<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
TRIANGLE PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 000-21589 56-1930728
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(State of incorporation or organization) (Commission (IRS Employer
File Number) Identification No.)
4 UNIVERSITY PLACE, 4611 UNIVERSITY DRIVE, DURHAM, NORTH CAROLINA 27707
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(Address of principal executive offices)
Registrant's telephone number, including area code (919) 493-5980
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
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(TITLE OF CLASS)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
PREFERRED STOCK PURCHASE RIGHTS
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(TITLE OF CLASS)
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Item 5. OTHER EVENTS.
On January 29, 1999, the Board of Directors of Triangle
Pharmaceuticals, Inc. (the "Company") declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of Common Stock
(the "Common Stock"), par value $.001 per share, of the Company. In addition,
the holders of outstanding Series A Preferred Stock will receive one Right
for each share of Common Stock issuable upon conversion of the Series A
Preferred Stock. The dividend is payable on February 16, 1999 (the "Record
Date") to the stockholders of record on that date. Each Right entitles the
registered holder to purchase from the Company one one-thousandth of a share
(a "Unit") of Series B Junior Participating Preferred Stock, par value $.001
per share (the "Series B Preferred Stock"), of the Company at a price of $100
per Unit (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement dated as of February
1, 1999 (the "Rights Agreement") between the Company and American Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on
the first date of a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") have acquired beneficial
ownership of 15% or more of the outstanding Common Stock or (ii) 10 business
days (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of such outstanding
Common Stock (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock
certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Record Date, upon
transfer or new issuance of Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Stock, outstanding as of the Record
Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common
Stock as of the Close of Business on the Distribution Date and such separate
Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire at the close of business on February 16, 2009, (the
"Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each
case as described below.
The Purchase Price payable, and the number of Units of
Series B 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 Series B Preferred Stock, (ii) upon
the grant to holders of the Units of Series B Preferred Stock of certain
rights or warrants to subscribe for or purchase Units of Series B Preferred
Stock at a price, or securities convertible into Units of Series B Preferred
Stock with a conversion price, less than the then current market price of the
Units of Series B Preferred Stock or (iii) upon the distribution to holders
of the Units of Series B Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Units of Series B Preferred Stock)
or of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of Units of
Series B 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 any such
case, prior to the Distribution Date.
Units of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each Unit of Preferred Stock will be entitled
to a dividend equal to any dividend declared per share of Common Stock. In
the event of liquidation, each Unit of Preferred Stock will be entitled to a
payment equal to any payment made per share of Common Stock. Each Unit of
Preferred Stock will have one vote, voting together with the Common Stock.
2
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Finally, in the event of any merger, consolidation or other transaction in
which shares of Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive an amount equal to the amount received per share of
Common Stock. These rights are protected by customary antidilution provisions.
Because of the nature of the dividend, liquidation and
voting rights, and the value of the Series B Preferred Stock, the Units of
Series B Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
In the event that, after the Rights become exercisable, the
Company is acquired in a merger or other business combination transaction
with an Acquiring Person or an affiliate thereof, or 50% or more of its
consolidated assets or earning power are sold to an Acquiring Person or an
affiliate thereof, proper provision will be made so that each holder of a
Right will thereafter have the right to receive, upon exercise thereof at the
then current exercise price of the Rights, that number of shares of common
stock of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the Rights.
In the event that any person or group of affiliated or
associated persons becomes the beneficial owner of 15% or more of the
outstanding shares of Common Stock, proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter be void), will thereafter have the right to
receive upon exercise Units of Series B Preferred Stock (or cash, Common
Stock, other securities or property) having a market value of two times the
exercise price of the Rights.
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of
the outstanding shares of Common Stock and prior to the acquisition by such
person or group of 50% or more of the outstanding Common Stock, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such person or group which have become void), in whole or in part, at an
exchange ratio of one Unit of Series B Preferred Stock (subject to
adjustment) which shall equal, subject to adjustment to reflect stock splits,
stock dividends and similar transactions occurring after the date hereof,
that number obtained by dividing the Purchase Price by the then current per
share market price per Unit of Series B Preferred Stock on the earlier of (i)
the date on which any Person becomes an Acquiring Person and (ii) the date on
which a tender or exchange offer is announced by any Person, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more
of the shares of Company Common Stock then outstanding.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an adjustment of
at least 1% in such Purchase Price. No fractional shares of Series B
Preferred Stock will be issued (other than fractions which are integral
multiples of one one-thousandth of a share of Series B Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts)
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Units of Series B Preferred Stock on the last trading day prior
to the date of exercise.
At any time on or prior to the close of business on the
first date of a public announcement that a person or group of affiliated or
associated persons acquire beneficial ownership of 15% or more of the
outstanding Common Stock (unless the Board of Directors extends such ten-day
period), the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.001 per Right (the "Redemption
Price"). The redemption of the rights may be made effective at such time on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price. The Rights are also
redeemable under other circumstances as specified in the Rights Agreement.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights
except that from and after a Distribution Date no such amendment may
adversely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
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The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to acquire
the Company on terms not approved by the Company's Board of Directors, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Rights may be
redeemed by the Company at the Redemption Price prior to the occurrence of a
Distribution Date.
The Rights Agreement, dated as of February 1, 1999 between
the Company and the Rights Agent, specifying the terms of the Rights, is
attached hereto as an exhibit and is incorporated herein by reference. The
foregoing description of the Rights is qualified in its entirety by reference
to such exhibit. The Certificate of Designation for the Series B Junior
Participating Preferred Stock is attached hereto as an exhibit. The foregoing
description of the Series B Junior Participating Preferred Stock is qualified
in its entirety by reference to such exhibit.
Item 2. EXHIBITS.
1. Rights Agreement, dated as of February 1, 1999, between the Company
and American Stock Transfer & Trust Company, which includes the form of
Certificate of Designation for the Series B Junior Participating
Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit
B and the Summary of Rights to Purchase Series B Preferred Stock as
Exhibit C. Pursuant to the Rights Agreement, printed Right Certificates
will not be mailed until as soon as practicable after the earlier of
(i) the close of business on the first date of a public announcement
that a person or group has acquired beneficial ownership of 15% or more
of the shares of Common Stock or (ii) the tenth (10th) business day (or
such later date as may be determined by action of the Board of
Directors) after a person commences, or announces its intention to
commence, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or
more of the shares of Common Stock.
4
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
TRIANGLE PHARMACEUTICALS, INC.
By: /s/ James A. Klein, Jr.
-------------------------------------------
Name: James A. Klein, Jr.
DATE: February 5, 1999 Chief Financial Officer and Treasurer
5
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
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<C> <S>
1. Rights Agreement, dated as of February 1, 1999, between the Company
and American Stock Transfer & Trust Company, which includes the form of
Certificate of Designation for the Series B Junior Participating
Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit
B and the Summary of Rights to Purchase Preferred Stock as Exhibit C.
Pursuant to the Rights Agreement, printed Right Certificates will not
be mailed until as soon as practicable after the earlier of (i) the
close of business on the first date of a public announcement that a
person or group has acquired beneficial ownership of 15% or more of the
shares of Common Stock or (ii) the tenth (10th) business day (or such
later date as may be determined by action of the Board of Directors)
after a person commences, or announces its intention to commence, a
tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of 15% or more of the
shares of Common Stock.
</TABLE>
6
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TRIANGLE PHARMACEUTICALS, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
(RIGHTS AGENT)
RIGHTS AGREEMENT
DATED AS OF FEBRUARY 1, 1999
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TABLE OF CONTENTS
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Page
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Section 1. Certain Definitions.. . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. Appointment of Rights Agent.. . . . . . . . . . . . . . . . . . . . .5
Section 3. Issue of Rights Certificates. . . . . . . . . . . . . . . . . . . . .5
Section 4. Form of Rights Certificates.. . . . . . . . . . . . . . . . . . . . .7
Section 5. Countersignature and Registration.. . . . . . . . . . . . . . . . . .8
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.. . . .9
Section 8. Cancellation and Destruction of Rights Certificates.. . . . . . . . 11
Section 9. Reservation and Availability of Preferred Stock.. . . . . . . . . . 11
Section 10. Preferred Stock Record Date.. . . . . . . . . . . . . . . . . . . . 12
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares. . . . . 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 14. Fractional Rights and Fractional Shares.. . . . . . . . . . . . . . 24
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16. Agreement of Rights Holders.. . . . . . . . . . . . . . . . . . . . 25
Section 17. Rights Certificate Holder Not Deemed a Stockholder. . . . . . . . . 26
Section 18. Concerning the Rights Agent.. . . . . . . . . . . . . . . . . . . . 26
Section 19. Merger or Consolidation or Change of Name of Rights Agent.. . . . . 26
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . 27
Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . 29
Section 22. Issuance of New Rights Certificates.. . . . . . . . . . . . . . . . 30
Section 23. Redemption and Termination. . . . . . . . . . . . . . . . . . . . . 31
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . 33
Section 26. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . 34
Section 28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 29. Determinations and Actions by the Board of Directors. . . . . . . . 35
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
Section 30. Benefits of This Agreement. . . . . . . . . . . . . . . . . . . . . 35
Section 31. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 32. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 34. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . 36
EXHIBITS
Exhibit A - Form of Certificate of Designation of Series B Junior
Participating Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Shares of Series B Junior
Participating Preferred Stock
</TABLE>
ii.
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 1, 1999, between
Triangle Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company (the "Rights Agent").
WHEREAS, effective January 29, 1999 (the "Rights Dividend
Declaration Date"), the Board of Directors authorized and declared a
distribution of one Right (each, a "Right") for each share of Common Stock
(as hereinafter defined) of the Company outstanding as of the Close of
Business (as hereinafter defined) on February 16 (the "Record Date"), each
Right initially representing the right to purchase one one-thousandth of a
share (a "Unit") of Preferred Stock (as hereinafter defined) upon the terms
and subject to the conditions herein set forth, and has 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 earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date
(as such terms are hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 15% or more of
the shares of Common Stock of the Company then outstanding but shall not
include the Company, any Subsidiary (as such term is hereinafter defined) of
the Company, any employee benefit plan of the Company or any Subsidiary of
the Company, or any entity holding shares of Common Stock for or pursuant to
the terms of any such plan. Notwithstanding the foregoing:
(i) no Person shall become an "Acquiring Person" as the result
of an acquisition of shares of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the
shares of Common Stock of the Company then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the Beneficial Owner of 15% or
more of the shares of Common Stock of the Company then outstanding by
reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional
shares of Common Stock of the Company, then such Person shall be deemed
to be an "Acquiring Person" hereunder; and
(ii) if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring Person" as
defined pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock
1.
<PAGE>
so that such Person would no longer be an "Acquiring Person" (as defined
pursuant to the foregoing provisions of this paragraph (a)), then such
Person shall not be deemed to be an "Acquiring Person" for any purpose of
this Agreement.
(b) "Adjustment Shares" has the meaning set forth in Section
11(a)(ii).
(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 Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Rule 13d-3 thereunder (or any
comparable or successor law or regulation); or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not
in writing, other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights,
rights (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 or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; PROVIDED FURTHER, 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: (x) 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 Exchange Act and the Exchange Act Regulations, and
(y) is not reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (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,
other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities),
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to subparagraph (i) of this paragraph (d)) or
disposing of any securities of the Company; PROVIDED, HOWEVER, that in no
case shall an officer or director of the Company be deemed (A) the
Beneficial Owner of any securities beneficially owned by another officer
or director of the Company solely by reason of actions undertaken by such
persons in their
2.
<PAGE>
capacity as officers or directors of the Company or (B) the Beneficial
Owner of securities held of record by the trustee of any employee benefit
plan of the Company or any Subsidiary of the Company for the benefit of
any employee of the Company or any Subsidiary of the Company, other than
the officer or director, by reason of any influence that such officer or
director may have over the voting of the securities held in the plan;
(iv) Notwithstanding anything in this definition of "Beneficial
Owner" and "beneficially own" to the contrary, the phrase "then
outstanding," when used with reference to a Person who is the Beneficial
Owner 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 beneficially own hereunder.
(e) "Business Day" shall mean any day other than a Saturday,
a Sunday, or a day on which banking institutions in the State of California
are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., Eastern time, on such date; PROVIDED, HOWEVER, that if such date is not
a Business Day it shall mean 5:00 P.M., California time, on the next
succeeding Business Day.
(g) "Common Stock" when used with reference to the Company
shall mean the shares of common stock of the Company, par value $0.001 per
share. "Common Stock" when used with reference to any Person other than the
Company shall mean the capital stock (or other equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(h) "Company" shall have the meaning set forth in the
recitals to this Agreement.
(i) "current per share market price" shall have the meaning
set forth in Section 11(d)(i) hereof.
(j) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(k) "Directors" shall mean the members of the Board of
Directors of the Company.
(l) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(m) "equivalent preferred stock" shall have the meaning set
forth in Section 11(b) hereof.
(n) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
3.
<PAGE>
(o) "Exchange Act Regulations" shall mean the General Rules
and Regulations under the Exchange Act.
(p) "Exchange Ratio" shall have the meaning set forth in
Section 24 hereof.
(q) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(r) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(s) "Nasdaq" shall have the meaning set forth in Section
11(d) hereof.
(t) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of
such entity.
(u) "Preferred Stock" shall mean shares of Series B Junior
Participating Preferred Stock, par value $0.001, of the Company having the
rights and preferences set forth in the Form of Certificate of Designation
attached to this Agreement as EXHIBIT A.
(v) "preferred stock equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(w) "Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.
(x) "Record Date" shall have the meaning set forth in the
recitals to this Agreement.
(y) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(z) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(aa) "Right" shall have the meaning set forth in the recitals
to this Agreement.
(bb) "Rights Agent" shall have the meaning set forth in the
recitals to this Agreement.
(cc) "Rights Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(dd) "Rights Dividend Declaration Date" shall have the
meaning set forth in the recitals to this Agreement.
(ee) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii)(A), (B) or (C) hereof.
4.
<PAGE>
(ff) "Section 11(a)(iii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(gg) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(hh) "Section 24(a) Exchange Ratio" has the meaning set forth
in Section 24(a) hereof.
(ii) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(jj) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
(kk) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ll) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
(mm) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(nn) "Trading Day" shall have the meaning set forth in
Section 11(d)(i) hereof.
(oo) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the
Shares Acquisition Date and (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by a majority of the Directors
prior to such time as any Person becomes an Acquiring Person and of which the
Company will give the Rights Agent prompt written notice) 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 entity holding shares of Common Stock for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any
successor rule or of the first public announcement of the intention of 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 entity
holding shares of Common
5.
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Stock for or pursuant to the terms of any such plan) to commence a tender or
exchange offer, if upon consummation thereof such Person would be the
Beneficial Owner of 15% or more of the shares of Company Common Stock then
outstanding (the earlier of (i) and (ii) above being the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for shares of Common Stock
registered in the names of the holders thereof (which certificates shall also
be deemed to be Rights Certificates) and not by separate Rights Certificates,
and (y) the right to receive Rights Certificates will be transferable only in
connection with the transfer of shares of Common Stock. As soon as
practicable after the Distribution Date, the Company will notify the Rights
Agent thereof and the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of shares of 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 Rights Certificate, in substantially the form of
EXHIBIT B hereto (a "Rights Certificate"), evidencing one Right for each
share of Common Stock so held. As of the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Shares of Series B Junior Participating Preferred Stock, in substantially the
form of EXHIBIT C hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of shares of 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 shares of
Common Stock outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of
the holders thereof together with a copy of the Summary of Rights attached
thereto. Until the Distribution Date (or the Expiration Date), the surrender
for transfer of any certificate for shares of Common Stock outstanding on the
Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
shares of Common Stock represented thereby.
(c) Certificates for shares of Common Stock which become
outstanding (including, without limitation, reacquired shares of Common Stock
referred to in the last sentence of this paragraph (c)) after the Record Date
but prior to the earlier of the Distribution Date and the Expiration Date
shall have impressed on, printed on, written on or otherwise affixed to them
the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between Triangle Pharmaceuticals,
Inc. and American Stock Transfer & Trust Company,
dated as of February 1, 1999 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal executive offices of
Triangle Pharmaceuticals, Inc. 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. Triangle Pharmaceuticals, Inc. will
mail to the holder of this certificate a copy of the
Rights Agreement without charge after
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receipt of a written request therefor. Under certain
circumstances, as 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 the Distribution Date and the Expiration Date, the Rights
associated with the shares of Common Stock represented by such certificates
shall be evidenced by such certificates alone, and the surrender for transfer
of any such certificate shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented thereby. In the event
that the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with
such shares of Common Stock shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the
shares of Common Stock which are no longer outstanding.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase Units of Preferred Stock and of assignment to be printed on the
reverse thereof) shall be substantially the same as EXHIBIT B hereto and may
have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange or
transaction reporting system 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 shall entitle the holders thereof
to purchase the number of Units of Preferred Stock as shall be set forth
therein at the price per Unit of Preferred Stock set forth therein, but the
number of such Units of Preferred Stock and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that
represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom such Acquiring Person has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which a majority of the 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 shall
contain (to the extent feasible) 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
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of an Acquiring Person (as such terms are defined in the
Rights Agreement between Triangle Pharmaceuticals, Inc. and
American Stock Transfer & Trust Company, as Rights Agent,
dated as of February 1, 1999 (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.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer or Chief Financial
Officer, either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested by
the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned
by the Rights Agent and shall not be valid for any purpose unless
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 Certificate 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 for such purpose, 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 date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e) and 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 Rights Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling
the registered holder to purchase a like number of Units of Preferred Stock
(or, following a Triggering Event, other securities, cash or other assets, as
the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Rights 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
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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
Sections 4(b), 7(e) and 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, split up, 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,
at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if mutilated, the
Company will make and deliver a new Rights Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS.
(a) Except as provided in Sections 23(c) and 7(e), 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 certification on the reverse side
thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each Unit of Preferred Stock as to which the Rights are exercised, at or
prior to the earliest of (i) the Close of Business on the tenth anniversary
hereof (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"), or (iii)
the time at which such Rights are exchanged as provided in Section 24 hereof
(the earlier of (i), (ii) and (iii) being the "Expiration Date").
(b) The Purchase Price for each Unit of Preferred Stock
pursuant to the exercise of a Right shall initially be One Hundred dollars
($100.00), shall be subject to adjustment from time to time as provided in
Sections 11 and 13 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 form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the number of Units of
Preferred Stock (or other securities or property, as the case may be) to be
purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Rights Certificate in accordance with Section 9
hereof in cash, or by certified check or cashier's check payable to the order
of the Company, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for the Preferred Stock) a
9.
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certificate or certificates for the number of Units 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 shall have elected to
deposit the total number of Units of Preferred Stock issuable upon exercise
of the Rights hereunder with a depositary agent, requisition from the
depositary agent of a depositary receipt or depositary receipts representing
such number of Units of Preferred Stock as are to be purchased (in which case
certificates for the Units of Preferred Stock represented by such receipt or
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance 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) when appropriate, after
receipt thereof, deliver such cash 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 (including to zero) pursuant to Section 11(a)(iii)
hereof) may be made in cash or by certified bank check or bank draft payable
to the order of the Company. In the event that the Company is obligated to
issue other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities,cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing a number of Rights equivalent to the number of Rights
remaining unexercised shall be issued by the Rights Agent to the registered
holder of such Rights Certificate or to such registered holder's duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Triggering 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 such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such (a "Post Transferee"), (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which a majority of the Directors of the
Company has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(e) (a
"Prior Transferee") or (iv) any subsequent transferee receiving transferred
Rights from a Post Transferee or a Prior Transferee, either directly or
through one or more intermediate transferees, 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
ensure 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 to any other Person as a result of its failure to
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make any determinations with respect to an Acquiring Person or any of such
Acquiring Person's Affiliates, Associates or transferees 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.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS
CERTIFICATES. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered
to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this Rights
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,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK.
(a) The Company covenants and agrees that it will use its
best efforts to cause to be reserved and kept available out of and to the
extent of its authorized and unissued Units of Preferred Stock not reserved
for another purpose that will be sufficient to permit the exercise in full of
all outstanding Rights. Upon the occurrence of any events resulting in an
increase in the aggregate number of shares of Preferred Stock (or other
equity securities of the Company) issuable upon exercise of all outstanding
Rights above the number then reserved, the Company shall make appropriate
increases in the number of shares so reserved.
(b) If the Units of Preferred Stock to be issued and
delivered upon the exercise of the Rights are at any time listed on a
national securities exchange or included for quotation on any transaction
reporting system, the Company shall during the period from the Distribution
Date to the Expiration Date use its best efforts to cause all shares reserved
for such issuance to be listed on such exchange or included for quotation on
any such transaction reporting system 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 in 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
Securities Act, with respect to the securities purchasable upon exercise of
the Rights on an appropriate form,
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(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 Securities 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, or an exemption therefrom shall be
available 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 Units of Preferred Stock
(and, following the occurrence of a Triggering Event, any other securities
that may be delivered upon exercise of Rights) shall, at the time of delivery
of the certificates for such Units of Preferred Stock (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and non-assessable.
(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 or of any Units of Preferred Stock 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
certificates or depositary receipts for Units of Preferred Stock in a name
other than that of, the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Units of Preferred Stock upon the
exercise of any Rights until any 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 reasonable
satisfaction that no such tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each person in
whose name any certificate for Units of Preferred Stock (or, following the
occurrence of a Triggering Event, other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of record of the Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) 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 aggregate
Purchase Price (and any applicable transfer taxes) was made; PROVIDED,
HOWEVER, that if the date of such surrender and payment is a date upon which
the Preferred Stock (or, following the occurrence of a Triggering Event,
other securities) transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock transfer books of the Company are open; PROVIDED FURTHER,
HOWEVER, that if delivery of Units of Preferred Stock is delayed pursuant to
Section 9(c), such Persons shall be deemed to have become the record holders
of such Units of Preferred Stock only when such Units first become
deliverable. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to securities 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
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not be entitled to receive any notice of any proceedings of the Company,
except as provided herein. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any
rights of a holder of a Unit of Preferred Stock 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.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kinds of securities
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 shares of
Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares of Preferred Stock 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 or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), 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 capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Rights exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital stock
which, if such Rights had been exercised immediately prior to such date and
at a time when the Preferred Stock transfer books of the Company were open,
such holder would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one Right. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii), 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).
(ii) Subject to Section 24 of this Agreement, in the
event that (A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement, directly
or indirectly, shall (1) merge into the Company or otherwise combine with
the Company and the Company shall be the continuing or surviving
corporation of such merger or combination and shares of Company Common
Stock shall remain outstanding and unchanged, (2) in one transaction or a
series of transactions, transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of Company
Common Stock, for other equity securities of the Company or any such
Subsidiary, or for securities exercisable for or convertible into shares
of equity securities of the Company or any of its Subsidiaries (whether
shares of Company Common Stock or otherwise) or otherwise obtain from the
Company or any of its Subsidiaries, with or without consideration, any
additional shares of such equity securities or securities exercisable for
or convertible into such equity securities other than pursuant to a pro
rata distribution to all holders of shares of Company Common Stock,
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(3) sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries or
any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting
in such capacity, assets (including securities) on terms and conditions
less favorable to the Company or such Subsidiary or plan than those that
could have been obtained in arm's-length negotiations with an
unaffiliated third party, other than pursuant to a transaction set forth
in Section 13(a) hereof, (4) sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one transaction
or a series of transactions, to, from or with the Company or any of its
Subsidiaries or any employee benefit plan maintained by the Company or
any of its Subsidiaries or any trustee or fiduciary with respect to such
plan acting in such capacity (other than transactions, if any, consistent
with those engaged in, as of the date hereof, by the Company and such
Acquiring Person or such Associate or Affiliate), 50% or more of the
Company's assets (including securities or intangible assets) other than
pursuant to a transaction set forth in Section 13(a) hereof, (5)
receive, or any designee, agent or representative of such Acquiring
Person or any Affiliate or Associate of such Acquiring Person shall
receive, any compensation from the Company or any of its Subsidiaries
other than compensation for full-time employment as a regular employee at
rates in accordance with the Company's (or its Subsidiaries') past
practices, or (6) receive the benefit, directly or indirectly (except
proportionately as a holder of shares of Company Common Stock or as
required by law or governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or
other tax advantages provided by the Company or any of its Subsidiaries
or any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting
in such capacity; or (B) any Person shall become an Acquiring Person,
unless the event causing the Person to become an Acquiring Person is a
transaction set forth in Section 13(a); or (C) during such time as there
is an Acquiring Person, there shall be any reclassification of securities
(including any reverse stock split), or recapitalization of the Company,
or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions involving
the Company or any of its Subsidiaries, other than a transaction or
transactions to which the provisions of Section 13(a) apply (whether or
not with or into or otherwise involving an Acquiring Person), which has
the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries that is directly or
indirectly beneficially owned by any Acquiring Person or any Person or
any Associate or Affiliate of any Acquiring Person;
then promptly following the occurrence of an event described in Section
11(a)(ii)(A), (B) or (C) (a "Section 11(a)(ii) Event"), proper provision
shall be made so that each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive for each Right, upon
exercise thereof in accordance with the terms of this Agreement and payment
of the then-current Purchase Price, in lieu of the number of Units of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, such number of Units of
Preferred Stock as shall equal the result obtained by multiplying the
then-current Purchase Price by the then number of Units of Preferred Stock
for which a Right was
14.
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exercisable (or would have been exercisable if the Distribution Date had
occurred) immediately prior to the first occurrence of a Triggering Event,
and dividing that product by 50% of the current per share market price
(determined pursuant to Section 11(d) hereof) for shares of Common Stock on
the date of occurrence of the Triggering Event (such number of Units of
Preferred Stock being hereinafter referred to as the "Adjustment Shares").
(iii) In the event that the number of Units of Preferred
Stock which are authorized by the Company's Amended and Restated
Certificate 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, or if any necessary regulatory
approval for such issuance has not been obtained by the Company, the
Company shall, in lieu of issuing Units of Preferred Stock in accordance
with Section 11(a)(ii) hereof, upon approval by a majority of the
Directors: (A) determine the excess of (1) the value of the Units of
Preferred Stock issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess being referred to as the
"Spread") and (B) with respect to each Right, make adequate provision to
substitute for such Units of Preferred Stock, upon exercise of the
Rights, (1) cash, (2) a reduction in the Purchase Price, (3) other equity
securities of the Company (including, without limitation, Common Stock or
shares or units of shares of any series of preferred stock which the
Board of Directors of the Company has deemed to have the same value as
the Units of Preferred Stock (such shares or units of preferred stock are
herein called "preferred stock equivalents")), except to the extent that
the Company has not obtained any necessary regulatory approval for such
issuance, (4) debt securities of the Company, except to the extent that
the Company has not obtained any necessary regulatory approval for such
issuance, (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 a nationally recognized investment
banking firm 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 following the
later of (x) occurrence of a Section 11(a)(ii) Event, and (y) the date on
which the Company's right of redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein as the "Section
11(a)(iii) 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, Units of Preferred Stock (to the extent
available), except to the extent that the Company has not obtained any
necessary regulatory approval for such issuance, and then, if necessary,
cash, which Units and/or cash have an aggregate value equal to the
Spread.
(b) In the event that the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Units of
Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Units of Preferred Stock
(or shares having the same rights, privileges and preferences as the
Preferred Stock ("equivalent preferred stock")) or securities convertible
into Units of Preferred Stock or equivalent preferred stock at a price per
Unit of Preferred Stock or equivalent preferred stock (or having a conversion
price per share, if a security convertible into Units of Preferred Stock or
equivalent preferred stock) less than the then current per share market price
of a Unit of
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Preferred Stock (as determined pursuant to Section 11(d)) 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
Units of Preferred Stock outstanding on such record date plus the number of
Units of Preferred Stock which the aggregate offering price of the total
number of Units 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 Units of Preferred Stock
outstanding on such record date plus the number of additional Units 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 in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
a majority of the 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. Units 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, options 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 Units of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend) assets
(other than a dividend payable in Units of Preferred Stock but including any
dividend payable in equity securities other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(d)
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 then
current per share market price (as determined pursuant to Section 11(d)) of
the Preferred Stock on such record date, less the fair market value (as
determined in good faith by a majority of the 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 holder of Rights) of the
cash, assets or evidences of indebtedness to be distributed or of such
subscription rights or warrants distributable in respect of a share of
Preferred Stock and the denominator of which shall be such current per share
market price (as determined pursuant to Section 11(d)) of a 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 again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the thirty
(30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; PROVIDED, HOWEVER, that in the event that the
"current per share market price" of the
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Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such
shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the "current per share market price" shall be appropriately adjusted to
reflect the "current market price" per share equivalent of such Security.
The closing price for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the Nasdaq National Market System ("Nasdaq") or, if
the Security is not listed or admitted to trading on the Nasdaq, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed
or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the Nasdaq or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by a majority of the Directors. If on any such date no market maker
is making a market in the Security, the "current per share market price" of
such Security on such date as determined in good faith by the Board of
Directors of the Company as provided for below shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for
the transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Stock shall be
determined in accordance with the method set forth in Section 11(d)(i).
If the "current per share market price" of the 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 clause (i) of
this Section 11(d), the "current per share market price" of the Preferred
Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such amount may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to shares of
Company Common Stock occurring after the date of this Agreement)
multiplied by the current market price per share of Company Common Stock.
If shares of neither the Company Common Stock nor Preferred Stock is
publicly held or so listed or traded, "current per share market price" 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 binding on the Rights Agent and the holders of the Rights.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1%
in the Purchase Price; PROVIDED, HOWEVER, that any adjustments which by
reason of this Section 11(e) are not required to be made
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shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or
to the nearest one one-thousandth of a share of Preferred Stock or one
one-hundredth of any other share or security 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 years from the date of the transaction which requires such adjustment
or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) hereof, the holder of any Rights thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Units of Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Rights 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 Section 11(a), (b), (c), (d), (e), (g), (h), (i), (j),
(k), (l) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 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 Units 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 Units of Preferred Stock (calculated to the nearest
one-millionth of a share of Preferred Stock) obtained by dividing (i) the
product obtained by multiplying (x) the number of Units of Preferred Stock
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
by, (ii) the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of Units of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of Units 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-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 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
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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 to be so distributed shall be issued, executed and countersigned
in the manner provided for herein 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 Units 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 Unit and the number of Units of
Preferred Stock which were expressed in the initial Rights Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value of the number of Units
of Preferred 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 number of Units of Preferred Stock at such adjusted
Purchase Price.
(l) 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 issuing to the holder of any Rights exercised after such
record date of that number of Units of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over
and above the Units 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) upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any (i) consolidation or subdivision
of the Preferred Stock, (ii) issuance wholly for cash of any Unit of
Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) dividends on
Preferred Stock payable in Preferred Stock or (v) issuance of rights, options
or warrants referred to in this Section 11, hereafter made by the Company to
holders of Units of its Preferred Stock shall not be taxable to such
stockholders.
(n) The Company 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(o)), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)), or (iii)
sell or
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transfer (or permit any Subsidiary to sell or transfer), in one transaction,
or a series of 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(o)), if (x) at the time of or immediately after such
consolidation, merger or sale 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 or sale, the Person which constitutes, or
would constitute the "Principal Party" for purposes of Section 13(a) shall
have distributed or otherwise transferred to its stockholders or other
persons holding an equity interest in such Person Rights previously owned by
such Person or any of its Affiliates and Associates; PROVIDED, HOWEVER, this
Section 11(n) shall not affect the ability of any Subsidiary of the Company
to consolidate with, merge with or into, or sell or transfer assets or
earning power to, any other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not,
except as permitted by Sections 23, 24 or 27, take (or permit any Subsidiary
to take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) In the event that, at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare
or pay any dividend on outstanding shares of Common Stock payable in shares
of Common Stock or (ii) effect a subdivision, combination or consolidation of
the Common Stock (by reclassification or otherwise than by payment of
dividends in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in any such case the number of Units of
Preferred Stock purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of Units of Preferred
Stock so purchasable immediately prior to such event by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the shares of Common Stock or Units of Preferred Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 25 hereof. Notwithstanding the
foregoing sentence, the failure by the Company to make such certification or
give such notice shall not affect the validity of or the force or effect of
the requirement for such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment contained
therein and shall not be deemed to have knowledge of such adjustment unless
and until it shall have received such certificate.
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Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) Except as provided in Section 13(b) hereof, in the event
that, following a Shares Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o))
shall consolidate with the Company, or merge with and into the Company and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the 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) to any Person or
Persons (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), in one or more transactions, directly or
indirectly, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole)(any such
event being a "Section 13 Event"), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e), shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price, such number of
validly authorized and issued, fully paid and non-assessable shares of Common
Stock of the Principal Party (as such term is hereinafter defined), which
shares shall not be subject to any liens, encumbrances, rights of first
refusal, transfer restrictions or other adverse claims, as shall be equal to
the result obtained by (1) multiplying the then current Purchase Price by the
number of Units 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 Units of Preferred Stock for
which a Right would be exercisable hereunder but for the occurrence of such
Section 11(a)(ii) Event by the Purchase Price which would be in effect
hereunder but for such first occurrence) and (2) dividing that product
(which, following the direct occurrence of a Section 13 Event, shall be the
"Purchase Price" for all purposes of this Agreement) by 50% of the current
per share market price (determined pursuant to Section 11(d)) of the shares
of 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, for all purposes of this Agreement, thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 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 ensure that the provisions of this
Agreement shall thereafter be applicable to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) shall be of no further effect following the
first occurrence of any Section 13 Event.
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(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Company Common Stock are
converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer of shares of Common Stock that has the highest
aggregate current market price (determined pursuant to Section 11(d)) and
(B) if no securities are so issued, the Person that is the other party to
such merger or consolidation, or, if there is more than one such Person,
the Person the Common Stock of which has the highest aggregate current
market price (determined pursuant to Section 11(d)); and
(ii) 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 largest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is
a party to such transaction or transactions receives the same portion of
the assets or earning power transferred pursuant to such transaction or
transactions or if the Person receiving the largest portion of the assets
or earning power cannot be determined, whichever Person the Common Stock
of which has the highest aggregate current market price (determined
pursuant to Section 11(d)); 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-month period registered under
Section 12 of the Exchange Act ("Registered Common Stock"), or such
Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other Person; (2) if
the Common Stock of such Person is not Registered Common Stock or such
Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person but is not a direct or indirect Subsidiary
of another Person which has Registered Common Stock outstanding,
"Principal Party" shall refer to the ultimate parent entity of such
first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever of such other
Persons is the issuer of the Registered Common Stock having the highest
aggregate current per share market price (determined pursuant to Section
11(d)); and (4) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and none of
such other Persons has Registered Common Stock outstanding, "Principal
Party" shall refer to whichever ultimate parent entity is the corporation
having the greatest stockholders' equity or, if no such ultimate parent
entity is a corporation, shall refer to whichever ultimate parent entity
is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of 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
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providing for the terms set forth in paragraphs (a) and (b) of this Section
13 and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement under
the Securities Act with respect to the shares of Common Stock that may be
acquired upon exercise of the Rights, (B) cause such registration
statement to remain effective (and to include a prospectus complying with
the requirements of the Securities Act) until the Expiration Date, and
(C) as soon as practicable following the execution of such agreement take
such action as may be required to ensure that any acquisition of such
shares of Common Stock upon the exercise of the Rights complies with any
applicable state securities or "blue sky" laws; and
(ii) 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.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or Bylaws or
other instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue, in connection with,
or as a consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the
then current market price per share (determined pursuant to Section 11(d)) or
securities exercisable for, or convertible into, shares of Common Stock of
such Principal Party at less than such then current marker price (other than
to holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the shares of Common Stock of such Principal Party pursuant to the provisions
of this Section 13, then, in such event, the Company shall not consummate any
such transaction unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such Principal Party
shall have been cancelled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision will have no
effect in connection with, or as a consequence of, the consummation of the
proposed transaction.
(e) The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence of
a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in
Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall 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
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the current market value of a whole Right. For the 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 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 Nasdaq or, if the Rights are not listed or admitted to trading
on the Nasdaq, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on 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 Directors. 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
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share
of Preferred Stock). Fractions of Preferred Stock in integral multiples of
one one-thousandth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; PROVIDED,
HOWEVER, that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred Stock
represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-thousandth of a
share of Preferred Stock, the Company shall 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 a
share of Preferred Stock as determined pursuant to Section 11(d).
(c) The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
Section 15. RIGHTS OF ACTION. All rights of action in
respect of this Agreement, excepting the rights of action given to the Rights
Agent under Section 18 hereof, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of certificates representing shares of Common Stock); and
any registered holder of any Rights Certificate (or, prior to the
Distribution Date, a certificate representing shares of 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 a certificate
representing shares of Common Stock), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or
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otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Rights Certificate in the manner 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 will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
Section 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 shares of the Company's
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 office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name the 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 shall 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.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. 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
Units of Preferred Stock or any other securities of the Company which may at
any time be issuable upon 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 stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive
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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.
Section 18. CONCERNING THE RIGHTS AGENT. 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 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 for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence or willful misconduct on the part of
the Rights Agent, for any action taken, suffered or omitted by the Rights
Agent in connection with the execution, acceptance and administration of this
Agreement and the exercise and performance hereunder of its duties, including
the costs and expenses of defending against and appealing any claim of
liability. Anything to the contrary notwithstanding, in no event shall the
Rights Agent be liable for special, indirect, consequential or incidental
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
damages. The indemnity provided herein shall survive the termination of this
Agreement and the expiration of the Rights. The costs and expenses incurred
in enforcing this right of indemnification shall be paid by the Company.
The Rights Agent may conclusively rely upon and 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 and the exercise and performance of its duties hereunder in
reliance upon any Rights Certificate or certificate for Units of Preferred
Stock or shares of 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, or otherwise upon the advice of counsel as set forth in Section
20 hereof.
Section 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 stock transfer or corporate trust business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 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
the 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 Rights Agent or in
the name of the successor Rights Agent;
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and in all 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.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions and no implied duties or obligations shall be
read into this Agreement against the Rights Agent, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it
may consult with legal counsel of its choice (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, suffered or omitted by it in good faith and in accordance with such
advice or opinion.
(b) Whenever in the administration, exercise and performance
of its duties under this Agreement the Rights Agent shall deem it necessary
or desirable that any fact or matter be proved or established by the Company
prior to taking, suffering or omitting any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Chief Financial
Officer, or 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 to the
Company and any other Person only for its own 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 (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any liability or
responsibility in respect of the legality, validity or enforceability of this
Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the legality, validity or
enforceability or the execution of any Rights Certificate (except its
countersignature thereof and has actual knowledge of such change or
adjustment); nor shall it be liable or
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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 change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment
in the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates after
receipt of the certificate described in Section 12 hereof or has actual
knowledge of such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Units of Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any Preferred Stock
will, when 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 administration, exercise and
performance of its duties hereunder from any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Secretary or any Assistant Secretary 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 by it in good faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions. Any
application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this 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 (5) Business Days
after the date any officer of the Company actually received 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.
(h) The Rights Agent and any stockholder, 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.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Company resulting from
any
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such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) 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 the Rights Agent in good faith believes that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise, transfer, split up, combination or
exchange, the certification on the form of assignment or form of election to
purchase, as the case may be, that the Rights evidenced by the Rights
Certificate are not owned by an Acquiring Person, or an Affiliate or
Associate thereof, has either not been completed or in any manner indicates
any other response thereto, the Rights Agent shall not take any further
action with respect to such requested exercise, transfer, split up,
combination or exchange, without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Stock or Preferred Stock (as to
which the Rights Agent has received prior written notice) by registered or
certified mail, and the Company shall mail notice thereof 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 or Preferred Stock (as
to which the Rights Agent has received prior written notice) 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 such holder's Rights
Certificate for inspection by the Company), then the 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 either (A) a
corporation organized and doing business under the laws of the United States
or of any state of the United States, in good standing, authorized under such
laws to exercise corporate trust or stock transfer powers, and subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million or (B) an affiliate of such a corporation. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Stock or Preferred Stock, and mail a notice thereof in writing to the
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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.
Section 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 benefit plan or arrangement or upon the exercise,
conversion or exchange of securities of the Company currently outstanding or
issued at any time in the future 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 and this sentence shall be null
and void AB INITIO if, and to the extent that, such issuance or this sentence
would create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights Certificate
would be issued or would create a significant risk of or result in such
options' or employee plans' or arrangements' failing to qualify for otherwise
available special tax treatment 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. Any rights Certificate
issued pursuant to this Section 22 shall have impressed on, printed on,
written on or otherwise affixed to and shall be subject to the legend set
forth in Section 3(c) hereof.
Section 23. REDEMPTION AND TERMINATION.
(a) The Company may, at its option, upon approval by a
majority of the Directors, at any time prior to the earlier of (i) the Shares
Acquisition Date, or (ii) the Final Expiration Date redeem all but not less
than all the then outstanding Rights at a redemption price of $0.001 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"), and the Company
may, at its option, pay the Redemption Price either in cash, shares of Common
Stock (based on the current per share market price thereof (as determined
pursuant to Section 11(d) hereof) at the time of redemption), or any other
form of consideration deemed appropriate by the Board of Directors. The
redemption of the Rights by the Board of Directors may be made effective at
such time on such basis and with such conditions as a majority of the
Directors in their sole discretion may establish.
(b) Immediately upon the action of a majority of the
Directors of the Company ordering the redemption of the Rights pursuant to
paragraph (a) of this Section 23, 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.
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The Company shall promptly give public notice of any such redemption;
PROVIDED, HOWEVER, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within 10 days
after such action of a majority of the Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the Rights
Agent and shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common 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. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof, and other
than in connection with the purchase of shares of Common Stock prior to the
Distribution Date.
(c) Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable pursuant to Section 7(a) at
any time when the Rights are redeemable hereunder.
Section 24. EXCHANGE.
(a) The Company, at its option, upon approval by a majority
of the Directors, at any time after any Person becomes an Acquiring Person,
may exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 7(e) hereof) for Units of Preferred Stock at an
exchange ratio equal to, subject to adjustment to reflect stock splits, stock
dividends and similar transactions occurring after the date hereof, that
number obtained by dividing the Purchase Price by the then current per share
market price per Unit of Preferred Stock on the earlier of (i) the date on
which any Person becomes an Acquiring Person and (ii) the date on which a
tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity) is first published or sent or given
within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any
successor rule, if upon consummation thereof such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding (such exchange ratio being hereinafter referred to as the
"Section 24(a) Exchange Ratio"). Notwithstanding the foregoing, the Company
may not effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained
by the Company or any of its Subsidiaries, or any trustee or fiduciary with
respect to such plan acting in such capacity), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of Units of
Preferred Stock equal to the number of such Rights held by such holder
multiplied by the
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Section 24(a) Exchange Ratio. The Company shall promptly give public notice
of any such exchange; PROVIDED, HOWEVER, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of Units of Preferred Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected PRO RATA based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Preferred
Stock which are authorized by the Company's Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Preferred
Stock for issuance upon exchange of the Rights or make adequate provision to
substitute (1) cash, (2) Company Common Stock or other equity securities of
the Company, (3) debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing, having an aggregate value equal to the
Adjustment Spread, where such aggregate value has been determined by a
majority of the Directors. To the extent that the Company determines that
some action need be taken pursuant to subsection (a) of this Section 24, the
Board of Directors may temporarily suspend the exercisability of the Rights
for a period of up to sixty (60) days following the date on which the event
described in Section 24(a) shall have occurred, in order to seek any
authorization of additional shares of Preferred Stock and/or to decide the
appropriate form of distribution to be made pursuant to the above provision
and to determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions
smaller than or to distribute certificates which evidence fractions smaller
than one one-thousandth of a share of Preferred Stock. In lieu thereof, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional Units would otherwise be issuable an amount
in cash equal to the same fraction of the current market value (as determined
pursuant to Section 11(d)(i) hereof) of one Unit of Preferred Stock.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Stock
or to make any other distribution to the holders of its Preferred Stock
(other than a regular quarterly cash dividend), (ii) to offer to the holders
of its Preferred Stock rights or warrants to subscribe for or to purchase any
additional Units of Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding Preferred Stock), (iv) to effect any consolidation
or merger
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into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the
Common Stock payable in shares of Common Stock or to effect a subdivision,
combination or consolidation of the shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of
Common Stock), then, in each such case, the Company shall give to each holder
of a Rights Certificate, 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, or distribution of rights or warrants, or the date on
which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock and/or
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 ten (10) 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 ten (10) days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the shares of Common Stock and/or shares of Preferred Stock,
whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of Rights under
Section 11(a)(ii) hereof. In the event any Person becomes an Acquiring
Person, the Company will promptly notify the Rights Agent thereof.
Section 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 sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Triangle Pharmaceuticals, Inc.
4 University Place
4611 University Drive
Durham, North Carolina 27707
Attention: General Counsel
Subject to the provisions of Section 21 hereof, 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 sent by
registered or certified mail and shall be deemed given upon receipt and
addressed (until another address is filed in writing with the Company) as
follows:
American Stock Transfer & Trust Company
6201 Fifteenth Avenue
Brooklyn, New York 11219
Attention: Herb Lemmer
33.
<PAGE>
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate 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.
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date, the Company may supplement or amend this Agreement in any
respect, without the approval of any holders of Rights, by action of its
Board of Directors and the Rights Agent shall, if the Company so directs,
execute such supplement or amendment. From and after the Distribution Date,
the Company may from time to time supplement or amend this Agreement without
the approval of any holders of Rights, by action of its Board of Directors 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 or
(iv) 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 an Acquiring Person), including,
without limitation, to change the Purchase Price, the Redemption Price, any
time periods herein specified, and any other term hereof, any such supplement
or amendment to be evidenced by a writing signed by the Company and the
Rights Agent; PROVIDED, HOWEVER, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.
Upon receipt of a certificate from an appropriate officer of the Company that
the proposed supplement or amendment is consistent with this Section 27 and,
after such time as any Person has become an Acquiring Person, that the
proposed supplement or amendment does not adversely affect the interests of
the holders of Rights, the Rights Agent shall execute such supplement or
amendment.
Section 28. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the 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, or 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 a determination to redeem
or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing), which are
done or made by the Board of Directors in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights Certificates
34.
<PAGE>
and all other parties and (y) not subject the Board of Directors to any
liability to the holders of the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, shares of 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, shares of Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; 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 tenth Business Day following the date of such determination
by the Board of Directors of the Company.
Section 32. GOVERNING LAW. This Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of
the several sections of this Agreement are inserted or convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
35.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
ATTEST: TRIANGLE PHARMACEUTICALS, INC
By: By:
---------------------------------- ----------------------------------
Name: John A. Denniston Name: David W. Barry
Title: Counsel for Triangle Title: Chairman and Chief
Pharmaceuticals, Inc. Executive Officer
ATTEST: AMERICAN STOCK TRANSFER & TRUST
COMPANY
as Rights Agent
By: By:
---------------------------------- ----------------------------------
Name: Name:
-----------------------------
Title: Title:
----------------------------
<PAGE>
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATION
of
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
TRIANGLE PHARMACEUTICALS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
_________________________________
TRIANGLE PHARMACEUTICALS, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware
(hereinafter called the "Corporation"), hereby certifies that the following
resolution was adopted by the Board of Directors of the Corporation as
required by Section 151 of the General Corporation Law at a meeting duly
called and held on January 29, 1999;
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of the Corporation (hereinafter called the "Board
of Directors" or the "Board") in accordance with the provisions of the
Certificate of Incorporation, the Board of Directors hereby creates a series
of Preferred Stock, par value $.001 per share (the "Preferred Stock"), of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences, and limitations thereof as follows:
Series B Junior Participating Preferred Stock:
Section 1. DESIGNATION AND AMOUNT. The shares of such
series shall be designated as "Series B Junior Participating Preferred Stock"
(the "Series B Preferred Stock") and the number of shares constituting the
Series B Preferred Stock shall be One Million Two Hundred Thousand
($1,200,000). Such number of shares may be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of shares of Series B
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<PAGE>
Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series B
Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series B Preferred Stock with respect to dividends, each
holder of a share of Series B Preferred Stock, in preference to the
holders of shares of Common Stock, par value $.001 per share (the "Common
Stock"), of the Corporation, 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 for the purpose, quarterly dividends
payable in cash on the last day of March, June, September and December 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
Series B Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to, subject to the provision for adjustment hereinafter set
forth, One Thousand (1,000) times the aggregate per share amount of all
cash dividends, and One Thousand (1,000) 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 a
share or fraction of Series B Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series B Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the shares of Series B Preferred Stock as provided in paragraph (A) of
this Section immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided, however, that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period between
any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share of Series B
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
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<PAGE>
(C) Dividends shall begin to accrue and be cumulative on each
outstanding share of Series B Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
share of Series B Participating Preferred Stock, unless the date of issue
of such share is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such share shall begin
to accrue from the date of issue of such share, 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 B Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series B Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series B
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior
to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series B Preferred Stock shall entitle the holder
thereof to One Thousand (1,000) votes on all matters submitted to a vote
of the stockholders of the Corporation. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of
shares of Series B Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designation creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series B 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 stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series B Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth herein)
for taking any corporate action.
A-3
<PAGE>
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series
B Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except dividends paid ratably on the shares
of Series B Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock, or any shares
of stock ranking on a parity with the Series B Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series Bnd classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series B
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled 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
A-4
<PAGE>
forth herein, in the Certificate of Incorporation, or in any other
Certificate of Designation creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock unless, prior
thereto, the holders of shares of Series B Preferred Stock shall have
received One Thousand Dollars ($1,000) per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of
shares of Series B Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock (the "Common
Adjustment"), or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred Stock, except distributions made
ratably on the Series B Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event (the "Adjustment Number").
(B) In the event, however, that there are not sufficient assets
available to permit payment in full to the Series B Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series B
Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences. In the event, however, 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.
(C) In the event the Corporation shall at any time after
January 29, 1999 (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) 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
A-5
<PAGE>
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. CONSOLIDATION, MERGER, ETC. In case the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case each share of Series B Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to One Thousand (1,000)
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case
the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series B Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series B Preferred
Stock shall not be redeemable.
Section 9. RANK. The Series B Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's Preferred Stock.
Section 10. AMENDMENT. The Certificate of Incorporation of
the Corporation shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series B
Preferred Stock so as to affect them adversely without the affirmative vote
of the holders of at least a majority of the outstanding shares of Series B
Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designation is executed
on behalf of the Corporation by its Chief Financial Officer and Treasurer
this ___ day of _________, 1999.
-------------------------------------------
Name: James A. Klein, Jr.
Title: Chief Financial Officer and Treasurer
A-6
<PAGE>
EXHIBIT B
Form of Rights Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER FEBRUARY 16, 2009 OR EARLIER
IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY
AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND 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 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 SUCH AGREEMENT.(1)]
Rights Certificate
TRIANGLE PHARMACEUTICALS, 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 February 1, 1999 (the
- ------------------------------
(1) The portion of the legend in bracket shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
<PAGE>
"Rights Agreement"), between Triangle Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and American Stock Transfer & Trust Company (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M., New York time, on February 16, 2009, at the office of the
Rights Agent designated for such purpose, or at the office of its successor
as Rights Agent, one one-thousandth (a "Unit") of a fully paid non-assessable
share of Series B Junior Participating Preferred Stock, par value $.001 per
share (the "Series B Preferred Stock") of the Company, at a purchase price of
$____.00 per Unit of Series B Preferred Stock (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of Units of Series B Preferred Stock which
may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of February 16,
1999 based on the Series B Preferred Stock as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of Units
of Series B Preferred Stock 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.
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. Copies of the Rights Agreement are on file at the
principal executive offices of the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office 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 Series B 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 a redemption
price of $0.001 per Right.
No fractional shares of Series B Preferred Stock will be issued
upon the exercise of any Rights or Rights evidenced hereby (other than
fractions which are integral multiples of one one-thousandth of a share of
Series B Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment will 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 Units of Series B 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 stockholder of the
Company or any right to vote for
B-2
<PAGE>
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights 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 signature of the proper officers of the Company and
its corporate seal. Dated as of _____________________.
ATTEST: TRIANGLE PHARMACEUTICALS, INC.
By
- ----------------------------------- -----------------------------------
Name: Name: James A. Klein
Title: Title: Chief Financial Officer and
Treasurer
Countersigned:
AMERICAN STOCK TRANSFER
& TRUST COMPANY
as Rights Agent
By
---------------------------------
Authorized Signatory
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<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 Guaranteed:
Signatures must be guaranteed by a participant in a Securities
Transfer Association Inc. recognized signature guarantee medallion program.
B-2
<PAGE>
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by
this Rights Certificate are not beneficially owned by an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement).
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Signature
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NOTICE
The signature in the foregoing Form of Assignment must conform
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and such Assignment will not be honored.
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate.)
To: TRIANGLE PHARMACEUTICALS, Inc.
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Rights Certificate to purchase
the units of Series B Junior Participating Preferred Stock issuable upon the
exercise of such Rights and requests that certificates for such Series B
Junior Participating Preferred Stock be issued in the name of:
Please insert social security
or other identifying number
-------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
-------------------------------------------------
(Please print name and address)
Dated ______________, _____
--------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in a Securities
Transfer Association Inc. recognized signature guarantee medallion program.
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<PAGE>
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by
this Rights Certificate are not beneficially owned by an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement).
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Signature
-----------------------------------
NOTICE
The signature in the foregoing Form of Election to Purchase
must conform to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Election to Purchase, as the case may be, is not completed, the Company and
the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Rights Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Election to
Purchase will not be honored.
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<PAGE>
EXHIBIT C
TRIANGLE PHARMACEUTICALS, INC.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
On January 29, 1999 the Board of Directors of Triangle
Pharmaceuticals, Inc. (the "Company") declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of Common Stock
(the "Common Stock"), par value $.001 per share, of the Company. In
addition, the holders of outstanding Series A Preferred Stock will receive
one Right for each share of Common Stock issuable upon conversion of the
Series A Preferred Stock. The dividend is payable on February 16, 1999 (2)
(the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one
one-thousandth of a share (a "Unit") of Series B Junior Participating
Preferred Stock, par value $.001 per share (the "Series B Preferred Stock"),
of the Company at a price of $100 per Unit (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a
Rights Agreement dated as of February 1, 1999 (the "Rights Agreement")
between the Company and American Stock Transfer & Trust Company, as Rights
Agent (the "Rights Agent").
Until the earlier of (i) the close of business on the first
date of a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired beneficial ownership
of 15% or more of the outstanding Common Stock and (ii) the close of business
on the tenth business day (or such later date as may be determined by a
majority of the Board of Directors prior to such time as any Person becomes
an Acquiring Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more
of such outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, subject to certain
conditions, with respect to any of the Common Stock certificates outstanding
as of the Record Date, by such Common Stock certificate with a copy of this
Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Record Date, upon
transfer or new issuance of Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Stock, outstanding as of
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(2) Pursuant to Rule 10b-17, must be at least 10 days after Declaration Date.
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<PAGE>
the Record Date, even without such notation or a copy of this Summary of
Rights being attached thereto, will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Stock as of the Close of Business on the Distribution
Date and such separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire at the close of business on February 16, 2009 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each
case as described below.
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) upon the grant to holders of
the Units of Preferred Stock of certain rights or warrants to subscribe for
or purchase Units of Preferred Stock at a price, or securities convertible
into Units of Preferred Stock with a conversion price, less than the then
current market price of the Units of Preferred Stock or (iii) upon the
distribution to holders of the Units of Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Units of Preferred
Stock) or of subscription rights or warrants (other than those referred to
above).
The number of outstanding Rights and the number of Units 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 any such
case, prior to the Distribution Date.
Units of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each Unit of Preferred Stock will be entitled
to a dividend equal to any dividend declared per share of Common Stock. In
the event of liquidation, each Unit of Preferred Stock will be entitled to a
payment equal to any payment made per share of Common Stock. Each Unit of
Preferred Stock will have one vote, voting together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in
which shares of Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive an amount equal to the amount received per share of
Common Stock. These rights are protected by customary antidilution
provisions.
Because of the nature of the dividend, liquidation and voting
rights, the value of each Unit of Preferred Stock purchasable upon exercise
of the Rights should approximate the value of one share of Common Stock.
In the event that, after the Rights become exercisable, the
Company is acquired in a merger or other business combination transaction
with an Acquiring Person or an affiliate thereof, or 50% or more of its
consolidated assets or earning power are sold to an Acquiring Person or an
affiliate thereof, proper provision will be made so that each holder of a
Right will
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thereafter have the right to receive, upon exercise thereof at the then
current exercise price of the Rights, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Rights.
In the event that any person or group of affiliated or
associated persons becomes the beneficial owner of 15% or more of the
outstanding shares of Common Stock proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter be void), will thereafter have the right to
receive upon exercise that number of shares of Units of Preferred Stock (or
cash, common stock, other securities or property) having a market value of
two times the exercise price of the Rights.
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of
the outstanding shares of Common Stock and prior to the acquisition by such
person or group of 50% or more of the outstanding Common Stock, the Board of
Directors of the Company may exchange all or part of the Rights (other than
Rights owned by such person or group which have become void) for Units of
Preferred Stock at an exchange ratio of (subject to adjustment) which shall
equal, subject to adjustment to reflect stock splits, stock dividends and
similar transactions occurring after the date hereof, that number obtained by
dividing the Purchase Price by the then current per share market price per
Unit of Preferred Stock on the earlier of (i) the date on which any Person
becomes an Acquiring Person and (ii) the date on which a tender or exchange
offer is announced by any Person, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Company Common
Stock then outstanding.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at
least 1% in such Purchase Price. No fractional shares of Preferred Stock
will be issued (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of
the Company, be evidenced by depositary receipts) and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Units of
Preferred Stock on the last trading day prior to the date of exercise.
The Company may, at its option, upon approval by a majority of
the Board of Directors, at any time prior to the earlier of (i) the Shares
Acquisition Date, or (ii) the close of business on the tenth anniversary of
the Rights Agreement redeem the Rights in whole, but not in part, at a price
of $0.001 per Right (the "Redemption Price"). The redemption of the rights
may be made effective at such time on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. Immediately
upon any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price. The Rights are also redeemable under other circumstances as
specified in the Rights Agreement.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights
upon the approval of a majority of the Board of Directors except that from
and after a Distribution Date no such amendment may adversely affect the
interests of the holders of the Rights.
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<PAGE>
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors, except
pursuant to an offer conditioned on a substantial number of rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors because the Rights may be
redeemed by the Company at the Redemption Price prior to the occurrence of a
Distribution Date.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement
on Form 8-A. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
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