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OSI PHARMACEUTICALS, INC.
and
THE BANK OF NEW YORK
as Rights Agent
RIGHTS AGREEMENT
Dated as of September 27, 2000
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Section 1. Definitions.....................................................................................1
Section 2. Appointment of Rights Agent.....................................................................5
Section 3. Issue of Rights and Right Certificates..........................................................5
Section 4. Form of Right Certificates......................................................................6
Section 5. Signature and Countersignature of Right Certificates; Registration of
Ownership and Transfers.........................................................................7
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.........................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...................................8
Section 8. Cancellation of Right Certificates.............................................................11
Section 9. Reservation and Availability of Preferred Stock; Compliance with
Registration or Other Requirements of Securities Laws; Transfer Taxes.........................11
Section 10. Preferred Stock Record Date....................................................................12
Section 11. Modification of Rights and Adjustment of Purchase Price, Number of Shares,
Number of Rights and Securities Purchasable....................................................13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................19
Section 14. Fractional Rights and Fractional Shares........................................................21
Section 15. Rights of Action...............................................................................23
Section 16. Agreement of Right Holders.....................................................................23
Section 17. Right Certificate Holder Not Deemed a Stockholder..............................................24
Section 18. Concerning the Rights Agent....................................................................24
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................25
Section 20. Duties of Rights Agent.........................................................................25
Section 21. Change of Rights Agent.........................................................................28
Section 22. Issuance of New Right Certificates.............................................................28
Section 23. Redemption of Rights...........................................................................29
Section 24. Notice of Certain Events.......................................................................30
Section 25. Notices........................................................................................31
Section 26. Supplements and Amendments.....................................................................31
Section 27. Successors.....................................................................................32
Section 28. Determinations and Actions by the Company or the Board of Directors............................32
Section 29. Benefits of this Agreement.....................................................................33
Section 30. Severability...................................................................................33
Section 31. Governing Law..................................................................................33
Section 32. Counterparts...................................................................................33
Section 33. Descriptive Headings...........................................................................33
Exhibit A - Terms of Preferred Stock
Exhibit B - Summary of Rights to Purchase Preferred Stock
Exhibit C - Form of Right Certificate
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RIGHTS AGREEMENT
AGREEMENT dated as of September 27, 2000, between OSI PHARMACEUTICALS,
INC., a Delaware corporation (the "Company"), and THE BANK OF NEW YORK, a New
York banking corporation, as rights agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend, distributable to the holders of common stock of the Company of record
at the Record Date (hereinafter defined), of rights to purchase shares of
Preferred Stock of the Company and has also authorized the issuance of one such
right to the holder of each share of common stock of the Company which shall
become outstanding after the Record Date and before the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (such terms
are hereinafter defined). This Agreement provides for the issuance and the terms
of such rights and other matters relating thereto.
NOW THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereby agree as follows:
Section 1. Definitions.
The following terms used in this Agreement have the meanings indicated
therefor:
(a) "Acquiring Person," except as provided in the next sentence, means
any Person who or which, together with all Affiliates and Associates of such
Person, shall at any time be the Beneficial Owner of 17.5% or more of the shares
of Common Stock then outstanding. Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or any such Subsidiary,
(iv) any Person organized, appointed or established by the Company or any such
Subsidiary for or pursuant to any such plan or (v) any Person who or which,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 17.5% or more of the shares of Common Stock then outstanding
as a result of the acquisition of shares of Common Stock directly from the
Company or pursuant to a Permitted Offer and (B) no Person shall become an
"Acquiring Person" either (x) as the result of an acquisition of Common Stock by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares Beneficially Owned by such Person to 17.5% or
more of the shares of Common Stock of the Company then outstanding; provided,
that if (i) a Person who would become an Acquiring Person but for the provisions
of this clause (x) as a result of the acquisition of shares of Common Stock by
the Company and (ii) after such acquisition of shares by the Company such Person
becomes the Beneficial Owner of any additional share of Common Stock of the
Company, then such Person shall be deemed an "Acquiring Person" or (y) if (i)
within eight (8) days after such Person would otherwise have become an Acquiring
Person (but for the operation of this clause (y)) such Person notifies the Board
of Directors of the Company
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that such Person did so inadvertently and (ii) within two (2) days after such
notification such Person is the Beneficial Owner of less than 17.5% of the
shares of Common Stock then outstanding.
(b) "Affiliate" and "Associate" have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the Record Date.
(c) "Beneficial Owner" of securities means the following: A Person
shall be deemed the "Beneficial Owner" of and shall be deemed to "Beneficially
Own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the exercise
of conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise (provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange) or (B) the right, alone or with any other
Person, to vote or to direct the voting pursuant to any agreement, arrangement
or understanding (provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, any security if such agreement,
arrangement or understanding granting the right to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the proxy rules and regulations under the Exchange Act and (2) is not then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are Beneficially Owned (within the definition thereof
set forth in clause (i) or (ii)), directly or indirectly, by any other Person
with which such first-mentioned Person or any of such first-mentioned Person's
Affiliates or Associates has any agreement, arrangement or understanding for the
acquiring, holding, disposing or voting (except to the extent provided by the
provisos of the foregoing clauses (ii)(A) and (ii)(B)) any securities of the
Company.
(d) "Board of Directors" or "Board" means the board of directors of
the Company.
(e) "Business Day" means any day other than a Saturday or 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.
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(f) "Close of Business" on any day means 5:00 P.M., New York City
time, on such day; provided, however, that if such day is not a Business Day it
shall mean 5:00 P.M., New York City time, on the next succeeding Business Day.
(g) "Common Stock" when used with reference to the Company means
shares of common stock, par value $0.01, of the Company. "Common Stock" when
used with reference to any Person other than the Company means the capital stock
(or other form of equity interest) with the greatest voting power of such Person
or, if such Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person, the terms of which shares
or units do not limit (as a fixed amount and not merely in proportional terms)
the amount of dividends or income payable or distributable on such shares or
units or the amount of assets distributable on such shares or units upon any
voluntary or involuntary liquidation, dissolution or winding up of such Person
and do not provide that such shares or units are subject to redemption at the
option of such Person, or any shares of capital stock or units of equity
interests into which the foregoing shall be reclassified or changed; provided,
however, that if at any time there shall be more than one such class or series
of capital stock of or equity interests in such Person, "Common Stock" of such
person shall include all such classes and series substantially in the proportion
of the total number of shares or other units of each such class or series
outstanding at such time.
(h) "Company" means OSI Pharmaceuticals, Inc., a Delaware corporation.
(i) "Co-Rights Agent" means, at any time when there shall be more than
one Person duly acting as Rights Agent, each such Person other than the Rights
Agent.
(j) "Distribution Date" has the meaning assigned thereto in Section
3(b).
(k) "Equivalent Preference Shares" has the meaning assigned thereto in
Section 11(b).
(l) "Exchange Act" means the Securities Exchange Act of 1934 as
amended.
(m) "Final Expiration Date" means August 31, 2010.
(n) "Interested Stockholder" means any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, Affiliate or Associate has an interest, or any other
Person acting directly or indirectly on behalf of or in concert with any such
Acquiring Person, Affiliate or Associate.
(o) "Permitted Offer" means a tender or exchange offer which is for
all outstanding shares of Common Stock at a price and on terms determined prior
to the purchase of any shares under such tender or exchange offer by the Board
of Directors to be adequate, taking into account all factors that the directors
deem relevant, including without limitation amounts that the directors believe
could reasonably be realized if the Company or its assets were sold on an
orderly basis designed to realize maximum value, and otherwise in the best
interests of the
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Company and its stockholders (other than the Person or an Affiliate or Associate
thereof on whose behalf the tender or exchange offer is made), taking into
account all factors that the directors may deem relevant thereto.
(p) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization or other entity, including,
without limitation, any "group," as that term is used in Rule 13d-5(b) under the
Exchange Act, or a government or governmental agency.
(q) "Preferred Stock" means shares of Series SRP Junior Participating
Preferred Stock, par value $0.01 per share, of the Company, the terms of which
are set forth on Exhibit A hereto.
(r) "Principal Party" has the meaning assigned thereto in Section
13(b).
(s) "Purchase Price" has the meaning assigned thereto in Section 7(b).
(t) "Record Date" means the Close of Business on September 27, 2000.
(u) "Redemption Date" has the meaning assigned thereto in Section
7(a).
(v) "Redemption Price" has the meaning assigned thereto in Section 23.
(w) "Right" means a right issued pursuant to this Agreement to
purchase one one-thousandth of a share of Preferred Stock at the Purchase Price
and on the other terms, subject to the conditions, set forth in this Agreement.
(x) "Right Certificates" means certificates evidencing Rights as
provided for in Section 3.
(y) "Rights Agent" at any time means the Person then duly acting as
rights agent hereunder. The initial such Rights Agent is The Bank of New York.
(z) "Section 11(a)(ii) Event" has the meaning assigned thereto in
Section 11(a)(ii).
(aa) "Section 13 Event" has the meaning assigned thereto in Section
13(a).
(bb) "Securities Act" means the Securities Act of 1933, as amended.
(cc) "Shares Acquisition Date" means the date of the first public
announcement (including, without limitation a report filed pursuant to Section
13(d) under the Exchange Act) by the Company or any Person who is then an
Acquiring Person that a Person has become an Acquiring Person; provided that if
such Person is determined not to have become an Acquiring Person by reason of
action taken pursuant to Section 1(a)(B)(y), then no Shares Acquisition Date
shall be deemed to have occurred.
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(dd) "Subsidiary" of any Person means any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interests is owned, directly or indirectly, by such Person.
(ee) "Trading Day" has the meaning assigned thereto in Section 11(d).
(ff) "Voting Securities" of any Person means the securities (or other
equity interest) of such Person, the holders of which are entitled to vote
generally in the election of directors (or similar supervisory authorities).
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of Rights in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable. 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 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.
Section 3. Issue of Rights and Right Certificates.
(a) The Company will issue (i) as of the Record Date, to each then
holder of record of shares of Common Stock, Rights at the rate of one Right per
share of such Common Stock and (ii) as of the date of issuance of any shares of
Common Stock hereafter issued by the Company after the Record Date and before
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, to the first holder thereof, one Right per share of such Common
Stock.
(b) The "Distribution Date" means the earlier of (i) the Close of
Business on the tenth day (or such later day as may be determined by action of
the Board of Directors of the Company) after the date of the commencement of, or
first public announcement of the intention of any Person to commence, a tender
or exchange offer the consummation of which would result in any Person becoming
an Acquiring Person and (ii) the Shares Acquisition Date.
(c) From the Record Date until the Distribution Date (i) the Rights
will be evidenced by the related certificates for shares of Common Stock
registered in the names of the holders thereof (which certificates shall be
deemed to be Right Certificates for such Rights) and not by separate Right
Certificates, whether or not such Common Stock certificates contain the legend
provided for in paragraph (e) of this Section, and (ii) the Rights (including
the right to receive Right Certificates) will be transferable only in connection
with the transfer of Common Stock and the surrender for transfer of any
certificate for Common Stock. The Company shall give the Rights Agent prompt
written notice of the Distribution Date. As soon as practicable after the
Distribution Date and receipt of written notice of the Distribution Date from
the Company, the Rights Agent will, at the Company's expense, send, by
first-class postage-prepaid mail, to each
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record holder of Common Stock as of the Close of Business on the Distribution
Date, at the address of such holder shown on the records of the Company, a Right
Certificate, in the form provided for in Section 4, evidencing one Right for
each share of Common Stock so held subject to adjustment as provided herein. As
of and after the Distribution Date, the Rights will be evidenced solely by the
Right Certificates.
(d) As soon as practicable after the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Stock, in substantially
the form of Exhibit B hereto (the "Summary of Rights"), by first-class
postage-prepaid mail, to each record holder of Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company.
(e) Certificates for Common Stock issued after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between OSI
PHARMACEUTICALS, INC. (the "Company") and THE BANK OF NEW YORK, as
Rights Agent, dated as of September 27, 2000 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal
executive office of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the
date of mailing, without charge, promptly after receipt of a
written request therefor. Under certain circumstances, Rights
beneficially owned by Acquiring Persons or Associates or
Affiliates thereof (as defined in the Rights Agreement) and any
subsequent holder of such Rights may become null and void.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Preferred Stock and of assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit C hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed or to conform to usage. The Right Certificates shall be in a
machine printable format and in a form reasonably satisfactory to the Rights
Agent. Subject to the provisions of Section 22, Right Certificates issued in
respect of shares of Common Stock which were issued and outstanding as of the
Record Date shall be dated
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as of the Record Date, and all Right Certificates issued in respect of other
shares of Common Stock shall be dated as of the respective dates of issuance of
such Common Stock, and in either case shall state the number of shares of
Preferred Stock and the Purchase Price thereof per one one-thousandth of a share
of Preferred Stock, but such number of such shares of Preferred Stock and the
Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3 or Section 22
that represents Rights which are null and void pursuant to Section 7(e) and any
Right Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate were issued to a
Person who was or became an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Right Certificate and the
Rights represented thereby are null and void.
The Company shall instruct the Rights Agent in writing of the Rights which
should be so legended and shall supply the Rights Agent with such legended Right
Certificates.
Section 5. Signature and Countersignature of Right Certificates;
Registration of Ownership and Transfers.
(a) The Right Certificates shall be executed on behalf of the Company
by its chairman, its president or a vice president, either manually or by
facsimile signature, and have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the secretary or an assistant secretary or
the treasurer or an assistant treasurer of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid 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 thereof by the
Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of 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.
(b) After the Distribution Date, the Rights Agent will keep or cause
to be kept, at the office of the Rights Agent designated for such purposes,
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 and certificate number of each of the Right
Certificates.
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Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any
time after the Close of Business on the Distribution Date until the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate 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 shares of Preferred Stock (or Common Stock, other
securities, cash or other assets, as the case may be) as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. 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 set
forth on the reverse side of the Right Certificate, and the certificate
following the form of assignment, appropriately executed, at the office of the
Rights Agent designated for such purpose.
(b) 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 completed and signed
the certificate following 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) of such Right
Certificate or Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon the Rights Agent shall countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment by the holders of Rights of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Right
Certificates.
(c) 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 of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate, if mutilated, the Company will make 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; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent designated
for such purpose, together with payment of the Purchase Price for each one
one-thousandth of a share of Preferred Stock (or Common Stock, other securities,
cash or other
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assets, as the case may be) as to which the Rights are exercised, and an amount
equal to any applicable transfer tax as provided in Section 7(c), at or prior to
the earlier of (i) the Close of Business on the Final Expiration Date or (ii)
the time at which the Rights are redeemed as provided in Section 23 (the
"Redemption Date").
(b) The purchase price (the "Purchase Price") for each one
one-thousandth of a share of Preferred Stock pursuant to the exercise of a Right
shall initially be $500.00, subject to adjustment from time to time as provided
in the next sentence and in Sections 11 and 13, payable in lawful money of the
United States of America in accordance with Section 7(c). Anything in this
Agreement to the contrary notwithstanding, in the event that at any time after
the Record Date and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Stock payable in shares of its Common
Stock or (ii) effect a subdivision, combination or consolidation of its shares
of Common Stock (by reclassification or otherwise than by payment of dividends
in shares of its Common Stock) into a greater or lesser number of shares of
Common Stock, then in any such case, each share of Common Stock of the Company
outstanding following such subdivision, combination or consolidation shall
continue to have a Right associated therewith and the Purchase Price after any
such event shall be proportionately adjusted to equal the result obtained by
multiplying the Purchase Price immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of such Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of such Common Stock outstanding
immediately following the occurrence of such event. The adjustment provided for
in the preceding sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares (other securities or other assets,
as the case may be) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 in cash, by certified check or bank draft payable to
the order of the Company, or as otherwise provided herein, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Stock certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a share
of Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by
such transfer agent of the Preferred Stock with the depositary agent) and the
Company hereby directs the depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional interests in shares in accordance with Section
14, (iii) after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificates registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver the cash
referred to in clause (ii), to or upon the order of the registered holder of
such Right Certificate. The payment of the Purchase Price may be made (x) in
cash or by certified check or bank draft
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payable to the order of the Company or (y) by delivery of a certificate or
certificates (with appropriate stock powers executed in blank attached thereto)
evidencing the number of shares of Common Stock equal to the then Purchase Price
divided by the closing price (as determined pursuant to Section 11(d) hereof)
per share of Common Stock on the Trading Day immediately preceding the date of
such exercise). In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities are available for distribution by the
Rights Agent, if and when appropriate.
(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 to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
Beneficially Owned by (i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or an Affiliate or
Associate thereof) who becomes such transferee after the Acquiring Person
becomes an Acquiring Person or (iii) a transferee of an Acquiring Person (or an
Affiliate or Associate thereof) who becomes such transferee prior to or
concurrently with the Acquiring Person becoming an Acquiring Person and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has a continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board of Directors of the Company determines 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 to exercise any such
Right, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the provisions of this Section
7(e) and Section 4(b) are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its failure to make
any determination hereunder with respect to an Acquiring Person or its
Affiliates, Associates or transferees. The Rights Agent will endeavor to comply
with the provisions hereof to the extent it has received instructions from the
Company concerning such matters. The provisions of this Section 7(e) shall be
operative whether or not the legend provided for in Section 4(b) is set forth on
the Right Certificate for any Rights referred to in this Section.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
transfer or exercise unless such registered holder shall have (i) completed and
signed the certificate following the form of assignment or election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
assignment or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or
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former Beneficial Owner) of such Right Certificate or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation 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 to any
of its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other 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 Preferred Stock; Compliance
with Registration or Other Requirements of Securities Laws; Transfer Taxes.
(a) The Company covenants and agrees that at all times prior to the
occurrence of a Section 11(a)(ii) Event it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock or any
shares of Preferred Stock held in its treasury the number of shares of Preferred
Stock that will be sufficient to permit the exercise in full of all outstanding
Rights and, after the occurrence of a Section 11(a)(ii) Event, shall, to the
extent reasonably practicable, so reserve and keep available a sufficient number
of shares of Common Stock or such other securities as may be required to permit
the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, after the
occurrence of a Section 11(a)(ii) Event, the shares of Common Stock or other
securities) issuable upon the exercise of Rights are listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as is
practicable after the Shares Acquisition Date, a registration statement under
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 at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the Final
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time (not to exceed ninety (90) days)
after the Shares Acquisition Date, the exercisability of the Rights in order to
prepare and file such registration
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statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement, in each case with simultaneous
written notice to the Rights Agent, 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. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained. 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 shares of Preferred Stock (or shares of
Common Stock or other securities) delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such shares of Preferred Stock (or
other securities), subject to payment of the Purchase Price, be duly and validly
authorized and issued and, if such securities are represented by shares, fully
paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock (or shares of Common Stock or other securities)
upon the exercise of Rights. The Company shall not, however, be required (i) to
pay any transfer tax that may be payable in respect of any transfer or delivery
of Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the shares of Preferred Stock (or shares
of Common Stock or other securities) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or (ii) to issue or deliver any certificates or depositary receipts for
shares of Preferred Stock (or shares of Common Stock or other securities) upon
the exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Preferred Stock Record Date.
Each Person in whose name any certificate for shares of Preferred Stock
(or shares of Common Stock or other securities) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock (or shares of Common Stock or other securities)
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 Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which
transfer books of the Company for the shares of Preferred Stock (or shares of
Common Stock or other securities) 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 such transfer books are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate, as such, shall not be entitled to any rights of a holder of shares
of Preferred Stock (or Common Stock or other securities) for which the Rights
shall be exercisable, including, without limitation,
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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. Modification of Rights and Adjustment of Purchase Price,
Number of Shares, Number of Rights and Securities Purchasable.
The Purchase Price, the number of shares of Preferred Stock covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding shares of Preferred Stock, (C)
combine the outstanding shares of Preferred Stock into a smaller number of
shares of Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock issuable
on such date, shall be proportionately adjusted so that the holder of any 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 Preferred Stock transfer
books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person (a "Section
11(a)(ii) Event"), then proper provision shall be made so that each holder of a
Right at any time thereafter outstanding (except as provided in Section 7(e))
shall, for a period of 60 days after the later of the occurrence of any such
event or the effective date of an appropriate registration statement under the
Securities Act pursuant to Section 9, have a right to receive, upon exercise of
such Right at a price equal to the then current Purchase Price, in accordance
with the terms of this Agreement and in lieu of shares of Preferred Stock, such
number of shares of Common Stock as shall equal the result obtained by
multiplying (x) the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which the Right was
exercisable immediately prior to the occurrence of such Section 11(a)(ii)
Event, and dividing that product by (y) 50% of the then current per share
market price of the shares of Common Stock (determined pursuant to Section
11(d)); provided, however, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the provisions of Section
13, then only the provisions of Section 13 shall apply and no adjustment shall
be made pursuant to this Section 11(a)(ii);
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(iii) In the event that there shall not be sufficient treasury
shares or authorized but unissued shares of Common Stock to permit the exercise
in full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exercise of the Rights or shall
substitute for the Common Stock otherwise purchasable, upon payment of the
Purchase Price, a combination of some or all of the following that has an
aggregate value equal to the aggregate current per share market price of the
shares of Common Stock (determined pursuant to Section 11(d)) purchasable upon
exercise in full of the Rights (where such aggregate value has been determined
by the Board of Directors of the Company after considering the advice of a
nationally recognized investment banking firm selected by the Board of
Directors): (i) fractions of a share of Common Stock, (ii) other equity
securities of the Company, (iii) debt securities of the Company or (iv) other
assets.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("Equivalent Preference
Shares")) or securities convertible into Preferred Stock or Equivalent
Preference Shares at a price per share of Preferred Stock or Equivalent
Preference Shares (or having a conversion price per share, if a security
convertible into Preferred Stock or Equivalent Preference Shares) less than the
current per share market price of the Preferred Stock (as determined pursuant
to Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and Equivalent
Preference Shares so to be offered (and the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and Equivalent Preference Shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Shares of Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of shares of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash or
assets (other than a regular quarterly cash dividend or a dividend payable in
shares of Preferred Stock) or subscription rights, options or warrants
(excluding those referred to
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<PAGE> 17
in Section 11(b)), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
current per share market price of the shares of Preferred Stock (determined
pursuant to Section 11(d)) on such record date less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Preferred Stock and the denominator of which shall be such current per share
market price of the shares of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price that would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of the Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such Common Stock for the
30 consecutive Trading Days immediately prior to such date; provided, however,
that in the event that the current per share market price of the Common Stock
is determined during a period after the announcement by the issuer of such
Common Stock of (1) a dividend or distribution on such Common Stock payable in
such Common Stock or securities convertible into such Common Stock or (2) any
subdivision, combination or reclassification of such Common Stock and prior to
the expiration of 30 Trading Days after the ex-dividend date for such dividend
or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, such daily closing prices shall
be appropriately adjusted to reflect the effect of such dividend, distribution,
subdivision, combination or reclassification. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Common Stock selected by the Board of Directors of the Company. If on any such
date the shares of Common Stock are not so listed or traded, or no market maker
is making a market in the Common Stock, "current per share market price" shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. The term "Trading Day" means a day on which the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the
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<PAGE> 18
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Stock shall be determined in the same
manner as set forth above for Common Stock in clause (i) of this Section 11(d).
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one one hundred-thousandth
of a share of Preferred Stock or one-ten thousandth of a share of Common Stock
or other security. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction that requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, 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 shares of Preferred Stock contained in Sections 11(a) through
11(c), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and 11(c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one
one-hundred thousandth of a share of Preferred Stock) obtained by (i)
multiplying (x) the number of one one-thousandths of a share covered by a Right
immediately prior to such adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of shares of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after
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such adjustment of the number of Rights shall be exercisable for the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one one-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least 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, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the 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 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 Purchase Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of shares of Preferred Stock
purchasable thereunder as such terms were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-thousandth of the then par value, if any, of
the Preferred Stock issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
of the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
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<PAGE> 20
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the shares of Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) dividends on shares of
Preferred Stock payable in shares of Preferred Stock or (v) issuance of rights,
options or warrants referred to in Section 11(b), hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that, after the Distribution
Date, it shall not, except as permitted by Section 23 or Section 26 hereof,
take (or permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
(o) The Company covenants and agrees that, after the Distribution
Date, it shall not (i) consolidate with any Person (other than a Subsidiary of
the Company in a transaction which does not violate Section 11(n)), (ii) merge
with or into any other Person (other than a Subsidiary of the Company in a
transaction which does not violate Section 11(n)) or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction or a series of
related transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any Person or Persons (other than one or more of the Company and its
Subsidiaries in one or more transactions each of which does not violate Section
11(n)), if (x) at the time of or immediately after such consolidation, merger,
sale or transfer there are any charter or by-law provisions or any rights,
warrants or other instruments or securities outstanding or agreements in effect
or other actions taken which would materially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the stockholders of the Person who constitutes, or would constitute, the
Principal Party for purposes of Section 13(a) shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates. The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such other Person shall
have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 11(o).
(p) The exercise of Rights in accordance with Section 11(a)(ii) shall
only result in the loss of the rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the other rights represented by such
Rights under this Rights Agreement, including without limitation the rights
provided for in Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts
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<PAGE> 21
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Common Stock or the Preferred Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 25.
The Rights Agent shall be fully protected in relying on such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, on or after the Shares Acquisition Date, any
of the following (each a "Section 13 Event") shall occur, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
Interested Stockholder or, if in such consolidation or merger all holders of
shares of Common Stock are not treated alike, any other Person, (y) the Company
shall consolidate or merge with any Interested Stockholder or, if in such
consolidation or merger all holders of shares of Common Stock are not treated
alike, any other Person, and the Company shall be the continuing or surviving
corporation of such consolidation or merger (other than, in the case of any
transaction described in clause (x) or (y), a merger or consolidation which
would result in all of the Voting Securities outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting Securities
of the Company or such other surviving entity outstanding immediately after
such consolidation or merger and the holders of such securities not having
changed as a result of such merger or consolidation) or (z) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any Interested
Stockholder or Stockholders or, if in such transaction all holders of shares of
Common Stock are not treated alike, any other Person (other than the Company or
any Subsidiary of the Company in one or more transactions each of which does
not violate Section 11(n)), then, and in each such case (except as provided in
Section 13(e)), proper provision shall be made so that (i) each holder of a
Right at any time thereafter outstanding (except as provided in Section 7(e))
shall thereafter have the right to receive, upon the exercise of such Right at
a price equal to the then current Purchase Price, in accordance with the terms
of this Agreement and in lieu of shares of Preferred Stock, such number of
freely tradable shares of Common Stock of the Principal Party, not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-thousandths of a share of Preferred Stock for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii)) and dividing that product by (B)
50% of the then current per share market price of the shares of Common Stock of
such Principal Party (determined pursuant to Section 11(d)) on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 shall apply
only to such Principal Party following the first occurrence of a Section 13
Event; and (iv) such Principal Party shall
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take such steps (including without limitation the reservation of a sufficient
number of shares of its Common Stock) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" means:
(i) in the case of any transaction described in clause (x) or
(y) of Section 13(a), the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other
party to such merger or consolidation (including, if applicable, the Company if
it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) 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 of the foregoing cases, (A) if the shares of
Common Stock of such Person are not at such time and have not been continuously
over the preceding 12 months registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person the shares
of Common Stock of which are and have been so registered, "Principal Party"
shall refer to such other Person; (B) if such Person is a Subsidiary, directly
or indirectly, of more than one Person, the shares of Common Stock of two or
more of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the shares of Common Stock having the
greatest aggregate market value; and (C) 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
clauses (A) and (B) above shall apply to each of the chains of ownership having
an interest in such joint venture as if such party to the joint venture 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 such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
its authorized shares of Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in Sections 13(a) and 13(b) and further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer mentioned in Section 13(a), the Principal Party at its
own expense shall:
(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
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<PAGE> 23
form, and will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue sky laws
of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
(d) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. The rights
under this Section 13 shall be in addition to the rights to exercise Rights and
adjustments under Section 11(a)(ii) and shall survive any exercise thereof.
(e) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in clause (x) or
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a Permitted Offer (or a
wholly owned Subsidiary of any such Person or Persons), (ii) the price per share
of Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such Permitted Offer and (iii) the form of consideration
offered in such transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any such transaction
contemplated by this Section 13(e), all Rights then outstanding shall expire.
(f) In no event shall the Rights Agent have any liability in respect
to any such Principal Party transactions. 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.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such
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<PAGE> 24
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Right or to
issue certificates which evidence fractions of shares of Preferred Stock (other
than fractions that are integral multiples of one one-thousandth of a share of
Preferred Stock). Fractions of shares of Preferred Stock in integral multiples
of one one-thousandth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
Beneficial Owners of the shares of Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of Preferred Stock, the
Company 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 current market value of one share of Preferred Stock. For
purposes of this Section 14(b) the current market value of a share of Preferred
Stock shall be the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d)(ii) and the second sentence of Section 11(d)(i)) for
the Trading Day immediately prior to the date of such exercise.
(c) After the occurrence of a Section 11(a)(ii) Event, the Company
shall not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Right Certificates which are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a share of Common Stock. For purposes of this Section 14(c) the current
market value of a share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section 11(d)(i))
for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of such Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares (except as provided above) upon exercise of a Right.
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<PAGE> 25
Section 15. Rights of Action.
All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of Common Stock); and any registered
holder of any Right Certificate (or, prior to the Distribution Date, of any
share of Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of any other
holder of shares of Common Stock), may, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's right to exercise the Rights 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 will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations 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, the Rights will be transferable
only in connection with the transfer of the shares of Common Stock;
(b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully completed and duly executed;
(c) Subject to Section 6 and Section 7(e), the Company and the Rights
Agent may deem and treat the Person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission,
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<PAGE> 26
or any statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, that the Company shall 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 Stockholder.
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 shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 24), 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 to in writing between 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 other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to fully
indemnify the Rights Agent for, and to hold it harmless against, any and all
loss, liability, claim damage or expense, incurred without gross negligence 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 the costs and expenses of defending itself against any
claim of liability arising therefrom, directly or indirectly. The provisions of
this Section 18(a) shall survive the expiration of the Rights and the
termination of this Agreement.
(b) The Rights Agent shall be fully 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 shares of Preferred Stock or Common Stock or
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, instruction,
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, or
otherwise upon the advice of its counsel as set forth in Section 20(a).
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<PAGE> 27
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
all or principally all of the corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21. 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 Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name, and in all such cases such 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 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 of its selection
(who may be legal counsel for the Company), and the advice or opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity or existence of any Acquiring
Person and the determination of "current per share market price") be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by
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<PAGE> 28
any one of the chairman, the president, any vice president, the secretary, an
assistant secretary, the treasurer or an assistant treasurer of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered to be taken in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence 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 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 void pursuant to Section 7(e)) or any adjustment provided for in
Sections 7, 11 or 13 or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after the Rights Agent's actual receipt
of a certificate described in Section 12); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or Common Stock to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Preferred Stock or Common Stock will, when issued, be validly authorized and
issued, fully paid and nonassessable, 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 assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the chairman, the president, any vice president, the secretary or the
treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
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
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<PAGE> 29
Agent in accordance with a proposal included in such application on or after the
date specified in such application (which date shall not be less than three
Business Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other 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, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
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 completed or indicates an affirmative response to clause (1) or (2)
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(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 (i) in reliance upon the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached thereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
refusal to honor any otherwise permissible assignment or election by reason of
the non-execution.
(m) The Company agrees to give the Rights Agent written notice of any
event or ownership which would prohibit the exercise or transfer of the Right
Certificates, such notice to be given promptly after the Company acquires actual
knowledge of such event or ownership.
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<PAGE> 30
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 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail, such notice to be at the expense of the
Company. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 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,
then the Rights Agent or any registered holder of any Right Certificate may, at
the expense of the Company, apply to any court of competent jurisdiction for the
appointment of a new Rights Agent; provided that such holder of a Right
Certificate shall, prior to making such application, have submitted such
holder's Right Certificate to the Company for inspection. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of New York (or of any other state of the United States so long as
such corporation is authorized to do business in the State of New York), in good
standing, that is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and that has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million, provided that the
Company's transfer agent for its shares of Common Stock shall be an acceptable
successor Rights Agent without regard to the foregoing capital and surplus
requirement. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Right 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, 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 Purchase Price and the number or kind or
class of shares or other securities or property purchasable under
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<PAGE> 31
the Right Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common Stock
after the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
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 to 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 of Rights.
(a) The Board of Directors of the Company may, at its option, at any
time prior to 5:00 P.M., New York City time, on the earlier of (x) the date on
which a Section 11(a)(ii) Event shall have occurred (even if prior to the Record
Date) and (y) the Final Expiration Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided, however, that in the event
payment of the Redemption Price to a holder of Rights would result in the
payment of an amount not equal to $.01 or an integral multiple of $.01, the
amount to be paid shall be rounded upward to the next $.01.
(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. Within 10 days after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than (i) as
specifically set forth in this Section 23 or (ii) in connection with the
purchase of shares of Common Stock prior to the Distribution Date.
(c) The Company may, at its option discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the
redemption of the Rights pursuant to this Section 23 and (ii) mailing payment of
the Redemption Price to the registered holders of the Rights at their respective
last addresses as they appear on the registry books of the Rights Agent
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<PAGE> 32
or, prior to the Distribution Date, on the registry books of the Transfer Agent
of the Common Stock, and upon such action all outstanding Rights and Rights
Certificates shall be null and void without any further action by the Company.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose (a) to pay any dividend payable
in stock of any class to the holders of shares of Preferred Stock or to make any
other distribution to the holders of shares of Preferred Stock (other than a
regular quarterly cash dividend) or (b) to offer to the holders of shares of
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or of stock of any class or any other
securities, rights or options or (c) to effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock) or (d) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction that does not violate Section 11(n)) or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or any of its Subsidiaries in one or more
transactions, each of which does not violate Section 11(n) or in a transaction
that may be effected without notice to or approval of or consent by the holders
of at least a majority of the outstanding shares of Common Stock), or (e) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Right Certificate and to
the Rights Agent in accordance with Section 25 a notice of such proposed action
which shall specify the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Stock or Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (a) or (b)
above at least 20 days prior to the record date for determining holders of the
Preferred Stock for purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Common
Stock or Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then (i) the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate and to the Rights Agent, in accordance with Section 25, a notice of
the occurrence of such event, which shall specify the event and the consequences
of the event to the holders of Rights under Section 11(a)(ii) and (ii) all
references in Section 24(a) to shares of Preferred Stock shall be deemed
thereafter to refer also to shares of Common Stock and, if appropriate, other
securities of the Company.
(c) The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote on any such action by the holders of capital stock of
the Company.
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Section 25. Notices.
(a) 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:
OSI Pharmaceuticals, Inc.
106 Lindbergh Boulevard
Uniondale, New York 11553
Attention: Secretary
(b) 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:
The Bank of New York
101 Barclay Street
New York, NY 10286
Attn: Stock Transfer Administration
(c) 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, if prior to the Distribution Date, to the holders of certificates
representing shares of Common Stock) shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments.
Subject to the penultimate sentence of this Section 26, prior to the
Distribution Date the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement (including
supplements or amendments that may be deemed to affect adversely the interests
of the holders of Rights) without the approval of any holders of shares of
Common Stock or Rights. Subject to the penultimate sentence of this Section 26,
from and after the Distribution Date the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights 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 hereof, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem desirable, including, without limitation, the
addition of other events requiring adjustment to the Rights under Section
11(a)(ii) or Section 13 or procedures relating to the redemption of the Rights,
which change, amendment or supplement shall not adversely affect the interests
of the holders of Rights (other than Rights which are null and void pursuant to
Section 7(e)); provided, that from and after the Distribution Date, this
Agreement may not be
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<PAGE> 34
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, or the benefits to, the holders of Rights. Upon the delivery of a
certificate of an officer of the Company which states that a proposed supplement
or amendment is in compliance with the terms of this Section 26, the Rights
Agent shall execute such supplement or amendment. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section, the Rights Agent shall execute such supplement or amendment.
Notwithstanding any other provision hereof, the Rights Agent's consent must be
obtained regarding any amendment or supplement pursuant to this Section 26 which
alters the Rights Agent's rights or duties. Notwithstanding anything contained
in this Agreement to the contrary, without the approval or consent of the
holders of the affected Rights then outstanding (other than Rights which are
null and void pursuant to Section 7(e)) no supplement or amendment shall be made
which decreases the Redemption Price, increases the Purchase Price or decreases
the number of one one-thousandths of a share of Preferred Stock for which a
Right is exercisable. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of shares of Common Stock.
Section 27. 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 28. Determinations and Actions by the Company or the Board of
Directors.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Stock of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board 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 or to amend this Agreement or
as to whether an Acquiring Person exists or as to whether any Section 11(a)(ii)
Event has occurred). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other Persons and (y) not subject any
Person who was a director of the Company at the time thereof to any liability to
the holders of the Rights.
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<PAGE> 35
Section 29. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give any Person other
than the Company, the Rights Agent and the registered holders of Right
Certificates (and, prior to the Distribution Date, the registered holders of
shares of Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the registered holders of shares of Common
Stock).
Section 30. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in good faith that severing the invalid language of this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23, if it shall then have expired, 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 31. Governing Law.
This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State,
provided, however, that the rights and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New York.
Section 32. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 33. Descriptive Headings.
Descriptive headings of Sections of this Agreement are inserted for
convenience of reference only, form no part of this Agreement and shall not be
considered for purposes of interpreting or construing any of the provisions
hereof.
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
OSI PHARMACEUTICALS, INC.
By: /s/ Robert L. Van Nostrand
------------------------------------------
Vice President and Chief Financial Officer,
Secretary and Treasurer
THE BANK OF NEW YORK, as Rights Agent
By: /s/ Diana Ajjan
-------------------------------------------
Vice President
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