SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
XOMA Ltd.
(Formerly XOMA Arizona, Inc.)
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(Exact name of registrant as specified in its charter)
Bermuda 94-2756657
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
2910 Seventh Street
Berkeley, CA 94710
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
If this form relates to the registration of a class of securities pursuant
to Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box. [ ]
If this form relates to the registration of a class of securities pursuant
to Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), check the following box. [ x ]
Securities Act registration statement file number to which this form
relates:
333-68045 (if applicable)
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares
Preference Share Purchase Rights
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(Title of class)
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Item 1. Description of Registrant's Securities to Be Registered.
This Form 8-A relates to the common shares and preference share purchase
rights of XOMA Ltd., a Bermuda company, the surviving entity upon consummation
of a corporate reorganization whereby XOMA Corporation changed its domicile from
Delaware to Bermuda.
COMMON SHARES
General
The Memorandum of Continuance (the "Memorandum of Continuance") and the
Bye-Laws (the "Bye-Laws") of XOMA Ltd. (the "Company") provide that the
authorized common share capital of the Company is limited to 70,000,000 Common
Shares, par value U.S. $.0005 per share (the "Common Shares").
Voting
The holders of Common Shares are entitled to one vote per share. All
actions submitted to a vote of shareholders shall be voted on by the holders of
Common Shares, voting together as a single class (together with the Series A
Preference Shares, if any), except as provided by law.
Dividends
Holders of Common Shares are entitled to participate, on a share for share
basis, with the holders of any other common shares outstanding, with respect to
any dividends declared by the Board of Directors, subject to the rights of
holders of preference shares. Dividends will generally be payable in U.S.
dollars. The Company currently does not intend to pay dividends and intends to
retain any earnings for use in its business and the financing of its capital
requirements for the foreseeable future. The payment of any future cash
dividends on the Common Shares is necessarily dependent upon its earnings and
financial needs of the Company, along with applicable legal and contractual
restrictions.
Liquidation
On a liquidation of the Company, holders of Common Shares will be entitled
to receive any assets remaining after the payment of the Company's debts and the
expenses of the liquidation, subject to such special rights as may be attached
to any other class of shares.
Redemption
The Common Shares are not subject to redemption either by the Company or
the holder thereof.
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Variation Of Rights
Under the Bye-Laws, if at any time the share capital of the Company is
divided into different classes of shares, the rights attached to any class
(unless otherwise provided by the terms of the issue of the shares of that
class) may be varied with the consent in writing of the holders of a majority of
the issued shares of that class either in writing or with the sanction of a
resolution passed at a separate general meeting.
PREFERENCE SHARE PURCHASE RIGHTS
The Board of Directors of the Company has adopted an Amended and Restated
Shareholder Rights Agreement (the "New Rights Agreement"), which is
substantially identical to the Company's previous Stockholder Rights Agreement
except that the New Rights Agreement is governed by Bermuda law (other than the
rights, duties and obligations of the Rights Agent, which are governed by New
York law).
Pursuant to the New Rights Agreement, the Company issued one Preference
Share Purchase Right (a "Right") for each outstanding Common Share. Each Right
entitles the holder to purchase from the Company a unit consisting of one
one-hundredth (a "Unit") of a Series A Preference Share at a cash exercise price
of $30.00 per Unit, subject to adjustment.
The Rights are attached to all outstanding Common Shares. The Rights will
separate from the Common Shares and will be distributed to holders of Common
Shares upon the earliest of (i) ten business days after the first public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 20% or more of the
Common Shares then outstanding (the date of said announcement being referred to
as the "Share Acquisition Date"), (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person
or group of persons becoming an Acquiring Person or (iii) the declaration by the
Board of Directors that any person is an "Adverse Person" (the earliest of such
dates, the "Distribution Date").
The Board of Directors may generally declare a person to be an Adverse
Person after a declaration that such person has become the beneficial owner of
10% or more of the outstanding Common Shares and a determination that (a) such
beneficial ownership by such person is intended to cause or is reasonably likely
to cause the Company to repurchase the Common Shares owned by such Person or to
cause the Company to enter into other transactions not in the best long-term
interests of the Company or (b) such beneficial ownership is reasonably likely
to cause a material adverse impact on the business or prospects of the Company.
The Rights are not exercisable until the Distribution Date and will expire on
December 31, 2002, unless previously redeemed or exchanged by the Company.
In the event that a person becomes an Acquiring Person or the Board of
Directors determines that a person is an Adverse Person, each holder of a Right
will thereafter have
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the right (a "Subscription Right") to receive upon exercise that number of Units
of Series A Preference Shares having a market value of two times the exercise
price of the Rights. In the event that, at any time following the Share
Acquisition Date, (i) the Company consolidates with, or merges or amalgamates
with and into, any person, and the Company is not the surviving corporation;
(ii) any person consolidates or amalgamates with the Company, or merges or
amalgamates with and into the Company and the Company is the continuing or
surviving corporation of such transaction and, in connection with such
transaction, all or part of the Common Shares are changed into or exchanged for
other securities of any other person or cash or any other property, or (iii) 50%
or more of the Company's assets are sold or otherwise transferred, provision
shall be made so that each holder of a Right shall thereafter have the right (a
"Merger Right") to receive, upon exercise, common shares of the acquiring
company having a market value equal to two times the exercise price of the
Rights. Rights that are beneficially owned by an Acquiring or Adverse Person
may, under certain circumstances, become null and void.
At any time after a person becomes an Acquiring Person or the Board of
Directors determines that a person is an Adverse Person, the Board of Directors
may exchange all or any part of the then outstanding and exercisable Rights for
Common Shares or Units of Series A Preference Shares at an exchange ratio of one
Common Share or one Unit of Series A Preference Shares per Right.
Notwithstanding the foregoing, the Board of Directors generally will not be
empowered to effect such exchange at any time after any person becomes the
beneficial owner of 50% or more of the Common Shares then outstanding.
The Rights may be redeemed in whole, but not in part, at a price of U.S.
$.001 per Right by the Board of Directors at any time prior to the date on which
a person is declared to be an Adverse Person, the tenth business day after the
Share Acquisition Date, the occurrence of an event giving rise to the Merger
Right or the expiration date of the New Rights Agreement.
THE SERIES A PREFERENCE SHARES
There are no Series A Preference Shares outstanding. Pursuant to the rights
of the Series A Preference Shares, subject to the rights of holders of any
shares of any series of preference shares ranking prior and superior, the
holders of Series A Preference Shares are 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 first day of March, June,
September and December in each year (a "Dividend Payment Date"), commencing on
the first Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preference Shares, in an amount per share equal to the
greater of (a) U.S. $1.00 or (b) 100 times the aggregate per share amount of all
cash dividends, plus 100 times the aggregate per share amount of all non-cash
dividends or other distributions, other than a dividend payable in Common
Shares, declared on the Common Shares since the immediately preceding Dividend
Payment Date, or, with respect to the first Dividend Payment Date, since the
first issuance of Series A Preference Shares.
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In addition to any other voting rights required by law, holders of Series A
Preference Shares shall have the right to vote on all matters submitted to a
vote of shareholders of the Company with each Series A Preference Share entitled
to 100 votes. Except as otherwise provided by law, holders of Series A
Preference Shares and holders of Common Shares shall vote together as one class
on all matters submitted to a vote of shareholders of the Company.
Unless otherwise provided in the rights attaching to a subsequently
designated series of preference shares of the Company, the Series A Preference
Shares shall rank junior to any other series of preference shares as to the
payment of dividends and distribution of assets on liquidation, dissolution or
winding-up and shall rank senior to the Common Shares. Upon any liquidation,
dissolution or winding-up of the Company, no distributions shall be made to
holders of shares of stock ranking junior to the Series A Preference Shares
unless, prior thereto, the holders of Series A Preference Shares shall have
received an amount equal to accrued and unpaid dividends and distributions,
whether or not declared, to the date of such payment, plus an amount equal to
the greater of (1) U.S. $100.00 per share or (2) an aggregate amount per share
equal to 100 times the aggregate amount to be distributed per share to holders
of Common Shares or to the holders of stock ranking on parity with the Series A
Preference Shares, except distributions made ratably on the Series A Preference
Shares and all other such parity stock in proportion to the total amount to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding-up.
If the Company shall enter into any consolidation, amalgamation, merger,
combination or other transaction in which Common Shares are exchanged for or
changed into cash, other securities and/or any other property, then any Series A
Preference Shares outstanding shall at the same time be similarly exchanged or
changed in an amount per share equal to 100 times the aggregate amount of cash,
securities and/or other property, as the case may be, into which or for which
each Common Share is changed or exchanged.
The Series A Preference Shares shall not be redeemable.
Copies of the Memorandum of Continuance, the Bye-Laws, the New Rights
Agreement and the resolutions regarding preferences and rights of the Series A
Preference Shares are filed herewith as exhibits. The foregoing descriptions of
the Common Shares, the Rights and the Series A Preference Shares do not purport
to be complete and are qualified in their entirety by reference to such
exhibits, which are hereby incorporated herein by reference.
Item 2. Exhibits
3.1 Memorandum of Continuance of XOMA Ltd.
3.2 Bye-Laws of XOMA Ltd.
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4.1 Amended and Restated Shareholder Rights Agreement, dated as of October
27, 1993 and amended and restated as of December 31, 1998, between
XOMA Corporation (to be renamed XOMA Ltd.) and ChaseMellon Shareholder
Services, L.L.C. (successor to First Interstate Bank of California),
as Rights Agent.
4.2 Resolutions Regarding Preferences and Rights of Series A Preference
Shares.
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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, thereunto duly authorized.
XOMA Ltd.
Date: May 21, 1999 By:/s/ Christopher J. Margolin
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Name: Christopher J. Margolin
Title: Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Number Description
3.1 Memorandum of Continuance of XOMA Ltd. (incorporated herein by
reference to Exhibit 3.4 to XOMA Arizona, Inc.'s Registration
Statement on Form S-4 (File No. 333- 68045)).
3.2 Bye-Laws of XOMA Ltd. (incorporated herein by reference to Exhibit 3.5
to XOMA Arizona, Inc.'s Registration Statement on Form S-4 (File No.
333-68045)).
4.1 Amended and Restated Shareholder Rights Agreement, dated as of October
27, 1993 and amended and restated as of December 31, 1998, between
XOMA Corporation (to be renamed XOMA Ltd.). and ChaseMellon
Shareholder Services, L.L.C. (successor to First Interstate Bank of
California), as Rights Agent.
4.2 Resolutions Regarding Preferences and Rights of Series A Preference
Shares (included as Exhibit A to Exhibit 4.1 above).
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XOMA CORPORATION
(to be renamed XOMA Ltd.)
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
(successor to First Interstate Bank of California)
as Rights Agent
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Amended and Restated Shareholder Rights Agreement
Dated as of October 27, 1993
and
Amended and Restated as of December 31, 1998
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Table of Contents
Section Page
1. Certain Definitions.................................................2
2. Appointment of Rights Agent.........................................7
3. Issue of Right Certificates.........................................7
4. Form of Right Certificates.........................................10
5. Countersignature and Registration..................................11
6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates...............................................13
7. Exercise of Rights; Exercise Price; Expiration Date of Rights......14
8. Cancellation and Destruction of Right Certificates.................17
9. Reservation and Availability of Preference Shares..................17
10. Preference Share Record Date.......................................19
11. Adjustment of Exercise Price, Number and Kind of
Shares or Number of Rights.......................................19
12. Certificate of Adjusted Exercise Price or Number of Shares.........30
13. Consolidation, Amalgamation, Merger or Sale or Transfer
of Assets or Earning Power.......................................31
14. Fractional Rights and Fractional Shares............................35
15. Rights of Action...................................................35
16. Agreement of Right Holders.........................................36
17. Right Certificate Holder Not Deemed a Stockholder..................37
18. Concerning the Rights Agent........................................37
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Section Page
19. Merger or Consolidation or Change of Name of Rights Agent..........38
20. Duties of Rights Agent.............................................39
21. Change of Rights Agent.............................................42
22. Issuance of New Right Certificates.................................43
23. Redemption and Termination.........................................44
24. Exchange...........................................................46
25. Notice of Certain Events...........................................47
26. Notices............................................................49
27. Supplements and Amendments.........................................49
28. Successors.........................................................50
29. Determinations and Actions by the Board of Directors...............50
30. Benefits of This Agreement.........................................51
31. Severability.......................................................51
32. Governing Law......................................................52
33. Descriptive Headings...............................................52
Exhibit A -- Form of Resolutions Regarding Preferences and Rights
of Series A Preference Shares
Exhibit B -- Form of Right Certificate
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AMENDED AND RESTATED
SHAREHOLDER RIGHTS AGREEMENT
Agreement, dated as of October 27, 1993, and amended and restated as of
December 31, 1998, between XOMA Corporation (to be renamed XOMA Ltd.) (the
"Company") and ChaseMellon Shareholder Services, L.L.C. (successor to First
Interstate Bank of California) (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company desires to provide all
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that all shareholders of the
Company receive fair and equal treatment in the event of any proposed takeover
of the Company; and
WHEREAS, on October 27, 1993, the Board of Directors of Xoma Corporation, a
Delaware corporation ("XOMA Delaware"), authorized and declared a dividend
distribution of one Original Right (as such term is hereinafter defined) for
each outstanding share of Common Stock, par value $0.0005 per share, of XOMA
Delaware (the "Common Stock") outstanding as of the close of business on
November 12, 1993 (the "Record Date"), and contemplated the issuance of one
Original Right for each share of Common Stock of XOMA Delaware issued (whether
originally issued or sold from XOMA Delaware's treasury) between the Record Date
and the earlier of the Distribution Date or the Expiration Date (as such terms
are hereinafter defined), each Original Right initially representing the right
to purchase one one-hundredth of a share of Series A Cumulative Preferred Stock
of XOMA Delaware having rights, powers and preferences substantially identical
to those set forth in the form of the Resolutions Regarding Preferences and
Rights of Series A Preference Shares attached hereto as Exhibit A, upon the
terms and subject to the conditions substantially identical to those hereinafter
set forth (the "Original Rights"); and
WHEREAS, pursuant to a corporate reorganization (the "Reorganization"),
XOMA Delaware will change its legal domicile from Delaware to Bermuda as
follows: (i) pursuant to an Agreement and Plan of Merger dated as of November
25, 1998, XOMA Delaware merged with and into the Company, which immediately
prior thereto was a wholly-owned subsidiary of XOMA Delaware,
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whereupon the Original Rights were deemed to constitute Rights of the Company
and (ii) pursuant to a Memorandum of Continuance, upon the registration thereof
(the "Effective Time") the Company will become a Bermuda company through a
continuation procedure under Arizona and Bermuda law and will be renamed XOMA
Ltd.; and
WHEREAS, the Board of Directors of the Company, prior to the registration
of the Memorandum of Continuance, authorized the amendment and restatement of
this Agreement, to be effective at the Effective Time, such that each
outstanding Original Right will automatically represent one Right (as such term
is hereinafter defined), and contemplates the issuance of one Right for each
Common Share of the Company issued between the Effective Time and the earlier of
the Distribution Date or the Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase one
one-hundredth of one Series A Preference Share of the Company having the rights,
powers and preferences set forth in the form of the Resolutions Regarding
Preferences and Rights of Series A Preference Shares attached hereto as Exhibit
A, upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
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 hereinafter defined) who
or which, together with all Affiliates (as such term is hereinafter defined) and
Associates (as such term is hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 20% or more of the
Common Shares then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, (iii) any
employee benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company or (iv) any Person holding Common Shares organized,
appointed or established by the Company or any Subsidiary of the Company for or
pursuant to the terms of any such employee benefit plan or compensation
arrangement (the Persons described in clauses (i) through (iv) above are
referred to herein as "Exempt Persons").
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Notwithstanding the foregoing, no Person shall become an "Acquiring Person"
as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 20% or more of the Common Shares
then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 20% or more of the Common Shares 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
Common Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person."
(b) "Adverse Person" shall mean any Person declared to be an Adverse Person
by the Board of Directors upon a determination of the Board of Directors that
the criteria set forth in Section 11(a)(ii)(B) apply to such Person.
(c) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations (the "Rules")
under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement; provided, however, that no person
who is a director or officer of the Company shall be deemed an Affiliate or an
Associate of any other director or officer of the Company solely as a result of
his or her position as director or officer of the Company.
(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, directly or indirectly, beneficially owns (as determined
pursuant to Rule 13d-3 of the Rules under the Exchange Act, as in effect on
the date of this Agreement);
(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 or upon the satisfaction
of any conditions or both) 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
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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," (1) 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; (2) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event; or (3) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Sections 3(a), 11(i) or 22 hereof; or
(B) the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the Rules and (2) is not also then reportable by such person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(C) the right to dispose of or a "pecuniary interest" or an
"indirect pecuniary interest" in (as determined pursuant to Rule
16a-1(a)(2) of the Rules), in any event including pursuant to any
agreement, arrangement or understanding (whether or not in writing)
(other than customary arrangements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities); 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, hold-
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ing, voting (except pursuant to a revocable proxy as described in clause
(B) of Section 1(d)(ii) hereof) or disposing of any securities of the
Company;
provided, however, that (1) no Person ordinarily engaged in business as an
underwriter of securities shall be deemed the Beneficial Owner of any securities
acquired through such Person's participation as an underwriter in good faith in
a firm commitment underwriting pursuant to an underwriting agreement with the
Company until the expiration of 40 days after the date of such acquisition and
(2) no Person who is a director or an officer of the Company shall be deemed,
solely as a result of his or her position as director or officer of the Company,
the Beneficial Owner of any securities of the Company that are beneficially
owned by any other director or officer of the Company.
(e) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York 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., New York
City time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.
(g) "Common Shares" shall mean the Common Shares, par value $0.0005 per
share, of the Company except that "Common Shares" when used with reference to
any Person other than the Company shall mean the capital stock with the greatest
voting power, or the equity securities or other equity interests having power to
control or direct the management of such Person or, if such Person is a
Subsidiary of another person, the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding such capital stock,
equity securities or equity interests.
(h) "Common Stock" shall mean the Common Stock, par value $0.0005 per
share, of XOMA Delaware, except that "Common Stock" when used with reference to
any Person other than XOMA Delaware shall mean the capital stock with the
greatest voting power, or the equity securities or other equity interests having
power to control or direct the management of such Person or, if such Person is a
Subsidiary of another person, the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding such capital stock,
equity securities or equity interests.
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(i) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board, who is not
an Acquiring Person, an Adverse Person, or an Affiliate or Associate of an
Acquiring Person or an Adverse Person, or a representative or nominee of an
Acquiring Person or an Adverse Person or of any such Affiliate or Associate and
was a member of the Board prior to the date hereof, and (ii) any Person who
subsequently becomes a member of the Board of Directors who is not an Acquiring
Person, an Adverse Person, or an Affiliate or Associate of an Acquiring Person
or an Adverse Person, or a representative of an Acquiring Person or an Adverse
Person or of any such Affiliate or Associate, if such Person's nomination for
election or election to the Board of Directors is recommended or approved by a
majority of the Continuing Directors.
(j) "Distribution Date" shall have the meaning defined in Section 3(a)
hereof.
(k) "Exempt Persons" shall have the meaning defined in the definition of
Acquiring Person.
(l) "Exercise Price" shall have the meaning defined in Section 7(b) hereof.
(m) "Expiration Date" and "Final Expiration Date" shall have the meanings
set forth in Section 7(a) hereof.
(n) "Fair Market Value" of any securities or other property shall be as
determined in accordance with Section 11(d) hereof.
(o) "Person" shall mean an individual, a corporation, a partnership, an
association, a joint stock company, a trust, a business trust, a government or
political subdivision, any unincorporated organization, or any other association
or entity.
(p) "Preference Shares" shall mean Series A Preference Shares, par value
$0.05 per share, of the Company having the rights and preferences set forth in
the form of the Resolutions Regarding Preferences and Rights of Series A
Preference Shares attached hereto as Exhibit A.
(q) "Principal Party" shall have the meaning defined in Section 13(b)
hereof.
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(r) "Record Date" shall mean the close of business on November 12, 1993.
(s) "Redemption Price" shall have the meaning defined in Section 23 hereof.
(t) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(u) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(v) "Share Acquisition Date" shall mean the date of the first public
announcement (which for purposes of this definition shall include, without
limitation, a press release or a publicly available report or filing with the
Securities and Exchange Commission or any other governmental agency) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(w) "Subsidiary" shall mean, with respect to any Person, any other Person
of which a majority of the voting power of the voting equity securities or
voting interests is owned, directly or indirectly, by such Person, or which is
otherwise controlled by such Person.
(x) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(y) "United States" means the United States of America.
(z) "$" means United States dollars.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents (the "Co-Rights Agents") as it may deem necessary or desirable
upon ten (10) days' prior written notice to the Rights Agent. The Rights Agent
shall have no duty to supervise, and shall in no event be liable for, the acts
or omissions of any such Co-Rights Agent. In the event the Company appoints one
or more Co-Rights Agents, the respective duties of the Rights Agent and any
Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
<PAGE>
-8-
(a) From the date hereof until the earliest of (i) the close of business on
the tenth Business Day after the Share Acquisition Date, (ii) the close of
business on the tenth Business Day (or such other Business Day, if any, as the
Board of Directors may determine in its sole discretion) after the date of the
commencement by any Person, other than an Exempt Person, of a tender or exchange
offer if, upon consummation thereof, such Person would be the Beneficial Owner
of 20% or more of the Common Shares then outstanding or (iii) the determination
by the Board of Directors of the Company, pursuant to the criteria set forth in
Section 11(a)(ii)(B) hereof, that a Person is an Adverse Person (including any
such date which is after the date of this Agreement and prior to the issuance of
the Rights) (the earliest of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for the Common Shares
(including, without limitation, any certificates for shares of Common Stock of
XOMA Delaware which, as of the Effective Time, will automatically represent
Common Shares) registered in the names of the holders of the Common Shares
(which certificates for Common Shares (or Common Stock) shall be deemed also to
be certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
Common Shares. As soon as practicable after the Company has notified the Rights
Agent of the occurrence of the Distribution Date and provided the Rights Agent
with all necessary information and materials, the Rights Agent will send, by
first-class, insured, postage prepaid mail, to each record holder of the Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more certificates, in
substantially the form of Exhibit B hereto (the "Right Certificates"),
evidencing one Right for each Common Share so held. In the event that an
adjustment in the number of Rights per Common Share has been made pursuant to
Section 11(o) hereof, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) at the time of
distribution of the Right Certificates, so that Right Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the close of business on the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) With respect to certificates for the Common Shares issued prior to the
close of business on the Record Date, the Rights will be evidenced by such
certificates for the Common Shares on or until the Distribution Date (or the
earlier
<PAGE>
-9-
redemption, expiration or termination of the Rights), and the registered
holders of the Common Shares also shall be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the transfer of any of the Common
Shares outstanding prior to the date of this Agreement shall also constitute the
transfer of the Rights associated with such Common Shares. Certificates for
Common Shares represented by certificates of Common Stock of XOMA Delaware,
which contain the version of the foregoing legend provided for in Section 3(c)
prior to its amendment and restatement (the "Old Legend"), shall, at the
Effective Time, automatically be deemed to also represent certificates for the
Rights.
(c) Certificates for the Common Shares issued after the Effective Time, but
prior to the earlier of the Distribution Date or the redemption, expiration or
termination of the Rights, shall be deemed also to be certificates for Rights,
and shall bear a legend, substantially in the form set forth below:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in an Amended and Restated Shareholder
Rights Agreement between XOMA Ltd. (formerly known as XOMA
Corporation) and ChaseMellon Shareholder Services, L.L.C. (successor
to First Interstate Bank of California), as Rights Agent, dated as of
October 27, 1993 and amended and restated as of December 31, 1998 (the
"Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices
of XOMA Ltd. 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. XOMA Ltd. may redeem
the Rights at a redemption price of $0.001 per Right, subject to
adjustment, under the terms of the Rights Agreement. XOMA Ltd. will
mail to the holder of this certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain circumstances,
Rights issued to or held by Acquiring Persons, Adverse Persons or any
Affiliates or Associates thereof (as defined in the Rights Agreement),
and any subsequent holder of such Rights, may become null and void.
<PAGE>
-10-
With respect to such certificates containing the foregoing legend (or the Old
Legend), the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), and the transfer of any Common Shares shall also constitute the
transfer of the Rights associated with such Common Shares. In the event that the
Company purchases or acquires any Common Shares after the Effective Time but
prior to the Distribution Date, any Rights associated with such Common Shares
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares which are no longer
outstanding. The failure to print the foregoing legend on any such Common Share
Certificate or any defect therein shall not affect in any manner whatsoever the
application or interpretation of the provisions of Section 7(e) hereof.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase shares
and of assignment and of the certificate to be printed on the reverse thereof)
shall each be substantially in the form of Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate (but which do
not affect the duties, rights or obligations of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to customary usage. Subject to the provisions of Section
11 and Section 22 hereof, the Right Certificates, whenever distributed, shall be
dated as of the Record Date, shall show the date of countersignature, and on
their face shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preference Share as shall be set forth therein at the price
set forth therein (the "Exercise Price"), but the number of such shares and the
Exercise Price shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by (i) an Acquiring Person, an
Adverse Person or any Associate or Affiliate of an Acquiring Person or an
Adverse Person, (ii) a transferee or nominee of an Acquiring Person or an
Adverse Person (or of any Associate or Affiliate of an Acquir-
<PAGE>
-11-
ing Person or an Adverse Person) who becomes a transferee or nominee after the
Acquiring Person or Adverse Person becomes such, or (iii) a transferee of an
Acquiring Person or an Adverse Person (or of any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person or Adverse
Person to holders of equity interests in such Acquiring Person or Adverse Person
or to any Person with whom the Acquiring Person or Adverse Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 7(e) hereof,
and any Right Certificate issued pursuant to Section 6, Section 11 or Section 22
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall have deleted therefrom the
second sentence of the existing legend on such Right Certificate and in
substitution therefor shall contain the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person,
an Adverse Person or an Affiliate or an Associate of an Acquiring
Person or an Adverse Person (as such terms are defined in the Rights
Agreement). This Right Certificate and the Rights represented hereby
may become null and void under certain circumstances as specified in
Section 7(e) of the Rights Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or Adverse Person or
any Associate or Affiliate thereof and the Rights Agent shall have no obligation
under this paragraph (b) until it has received such notice. The failure to print
the foregoing legend on any such Right Certificate or any defect therein shall
not affect in any manner whatsoever the application or interpretation of the
provisions of Section 7(e) hereof. The Company shall instruct the Rights Agent
in writing of the Rights which should be so legended.
Section 5. Countersignature and Registration.
<PAGE>
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(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board or its President and by its Secretary either manually
or by facsimile signature, and shall have affixed thereto the Company's seal or
a facsimile thereof which shall be attested to by the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by an authorized signatory of the
Rights Agent, which need not be the same authorized signatory for all of the
Right Certificates, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by an authorized
signatory of the Rights Agent, and issued and delivered by the Company with the
same force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any Right Certificates may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
In case any authorized signatory of the Rights Agent who shall have
countersigned any of the Right Certificates shall cease to be so authorized
before delivery by the Company, such Right Certificates, nevertheless, may be
issued and delivered by the Company with the same force and effect as though the
person who countersigned such Right Certificates had not ceased to be so
authorized; and any Right Certificate may be countersigned on behalf of the
Rights Agent by any person who, at the actual date of the countersignature of
such Right Certificate, shall be properly authorized to countersign such Right
Certificate, although at the date of the execution of this Agreement any such
person was not so authorized.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at one of its offices designated as the appropriate place for surrender
of Right Certificates upon exercise or transfer, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
<PAGE>
-13-
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the close of business on the Distribution Date, and at
or prior to the close of business on the Expiration Date, any Right Certificate
or Right Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates entitling the registered holder
to purchase a like number of one one-hundredths of a Preference Share (or
following a Triggering Event, preference shares, cash, property, debt
securities, common shares or any combination thereof) as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase and at
the same Exercise Price. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged, with the
form of assignment and certificate duly executed, along with a signature
guarantee and such other and further documentation as the Rights Agent may
reasonably request, at the office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate until the registered holder shall have properly completed and
signed the certificate contained in the form of assignment on the reverse side
of such Right Certificate and shall have provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company or the Rights Agent shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4(b), Section
7(e), Section 14 and Section 20(k) hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment by the holder of a Right
Certificate of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. The Rights Agent shall have no duty or obligation under this
Section unless and until it is reasonably satisfied that all such taxes and/or
charges have been paid.
(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 Right
Certificate, and, in case
<PAGE>
-14-
of loss, theft or destruction, of indemnity or security satisfactory to them,
and reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate, if mutilated, along with a signature guarantee and such
other and further documentation as the Rights Agent may reasonably request, the
Company will execute and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.
(a) Subject to Section 7 (e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, along with a
signature guarantee and such other and further documentation as the Rights Agent
may reasonably request, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment of the aggregate
Exercise Price for the total number of one one-hundredths of a Preference Share
(or Common Shares, other securities, cash or other assets, as the case may be)
as to which such surrendered Rights are then exercised, at or prior to the
earliest of (i) the close of business on December 31, 2002 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof (the earliest date being herein referred to as the
"Expiration Date"). Except as set forth in Section 7(e) hereof and
notwithstanding any other provision of this Agreement, any Person who prior to
the Distribution Date becomes a record holder of Common Shares may exercise all
of the rights of a registered holder of a Right Certificate with respect to the
Rights associated with such Common Shares in accordance with the provisions of
this Agreement, as of the date such Person becomes a record holder of Common
Shares.
(b) The Exercise Price for each one one-hundredth of a Preference Share
pursuant to the exercise of a Right shall initially be $30.00, shall be subject
to adjustment from time to time as provided in Section 11 and Section 13 hereof
and
<PAGE>
-15-
shall be payable in lawful money of the United States of America in accordance
with Section 7(c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate on the reverse side
thereof duly executed, along with a signature guarantee and such other and
further documentation as the Rights Agent may reasonably request, accompanied by
payment of the Exercise Price for the shares to be purchased and an amount equal
to any applicable transfer tax or governmental charge in cash, or by certified
check or bank draft payable to the order of the Company, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i)(A) procure that the
Company issues, and requisition from any transfer agent of Preference Shares (or
make available, if the Rights Agent is the transfer agent therefor) certificates
for, the number of one one-hundredths of a Preference Share 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 Preference Shares issuable upon exercise of the Rights hereunder with
a depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preference Share as are to
be purchased (in which case certificates for the Preference Shares represented
by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash,
if any, to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Company is obligated to issue other
securities (including Common Shares) of the Company, pay cash or distribute
other property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash or other property are
available for distribution by the Rights Agent, if and when necessary to comply
with this Agreement.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent
<PAGE>
-16-
to the Rights remaining unexercised shall be issued by the Rights Agent and
delivered to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 6 and Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person, an Adverse Person or any Associate or
Affiliate of an Acquiring Person or an Adverse Person, (ii) a transferee of an
Acquiring Person or an Adverse Person (or of any Associate or Affiliate of an
Acquiring Person or an Adverse Person) who becomes a transferee after the
Acquiring Person or Adverse Person becomes such or (iii) a transferee of an
Acquiring Person or an Adverse Person (or of any Associate or Affiliate of an
Acquiring Person or an Adverse Person) who becomes a transferee prior to or
concurrently with the Acquiring Person or Adverse Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to holders of equity
interests in such Acquiring Person or Adverse Person or to any Person with whom
the Acquiring Person or Adverse Person has any continuing agreement, arrangement
or understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall notify the Rights Agent when this Section applies and shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but neither the Company nor the Rights
Agent shall have any liability to any holder of Right Certificates or other
Person as a result of the Company's failure to make any determinations with
respect to an Acquiring Person or Adverse Person or any Affiliates or Associates
of an Acquiring Person or an Adverse Person or any transferee of any of them
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 of Rights 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
<PAGE>
-17-
side of the Right Certificate surrendered for such exercise, and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company.
Section 9. Reservation and Availability of Preference Shares.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preference Shares, the number
of Preference Shares that will be sufficient to permit the exercise in full of
all outstanding and exercisable Rights (it being understood that any of the
foregoing shares may also be reserved for other purposes) or will take such
other steps as are appropriate to assure that the number of such shares (or
their equivalents) sufficient to permit the exercise in full of all outstanding
Rights will be available upon such exercise.
(b) The Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all Preference Shares issued or reserved
for issuance to be listed, upon official notice of issuance, upon the principal
national securities exchange, if any, upon which the Common Shares are listed
or, if the principal market for the Common Shares is not on any national
securities exchange, to be eligible for quotation on The Nasdaq Stock Market
("Nasdaq") or any successor thereto or other comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event as of which the consideration to be delivered by the Company
upon exercise
<PAGE>
-18-
of the Rights has been determined in accordance with Section 11(a)(iii) hereof,
or as soon as required by law following the Distribution Date, as the case may
be, a registration statement under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus that at all times
meets 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 or (B) the
Expiration Date. The Company will also take such action as may be appropriate
under, and which will ensure compliance with, the laws of Bermuda, the federal
securities of the United States or "blue sky" laws of the various states of the
United States in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date determined in accordance with the provisions of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect (with
prompt notice of such public announcement to the Rights Agent). Failure of the
Company to notify the Rights Agent of the suspension will not affect the
effectiveness of the suspension. Notwithstanding any such 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. Unless otherwise notified in writing by the Company, the Rights
Agent may assume that any Right exercised is permitted to be exercised under
applicable law and shall have no liability for acting in reliance upon such
assumption.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preference Shares delivered upon the
exercise of the Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Exercise 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 Bermuda, United States federal and state transfer taxes and
other governmental
<PAGE>
-19-
charges which may be payable in respect of the issuance or delivery of the Right
Certificates or of any certificates for Preference Shares upon the exercise of
Rights. The Company shall not, however, be required (a) to pay any transfer tax
or other governmental charge which may be payable in respect of any transfer or
delivery of Right Certificates to a person other than, or in respect of the
issuance or delivery of securities in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise or
(b) to issue or deliver any certificates for securities in a name other than
that of the registered holder upon the exercise of any Rights until such tax
shall have been paid (any such tax or other governmental charge being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax or other
governmental charge is due.
Section 10. Preference Share Record Date. Each Person in whose name any
certificate for Preference Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preference
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable transfer taxes or other
governmental charge) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preference Share 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 Preference Share transfer books of the
Company are open. Prior to the exercise of the Right evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the
<PAGE>
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Preference Shares payable in Preference Shares, (B) subdivide the outstanding
Preference Shares, (C) combine the outstanding Preference Shares into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preference Shares (including any such reclassification
in connection with a consolidation, amalgamation or merger in which the Company
is the continuing or surviving corporation), except as otherwise provided in
this Section 11(a) and Section 7(e) hereof, the Exercise 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 Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preference Share register of the Company is open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) Subject to the provisions of Section 24, hereof, in the event
(A) any Person, alone or together with its Affiliates and Associates,
shall become an Acquiring Person, or
(B) the Board of Directors of the Company, by majority vote of all
Directors, shall declare any Person to be an Adverse Person, after (x) a
determination that such Person, alone or together with its Affiliates and
Associates, has become the Beneficial Owner of l0% or more of the
outstanding Common Shares and (y) a determination by the Board of
Directors, after reasonable inquiry and investigation, including such
consultation, if any, with such Persons as such directors shall deem
appropriate, that (a) such Beneficial Ownership by such Person is intended
to cause, is reasonably likely to cause or will cause the Company to
repurchase the Common Shares beneficially owned by such Person or to cause
pressure on the Company to take action or enter into a transaction or
series of transactions which would provide such Person with short-term
financial gain under circumstances where the Board of Directors determines
that the best long-term in-
<PAGE>
-21-
terests of the Company and its shareholders, but for the actions and
possible actions of such Person, would not be served by taking such action
or entering into such transactions or series of transactions at that time
or (b) such Beneficial Ownership is causing or reasonably likely to cause a
material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to
maintain its competitive position) on the business or prospects of the
Company; provided, however, that the Board of Directors of the Company may
not declare a Person to be an Adverse Person if, prior to the time that
such Person acquired 10% or more of the Common Shares then outstanding,
such Person provided to the Board of Directors in writing a statement of
such Person's purpose and intentions in connection with the proposed
acquisition of Common Shares, together with any other information
reasonably requested of such Person by the Board of Directors, and the
Board of Directors, based on such statement and reasonable inquiry and
investigation, including such consultation, if any, with such Person as the
Board of Directors shall deem appropriate, determines to notify and
notifies such Person in writing that it will not declare such Person to be
an Adverse Person; provided, further, that the Board of Directors may
expressly condition in any manner a determination not to declare a Person
an Adverse Person on such conditions as the Board of Directors may select,
including without limitation, such Person's not acquiring more than a
specified amount of stock and/or on such Person's not taking actions
inconsistent with the purposes and intentions disclosed by such Person in
the statement provided to the Board of Directors. No delay or failure by
the Board of Directors to declare a Person to be an Adverse Person shall in
any way waive or otherwise affect the power of the Board of Directors
subsequently to declare a Person to be an Adverse Person. In the event that
the Board of Directors should at any time determine, upon reasonable
inquiry and investigation, including consultation with such Persons as the
Board of Directors shall deem appropriate, that such Person has not met or
complied with any condition specified by the Board of Directors, the Board
of Directors may at any time thereafter declare such Person to be an
Adverse Person pursuant to the provisions of this Section 11(a)(ii)(B),
then, and in each such case, promptly following any such occurrence, proper
provision shall be made so that each holder of a Right, except as provided in
Section 7(e) hereof, shall there-
<PAGE>
-22-
after have a right to receive, upon exercise thereof at the then current
Exercise Price in accordance with the terms of this Agreement, such number of
Preference Shares as shall equal the result obtained by (x) multiplying the then
current Exercise Price by the then number of one one-hundredths of a Preference
Share for which such Right may be exercised immediately prior to the first
occurrence of a Section 11(a)(ii) Event and dividing that product by (y) 50% of
the Fair Market Value per one one-hundredth of a Preference Share (determined
pursuant to Section 11(d)) on the date of the occurrence of any one of the
events listed above in this Section 11(a)(ii).
(iii) In the event that there shall not be sufficient authorized but
unissued Preference Shares to permit the exercise in full of the Rights in
accordance with the foregoing Section 11(a)(ii), the Company shall take all
action as may be necessary to authorize and reserve for issuance such number of
additional Preference Shares as may from time to time be required to be issued
upon the exercise in full of all Rights outstanding and, if necessary, shall use
its best efforts to obtain shareholder approval thereof. Notwithstanding the
foregoing provisions of this Section 11(a)(iii), in lieu of issuing Preference
Shares in accordance with Section 11(a)(ii) hereof, if a majority of the
Directors then in office determines that such action is necessary or appropriate
and is not contrary to the interests of the holders of the Rights, they may
elect to cause the Company to pay, and if sufficient Preference Shares cannot be
issued for such purpose in accordance with the provisions hereof, the Company
shall issue or pay upon the exercise of the Rights, cash, property, debt
securities, preference shares or common shares, or any combination thereof,
having an aggregate Fair Market Value equal to the Fair Market Value of the
Preference Shares which otherwise would have been issuable pursuant to Section
11(a)(ii). Any such election by a majority of the Directors of the Company must
be made and publicly announced within 30 days of the date on which any Section
11(a)(ii) Event first occurs following the Share Acquisition Date.
(b) If the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preference Shares entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preference Shares (or securities having the same or more favorable
rights, privileges and preferences as or than the Preference Shares ("Preference
Share Equivalents")) or securities convertible into Preference Shares or
Preference Share Equivalents at a price per Preference Share or per share of
<PAGE>
-23-
Preference Share Equivalents (or having a conversion price per share, if a
security convertible into Preference Shares or Preference Share Equivalents)
less than the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per Preference Shares on such record date, the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preference Shares outstanding on such record date,
plus the number of Preference Shares which the aggregate offering price of the
total number of Preference Shares to be offered (or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Fair Market Value and the denominator of which shall be the number of
Preference Shares outstanding on such record date, plus the number of additional
Preference Shares and Preference Share Equivalents 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 the Fair Market Value thereof determined in
accordance with Section 11(d) hereof. Preference Shares held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such rights or warrants are not so issued,
the Exercise Price shall be adjusted to be the Exercise Price which would then
be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for the making of a distribution
to all holders of Preference Shares (including any such distribution made in
connection with a consolidation, amalgamation or merger in which the Company is
the continuing or surviving corporation) of evidences of indebtedness, cash
(other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Preference
Shares, but including any dividend payable in shares other than Preference
Shares) or convertible securities, subscription rights or warrants (excluding
those referred to in Section 11(b)), the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one one-hundredth of a Preference Share on such record date, less the Fair
Market value (as determined pursuant to Section 11(d) hereof) of the portion of
<PAGE>
-24-
the cash, assets or evidences of indebtedness so to be distributed or of such
convertible securities, subscription rights or warrants applicable to one
one-hundredth of a Preference Share and the denominator of which shall be the
Fair Market Value (as determined pursuant to Section 11(d) hereof) per one
one-hundredth of a Preference Share on such record date. 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 Exercise Price shall again be adjusted to
be the Exercise Price which would be in effect if such record date had not been
fixed.
(d) For the purpose of this Agreement, the "Fair Market Value" of any
Preference Share, Common Share or any other share or any Right or other security
or any other property shall be determined as provided in this Section 11(d).
(i) In the case of a publicly traded share or other security, the Fair
Market Value on any date shall be deemed to be the average of the daily
closing prices per share of such share or per unit of such other security
for the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to (but not including) such date; provided, however, that
in the event that the Fair Market Value per share of any share is
determined during a period following the announcement by the issuer of such
share of (x) a dividend or distribution on such share payable in additional
shares or securities convertible into additional shares or (y) any
subdivision, combination or reclassification of such shares, and prior to
the expiration of the 30 Trading Day period after (but not including) 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 Fair Market Value shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the securities are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such security is listed or
admitted to trading; or, if not listed or admitted to trading on any
<PAGE>
-25-
national securities exchange, the last quoted price (or, if not so quoted,
the average of the last quoted 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 no bids for such security are 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 such security
selected by the Board of Directors of the Company. If on any such date no
market maker is making a market in such security, the Fair Market Value of
such security on such date shall be determined reasonably and with utmost
good faith to the holders of the Rights by the Board of Directors of the
Company, provided, however, that if at the time of such determination there
is an Acquiring Person or an Adverse Person, the Fair Market Value of such
security on such date shall be determined by a nationally recognized
investment banking firm selected by the Board of Directors, which
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. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading
is open for the transaction of business or, if such security is not listed
or admitted to trading on any national securities exchange, a Business Day.
(ii) If a security is not publicly held or not so listed or traded,
"Fair Market Value" shall mean the fair value per share or per other unit
of such security, determined reasonably and with utmost good faith to the
holders of the Rights by the Board of Directors of the Company, provided,
however, that if at the time of such determination there is an Acquiring
Person or an Adverse Person, the Fair Market Value of such security on such
date shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors, which 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; provided, however, that for the
purposes of making any adjustment provided for by Section 11(a)(ii) hereof,
the Fair Market Value of a Preference Share shall not be less than the
product of the then Fair Market Value of a Common Share multiplied by the
higher of the then Dividend Multiple or Vote Multiple (as both of such
terms are defined in the form of Resolution of Preferences and Rights of
Series A Preference Shares attached as Exhibit A hereto) applicable to the
Preference Share
<PAGE>
-26-
and shall not exceed 105% of the product of the then Fair Market Value of a
Common Share multiplied by the higher of the then Dividend Multiple or Vote
Multiple applicable to the Preference Share.
(iii) In the case of property other than securities, the Fair Market
Value thereof shall be determined reasonably and with utmost good faith to
the holders of Rights by the Board of Directors of the Company, provided,
however, that if at the time of such determination there is an Acquiring
Person or an Adverse Person, the Fair Market Value of such security on such
date shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors, which determination shall be described
in a statement filed with the Rights Agent and shall be binding upon the
Rights Agent and the holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Exercise Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a Common Share or one-millionth of a
Preference Share, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment and (ii) the Expiration Date.
(f) If, as a result of any provision of Section 11(a) hereof, the holder of
any Right thereafter exercised shall become entitled to receive any shares of
capital stock of the Company other than Preference Shares, thereafter the number
of such other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preference Shares contained in
Section 11(a) through (o), inclusive, and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the Preference Shares 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 Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise
<PAGE>
-27-
Price, the number of one one-hundredths of a Preference Share 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 Exercise Price as a result of the
calculations made in Section 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 Exercise Price, that number of one one-hundredths of a
Preference Share (calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one one-hundredths of a Preference Share for which
a Right may be exercisable immediately prior to this adjustment by (y) the
Exercise Price in effect immediately prior to such adjustment of the Exercise
Price and (ii) dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(i) The company may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Rights, in substitution for any
adjustment in the number of Preference Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of one one-hundredths of a Preference
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company shall make a public
announcement (with prompt notice thereof to the Rights Agent) of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Exercise Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right 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
<PAGE>
-28-
holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the Company, the
adjusted Exercise Price) and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or the
number of Preference Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Exercise Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below the then stated value, if any, of the number of one
one-hundredths of a Preference Share 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 non-assessable Preference Shares at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer (with prompt notice thereof to the Rights
Agent) until the occurrence of such event the issuing to the holder of any Right
exercised after such record date the number of one one-hundredths of a
Preference Share or other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of one one-hundredths of a
Preference Share and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise 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 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 Exercise Price, in
addition to those adjustments
<PAGE>
-29-
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 Preference Shares, (ii) issuance wholly for cash of any
Preference Shares at less than the Fair Market Value, (iii) issuance wholly for
cash of Preference Shares or securities which by their terms are convertible
into or exchangeable for Preference Shares, or (iv) stock dividends or issuance
of rights, options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preference Shares, shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Sections 23, 24 and 27 hereof, take (nor will
it permit any of its Subsidiaries to take) any action if at any time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits afforded by the Rights.
(o) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate, amalgamate, merge or otherwise combine
with any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(n)) or (ii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries taken as a whole, to any other
Person or Persons (other than the Company and/or any of its Subsidiaries in one
or more transactions, each of which complies with Section 11(n)) if (x) at the
time of or immediately after such consolidation, amalgamation, merger,
combination, sale or transfer there are any rights, warrants or other
instruments outstanding or agreements or arrangements 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, amalgamation, merger, combination, sale or transfer
the shareholders of a Person who constitutes, or would constitute, the
"Principal Party" for the purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(p) In the event the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare a dividend on the
outstanding Common Shares payable in Common Shares or (ii) effect a subdivision,
combination or
<PAGE>
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consolidation of the outstanding Common Shares (by reclassification or otherwise
than by payment of dividends in Common Shares) into a greater or lesser number
of Common Shares, the number of Rights associated with each Common Share shall
be proportionately adjusted so that the number of Rights thereafter associated
with each Common Share following any such event shall equal the result obtained
by multiplying the number of Rights associated with each Common Share
immediately prior to such event by a fraction, the numerator of which shall be
the total number of Common Shares outstanding immediately prior to the
occurrence of any such event listed in clause (i) or (ii) above and the
denominator of which shall be the total number of Common Shares outstanding
immediately following the occurrence of such event listed in clause (i) or (ii)
above. 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.
(q) The failure by the Board of Directors to declare a Person to be an
Adverse Person following such Person becoming the Beneficial Owner of 10% or
more of the outstanding Common Shares shall not imply that such Person is not an
Adverse Person or limit the Board of Directors' right at any time in the future
to declare such Person to be an Adverse Person.
(r) Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date, the Company may, in lieu of making any adjustment to the
Exercise Price, the number of Preference Shares eligible for purchase on
exercise of each Right or the number of Rights outstanding, which adjustment
would otherwise be required by Section 11(a)(i), 11(b), 11(c), 11(h) or 11(i),
make such other equitable adjustment or adjustments thereto as the Board of
Directors (whose determination shall be conclusive) deems appropriate in the
circumstances.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11, Section 13 or Section
23(d) hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts and computations accounting
for such adjustment, (b) promptly file with the Rights Agent and with each
transfer agent for the Preference Shares and the Common Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 26 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment
contained therein and shall not be
<PAGE>
-31-
deemed to have knowledge of any such adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Amalgamation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, following the Share Acquisition Date, directly or
indirectly, (x) the Company shall under any applicable law consolidate with,
amalgamate with, merge with and into, or otherwise combine with any other Person
(other than a Subsidiary of the Company in a transaction which is not prohibited
by Section 11(n) hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation, amalgamation, merger or
combination, (y) any Person under any applicable law (other than a Subsidiary of
the Company in a transaction which is not prohibited by Section 11(n) hereof)
shall consolidate or amalgamate with the Company, or merge with and into the
Company or otherwise combine with the Company and the Company shall be the
continuing or surviving corporation of such consolidation, amalgamation, merger
or combination and, in connection with such amalgamation, merger or combination,
all or part of the Common Shares 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, mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer), in one transaction of
a series of related transactions, assets or earning power aggregating 50% or
more 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 or any
Subsidiary of the Company in one or more transactions, each of which is not
prohibited by Section 11(n) hereof), 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) hereof, shall have the right to receive, upon the exercise
thereof at the then current Exercise Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid and
non-assessable shares of freely tradeable Common Stock of the Principal Party
(as hereinafter defined in Section 13(b)), free and clear of rights of call or
first refusal, liens, encumbrances or other adverse claims, as shall be equal to
the result obtained by (1) multiplying the then current Exercise Price by the
number of one one-hundredths of a Preference Share for which a Right is
exercisable immediately prior to the first occurrence of a Section 13 Event, and
dividing that product by (2) 50% of the Fair Market Value (determined pursuant
to Section 11(d) hereof) per share of the Common Stock of such Principal Party
on the date of consumma-
<PAGE>
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tion of such consolidation, amalgamation, merger, combination, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, amalgamation, merger, combination, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply to such Principal Party; (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 to permit exercise of all outstanding
Rights in accordance with this Section 13(a) and the making of payments in cash
and/or other securities in accordance with Section 11(a)(iii) hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such
consolidation, amalgamation, merger or combination and if no securities are
so issued, the Person that is the other party to the consolidation,
amalgamation, merger or combination; 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
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (x) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary or Affiliate of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to such other
Person; (y) in case such Person is a direct or indirect Subsidiary or Affiliate
of more than one Person, the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever
<PAGE>
-33-
of such Persons is the issuer of the Common Stock having the greatest aggregate
market value of shares outstanding; and (z) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the rules set forth
in (x) and (y) above shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a "Subsidiary" of both or
all of such joint venturers and the Principal Parties in each such chain shall
bear the obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any Section 13 Event unless prior
thereto (x) the Principal Party shall have a sufficient number of authorized
shares of its Common Stock, which have not been issued or reserved for issuance,
to permit the exercise in full of the Rights in accordance with this Section 13,
and (y) the Company and each Principal Party and each other Person who may
become a Principal Party as a result of such consolidation, amalgamation,
merger, combination, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
Section 13(a) and (b) and further providing that, as soon as practicable after
the date of any consolidation, amalgamation, merger, combination, sale or
transfer of assets mentioned in Section 13(a), the Principal Party at its own
expense will:
(i) prepare and file a registration statement under the Securities Act
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus that at all times meets the
requirements of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky laws
of such jurisdictions as may be necessary or appropriate;
(iii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on Nasdaq;
<PAGE>
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(iv) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
material respects with the requirements for registration on Form 10 under
the Exchange Act; and
(v) take all such other steps as are required under applicable laws in
the United States and in other relevant jurisdictions to enable the
exercise in full of the Rights in accordance with this Section 13.
The provisions of this Section 13 shall similarly apply to successive
Section 13 Events. 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 exercisable shall thereafter become exercisable in the manner
described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired Common Shares pursuant to a tender offer or exchange offer for all
outstanding Common Shares, which complies with the provisos of Section
11(a)(ii)(B) hereof (or a wholly owned Subsidiary of any such Person, or
Persons), (ii) the price per Common Share offered in such transaction is not
less than the price per Common Share paid to all holders of Common Shares whose
shares were purchased pursuant to such tender offer or exchange offer, and (iii)
the form of consideration being offered to the remaining holders of Common
Shares pursuant to such transaction is the same as the form of consideration
paid pursuant to such offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
(e) In no event shall the Rights Agent, except with respect to its duties
set forth in this Agreement, have any liability in respect of any such Principal
Party Transactions, including, without limitation, the propriety thereof. The
Rights Agent may rely and be fully protected in relying upon a certificate of
the Company stating that the provisions of this Section 13 have been fulfilled.
Notwithstanding anything in this Agreement to the contrary, the prior written
consent of the Rights Agent must be obtained in connection with any supplemental
agreement which alters the rights or duties of the Rights Agent.
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Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(o) hereof, or to
distribute Right Certificates which evidence fractional Rights. If the Company
elects not to issue such fractional Rights, the Company shall pay, in lieu of
such fractional Rights, to the registered holders of the Right Certificates with
regard to which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the Fair Market Value of a whole Right, as
determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of Preference
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preference Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preference Shares (other than fractions which are
integral multiples of one one-hundredth of a Preference Share). In lieu of
fractional Preference Shares that are not integral multiples of one
one-hundredth of a Preference Share, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the Fair Market Value
of one one-hundredth of a Preference Share. For purposes of this Section 14(b),
the Fair Market Value of one one-hundredth of a Preference Share shall be
determined pursuant to Section 11(d) hereof for the Trading Day immediately
prior to the date of such exercise. The Rights Agent shall have no duty or
obligation with respect to this Section 14 and Section 24(e) hereof unless and
until it has received specific instructions (and sufficient cash, if required)
from the Company with respect to its duties and obligations under such Sections.
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (or, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares), without
the consent of the Right
<PAGE>
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Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, on his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Right evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be transferable only
simultaneously and together with the transfer of Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office or
offices of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and the appropriate forms and
certificates fully executed, along with a signature guarantee and such other and
further documentation as the Rights Agent may reasonably request;
(c) subject to Section 6, Section 7(e) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name a Right
Certificate (or, prior to the Distribution Date, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Share 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
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have any liability to any holder or a Right or other Person as the 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 obligations; provided, however,
that 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. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preference Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such compensation as
shall be agreed in writing from time to time by the Company and the Rights Agent
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration, execution and amendment
(excluding the amendment and restatement dated as of December 31, 1998) 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 and all loss, damage, claim, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including,
<PAGE>
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without limitation, the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. The indemnity provided in
this Section shall survive the termination of this Agreement and the termination
and the expiration of the Rights. Anything to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, punitive, indirect,
consequential or incidental loss or damage of any kind whatsoever (including,
but not limited to lost profits), even if the Rights Agent has been advised of
the likelihood of such loss or damage.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for Common Shares, Preference Shares, or 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 and executed by
the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the shareholder services
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 Person 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 Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
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(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only the
duties and obligations expressly imposed by this Agreement, and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent, upon the following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected by it (who may
be legal counsel for the Company), and the opinion or advice of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion or advice. The Company shall only be responsible for reasonable fees and
expenses of outside counsel which has been engaged by the Rights Agent with the
Company's prior written consent; provided, that Kelley Drye & Warren LLP may be
engaged by the Rights Agent without prior written consent for so long as it has
no conflict of interest with the Company, as determined by the Company in its
reasonable discretion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or Adverse
Person and the determination of "Fair Market Value") be proved or established by
the Company prior to taking or omitting to take or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof shall
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent to
be the Chairman of the Board, a Vice Chairman of the Board, the President, a
Vice President, the Treasurer, any Assistant Treasurer, or the Secretary of the
Company and delivered to the Rights Agent. Any such certificate shall be full
authorization and protection to the Rights Agent for any
<PAGE>
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action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate. (c) The Rights Agent shall be
liable hereunder only for its own 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 Right
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 have any liability for nor be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming null and void pursuant to Section 7(e)
hereof) or any adjustment required under the provisions of Sections 11, 13 or
23(c) hereof or responsible for the matter, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after the Rights Agent's actual receipt of a certificate
describing any such adjustment furnished in accordance with Section 12 hereof),
nor shall it be responsible for any determination by the Board of Directors of
the Company of current market value of the Rights or Preference Shares pursuant
to the provisions of Section 14 hereof; nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Common Shares or Preference Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Common Shares or
Preference Shares will, when so issued, be validly authorized and issued, fully
paid and non-assessable, nor shall the Rights Agent be responsible for the
legality of the terms hereof in its capacity as an administrative agent.
(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 assurance as may reasonably be required
<PAGE>
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by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person believed
by the Rights Agent to the Chairman of the Board, any Vice Chairman of the
Board, the President, a Vice President, the Secretary, or the Treasurer of the
Company, and is authorized 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 omitted to be taken or suffered to be taken 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 Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than five Business Days after the date any officer
of the Company actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, affiliates, 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 the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(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, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company
<PAGE>
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or to the holders of the Rights resulting from any such act, omission, default,
neglect or misconduct; provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provisions of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been properly completed or indicates an affirmative response to clause (1) or
clause (2) thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company. The Company shall give the Rights Agent prompt written instructions as
to the action to be taken regarding the Rights Certificates involved. The Rights
Agent shall be protected and shall not be liable for acting in accordance with
such instructions.
(l) In addition to the foregoing, the Rights Agent shall be protected and
shall incur no liability for, or in respect of, any action taken or omitted by
it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached hereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification, including, without limitation, any refusal
to honor any otherwise permissible assignment or election by reason of such
non-execution.
(m) The Company agrees to give the Rights Agent prompt written notice of
any event known to it which would prohibit the exercise or transfer of the Right
Certificates.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Shares and the Preference Shares,
<PAGE>
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by registered or certified mail. The Company may remove the Rights Agent or any
successor Rights Agent (with or without cause) upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preference Shares by
registered or certified mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the incumbent Rights Agent or the registered
holder of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be either (a) a Person
organized and doing business under the laws of the United States or of any state
of the United States, in good standing, which is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate of such a Person. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and the Preference Shares, and mail
a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, subject to Section 4 hereof, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Exercise
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Price per share and the number or kind or class of shares of stock or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustments
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, redeem all
but not less than all of the then outstanding Rights at a redemption price of
$0.001 per Right, subject to adjustments as provided in Section 23(d) hereof
(such redemption price being hereinafter referred to as the "Redemption Price");
provided, however, if the Board of Directors of the Company authorizes
redemption of the Rights in either of the circumstances set forth in clauses (i)
and (ii) below, then there must be Continuing Directors then in office and such
authorization shall require the concurrence of a majority of such Continuing
Directors: (i) such authorization occurs on or after the time a person becomes
an Acquiring Person or an Adverse Person, or (ii) such authorization occurs on
or after the date of a change (resulting from a proxy or consent solicitation)
in a majority of the directors in office at the commencement of such
solicitation if any Person who is a participant in such solicitation has stated
(or, if upon the commencement of such solicitation, a majority of the continuing
Directors of the Company has determined in good faith) that such Person (or any
of its Affiliates or Associates) intends to take, or may consider taking, any
action which would result in such Person becoming an Acquiring Person or an
Adverse Person or which would cause the occurrence of a Triggering Event un-
<PAGE>
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less, concurrent with such solicitation, such person (or one or more of its
Affiliates or Associates) is making a cash tender offer pursuant to a Schedule
14D-1 (or any successor form) filed with the Securities and Exchange Commission
for all outstanding Common Shares not beneficially owned by such Person (or by
its Affiliates or Associates). Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the Company's right
of redemption hereunder has expired. The Rights may be redeemed only until the
earliest of (i) 5:00 p.m., New York City time, on the tenth Business Day after
the Share Acquisition Date, (ii) the declaration by the Board of Directors that
any Person is an Adverse Person, (iii) the occurrence of a Section 13 Event, or
(iv) the Final Expiration Date.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and notify the holders of the then outstanding Rights of
such redemption by either (i) mailing a notice to all such holders, which notice
will state the method by which the payment of the Redemption Price will be made,
or (ii) issuing a press release announcing the manner of redemption of the
Rights in accordance with this Agreement and mailing payment of the Redemption
Price to all such holders. In either case, such mailing shall be made to each
holder's last address as it appears upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the register of the Transfer Agent for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Upon
payment of the Redemption Price, all outstanding Rights and Right Certificates
shall be null and void without any further action by the Company. 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 Section 24 hereof or in connection with the purchase
of Common Shares prior to the Distribution Date.
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Shares (based on the Fair Market Value of the Common Shares as of the
time of redemption) or any
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other form of consideration deemed appropriate by the Board of Directors.
(d) In the event the Company shall at any time after the date of this
Rights Agreement (i) pay any dividend on Common Shares in Common Shares, (ii)
subdivide the outstanding Common Shares into a greater number of shares or (iii)
combine the outstanding Common Shares into a smaller number of shares, then and
in each such event the Redemption Price after such event shall equal the
Redemption Price immediately prior to such event multiplied by a fraction, the
numerator of which is the number of Common Shares outstanding immediately prior
to such event and the denominator of which is the number of Common Shares
outstanding immediately after such event; provided, however, that in each case
such adjustment to the Redemption Price shall be made only if the amount of the
Redemption Price shall be reduced or increased by $0.001 per Right.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
on or after the occurrence of a Section 11(a)(ii) Event, 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 Common
Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any share split, share dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the beneficial owner of 50% or more of the
Common Shares of the Company.
(b) Immediately upon the action 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 Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give notice
of any such exchange (including notice to the Rights Agent) in accordance with
Section 26 hereof; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. Each such notice
of exchange will state
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the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preference Shares (or Preference Share Equivalents, as
such term is defined in Section 11(b) hereof) for Common Shares exchangeable for
Rights, at the initial rate of one one-hundredth of a Preference Share (or
Preference Share Equivalent) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preference Shares pursuant to
the terms thereof, so that the fraction of a Preference Share delivered in lieu
of each Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preference Shares (or Preference Share Equivalents) issued but not outstanding
or authorized but unissued 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 Common Shares or Preference Shares (or
Preference Share Equivalents) for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which evidence fractional Common Shares. If the
Company elects not to issue such fractional Common Shares, the Company shall
pay, in lieu of such fractional Common Shares, to the registered holders of the
Right Certificates with regard to which such fractional Common Shares would
otherwise be issuable, an amount in cash equal to the same fraction of the Fair
Market Value of a whole Common Share. For the purposes of this paragraph (e),
the Fair Market Value of a whole Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in
<PAGE>
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stock of any class to the holders of Preference Shares or to make any other
distribution to the holders of Preference Shares (other than a regular periodic
cash dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of Preference Shares rights or warrants to subscribe for or
to purchase any additional Preference Shares or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any reclassification
of its Preference Shares (other than a reclassification involving only the
subdivision of outstanding Preference Shares), or (iv) to effect any
consolidation, amalgamation, merger or other combination into or with, or to
effect any sale, mortgage or other transfer (or to permit one or more of its
Subsidiaries to effect any sale, mortgage or other transfer), in one transaction
or a series of related transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person (other than a Subsidiary of the Company in one or more transactions each
of which is not prohibited by Section 11(n) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
then in each such case, the Company shall give to each holder of a Right
Certificate and to the Rights Agent, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, amalgamation, merger,
combination, sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the Common Shares
and/or Preference Shares, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least twenty (20) days prior to the record date for determining holders of the
Preference Shares for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares and/or Preference Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each
registered holder of a Right Certificate and to the Rights Agent, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
<PAGE>
-49-
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii).
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 Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
XOMA Ltd.
2910 Seventh Street
Berkeley, California 94710
Attention: General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
235 Montgomery Street, 23rd Floor
San Francisco, California 94104
Attention: Joseph W. Thatcher, Jr.
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing Common
Shares) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. Prior to the earlier of the
Distribution Date or the Shares Acquisition Date and subject to the other
provisions of this Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement as the
Company may deem necessary or desirable without the approval of any holders of
certificates representing Common Shares. From and after the earlier of the
Distribution Date or the Shares Acquisition Date and subject to the other
provisions of this Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement
<PAGE>
-50-
without the approval of any holder of Right Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder (which shortening or
lengthening, following the first occurrence of an event set forth in clauses (i)
and (ii) of the first proviso to Section 23(a) hereof, shall be effective only
if there are Continuing Directors and shall require the concurrence of a
majority of such Continuing Directors), or (iv) to change or supplement the
provisions hereof in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Right Certificates (other than an Acquiring Person, an Adverse Person or any
Affiliate or Associate of an Acquiring Person or an Adverse Person); provided,
however, that this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable or
(B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and the benefits to, the
holders of Rights (other than an Acquiring Person, an Adverse Person or any
Affiliate or Associate of an Acquiring Person or Adverse Person). Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made on or after the Distribution Date which
changes the Redemption Price, the Final Expiration Date, the Exercise Price or
the number of one one-hundredths of a Preference Share for which a Right is
exercisable or which affects any right vested in the Rights Agent. Prior to
earlier of the Distribution Date or the Shares Acquisition Date, the interests
of the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares. Notwithstanding any other provision hereof, the Rights
Agent's consent must be obtained regarding any amendment or supplement pursuant
to this Section 27 which alters the Rights Agent's rights, obligations or
duties.
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 calcula-
<PAGE>
-51-
tion of the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Rules
under the Exchange Act as in effect on the date hereof. 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 (with, where specifically provided for herein, the concurrence of the
Continuing Directors) or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights, to
declare that a Person is an Adverse Person 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 (with, where specifically provided
for herein, the concurrence of the Continuing Directors) in good faith shall (x)
be final, conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all other parties, and (y) not subject any member of the Board
of Directors or the Continuing Directors to any liability to the holders of the
Rights or to any other person.
Section 30. Benefits of This Agreement. (a) The Company unilaterally and
irrevocably declares and undertakes for the benefit of the registered holders of
the Right Certificates (and prior to the Distribution Date, registered holders
of the Common Shares) that it will comply with, perform and observe all of its
obligations hereunder.
(b) Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, the Common
Shares) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, registered holders of the Common Shares).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of
<PAGE>
-52-
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 the Agreement would
adversely affect the purpose or effect of the Agreement, the right of redemption
set forth in Section 23 hereof shall be reinstated and shall not expire until
the close of business on the tenth day following the date of such determination
by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be governed by and construed in accordance
with the laws of Bermuda; provided, however, that all provisions regarding the
rights, duties and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as a deed as of the day and year first above written.
XOMA Corporation
1998 XOMA CORPORATION
"Corporate Seal, Arizona"
Attested: By /s/ John L. Castello
---------------------------------
Name: John L. Castello
By /s/ Christopher J. Margolin Title: Chairman of the Board,
------------------------------ President and Chief
Name: Christopher J. Margolin Executive Officer
Title: Vice President, General
Counsel and Secretary
[Notary Seal]
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
as Rights Agent
By /s/ Joseph W. Thatcher
--------------------------------
Name: Joseph W. Thatcher
Title: Assistant Vice President
<PAGE>
Exhibit A
RESOLUTIONS
REGARDING
PREFERENCES AND RIGHTS OF
SERIES A PREFERENCE SHARES
RESOLVED, that upon the effectiveness of the registration of a Memorandum
of Continuance with the Registrar of Companies of Bermuda (the "Effective
Time"), which will result in the Company becoming a Bermuda company pursuant to
a continuation procedure under Bermuda and Arizona law, there is hereby created
a series of preference shares of the Company; which series shall have the
following powers, preferences, and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof, in
addition to those set forth in the memorandum of continuance and bye-laws of the
Company:
1. Designation. The series of preference shares established hereby shall be
designated the "Series A Preference Shares" (and shall be referred to herein as
the "Series A Preference Shares") and the authorized number of Series A
Preference Shares shall be 650,000 shares. Such number of shares may be
increased or decreased, from time to time, by resolution of the Board of
Directors; provided that no decrease shall reduce the number of Series A
Preference Shares to a number less than the total of the number of such shares
then outstanding plus the number of such shares issuable upon the exercise of
outstanding rights, options or warrants or upon the conversion of outstanding
securities issued by the Company.
2. Dividends and Distributions.
(A)(i) Subject to the rights of the holders of any shares of any series of
preference shares (or any similar shares) ranking prior and superior to the
Series A Preference Shares with respect to dividends, the holders of Series A
Preference Shares, in preference to the holders of Common Shares and of any
other junior shares, 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 first day of March, June, September and
December in each year (each such date being referred to herein as a "Dividend
Payment Date"), commencing on the first Dividend Payment Date after the first
issuance of a Series A Preference Share or fraction thereof, in an amount per
share (rounded to
<PAGE>
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the nearest cent) equal to the greater of (a) U.S. $1.00 or (b) subject to the
provisions for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, plus 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in Common Shares or a subdivision of the outstanding
Common Shares (by reclassification or otherwise), declared on the Common Shares
since the immediately preceding Dividend Payment Date, or, with respect to the
first Dividend Payment Date, since the first issuance of any Series A Preference
Share or fraction thereof. The multiple of cash and non-cash dividends declared
on the Common Shares to which holders of the Series A Preference Shares are
entitled, which shall be 100 initially but which shall be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the "Dividend
Multiple." In the event the Company shall at any time after the date hereof (i)
declare or pay any dividend on Common Shares payable in Common Shares, or (ii)
effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise than by payment of a dividend in Common
Shares) into a greater or lesser number of Common Shares, then in each such case
the Dividend Multiple thereafter applicable to the determination of the amount
of dividends which holders of Series A Preference Shares shall be entitled to
receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction, the numerator of which is the number of Common
Shares outstanding immediately after such event and the denominator of which is
the number of Common Shares that were outstanding immediately prior to such
event.
(ii) Notwithstanding anything else contained in this paragraph (A), the
Company shall, out of funds legally available for that purpose, declare a
dividend or distribution on the Series A Preference Shares as provided in this
paragraph (A) immediately after it declares a dividend or distribution on the
Common Shares (other than a dividend payable in Common Shares); provided that,
in the event no dividend or distribution shall have been declared on the Common
Shares during the period between any Dividend Payment Date and the next
subsequent Dividend Payment Date, a dividend of U.S. $1.00 per Series A
Preference Share shall nevertheless be payable on such subsequent Dividend
Payment Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding Series
A Preference Shares from the Dividend Payment Date next preceding the date of
issue of such Series A Preference Shares, unless the date of issue of such
<PAGE>
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shares is prior to the record date for the first Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Dividend Payment Date or is a date
after the record date for the determination of holders of Series A Preference
Shares entitled to receive a quarterly dividend and before such Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the Series A Preference Shares 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 in accordance
with applicable law a record date for the determination of holders of Series A
Preference Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than such number of days
prior to the date fixed for the payment thereof as may be allowed by applicable
law.
3. Voting Rights. In addition to any other voting rights required by law,
the holders of Series A Preference Shares shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
Series A Preference Share shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the shareholders of the Company. The number of
votes which a holder of a Series A Preference Share is entitled to cast, which
shall initially be 100 but which may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Vote Multiple." In the
event the Company shall at any time after the date hereof (i) declare or pay any
dividend on Common Shares payable in shares, or (ii) effect a subdivision or
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
Vote Multiple thereafter applicable to the determination of the number of votes
per share to which holders of Series A Preference Shares shall be entitled shall
be the vote multiple immediately prior to such event multiplied by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event.
<PAGE>
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(B) Except as otherwise provided herein or by law, the holders of Series A
Preference Shares and the holders of Common Shares and the holders of any other
shares of the Company having general voting rights, shall vote together as one
class on all matters submitted to a vote of shareholders of the Company.
(C) Except as otherwise required by applicable law or as set forth herein,
holders of Series A Preference Shares 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 Shares as set forth herein) for taking any corporate
action.
4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series A Preference
Shares as provided in Paragraph 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared, on
Series A Preference Shares outstanding shall have been paid in full, the Company
shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preference Shares;
(ii) declare or pay dividends on or make any other distributions on
any shares ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preference Shares, except
dividends paid ratably on the Series A Preference Shares and all such
parity shares 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) except as permitted in subparagraph 4(A)(iv) below, redeem,
purchase or otherwise acquire for consideration any shares ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preference Shares, provided that the Company may at
any time redeem, purchase or otherwise acquire any such parity shares in
exchange for any shares of the Company ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preference Shares; or
<PAGE>
-5-
(iv) purchase or otherwise acquire for consideration any Series A
Preference Shares, or any shares ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preference Shares, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes; provided, however, that the foregoing
restrictions shall not apply to the repurchase of Common Shares held by
employees, officers, directors, or consultants of the Company (or their
permitted transferees) that are subject to restrictive stock purchase
agreements under which the Company has the option or obligation to
repurchase such shares upon the occurrence of certain events, such as
termination of employment.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of the Company unless the
Company could, under subparagraph (A) of this Paragraph 4, purchase or otherwise
acquire such shares at such time and in such manner.
5. Reacquired Shares. Any Series A Preference Shares purchased or otherwise
acquired by the Company in any manner whatsoever shall be canceled upon the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued preference shares and may be reissued as part of a new
series of preference shares to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation (voluntary
or otherwise), dissolution or winding up of the Company, no distributions shall
be made (x) to the holders of shares ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preference Shares
unless, prior thereto, the holders of Series A Preference Shares shall have
received an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, plus an amount
equal to the greater of (1) U.S. $100.00 per share or (2) an aggregate amount
per share, subject to the provision for adjustment hereinafter set forth, equal
to 100 times the aggre-
<PAGE>
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gate amount to be distributed per share to holders of Common Shares, or (y) to
the holders of shares ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preference Shares,
except distributions made ratably on the Series A Preference Shares and all
other such parity shares in proportion to the total amount to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up. In the event the Company shall at any time after the date hereof (i) declare
or pay any dividend on Common Shares payable in Common Shares, or (ii) effect a
subdivision or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
aggregate amount per share to which holders of Series A Preference Shares were
entitled immediately prior to such event under clause (x) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
7. Consolidation, Amalgamation, Merger, etc. In case the Company shall
enter into any consolidation, amalgamation, merger, combination or other
transaction in which the Common Shares are exchanged for or changed into other
shares or securities, cash and/or any other property, then in any such case the
Series A Preference Shares shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of shares,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each Common Share is changed or exchanged. In the
event the Company shall at any time after the date hereof (i) declare or pay any
dividend on Common Shares payable in Common Shares, or (ii) effect a subdivision
or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of Series A Preference Shares shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
<PAGE>
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8. Redemption. The Series A Preference Shares shall not be redeemable.
9. Ranking. Unless otherwise provided in the Resolutions Regarding
Preferences and Rights relating to a subsequently designated series of
preference shares of the Company, the Series A Preference Shares shall rank
junior to any other series of the Company's preference shares subsequently
issued, as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up and shall rank senior to the Common
Shares.
10. Amendment. The provisions of the memorandum of continuance or bye-laws
of the Company or of these resolutions shall not be amended, altered or repealed
in any manner which would materially alter or change the powers, preferences or
special rights of the Series A Preference Shares so as to effect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding Series A Preference Shares, voting separately as a class.
11. Fractional Shares. Series A Preference Shares may be issued in
fractions of a share (which fractions shall be integral multiples of one
one-hundredth of a share) which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preference Shares.
<PAGE>
Exhibit B
[Form of Right Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER DECEMBER 31, 2002 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF XOMA LTD., AT
U.S.$0.001 PER RIGHT ON THE TERMS SET FORTH IN THE AMENDED AND RESTATED
SHAREHOLDER RIGHTS AGREEMENT BETWEEN XOMA LTD. (FORMERLY KNOWN AS XOMA
CORPORATION) AND CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS RIGHTS AGENT,
DATED AS OF OCTOBER 27, 1993 AND AMENDED AND RESTATED AS OF DECEMBER 31, 1998
(THE "RIGHTS AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID.
Right Certificate
XOMA LTD.
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 Amended and Restated
Shareholder Rights Agreement dated as of October 27, 1993 and amended and
restated as of December 31, 1998 (the "Rights Agreement") between XOMA LTD.
(formerly known as XOMA CORPORATION) (the "Company") and CHASEMELLON SHAREHOLDER
SERVICES, L.L.C. (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 the close of business on December 31, 2002 at the office or offices
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-hundredth of a fully paid, non-assessable Series A Preference
Share (the "Preference Shares") of the Company, at a purchase price of U.S. $
per one one-hundredth of a share (the "Exercise Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase and
the related Certificate duly executed, along with a signature guarantee and such
other and further documentation as the Rights Agent may reasonably request. The
number of Rights evidenced by this Right Certificate (and the
<PAGE>
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number of shares which may be purchased upon exercise thereof) set forth above,
and the Exercise Price per share set forth above, are the number and Exercise
Price as of , based on the Preference Shares as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person, an Adverse Person or an Affiliate
or Associate of any such Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Adverse Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a Person who, after such transfer, became an
Acquiring Person or an Adverse Person, or an Affiliate or Associate of an
Acquiring Person or an Adverse Person, such Rights shall become null and void
and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Exercise Price and the number of
Preference Shares or other securities which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right 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 Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal office of the
Company and the designated office of the Rights Agent and are also available
upon written request to the Company or the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preference Shares as the Rights evidenced by the Right
Certificate or Certificates surrendered shall have
<PAGE>
-3-
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Certificates for the number of whole Rights not exercised.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof, along with a signature guarantee and
such other and further documentation as the Rights Agent may reasonably request,
another Right Certificate or Right Certificates for the number of whole Rights
not exercised.
Under certain circumstances, subject to the provisions of the Rights
Agreement, the Board of Directors of the Company at its option may exchange all
or any part of the Rights evidenced by this Certificate for the Company's Common
Shares or Preference Shares at an exchange ratio (subject to adjustment) of one
Common Share or one one-hundredth of a Preference Share per Right.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Board of Directors of the Company at its
option at a redemption price of U.S.$0.001 per Right (payable in cash, Common
Shares or other consideration deemed appropriate by the Board of Directors).
The Company is not obligated to issue fractional shares of stock upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a Preference Share, which may, at the
election of the Company, be evidenced by depositary receipts). If the Company
elects not to issue such fractional shares, in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preference Shares,
Common Shares or any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise,
<PAGE>
-4-
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
<PAGE>
-5-
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
[Corporate Seal] XOMA LTD.
Attested: By
--------------------------------
Name:
By Title:
-------------------------------
Name:
Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
- ------------------------------------
Authorized Signatory
Date of Countersignature:
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED_____________________________________________________________
hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ______________, ____
___________________________________________
Signature
Signature Guaranteed: ____________________
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate _________ are ______ are
not being transferred by or on behalf of a Person who is or was an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person (as
such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did did not directly or indirectly acquire the Rights evidenced by
this Right Certificate from any Person who is, was or became an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person.
Dated: ______________, ____ _____________________________________
Signature
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
<PAGE>
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To XOMA LTD.:
The undersigned hereby irrevocably elects to exercise _______ Rights
represented by this Right Certificate to purchase the Preference Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of:
Please insert U.S. social security
or other taxpayer identifying number: ________________________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate or if the Rights are being exercised pursuant to Section
11(a)(ii) of the Rights Agreement, a new Right Certificate for the balance of
such Rights shall be registered in the name of and delivered to:
Please insert U.S. social security
or other taxpayer identifying number: ________________________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
______________________________________________________________________________
Dated: _____________, ____
__________________________________________
Signature
Signature Guaranteed: __________________
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate ________ are ________
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person (as
such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did did not directly or indirectly acquire the Rights evidenced by
this Right Certificate from any Person who is, was or became an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person.
Dated: ______________, ____ __________________________________________
Signature
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
NOTICE
The signature to the foregoing Election To Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
