as defined in
Section 11(d)(i) hereof, of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been filed
with the Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Such notice shall be mailed to all such
holders at each holder's last address as it appears 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 Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
24. Exchange.
(a) The Company may, at its option, by resolution of the Board of
Directors, at any time after any Person becomes an Acquiring Person, exchange
all or any part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to Section 7(e) of this Agreement)
for shares of Common Stock at an exchange ratio (the "Exchange Ratio") of one
share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring with respect to the
Common Stock after the date of this Agreement.
(b) Immediately upon action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to Section 24(a) of this Agreement
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange, provided,
however, that
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the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company shall promptly mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent or, if prior to the Distribution Date, on
the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchange. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provision of Section 7(e) of this Agreement) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
authorized but unissued to permit the exchange in full of such Rights in
accordance with the provisions of this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
for issuance upon the exchange of the Rights. In the event that the Company
shall, after a good faith effort, be unable to take all such action as may be
necessary to authorize such additional shares of Common Stock, the Company shall
substitute, for each share of Common Stock that would otherwise be issuable upon
exchange of a Right, a number of shares of other equity securities or a fraction
thereof such that the Current Market Price of one share of such other equity
securities multiplied by such number or fraction is equal to the Current Market
Price of one share of Common Stock as of the date of issuance of such shares of
such other equity securities or fraction thereof, or take any such other action
as may be permissible under paragraph 11(a)(iii) of this Agreement.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates that evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, there shall be
paid to the registered holders of the Rights certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the Current Market Price of a whole share of
Common Stock.
25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities, rights
or options, or (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (iv) to effect any consolidation, statutory share
exchange or merger into or with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(n) hereof), or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons
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<PAGE>
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(n) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, statutory share exchange, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier.
(b) Upon the occurrence of a Section 11(a)(ii) Event, (i) the Company
shall, as soon as practicable thereafter, give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof,
and (ii) all references in the preceding paragraph to Preferred Stock shall be
deemed thereafter to refer to Common Stock and/or, if appropriate, other
securities.
26. Notices. Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights Certificate to or on
the Company shall be sufficiently given or made if delivered by hand, sent by
overnight courier or sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
NexMed, Inc.
350 Corporate Boulevard
Robbinsville, New Jersey 08691
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if delivered by hand, sent by overnight courier or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
Norwest Bank Minnesota, N.A.
Norwest Shareowner Services
161 North Concord Exchange
South St. Paul, Minnesota 55075-0738
Attention: Account Manager
Notices or demands authorized by this Agreement to be given or made by the
Company
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<PAGE>
or the Rights Agent to the holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates representing shares of Common
Stock) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
27. Supplements and Amendments. Prior to the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder, including the Final Expiration Date, (iv) to alter the Purchase Price
if the Final Expiration Date is changed, or (v) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of any Acquiring Person); provided, however, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (B) any other time period unless such
lengthening of such other time period is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights. Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment that changes the rights or duties of the
Rights Agent under this Agreement shall be effective without the execution of
such supplement or amendment by the Rights Agent.
28. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
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29. Determinations and Actions by the Board of Directors, etc.
(a) For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors of
the Company or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, but not limited to, a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calcula--_,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board to any liability to the holders of
the Rights.
(b) For purposes of this Agreement, any determination to be made by the
Board of Directors of the Company may be made by a duly constituted committee
thereof if so authorized to act by the Board of Directors pursuant to the
Company's Bylaws, and in such circumstances any reference to the Board of
Directors herein shall be deemed to include a reference to such committee.
30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the Close of Business on the tenth Business Day following
the date of such determination by the Board of Directors of the Company.
37
<PAGE>
32. Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Nevada and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State, except that Sections 18, 19, 20 and 21
relating to the rights, duties and obligations of the Rights Agent shall be
governed by the laws of the State of New York without reference to the choice of
law provisions thereof.
33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
34. Descriptive Headings. Descriptive headings of the several Sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
NEXMED, INC.
By: /s/ Y. Joseph Mo
----------------------------------------
Y. Joseph Mo
President and Chief Executive Officer
Attest:
By: /s/ Vivian H. Liu
----------------------------------------
Vivian H. Liu
Vice President, Chief Financial Officer
and Secretary
NORWEST BANK MINNESOTA, N.A.
By: /s/ Suzanne M. Swits
----------------------------------------
Name: Suzanne M. Swits
Title: Vice President
Attest:
By: /s/ Kenneth P. Swanson
---------------------------------------
Name: Kenneth P. Swanson
Title: Vice President
39
<PAGE>
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- _____ ________ Rights
NOT EXERCISABLE AFTER April 3, 2010 OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.](1)
Rights Certificate
NexMed, 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 April 3, 2000 (the "Rights Agreement"),
between NexMed, Inc., a Nevada corporation (the "Company"), and Norwest Bank
Minnesota, N.A. (the "Rights Agent"), to purchase from the Company at any time
prior to 5:00 p.m., eastern standard time, on April 3, 2010 at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-hundredths of a fully paid, nonassessable share of Series
A Junior Participating Preferred Stock (the "Preferred Stock") of the Company,
at a purchase price of $100.00 per one one-hundredths of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed. The Purchase
Price may be paid in cash or by certified bank check or money order payable to
the order of the Company. The number of Rights evidenced by this Rights
Certificate (and the number of shares of Preferred Stock which may be purchased
upon exercise hereof) set forth above, and the Purchase Price per share set
forth above, are the number and Purchase Price as of ___________________, based
on the Preferred Stock as constituted at such date.
- ---------
(1) The portion of the legend in brackets shall be inserted only if applicable
and shall replace the immediately preceding sentence of the legend.
<PAGE>
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person or an Associate or Affiliate of
any such Acquiring Person, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are available upon written request to the
Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-hundredths of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $0.001 per Right at any time prior to the earliest of the Close of
Business on (i) the tenth Business Day following the Stock Acquisition Date (as
such time period may be extended pursuant to the Rights Agreement) or (ii) the
Final Expiration Date. After the expiration of the redemption period referenced
in clause (i) above, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to less than 15% (or, in the
case of the Grandfathered Stockholder, 25% or less) of the outstanding shares of
Common Stock in a transaction or series of transactions not
2
<PAGE>
involving the Company and there are no other Acquiring Persons.
The Company may (but shall not be required to) issue fractional shares of
Preferred Stock upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), and in lieu thereof a cash payment may be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in 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.
WITNESS, the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ____________
ATTEST: NEXMED, INC.
[Corporate Seal]
By _______________________ By _______________________
Vivian H. Liu Y. Joseph Mo
Vice President, Chief Financial Chairman of the Board of Directors,
Officer Secretary President and Chief Executive Officer
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By_______________________
Authorized Signature
3
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
[To be executed by the registered holder if such holder
desires to transfer the 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: _______________
_____________________________________
Signature
Signature Medallion Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such 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 the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person.
Dated: _________________
_____________________________________
Signature
Signature Medallion Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
4
<PAGE>
FORM OF ELECTION TO PURCHASE
[To be executed by the registered holder if such holder desires to exercise
Rights represented by the Rights Certificate.]
To: The Rights Agent
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other Person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Please insert social security or other identifying number: _______
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Please insert social security or other identifying number: ___________________
Dated: _________________
________________________________
Signature
Signature Guaranteed:
5
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such term is defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person.
Dated: ___________________
______________________________________
Signature
Signature Medallion Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
6
<PAGE>
EXHIBIT B
Summary of Terms
Issuance: One Right to buy one one-hundredth of a share of a new series of
preferred stock. The rights will be issued as a dividend on each outstanding
share of Common Stock of the Company. Until the Rights become exercisable, all
further issuances of Common Stock, including Common Stock issuable upon exercise
of outstanding options or conversion of the Company's outstanding convertible
preferred stock, would include issuances of Rights.
Term: Ten years.
Purchase price: An amount per one one-hundredth of a share of the preferred
stock which approximates the Board's view of the long-term value of the
Company's Common Stock. The purchase price is subject to certain anti-dilution
adjustments.
Rights detach and become exercisable: The Rights are not exercisable and are not
transferable apart from the Common Stock of the company until the tenth day
after such time as a person or group acquires beneficial ownership of the
Specified Percentage (i.e., 15% or 20%, as the case may be) or more of the
Company's Common Stock or the tenth business day (or such later time as the
Board of Directors may determine) after a person or group announces its
intention to commence or commences a tender or exchange offer the consummation
of which would result in beneficial ownership by a person or group of the
specified Percentage or more of the company's Common Stock. As soon as
practicable after the Rights become exercisable, separate Right Certificates
would be issued and the Rights would become transferable apart from the
Company's Common Stock.
Protection against creeping acquisition/open-market purchases: In the event a
person or group were to acquire the Specified Percentage or more of the Common
Stock, each Right then outstanding would "flip in" and become a right to buy
that number of shares of Common Stock of the Company which at the time of such
acquisition would have a market value of two times the purchase price of the
Rights. The acquiror who triggered the Rights would be excluded from the
"flip-in" because its rights become null and void upon the triggering
acquisition.
Exchange: At any time after the acquisition by a person or group of the
Specified Percentage or more of the Common Stock of the Company and before the
acquisition by a person or group of 50% or more of the Common Stock of the
Company, the Board of Directors may exchange the Rights (other than Rights owned
by the Acquiring Person, which will have become void), in whole or in part, at
an exchange ratio of one share of the Company's Common Stock (or one
<PAGE>
one-hundredth of a share of junior participating preferred stock) per Right,
subject to adjustment.
Protection against squeezeout: If, after the Rights have become exercisable and
an acquiring company has acquired beneficial ownership of the Specified
Percentage or more of the Common Stock, the acquiring company were to merge or
otherwise combine with the Company, or the Company were to sell 50% or more of
its assets or earning power, each Right then outstanding would "flip over" and
thereby would become a right to buy that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value of two times the purchase price of the Rights.
Redemption: The rights are redeemable by the Board of Directors at a nominal
price per Right (i.e., $0.001 per Right) at any time prior to the acquisition by
a person or group of beneficial ownership of the Specified Percentage or more of
the Company's Common Stock. The redemption of the Rights may be made effective
at such time, on such basis and with such conditions as the Board of Directors
in its sole discretion may establish. Thus, the Rights would not interfere with
a negotiated merger or a white knight transaction even after a hostile tender
offer has been commenced. However, the Rights may prevent a white knight
transaction after someone has become an Acquiring Person.
Voting: The Rights would not have any voting rights.
Terms of preferred stock: The preferred stock issuable upon exercise of the
rights would be non-redeemable and rank junior to all other series of the
Company's preferred stock. The dividend, liquidation and the non-redemption
features of the preferred stock are designed so that the value of the one
one-hundredth interest in a share of new preferred stock purchasable with each
Right will approximate the value of one share of Common Stock. Each whole share
of preferred stock would be entitled to receive a quarterly preferential
dividend of at least $1 per share, but would be entitled to receive, in the
aggregate, a dividend of 100 times the dividend declared on the Common Stock. In
the event of liquidation of the Company, the holders of the new preferred stock
would be entitled to receive a preferential liquidation payment of at least $100
per share, but would be entitled to receive, in the aggregate, a liquidation
payment equal to 100 times the payment made per share of Common Stock. Each
share of preferred stock would have one vote, generally voting together as a
single class with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or other property, each
share of preferred stock would be entitled to receive 100 times the amount
received per share of Common Stock. The foregoing rights are protected against
dilution in the event additional shares of Common Stock are issued.
2
<PAGE>
Miscellaneous: The Rights Plan provides that the Company may not enter into any
transaction of the sort which would give rise to the "flip-over" right if in
connection therewith there are outstanding securities or there are agreements or
arrangements intended to counteract the protective provisions of the Rights. The
Rights Plan may be amended from time to time in any manner prior to someone
becoming an Acquiring Person.
3
<PAGE>
EXHIBIT C
CERTIFICATE OF DESIGNATION OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK OF
NEXMED, INC.
NexMed, Inc. (the "Corporation"), a corporation organized and existing
under the laws of the State of Nevada, pursuant to the authority contained in
Article Fifth of the Corporation's Amended and Restated Articles of
Incorporation (the "Articles of Incorporation") and in accordance with Section
78.1955 of the Nevada Revised Statutes (the "NRS"), hereby certifies the
following:
The Board of Directors of the Corporation (the "Board of Directors"),
pursuant to the authority expressly vested in it as aforesaid, has adopted the
following resolution on April 3, 2000:
RESOLVED, that one million (1,000,000) of the ten million (10,000,000)
authorized shares of preferred stock, $.001 par value per share, of the
Corporation ("Preferred Stock") shall be designated and authorized for issuance
as "Series A Junior Participating Preferred Stock," $.001 par value per share,
and shall possess the rights, powers, preferences, privileges and limitations
set forth as follows:
Section 1. Dividends and Distributions.
(i) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Junior Participating Preferred Stock with respect to dividends or other
distributions, the holders of shares of Series A Junior Participating Preferred
Stock, in preference to the holders of common stock, $.001 par value per share,
of the Corporation ("Common Stock") and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available therefor, quarterly dividends payable in cash on the
[fifteenth day of January, April, July and October] in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (x) $1.00
or (y) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Junior Participating Preferred Stock. In the event the
Corporation shall (A) declare any dividend on Common Stock payable in shares of
Common Stock, (B) subdivide the
<PAGE>
outstanding Common Stock, or (C) combine or consolidate the outstanding shares
of Common Stock into a smaller number of shares, then in each such case the
amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (y) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(ii) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in subparagraph (i)
above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
subject to the requirements of applicable law and the Articles of Incorporation,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.
Section 2. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set forth, each
share
2
<PAGE>
of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the shareholders of
the Corporation. In the event the Corporation shall at any time (A) declare any
dividend on Common Stock payable in shares of Common Stock, (B) subdivide the
outstanding Common Stock, or (C) combine or consolidate the outstanding Common
Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(ii) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of preferred stock or any similar stock, in the
Articles of Incorporation or by law, the holders of shares of Series A Junior
Participating Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of shareholders of the
Corporation.
(iii) Except as set forth herein or as otherwise required by law, holders
of Series A Junior Participating 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) to take any
corporate action.
Section 3. Certain Restrictions.
(i) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 1 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(A) declare or pay dividends on, redeem or purchase or otherwise
acquire for consideration, or make any other distributions on any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock;
(B) declare or pay dividends on, redeem or purchase or otherwise
acquire for consideration, 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 Junior
3
<PAGE>
Participating Preferred Stock, provided that there may be declared and paid
ratably dividends on the Series A Junior Participating 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;
and, provided further, that the Corporation may at any time redeem or 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
dissolution, liquidation or winding up) to the Series A Junior Participating
Preferred Stock; or
(C) redeem or purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or redeem or purchase
or otherwise acquire any shares of stock ranking on a parity with the Series A
Junior Participating 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.
(ii) The Corporation shall not permit any subsidiary of the Corporation
(for the account of such subsidiary) to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation
could, under subparagraph (i) of this Section 3, purchase or otherwise acquire
such shares at such time and in such manner.
(iii) No dividend shall be declared and paid, or set apart for payment on,
any share of the Series A Junior Participating Preferred Stock or any share of
any other series of Preferred Stock or any share of any class of stock, or
series thereof, ranking on a parity with the Series A Junior Participating
Preferred Stock as to dividends, for any dividend period unless at the same time
a like proportionate dividend for the same dividend period, ratably in
proportion to the respective dividends applicable thereto, shall be declared and
paid, or set apart for payment on, all shares of the Series A Junior
Participating Preferred Stock and all shares of all other series of Preferred
Stock and all shares of any class, or series thereof, ranking on a parity with
the Series A Junior Participating Preferred Stock as to dividends, then issued
and outstanding and entitled to receive dividends.
Section 4. Reacquired Shares. Any shares of Series A Junior Participating
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 cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock, subject to the conditions and restrictions on issuance set
forth herein or in the Articles of Incorporation, or as otherwise required by
law.
4
<PAGE>
Section 5. Liquidation, Dissolution or Winding Up.
(i) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $100 per share, plus an amount equal to all accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference"). Following the payment
of the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (A) the Series A Liquidation
Preference by (B) 100 (as appropriately adjusted as set forth in subparagraph
(iii) below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (B),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to one (1) with respect to such Series A Junior Participating Preferred
Stock and Common Stock, on a per share basis, respectively.
(ii) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of the Series
A Junior Participating Preferred Stock and such parity shares in proportion to
their respective liquidation preferences. In the event that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.
(iii) In the event the Corporation shall at any time (A) declare any
dividend on Common Stock payable in shares of Common Stock, (B) subdivide the
outstanding Common Stock, or (C) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
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immediately prior to such event.
(iv) Neither the sale, lease or conveyance of all or substantially all of
the property or business of the Corporation, nor the merger, consolidation or
statutory share exchange of the Corporation into or with any other corporation
or the merger, consolidation or statutory share exchange of any other
corporation into or with the Corporation, shall be deemed to be a liquidation,
dissolution or winding-up, voluntary or involuntary, for the purposes of this
Section 5.
Section 6. Statutory Share Exchange, Merger, Consolidation, Etc. In case
the Corporation shall enter into any statutory share exchange, merger,
consolidation, combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or securities, cash and/or
any other property, then in any such case the shares of Series A Junior
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time on or after the Rights
Declaration Date (A) declare any dividend on Common Stock payable in shares of
Common Stock, (B) subdivide the outstanding Common Stock, or (C) combine or
consolidate the outstanding Common Stock into a smaller number of shares, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 8. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of Preferred Stock as to the payment of
dividends and other distributions and the distribution of assets, unless the
terms of any such series shall provide otherwise.
Section 9. Amendment. Neither the Articles of Incorporation nor this
Certificate of Designation shall be amended in any manner which would materially
alter or change the powers, preferences, privileges or special rights of the
Series A Junior Participating Preferred Stock so as to affect any stockholder
holding such stock adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the Series A Junior Participating
Preferred Stock voting together as a single class. No approval of any class or
any series of
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stock of the Corporation, which, before amendment, is senior to the Series A
Junior Participating Preferred Stock as to the payment of distributions upon
dissolution of the Corporation (regardless of any limitations or restrictions on
the voting power of that class or series) shall be required for any amendment to
this Certificate of Designation.
Section 10. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share (which shall be integral multiples
of one one-hundredth of a share of Series A Junior Participating Preferred
Stock), which shall entitle the holder, in proportion to such holder's
fractional shares, to exercise the voting rights, receive the dividends or other
distributions, participate in distributions and to have the benefit of all other
rights of holders of Series A Junior Participating Preferred Stock set forth
herein.
The foregoing was duly adopted by the Board of Directors on April 3, 2000,
pursuant to the provisions of the NRS.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed as of April 3, 2000.
NEXMED, INC.
By:_______________________
Vivian H. Liu
Vice President and Secretary
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ACKNOWLEDGMENT
State of )
) ss.
County of )
On this ___ day of April, 2000, before me, the undersigned Notary Public,
duly commissioned and sworn, personally appeared _________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
Vice President of NexMed, Inc., a Nevada corporation ("NexMed") and known to me
to be the person who executed the within instrument on behalf of NexMed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate above written.
(Notary Public in and for the aforesaid
County and State)
[SEAL] My commission expires on:_______
7
Exhibit 20
For Immediate Release
Contacts:
Stuart Fine Vivian Liu
Rubenstein Investor Relations NexMed, Inc.
(212) 843-8092 (609) 208-9688, ext:101
[email protected] [email protected]
NEXMED ADOPTS SHAREHOLDER RIGHTS PLAN
ROBBINSVILLE, NJ. -- April 5, 2000 -- NexMed, Inc. (OTC BB: NEXM), announced
today that its Board of Directors has adopted a Shareholder Rights Plan under
which rights to purchase shares of its newly issued Series A Junior
Participating Preferred Stock will be distributed to shareholders as a non-cash
dividend at the rate of one right for each share of the Company's common stock,
par value $0.001 (the "Common Stock") held of record as of the close of business
on April 21, 2000.
The rights, which expire on April 3, 2010, will entitle shareholders to buy one
one-hundredth of a share of Series A Junior Participating Preferred Stock at an
exercise price of $100.00. The rights will become exercisable on the tenth
business day after the date that any person or group first announces that such
person or group (other than certain existing equity holders) has acquired 15% or
more of the then outstanding shares of the Company's Common Stock or first
announces a tender or exchange offer for 15% or more of the then outstanding
shares of the Company's Common Stock. If such person or group acquires 15% or
more of the outstanding shares of the Company's Common Stock, each right not
owned by that person or group will entitle its holder to purchase shares of the
Company's Common Stock having a market value of twice the right's then current
exercise price. The effect will be to discourage acquisitions of 15% or more of
the outstanding shares of the Company's Common Stock without negotiations with
the Company's Board of Directors.
The rights will trade with the Company's Common Stock, unless and until they are
separated upon the occurrence of certain future events. The Company's Board of
Directors may redeem the rights at any time prior to their becoming exercisable.
Additional details regarding the Shareholder Rights Plan will be outlined in a
summary to be mailed to all shareholders.
The Company recently announced that it is dosing a total of approximately 300
patients at 12 sites in its U.S. Phase II clinical program on the Alprox-TD(R)
cream for treating male erectile dysfunction ("ED"). The Company is also
developing the FemproxTM cream treatment for female sexual arousal disorder
("FSAD"). The Company anticipates that it will begin U.S. Phase II clinical
testing on the FemproxTM cream during third quarter 2000.
<PAGE>
About NexMed, Inc.
NexMed, Inc., an emerging international pharmaceutical and medical company, is
developing 1) the Alprox-TD(R) cream treatment for ED, 2) the FemproxTM cream
treatment for FSAD, and 3) the Viratrol(R) hand-held treatment device for herpes
simplex.
Statements under the Private Securities Litigation Reform Act: with the
exception of the historical information contained in this release, the matters
described herein contain forward-looking statements that involve risk and
uncertainties that may individually or mutually impact the matters herein
described, including but not limited to product development and acceptance,
manufacturing, competition, regulatory and/or other factors, which are outside
the control of the Company.
