SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION 12
(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
EMISPHERE TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-3306985
(State of Incorporation or (I.R.S. Employer
Organization) Identification no.)
15 SKYLINE DRIVE
HAWTHORNE, NEW YORK 10532
(Address of principal executive offices) (zip code)
If this Form relates to the If this Form relates to the
registration of a class of debt registration of a class of debt
securities and is effective upon securities and is to become effective
filing pursuant to General simultaneously with the effectiveness
Instruction A(c)(1) please check the of a concurrent registration statement
following box.[ ] under the Securities Act of 1933
pursuant to General Instruction A(c)(2)
please check the following box.[ ]
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
PREFERRED STOCK PURCHASE RIGHTS
(Title of class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On February 23, 1996, the Board of Directors of Emisphere
Technologies, Inc. (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each outstanding
share of common stock, par value $.01 per share (the "Common
Shares"), of the Company. The dividend is payable on March 15,
1996 (the "Record Date") to the stockholders of record at the
close of business on that date. Each Right entitles the
registered holder to purchase from the Company one one-
hundredth of a share of Series A Junior Participating
Cumulative Preferred Stock, par value $.01 per share (the
"Preferred Shares"), of the Company at a price of $80 per one
one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Continental Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired
beneficial ownership of 20% or more of the outstanding Common
Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such
time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of the
outstanding Common Shares (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share
certificate with a copy of this Summary of Rights attached
thereto.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the
Rights will be transferred with and only with the Common
Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common
Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender
for transfer of any certificates for Common Shares outstanding
as of the Record Date, even without such notation or a copy of
this Summary of Rights being attached thereto, will also
constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will
be mailed to holders of record of the Common Shares as of the
close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on February 23, 2006 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise
of the Right are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares
of certain rights or warrants to subscribe for or purchase
Preferred Shares with a conversion price less than the then-
current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or
dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of
each Right are also subject to adjustment in the event of a
stock split of the Common Shares or a stock dividend on the
Common Shares payable
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in Common Shares or subdivisions, consolidations or
combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preferred Share will be entitled
to a minimum preferential quarterly dividend payment of $1 per
share but will be entitled to an aggregate dividend of 100
times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100
per share but will be entitled to an aggregate payment of 100
times the payment made per Common Share. Each Preferred Share
will have 100 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 100 times the
amount received per Common Share. These rights are protected
by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-
hundredth interest in a Preferred Share purchasable upon
exercise of each Right should approximate the value of one
Common Share.
In the event that the Company is acquired in a merger or
other business combination transaction or 50% or more of its
consolidated assets or earning power are sold after a person or
group has become an Acquiring Person, proper provision will be
made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise
price of the Right. In the event that any person or group of
affiliated or associated persons becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right
to receive upon exercise such number of one one-hundredths of a
Preferred Share as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right is
then exercisable and dividing that product by (y) 50% of the
then current per share market price of the Company's Common
Shares.
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of
50% or more of the outstanding Common Shares, the Board of
Directors of the Company may exchange the Rights (other than
Rights owned by such person or group which will have become
void), in whole or in part, for consideration consisting of
one-half the securities of the Company that would be issuable
at such time upon exercise of one Right.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No
fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of
a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of
the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the tenth day following the
acquisition by a person or group of affiliated or associated
persons of beneficial ownership of 20% or more of the
outstanding Common Shares, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"); PROVIDED,
HOWEVER, that, for the 120-day period after any date of a
change (resulting from a proxy or consent solicitation) in a
majority of the Board of Directors of the Company in office at
the commencement of such solicitation, the Rights may only be
redeemed if (A) there are directors then in office who were in
office at the commencement of such solicitation and (B) the
Board of Directors of the Company, with the concurrence of a
majority of such directors then in office, determines that such
redemption is, in their judgment, in the best interests of the
Company and its stockholders. The Redemption of the Rights may
be made effective at such time on such basis with such
conditions as the Board of Directors in its sole discretion may
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establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of
the Rights, except that from and after a Distribution Date no
such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to
the Rights Agreement, which is hereby incorporated herein by
reference.
As of February 23, 1996, there were 8,370,512 shares of
Common Stock outstanding (as well as a further 2,815,389 shares
reserved for issuance upon exercise of outstanding stock
options). Each outstanding share of Common Stock at the close
of business on the Record Date will receive one Right. As long
as the Rights are attached to the Common Stock, the Company
will issue one Right with each new share of Common Stock so
that all such shares will have attached rights.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that
attempts to acquire the Company without conditioning the offer
on the Rights being redeemed or a substantial number of Rights
being acquired. However, the Rights should not interfere with
any tender offer or merger approved by the Company (other than
with an Acquiring Person) because the Rights do not become
exercisable in the event of an acquisition exempted by the
Company's Board of Directors.
Attached hereto as Exhibit 1 and incorporated herein by
reference are copies of the Rights Agreement and the exhibits
thereto, as follows: Exhibit A -- Certificate of Designations
of the Series A Junior Participating Cumulative Preferred
Stock; Exhibit B -- Form of Rights Certificate; and Exhibit C -
- Summary of Rights to Purchase Preferred Shares. THE
FOREGOING DESCRIPTION OF THE RIGHTS IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT AND SUCH EXHIBITS
THERETO.
ITEM 2. EXHIBITS
Exhibit 1. Rights Agreement, dated as of February 23, 1996, by
and between Emisphere Technologies, Inc. and
Continental Stock Transfer & Trust Company as Rights
Agent, which includes the form of Certificate of
Designations setting forth the terms of the Series A
Junior Participating Cumulative Preferred Stock, par
value $0.01 per share, as Exhibit A, the form of
Right Certificate as Exhibit B and the Summary of
Rights to Purchase Preferred Shares as Exhibit C.
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<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Act of 1934, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized.
EMISPHERE TECHNOLOGIES, INC.
By: /S/ MICHAEL M. GOLDBERG
Michael M. Goldberg, M.D.
Chairman and Chief
Executive Officer
Date: March 5, 1996
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EMISPHERE TECHNOLOGIES, INC.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Rights Agreement
Dated as of February 23, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1. CERTAIN DEFINITIONS................................. 1
Section 2. APPOINTMENT OF RIGHTS AGENT......................... 7
Section 3. ISSUE OF RIGHT CERTIFICATES......................... 7
Section 4. FORM OF RIGHT CERTIFICATES.......................... 8
Section 5. COUNTERSIGNATURE AND REGISTRATION................... 9
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR
STOLEN RIGHT CERTIFICATES 9......................... 9
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS 10................................... 10
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.. 11
Section 9. AVAILABILITY OF PREFERRED SHARES.................... 12
Section 10. PREFERRED SHARES RECORD DATE....................... 13
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS....................................13
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR
NUMBER OF SHARES................................... 20
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER............................ 20
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES............ 23
Section 15. RIGHTS OF ACTION................................... 24
Section 16. AGREEMENT OF RIGHT HOLDERS......................... 24
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Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.. 25
Section 18. CONCERNING THE RIGHTS AGENT........................ 25
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT....................................... 26
Section 20. DUTIES OF RIGHTS AGENT............................. 26
Section 21. CHANGE OF RIGHTS AGENT............................. 28
Section 22. ISSUANCE OF ADDITIONAL RIGHTS AND NEW RIGHT
CERTIFICATES....................................... 29
Section 23. REDEMPTION......................................... 29
Section 24. EXCHANGE........................................... 30
Section 25. NOTICE OF CERTAIN EVENTS........................... 31
Section 26. NOTICES............................................ 32
Section 27. SUPPLEMENTS AND AMENDMENTS......................... 32
Section 28. SUCCESSORS......................................... 33
Section 29. BENEFITS OF THIS AGREEMENT......................... 33
Section 30. SEVERABILITY....................................... 34
Section 31. GOVERNING LAW...................................... 34
Section 32. COUNTERPARTS....................................... 34
Section 33. DESCRIPTIVE HEADINGS............................... 34
Section 34. TERMINATION........................................ 35
Signatures ................................................... 37
Exhibit A - Form of Certificate of Designations
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Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
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<PAGE>
Agreement, dated as of February 23, 1996, between Emisphere
Technologies, Inc., a Delaware corporation (the "Company"), and
Continental Stock Transfer & Trust Company (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right")
for each Common Share (as hereinafter defined) of the Company
outstanding at the close of business on March 15, 1996 (the "Record
Date"), each Right representing the right to purchase one
one-hundredth (1/100) of a Preferred Share (as hereinafter defined),
upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect
to each Common Share that shall become outstanding between the Record
Date and the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
20% or more of the Common Shares of the Company then outstanding,
other than pursuant to a Qualifying Offer (as such term is hereinafter
defined), but shall not include the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, any employee benefit plan
of the Company or any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by the
Company which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person
to 20% or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner
of 20% or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if
the Board of Directors of the Company determines in good faith that a
Person who would otherwise be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), has become
such inadvertently, and such Person divests as promptly as practicable
a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring
<PAGE>
Person," as defined pursuant to the foregoing provisions of this paragraph
(a), then such Person shall not be deemed to be an "Acquiring Person" for
any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) 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
(other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than 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 to vote
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 the
agreement, arrangement or understanding 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 applicable rules and
regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)) or disposing
of any
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securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used
with reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to
own beneficially hereunder.
(d) "Book Value", when used with reference to Common Shares
issued by any Person, shall mean the amount of equity of such Person
applicable to each Common Share, determined (i) in accordance with
generally accepted accounting principles in effect on the date as of
which such Book Value is to be determined, (ii) using all the
consolidated assets and all the consolidated liabilities of such
Person on the date as of which such Book Value is to be determined,
except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (iii) after
giving effect to (A) the exercise of all rights, options and warrants
to purchase such Common Shares (other than the Rights), and the
conversion of all securities convertible into such Common Shares, at
an exercise or conversion price, per Common Share, which is less than
such Book Value before giving effect to such exercise or conversion
(whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (B) all dividends and other
distributions on the capital stock of such Person declared prior to
the date as of which such Book Value is to be determined and to be
paid or made after such date, and (C) any other agreement, arrangement
or understanding (written or oral), or transaction or other action
prior to the date as of which such Book Value is to be determined
which would have the effect of thereafter reducing such Book Value.
(e) "Business Combination" shall have the meaning set forth
in Section 13(a).
(f) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in New York
are authorized or obligated by law or executive order to close.
(g) "Close of business" on any given date shall mean 5:00
P.M., New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York time, on
the next succeeding Business Day.
(h) "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $.01 per share, of
the Company. "Common Shares" when used with reference to any Person
other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if
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such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(i) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(j) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(k) "Major Part," when used with reference to the assets of
the Company and its Subsidiaries as of any date, shall mean assets (i)
having a fair market value aggregating 50% or more of the total fair
market value of all the assets of the Company and its Subsidiaries
(taken as a whole) as of the date in question, (ii) accounting for 50%
or more of the total value (net of depreciation and amortization) of
all the assets of the Company and its Subsidiaries (taken as a whole)
as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in
accordance with generally accepted accounting principles then in
effect, or (iii) accounting for 50% or more of the total amount of
earnings before interest, taxes, depreciation and amortization or
revenues of the Company and its Subsidiaries (taken as a whole) as
would be shown on, or derived from, a consolidated or combined
statement of income of the Company and its Subsidiaries for the period
of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in
accordance with generally accepted accounting principles then in
effect.
(l) "Person" shall mean any individual, firm, corporation
or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Series A Junior
Participating Cumulative Preferred Stock, par value $.01 per share, of
the Company having the rights and preferences set forth in the Form of
Certificate of Designations attached to this Agreement as Exhibit A.
(n) "Principal Party" shall mean the Surviving Person in a
Business Combination; provided, however, that, if such Surviving
Person is a direct or indirect Subsidiary of any other Person,
"Principal Party" shall mean the Person which is the ultimate parent
of such Surviving Person and which is not itself a Subsidiary of
another Person. In the event ultimate control of such Surviving
Person is shared by two or more Persons, "Principal Party" shall mean
that Person that is immediately controlled by such two or more
Persons.
(o) "Purchase Price" with respect to each Right shall mean
$80, as such
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amount may from time to time be adjusted as provided
herein, and shall be payable in lawful money of the United States of
America. All references herein to the Purchase Price shall mean the
Purchase Price as in effect at the time in question.
(p) "Qualifying Offer" shall mean an all-cash tender offer
for all outstanding Common Shares which meets all of the following
requirements:
(i) on or prior to the date such offer is commenced
within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, such Person has, and has
provided to the Company, firm written commitments from
responsible financial institutions, which have been accepted by
such Person (or one of its Affiliates), to provide, subject only
to customary terms and conditions, funds for such offer which,
when added to the amount of cash and cash equivalents which such
Person then has available and has irrevocably committed in
writing to the Company to utilize for purposes of such offer,
will be sufficient to pay for all Common Shares outstanding on a
fully diluted basis pursuant to the offer and the second-step
transaction required by clause (v) below and all related
expenses, together with copies of all written materials prepared
by such Person for such financial institutions in connection with
obtaining such financing commitments;
(ii) after the consummation of such offer, such Person,
alone or together with any of its Affiliates and Associates, owns
Common Shares representing a majority of the then outstanding
Common Shares;
(iii) such offer remains open for at least 45 Business
Days; provided, however, that (x) if there is any increase in the
price of such offer, such offer must remain open for at least an
additional 20 Business Days after the last such increase, (y)
such offer must remain open for at least 20 Business Days after
the date that any bona fide alternative offer is made which, in
the opinion of one or more investment banking firms designated by
the Company, provides for consideration per share in excess of
that provided for in such offer, and (z) such offer must remain
open for at least 20 Business Days after the date on which such
Person reduces the per share price offered in accordance with
clause (v)(y) below; provided further, however, that such offer
need not remain open, as a result of this clause (iii), beyond
(i) the time which any other offer satisfying the criteria for a
Qualifying Offer is then required to be kept open under this
clause (iii), or (ii) the scheduled expiration date, as such date
may be extended by public announcement on or prior to the then
scheduled expiration date, of any other tender or exchange offer
for Common Shares with respect to which the Board of Directors
has agreed to redeem the Rights immediately prior to acceptance
for payment of Common Shares thereunder (unless such other offer
is terminated prior to its expiration without any
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Common Shares having been purchased thereunder);
(iv) such offer is accompanied by a written opinion, in
customary form, of a nationally recognized investment banking
firm which is addressed to the holders of Common Shares other
than such Person and states that the price to be paid to holders
pursuant to the offer is fair from a financial point of view to
such holders and includes any written presentation of such firm
showing the analysis and range of values underlying such
conclusions; and
(v) prior to or on the date that such offer is
commenced within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, such Person makes
an irrevocable written commitment to the Company (x) to
consummate a transaction or transactions promptly upon the
completion of such offer, whereby all Common Shares not purchased
in such offer will be acquired at the same price per share paid
in such offer, subject only to the condition that the Board of
Directors shall have granted any approvals required to enable
such Person to consummate such transaction or transactions
following consummation of such offer without obtaining the vote
of any other stockholder, (y) that such Person will not make any
amendment to the original offer which reduces the per share price
offered (other than a reduction to reflect any dividend declared
by the Company after the commencement of such offer or any
material change in the capital structure of the Company initiated
by the Company after the commencement of such offer, whether by
way of recapitalization, reorganization, repurchase or
otherwise), changes the form of consideration offered, or reduces
the number of shares being sought or which is in any other
respect materially adverse to the Company's stockholders, and
(z) that neither such Person nor any of its Affiliates or
Associates will make any offer for any equity securities of the
Company for a period of six months after the commencement of the
original offer if such original offer does not result in the
tender of the number of Common Shares required to be purchased
pursuant to clause (ii) above, unless another tender offer by
another party for all outstanding Common Shares is commenced that
(a) constitutes a Qualifying Offer or (b) is approved by the
Board of Directors of the Company (in which event, any new offer
by such Person or of any of its Affiliates or Associates must be
at a price no less than that provided for in such approved
offer).
(q) "Record Date" shall have the meaning set forth in the
introductory paragraph hereof.
(r) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
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(s) "Registered Common Shares" shall mean Common Shares
which are, as of the date of consummation of a Business Combination,
and have continuously been for the 12 months immediately preceding
such date, registered under Section 12 of the Exchange Act.
(t) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(u) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person.
(v) "Surviving Person" shall mean (1) the Person which is
the continuing or surviving Person in a consolidation or merger
specified in Section 13(a)(i) or 13(a)(ii) or (2) the Person to which
the Major Part of the assets of the Company and its Subsidiaries is
sold, leased, exchanged or otherwise transferred or disposed of in a
transaction specified in Section 13(a)(iii); provided, however, that,
if the Major Part of the assets of the Company and its Subsidiaries is
sold, leased, exchanged or otherwise transferred or disposed of in one
or more related transactions specified in Section 13(a)(iii) to more
than one Person, the "Surviving Person" in such case shall mean the
Person that acquired assets of the Company and/or its Subsidiaries
with the greatest fair market value in such transaction or
transactions.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common
Shares) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from
time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the tenth day after the Shares Acquisition Date or (ii)
the tenth Business Day (or such later date as may be determined by
action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to the
terms of any such plan and other than a Qualifying Offer) of, or of
the first public announcement of the intention of any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the
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terms of any such plan and other than a Qualifying Offer) to commence, a
tender or exchange offer the consummation of which would result in any
Person becoming the Beneficial Owner of Common Shares aggregating 20% or
more of the then outstanding Common Shares (including any such date which
is after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common
Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer
of Common Shares. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the
close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each Common Share so held. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form of Exhibit C
hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of
business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the
names of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Distribution Date (or the earlier
of the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding as of
the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to
in the last sentence of this paragraph (c)) 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 Emisphere Technologies, Inc.
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and Continental Stock Transfer & Trust Company dated as of
February 23, 1996 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of Emisphere
Technologies, Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by
this certificate. Emisphere Technologies, Inc. will mail to
the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the
Rights Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) may
become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common
Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the event
that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights associated
with the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred Shares
and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 22 hereof,
the Right Certificates shall entitle the holders thereof to purchase
such number of one one-hundredths of a Preferred Share as shall be set
forth therein at the price per one one-hundredth of a Preferred Share
set forth therein (the "Purchase Price"), but the number of such one
one-hundredths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President, any
of its Vice Presidents, or its Treasurer, either manually or by
facsimile signature, shall have affixed thereto the Company's seal or
a facsimile thereof, and shall be attested by the Secretary or an
Assistant Secretary of the Company, either
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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 countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by 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.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office, books for registration
and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 14 hereof, at any
time after the close of business on the Distribution Date, and at or
prior to the close of business on the earlier of the Redemption Date
or the Final Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights that
have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a Preferred Share 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 or Right Certificates
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 at the principal office
of the Rights Agent. 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 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.
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,
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<PAGE>
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 delivery to
the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Except as otherwise provided herein
(including Section 11), each Right shall entitle the registered holder
thereof, upon exercise thereof as provided herein, to purchase for the
Purchase Price, at any time after the Distribution Date and at or
prior to the earliest of (i) the close of business on February 23,
2006 (the "Final Expiration Date"), (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof (the "Redemption Date"),
or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof, one one-hundredth of a Preferred Share, subject to
adjustment from time to time as provided herein.
(b) 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 principal office of the Rights Agent in New York, New
York, together with payment of the Purchase Price for each one one-
hundredth (1/100th) of a Preferred Share as to which the Rights are
exercised, at or prior to the earlier of (i) the Final Expiration
Date, (ii) the Redemption Date or (iii) the time at which such Rights
are exchanged as provided in Section 24 hereof.
(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
Preferred Shares 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 hereof by certified check,
cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
if the Company shall have elected to deposit the Preferred Shares with
a depositary agent under a depositary agreement, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (in which
case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to
or
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upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder
and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(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 to the registered
holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) The Company may temporarily suspend, for a period of
time not to exceed 90 calendar days after the Distribution Date, the
exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), on appropriate form, with respect to the
Preferred Shares purchasable upon exercise of the Rights and permit
such registration statement to become effective; provided, however,
that no such suspension shall remain effective after, and the Rights
shall without any further action by the Company or any other Person
become exercisable immediately upon, the effectiveness of such
registration statement. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended and shall issue a further public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision herein to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite qualification
under the blue sky or securities laws of such jurisdiction shall not
have been obtained or the exercise of the Rights shall not be
permitted under applicable law.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Availability of Preferred Shares. (a) The
Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and
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unissued Preferred Shares, or any Preferred Shares held in its treasury,
the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7.
The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all Preferred Shares delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable
shares.
The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of
the Right Certificates or of any Preferred Shares upon the exercise of
Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a person other than, or the issuance
or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to
issue or to deliver any certificates or depositary receipts for
Preferred Shares 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 reasonable satisfaction that no such tax
is due.
(b) In the event that there shall not be sufficient
Preferred Shares issued but not outstanding or authorized but unissued
to permit the exercise or exchange of Rights in accordance with this
Agreement, the Company covenants and agrees that it will take all such
action as may be necessary to authorize additional Preferred Shares
for issuance upon the exercise or exchange of Rights pursuant to this
Agreement; provided, however, that if the Company is unable to cause
the authorization of additional Preferred Shares, then the Company
shall, or in lieu of seeking any such authorization, the Company may,
to the extent necessary and permitted by applicable law and any
agreements or instruments in effect prior to the Distribution Date to
which it is a party, (A) upon surrender of a Right, pay cash equal to
the Purchase Price in lieu of issuing Preferred Shares and requiring
payment therefor, (B) upon due exercise of a Right and payment of the
Purchase Price for each Preferred Share as to which such Right is
exercised, issue equity securities having a value equal to the value
of the Preferred Shares which otherwise would have been issuable
pursuant to this Agreement, which value shall be determined by a
nationally recognized investment banking firm selected by the Board or
(C) upon due exercise of a Right and payment of the Purchase for each
Preferred Share as to which such Right is exercised, distribute a
combination of Preferred Shares, cash and/or other equity and/or debt
securities having an aggregate value equal to the value of the
Preferred Shares which otherwise would have been issuable pursuant to
this Agreement, which value shall be determined by a nationally
recognized investment banking firm selected by the Board. To
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<PAGE>
the extent that any legal or contractual restrictions (pursuant to
agreements or instruments in effect prior to the Distribution Date to
which it is party) prevent the Company from paying the full amount
payable in accordance with the foregoing sentence, the Company shall
pay to holders of the Rights as to which such payments are being made
all amounts which are not then restricted on a pro rata basis as such
payments become permissible under such legal or contractual
restrictions until such payments have been paid in full.
(c) So long as the Preferred Shares issuable upon the
exercise or exchange of Rights are to be listed on any national
securities exchange or included for quotation on the National
Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ"), the Company covenants and agrees to use its best efforts
to cause, from and after such time as the Rights become exercisable or
exchangeable, all Preferred Shares reserved for such issuance to be
listed on such securities exchange upon official notice of issuance
upon such exercise or exchange or included on NASDAQ, as the case may
be.
Section 10. Preferred Shares Record Date. Each person in
whose name any certificate for Preferred Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Shares transfer books of the Company are
closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares transfer books
of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the
Rights shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number of
Preferred Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue any shares of its
capital stock in a
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reclassification of the Preferred Shares (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 Shares transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of
one Right.
(ii) Subject to Section 24 of this Agreement, in the event
any Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price
equal to the then current Purchase Price, in accordance with the terms
of this Agreement, such number of one one-hundredths (1/100ths) of a
Preferred Share as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the number of one one-hundredths
(1/100ths) of a Preferred Share for which a Right is then exercisable
and dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined pursuant to
Section 11(d) hereof) on the date of the occurrence of such event. In
the event that any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Company shall not take any
action which would eliminate or diminish the benefits intended to be
afforded by the Rights. As soon as practicable after a Person becomes
an Acquiring Person (provided the Company shall not have elected to
make the exchange permitted by Section 24 for all outstanding Rights),
the Company covenants and agrees to use its best efforts to:
(I) prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the
Preferred Shares purchasable upon exercise of the Rights;
(II) cause such registration statement to become effective
as soon as practicable after such filing;
(III) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Final Expiration
Date; and
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(IV) qualify or register the Preferred Shares purchasable
upon exercise of the Rights under the blue sky or securities laws
of such jurisdictions as may be necessary or appropriate.
In the event any Person becomes an Acquiring Person, from
and after the occurrence of such event, any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any
holder of such Rights shall thereafter have no right to exercise such
Rights under any provision of this Agreement. No Right Certificate
shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be void pursuant to
the preceding sentence shall be canceled.
(iii) In the event that there shall not be sufficient
Preferred Shares issued but not outstanding or authorized but unissued
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 Preferred Shares for issuance
upon exercise of the Rights.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred
Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in 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 Preferred Shares outstanding
on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares
and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to
be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of additional
Preferred Shares and/or
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equivalent preferred shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. 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. Preferred Shares owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets (other
than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share
market price of the Preferred Shares 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 assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of
the Preferred Shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be
the average of the daily closing prices per share of such Security for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event
that the current per share market price of the Security is determined
during a period following the
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announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or
(B) any subdivision, combination or reclassification of such Security
and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of
such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is 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 Security is listed or admitted to trading or, if
the Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if
on any such date the Security is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by
the Board of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted
to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i), multiplied
by one hundred (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof). If neither the Common Shares nor the Preferred Shares are
publicly held or so listed or traded, "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.
(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
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the nearest one one-millionth of a
Preferred Share or one ten-thousandth of any other share or security
as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the 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) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive,
and the provisions of Sections 7, 9, 10 and 13 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share)
obtained by (i) multiplying (x) the number of one one-hundredths of a
Preferred Share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of
a Preferred Share purchasable upon the exercise of a Right. Each of
the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights (calculated
to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect
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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
hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in
substitution and replacement for the 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 one one-hundredths of a Preferred
Share 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 one one-hundredths of a Preferred Share which
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-hundredth of the then par
value, if any, of the Preferred Shares 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 Preferred
Shares 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 Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares 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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(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
consolidation or subdivision of the Preferred Shares, issuance wholly
for cash of any Preferred Shares at less than the current market
price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred
Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders
of its Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or consolidation of
the Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case (A) the number of one one-hundredths of
a Preferred Share purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one one-
hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of
Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding
immediately after such event, and (B) each Common Share outstanding
immediately after such event shall have issued with respect to it that
number of Rights which each Common Share outstanding immediately prior
to such event had issued with respect to it. The adjustments provided
for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or
consolidation is effected.
(o) Notwithstanding any other provision of this Agreement,
no adjustment to the number of Preferred Shares (or fractions of a
share) or other securities for which a Right is exercisable or the
number of Rights outstanding or associated with each Common Share or
any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits
the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Sections 11 and 13,
unless the terms of this Agreement are amended so as to preserve such
benefits.
(p) The Company covenants and agrees that, after the
Distribution Date, except as permitted by Section 27, it will not take
(or permit any Subsidiary of the Company to take) any action if at the
time such action is taken it is intended or reasonably
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foreseeable
that such action will reduce or otherwise limit the benefits the
holders of the Rights would have had absent such action, including,
without limitation, the benefits under Sections 11 and 13. Any action
taken by the Company during any period after any Person becomes an
Acquiring Person but prior to the Distribution Date shall be null and
void unless such action could be taken under this Section 11(p) from
and after the Distribution Date. The Company shall not consummate any
Business Combination if any issuer of Common Shares for which Rights
may be exercised after such Business Combination in accordance with
Section 13 shall have taken any action that reduces or otherwise
limits the benefits the holders of the Rights would have had absent
such action, including, without limitation, the benefits under
Sections 11 and 13.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Section 11 or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment, and a brief statement of
the facts accounting for such adjustment, (b) file with the Rights
Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance
with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) In the event that, following a
Distribution Date, directly or indirectly, any transactions specified
in the following clauses (i), (ii) or (iii) of this Section 13(a)
(each such transaction being a "Business Combination") shall be
consummated:
(i) the Company shall consolidate with, or merge with and
into, any Acquiring Person or any Affiliate or Associate of an
Acquiring Person;
(ii) any Acquiring Person or any Affiliate or Associate of
an Acquiring Person shall merge with and into the Company and, in
connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for capital stock or other
securities of the Company or of any Acquiring Person or Affiliate
or Associate of an Acquiring Person or cash or any other
property; or
(iii) the Company shall sell, lease, exchange or
otherwise transfer or dispose of (or one or more of the
Subsidiaries shall sell, lease, exchange or otherwise transfer or
dispose of), in one or more transactions, the Major Part of the
assets of the Company and its Subsidiaries (taken as a whole) to
any Acquiring Person or any Affiliate or Associate of an
Acquiring Person,
then, in each such case, proper provision shall be made so that each
holder of a Right, except as provided in Section 11(a)(ii), shall
thereafter have the right to receive, upon the
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exercise thereof for
the Purchase Price in accordance with the terms of this Rights
Agreement, the securities specified below (or, at such holder's
option, the securities specified in Section 11(a)(ii)):
(A) If the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights
Agreement, such number of Registered Common Shares of such
Principal Party, free and clear of all liens, encumbrances or
other adverse claims, as shall have an aggregate current per
share market price equal to the result obtained by multiplying
the Purchase Price by two;
(B) If the Principal Party involved in such Business
Combination does not have Registered Common Shares outstanding,
each Right shall thereafter represent the right to receive, upon
the exercise thereof for the Purchase Price in accordance with
the terms of this Rights Agreement, at the election of the holder
of such Right at the time of the exercise thereof, any of:
(1) such number of Common Shares of the Surviving
Person in such Business Combination as shall have an
aggregate Book Value immediately after giving effect to such
Business Combination equal to the result obtained by
multiplying the Purchase Price by two;
(2) such number of Common Shares of the Principal
Party in such Business Combination (if the Principal Party
is not also the Surviving Person in such Business
Combination) as shall have an aggregate Book Value
immediately after giving effect to such Business Combination
equal to the result obtained by multiplying the Purchase
Price by two; or
(3) if the Principal Party in such Business
Combination is an Affiliate of one or more Persons which has
Registered Common Shares outstanding, such number of
Registered Common Shares of whichever of such Affiliates of
the Principal Party has Registered Common Shares with the
greatest aggregate current per share market price on the
date of consummation of such Business Combination as shall
have an aggregate current per share market price on the date
of such Business Combination equal to the result obtained by
multiplying the Purchase Price by two.
(b) The Company shall not consummate any Business
Combination unless each issuer of Common Shares for which Rights may
be exercised, as set forth in this Section 13, shall have sufficient
authorized Common Shares that have not been issued
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or reserved for
issuance (and which shall, when issued upon exercise thereof in
accordance with this Rights Agreement, be validly issued, fully paid
and nonassessable and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or
ownership thereof) to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto:
(i) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights,
shall be effective under the Securities Act; and
(ii) the Company and each such issuer shall have:
(A) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such
issuer of the obligations set forth in this Section 13
(including the obligation of such issuer to issue Common
Shares upon the exercise of Rights in accordance with the
terms set forth in Sections 13(a) and 13(c) and further
providing that such issuer, at its own expense, will use its
best efforts to:
(1) cause a registration statement
under the Securities Act on an appropriate form, with
respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights, to
remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until
the Final Expiration Date;
(2) qualify or register the Rights
and the Common Shares of such issuer purchasable upon
exercise of the Rights under the blue sky or securities
laws of such jurisdictions as may be necessary or
appropriate; and
(3) list the Rights and the Common
Shares of such issuer purchasable upon exercise of the
Rights on each national securities exchange on which
the Common Shares were listed prior to the consummation
of the Business Combination or, if the Common Shares
were not listed on a national securities exchange prior
to the consummation of the Business Combination, on a
national securities exchange;
(B) furnished to the Rights Agent a written
opinion of independent counsel stating that such
supplemental agreement is a valid, binding and enforceable
agreement of such issuer; and
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<PAGE>
(C) filed with the Rights Agent a certificate of
a nationally recognized firm of independent accountants
setting forth the number of Common Shares of such issuer
which may be purchased upon the exercise of each Right after
the consummation of such Business Combination.
(c) After consummation of any Business Combination and
subject to the provisions of Section 13(b), (i) each issuer of Common
Shares for which Rights may be exercised as set forth in this Section
13 shall be liable for, and shall assume, by virtue of such Business
Combination, all the obligations and duties of the Company pursuant to
this Rights Agreement, (ii) the term "Company" shall thereafter be
deemed to refer to such issuer, (iii) each such issuer shall take such
steps in connection with such consummation as may be necessary to
assure that the provisions hereof (including the provisions of
Sections 11(a) and 13(a)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights, and (iv) the number of
Common Shares of each such issuer thereafter 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 of Sections 11 and 13 and the provisions of Section 7, 9
and 10 with respect to the Preferred Shares shall apply, as nearly as
reasonably may be, on like terms to any such Common Shares.
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 (as determined pursuant
to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date on which such fractional Rights would
have been otherwise issuable; provided, however, that if the Rights
are not then publicly traded, the fair value of the Rights on such
date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share) upon exercise of the Rights or
to distribute certificates which evidence fractional Preferred Shares
(other than fractions which are integral multiples of one one-
hundredth of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one one-hundredth of a Preferred Share 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
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<PAGE>
such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are
not integral multiples of one one-hundredth of a Preferred Share, the
Company shall 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
Preferred Share. For the purposes of this Section 14(b), the current
market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. (a) 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 the Common Shares); and
any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such 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.
(b) Any holder of Rights who prevails in an action to
enforce the provisions of this Agreement shall be entitled to recover
the reasonable costs and expenses, including attorneys' fees, incurred
in such action.
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 Common
Shares;
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<PAGE>
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer; and
(c) 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 Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares 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.
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 Preferred Shares or any other securities of the Company
which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided
in Section 25 hereof), or to receive 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. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in
the premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted
by it in connection with, its administration of this Agreement in
reliance upon any Right Certificate or certificate for the Preferred
Shares or Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent,
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<PAGE>
certificate, statement,
or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel
as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the stock transfer
or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided, that such corporation
would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, any of the 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.
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 imposed by this Agreement 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 (who
may be legal counsel for the Company), and the 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
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Rights Agent shall deem it necessary or desirable that
any fact or matter 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 any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the 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 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Section 3, 11, 13,
23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except, with respect to the
exercise of Rights evidenced by Right Certificates after actual notice
that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether
any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the
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Chairman of the Board, the Chief
Executive Officer, 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 by it in good faith in
accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
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 Shares or
Preferred Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. 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 Shares or
Preferred Shares by registered or certified mail, and to the holders
of the Right 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
(who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be 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
as a banking institution in the State of New York), in good standing,
having an
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office in the State of New York, which 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 which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After
appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date of any
such appointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common
Shares or Preferred Shares, 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 Additional Rights and 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 the Right Certificates
made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities, notes or debentures
issued by the Company, and (b) may, in an other case, if deemed
necessary or appropriate by the Board of Directors of the Company,
issue Right Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i)
no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued,
and (ii) no such Right Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption. (a) The Board of Directors of
the Company may, at its option, at any time prior to the close of
business on the earlier of (i) the tenth day following the Shares
Acquisition Date or (ii) the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction
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<PAGE>
occurring after the date hereof
(such redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, that, in addition to any other
limitations contained herein on the right to redeem outstanding Rights
(including the occurrence of any event or the expiration of any period
after which the Rights may no longer be redeemed), for the 120-day
period after any date of a change (resulting from a proxy or consent
solicitation) in a majority of the Board of Directors of the Company
in office at the commencement of such solicitation, the Rights may
only be redeemed if (A) there are directors then in office who were in
office at the commencement of such solicitation and (B) the Board of
Directors of the Company, with the concurrence of a majority of such
directors then in office, determines that such redemption is, in their
judgment, in the best interests of the Company and its stockholders.
The redemption of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights pursuant to
paragraph (a) of this Section 23, and without any further action and
without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of
Directors ordering the redemption of the Rights, the Company shall
mail a notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become
void pursuant to the provisions of Section 11(a)(ii) hereof) for
consideration per Right consisting of one-half of the securities that
would be issuable at such time upon the exercise of one Right in
accordance with Section 11(a)(ii) or, if applicable, Section 9(b) (the
consideration issuable per Right pursuant to this Section 24(a) being
the "Exchange Consideration"). The Board of Directors may, at its
option, issue, in substitution for Preferred Shares, Common Shares in
an amount equal to the number of Preferred Shares
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<PAGE>
multiplied by one
hundred (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof).
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any entity holding
Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to para
graph (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to
receive the Exchange Consideration in exchange for each such Right
held by such holder. The Company shall promptly give public notice of
any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Rights for the Exchange
Consideration will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Right Certificates with
regard to which such fractional Common Shares would otherwise be
issuable an amount in cash equal to the same fraction of the current
market value of a whole Common Share. For the purposes of this para
graph (c), the current market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the
Company shall propose (i) to pay any dividend payable in stock of any
class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for or to purchase
any additional Preferred Shares or shares of stock
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<PAGE>
of any class or any
other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any other
Person, (v) to effect the liquidation, dissolution or winding up of
the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification
or otherwise than by payment of dividends in Common Shares), then, in
each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes
of such stock dividend, or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the Common Shares
and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least 10 days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event, which
notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
Emisphere Technologies, Inc.
15 Skyline Drive
Hawthorne, New York 10532
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage
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<PAGE>
prepaid, addressed (until another address is filed in writing with the
Company) as follows:
Continental Stock Transfer
& Trust Company
2 Broadway
New York, New York 10004
Attention: Compliance Department
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
shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. At any time
prior to the Distribution Date, the Company may, and the Rights Agent
shall if the Company so directs, supplement or amend any provision of
this Rights Agreement (including, without limitation, the date on
which the Distribution Date shall occur, the time during which the
Rights may be redeemed pursuant to Section 23 or any provision of the
Certificate of Designation) without the approval of any holder of the
Rights. From and after the Distribution Date and subject to
applicable law, the Company may, and the Rights Agent shall if the
Company so directs, amend this Rights Agreement without the approval
of any holders of Right Certificates (i) to cure any ambiguity or to
correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision of this Rights
Agreement or (ii) to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). Any supplement or
amendment adopted during any period after any Person has become an
Acquiring Person but prior to the Distribution Date shall be null and
void unless such supplement or amendment could have been adopted under
the prior sentence from and after the Distribution Date. Any
supplement or amendment to this Rights Agreement duly approved by the
Company that does not amend Sections 18, 19, 20 or 21 in a manner
adverse to the Rights Agent shall become effective immediately upon
execution by the Company, whether or not also executed by the Rights
Agent. Notwithstanding anything contained in this Agreement to the
contrary, during the 120-day period after any date of a change
(resulting from a proxy or consent solicitation) in a majority of the
Board of Directors of the Company in office at the commencement of
such solicitation, this Agreement may be supplemented or amended only
if (A) there are directors then in office who were in office at the
commencement of such solicitation and (B) the Board of Directors of
the Company, with the concurrence of a
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<PAGE>
majority of such directors then
in office, determines that such supplement or amendment is, in their
judgment, in the best interests of the Company and its stockholders
and, after the Distribution Date, the holders of the Right
Certificates.
Section 28. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 29. Benefits of this Agreement. (a) Nothing in
this Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
(b) Except as explicitly otherwise provided in this
Agreement, the Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of
Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of
this Agreement and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the Rights or to
amend this Agreement and a determination of whether an offer
constitutes a Qualifying Offer and whether there is an Acquiring
Person).
(c) Nothing contained in this Agreement shall be deemed to
be in derogation of the obligation of the Board of Directors of the
Company to exercise its fiduciary duty. Without limiting the
foregoing, nothing contained herein shall be construed to suggest or
imply that the Board of Directors shall not be entitled to reject any
Qualifying Offer or any other tender offer, or to recommend that
holders of Common Shares reject any Qualifying Offer or any other
tender offer, or to take any other action (including, without
limitation, the commencement, prosecution, defense or settlement of
any litigation and the submission of additional or alternative offers
or other proposals) with respect to any Qualifying Offer or any other
tender offer that the Board of Directors believes is necessary or
appropriate in the exercise of such fiduciary duty.
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
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<PAGE>
this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State.
Section 32. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of
any of the provisions hereof.
Section 34. Termination. Notwithstanding anything in
this Rights Agreement to the contrary, prior to such time as there is
an Acquiring Person the Board of Directors of the Company may approve
entering into an agreement providing for a merger of the Company with
another Person, which agreement may provide that upon the consummation
of such merger the Rights shall be canceled and shall terminate;
should the Board of Directors give such approval and should the
Company enter into such an agreement, the Rights shall be canceled and
terminated upon consummation of such merger without any further action
and without any notice.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year
first above written.
EMISPHERE TECHNOLOGIES, INC.
Attest:
By:
Title: Title:
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<PAGE>
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
Attest:
By: By:
Title: Title:
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<PAGE>
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
of
EMISPHERE TECHNOLOGIES, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
____________
Emisphere Technologies, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware
(hereinafter called the "Corporation"), hereby certifies that the
following resolution was adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation Law
at a meeting of the Board of Directors duly held on February 23, 1996:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation (hereinafter
called the "Board of Directors" or the "Board") in accordance with the
provisions of the Certificate of Incorporation, the Board of Directors
hereby creates a series of Preferred Stock, par value $.01 per share
(the "Preferred Stock"), of the Corporation and hereby states the
designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Series A Junior Participating Cumulative Preferred Stock:
Section 1. Designation and Amount. The shares of such
series shall be
A-1
<PAGE>
designated as "Series A Junior Participating
Cumulative Preferred Stock" (the "Series A Preferred Stock"). The
number of shares initially constituting the Series A Preferred Stock
shall be 200,000; provided, however, that if more than a total of
200,000 shares of Series A Preferred Stock shall be issuable upon the
exercise of Rights (the "Right") issued pursuant to the Rights
Agreement dated as of February 23, 1996, between the Corporation and
Continental Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agreement"), the Board of Directors of the Corporation,
pursuant to Section 151(g) of the General Corporation Law of the State
of Delaware, shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged, filed and recorded, in
accordance with the provisions of Section 103 thereof, providing for
the total number of shares of Series A Preferred Stock authorized to
be issued to be increased (to the extent that the Certificate of
Incorporation then permits) to the largest number of whole shares
(rounded up to the nearest whole number) issuable upon exercise of
such Rights. Such number of shares may be decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued
by the Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking
prior and superior to the Series A Preferred Stock with respect
to dividends, the holders of shares of Series A Preferred Stock,
in preference to the holders of Common Stock, par value $.01 per
share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the first
day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1 or
(b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at
any time declare
A-2
<PAGE>
or pay any dividend on the Common Stock payable
in shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for the
payment thereof, and shall be the same as the record date for any
corresponding dividend or distribution on the Common Stock.
(D) So long as any shares of the Series A Preferred Stock
are
A-3
<PAGE>
outstanding, no dividends or other distributions shall be
declared, paid or distributed, or set aside for payment or
distribution, on the Common Stock unless, in each case, the
dividend required by this Section 2 to be declared on the Series
A Preferred Stock shall have been declared.
(E) The holders of the shares of Series A Preferred Stock
shall not be entitled to receive any dividends or other
distributions except as provided herein.
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the
Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock into a greater or
lesser number of shares of Common Stock), then in each such case
the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock
or any similar stock, or by law, the holders of shares of Series
A Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) If, at the time of any annual meeting of stockholders
for the election of directors, the equivalent of six quarterly
dividends (whether or not consecutive) payable on any share or
shares of Series A Preferred Stock are in default, the number of
directors constituting the Board of Directors of the Corporation
shall be increased by two. In addition to voting together with
the holders of Common Stock for the election of other directors
of the Corporation, the holders of record of the Series A
Preferred Stock, voting separately as a class to the exclusion of
the holders of Common Stock, shall be entitled at said meeting of
stockholders (and at each
A-4
<PAGE>
subsequent annual meeting of
stockholders), unless all dividends in arrears have been paid or
declared and set apart for payment prior thereto, to vote for the
election of two directors of the Corporation, the holders of any
Series A Preferred Stock being entitled to cast that number of
votes per share of Series A Preferred Stock as specified in
clause (A) of this Section 3. Until the default in payments of
all dividends which permitted the election of said directors
shall cease to exist, any director who shall have been so elected
pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote
of the holders of the shares of Series A Preferred Stock at the
time entitled to cast a majority of the votes entitled to be cast
for the election of any such director at a special meeting of
such holders called for that purpose, and any vacancy thereby
created may be filled by the vote of such holders. If and when
such default shall cease to exist, the holders of the Series A
Preferred Stock shall be divested of the foregoing special voting
rights, subject to revesting in the event of each and every
subsequent like default in payments of dividends. Upon the
termination of the foregoing special voting rights, the terms of
office of all persons who may have been elected directors
pursuant to said special voting rights shall forthwith terminate,
and the number of directors constituting the Board of Directors
shall be reduced by two. The voting rights granted by this
Section 3(C) shall be in addition to any other voting rights
granted to the holders of the Series A Preferred Stock in this
Section 3.
(D) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special
voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock
as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock,
A-5
<PAGE>
except
dividends paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the
Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock
or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon
any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall
have received $100 per share, plus an amount equal to
A-6
<PAGE>
accrued and
unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of shares of Common Stock, or (2) to the holders
of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed
or exchanged. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
In the event both this Section 7 and Section 2 appear to apply to a
transaction, this Section 7 shall control.
Section 8. No Redemption. The shares of Series A
Preferred Stock shall
A-7
<PAGE>
not be redeemable; provided, however, that the
Corporation may purchase or otherwise acquire outstanding shares of
Series A Preferred Stock in the open market or by offer to any holder
or holders of shares of Series A Preferred Stock.
Section 9. Rank. The Series A Preferred Stock shall
rank, with respect to the payment of dividends and the distribution of
assets, junior to all series of any other class of the Corporation's
Preferred Stock, unless the Board of Directors shall specifically
determine otherwise in fixing the powers, preferences and relative,
participating, optional and other special rights of the shares of such
series and the qualifications, limitations and restrictions thereof.
Section 10. Fractional Shares. The Series A Preferred
Stock shall be issuable upon exercise of the Rights issued pursuant to
the Rights Agreement in whole shares or in any fraction of a share
that is one one-hundredths (1/100ths) of a share or any integral
multiple of such fraction which shall entitle the holder, in
proportion to such holder's fractional shares, to receive dividends,
exercise voting rights, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Stock.
In lieu of fractional shares, the Corporation, prior to the first
issuance of a share or a fraction of a share of Series A Preferred
Stock, may elect (l) to make a cash payment as provided in the Rights
Agreement for fractions of a share other than one one-hundredths
(1/100ths) of a share or any integral multiple thereof or (2) to issue
depository receipts evidencing such authorized fraction of a share of
Series A Preferred Stock pursuant to an appropriate agreement between
the Corporation and a depository selected by the Corporation; provided
that such agreement shall provide that the holders of such depository
receipts shall have all the rights, privileges and preferences to
which they are entitled as holders of the Series A Preferred Stock.
Section 11. Amendment. The Certificate of Incorporation
of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights
of the Series A Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting together as a
single class.
A-8
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Chief Executive Officer
and attested by its Secretary this 5th day of March, 1996.
EMISPHERE TECHNOLOGIES, INC.
By:
Michael M. Goldberg, M.D.
Chairman and Chief Executive Officer
Attest:
______________________________
Sam J. Milstein, Ph.D.
President, Chief Scientific
Officer and Secretary
A-9
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER FEBRUARY 23, 2006 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUB-
JECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
EMISPHERE TECHNOLOGIES, INC.
This certifies that ______________________________, or
registered assigns, is the registered owner of the number of Rights
set forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement, dated as
of February 23, 1996 (the "Rights Agreement"), between Emisphere
Technologies, Inc., a Delaware corporation (the "Company"), and
Continental Stock Transfer & Trust Company (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as
such term is defined in the Rights Agreement) and prior to 5:00 P.M.,
New York City time, on February 23, 2006 at the principal office of
the Rights Agent, or at the office of its successor as Rights Agent,
one one-hundredth of a fully paid non-assessable share of Series A
Junior Participating Cumulative Preferred Stock, par value $.01 per
share (the "Preferred Shares"), of the Company, at a purchase price of
$80 per one one-hundredth of a Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number and kind of shares
which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and kind of shares and
Purchase Price as of February 23, 1996, based on the Preferred Shares
as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares which may be
purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the
happening of certain events.
If the Rights evidenced by this Right Certificate are at any
time beneficially owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement), such Rights shall be null and void and
B-1
<PAGE>
nontransferable and the holder of any such Right (including any
purported transferee or subsequent holder) shall not have any right to
exercise or transfer any such Right.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right Certificates. Copies
of the Rights Agreement are on file at the principal executive offices
of the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights
Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of Preferred Shares as the
Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by the
Company at a redemption price of $.01 per Right or (ii) may be
exchanged in whole or in part for Preferred Shares or shares of the
Company's Common Stock, par value $.01 per share.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by
depositary receipts) but in lieu thereof a cash payment will be made,
as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of
the Preferred Shares or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice
of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced
by this Right Certificate shall have been exercised as provided in the
B-2
<PAGE>
Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
B-3
<PAGE>
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of _______________,
______.
ATTEST:
EMISPHERE TECHNOLOGIES, INC.
By
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By
Authorized Officer
B-4
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED
____________________________________________
hereby sells, assigns and transfers unto
____________________________________________
______________________________________________________________________
___________
(Please print name and address of transferee)
______________________________________________________________________
___________
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_________________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power
of substitution.
Dated:
_______________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in a
Securities Transfer Association ("STA") recognized signature program.
----------------------------------------------------------------------
----------------------------------------------------
The undersigned hereby certifies that the Rights evidenced
by this Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate
B-5
<PAGE>
thereof (as defined in the Rights
Agreement).
_______________________________________
Signature
B-6
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate)
To: EMISPHERE TECHNOLOGIES, INC.
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to purchase the Preferred
Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining
of such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:
Signature
Signature Guaranteed:
B-7
<PAGE>
Signatures must be guaranteed by a participant in a
Securities Transfer Association ("STA") recognized signature program.
Form of Reverse Side of Right Certificate -- continued
----------------------------------------------------------------------
-----------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
Signature
----------------------------------------------------------------------
-----------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon
the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to purchase, as the case may be, is
not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Right Certificate to
be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
B-8
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On February 23, 1996, the Board of Directors of Emisphere
Technologies, Inc. (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share
of common stock, par value $.01 per share (the "Common Shares"), of
the Company. The dividend is payable on March 15, 1996 (the "Record
Date") to the stockholders of record at the close of business on that
date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Junior Participating
Cumulative Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company at a price of $80 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Continental
Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") have acquired beneficial ownership of
20% or more of the outstanding Common Shares or (ii) 10 business days
(or such later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by
a person or group of 20% or more of the outstanding Common Shares (the
earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights
will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights),
new Common Share certificates issued after the Record Date upon
transfer or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also
constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of
C-1
<PAGE>
record of
the Common Shares as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on February 23, 2006 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company, in each case,
as described below.
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of the
Right are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Shares, (ii) upon the grant to
holders of the Preferred Shares of certain rights or warrants to
subscribe for or purchase Preferred Shares with a conversion price
less than the then-current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends
payable in Preferred Shares) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one one-
hundredths of a Preferred Share issuable upon exercise of each Right
are also subject to adjustment in the event of a stock split of the
Common Shares or a stock dividend on the Common Shares payable in
Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution
Date.
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preferred Share will be entitled to a
minimum preferential quarterly dividend payment of $1 per share but
will be entitled to an aggregate dividend of 100 times the dividend
declared per Common Share. In the event of liquidation, the holders
of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes, voting together with the
Common Shares. Finally, in the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each Preferred
Share will be entitled to receive 100 times the amount received per
Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth
interest in a Preferred Share purchasable upon exercise of each Right
should approximate the value of one Common Share.
C-2
<PAGE>
In the event that the Company is acquired in a merger or
other business combination transaction or 50% or more of its
consolidated assets or earning power are sold after a person or group
has become an Acquiring Person, proper provision will be made so that
each holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the Right,
that number of shares of common stock of the acquiring company which
at the time of such transaction will have a market value of two times
the exercise price of the Right. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon
exercise such number of one one-hundredths of a Preferred Share as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product
by (y) 50% of the then current per share market price of the Company's
Common Shares.
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or
more of the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such
person or group which will have become void), in whole or in part, for
consideration consisting of one-half the securities of the Company
that would be issuable at such time upon exercise of one Right.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of
at least 1% in such Purchase Price. No fractional Preferred Shares
will be issued (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election of
the Company, be evidenced by depositary receipts) and in lieu thereof,
an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of
exercise.
At any time prior to the tenth day following the acquisition
by a person or group of affiliated or associated persons of beneficial
ownership of 20% or more of the outstanding Common Shares, the Board
of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"); provided,
however, that, for the 120-day period after any date of a change
(resulting from a proxy or consent solicitation) in a majority of the
Board of Directors of the Company in office at the commencement of
such solicitation, the Rights may only be redeemed if (A) there are
directors then in office who were in office at the commencement of
such solicitation and (B) the Board of Directors of the Company, with
the concurrence of a majority of such directors then in office,
determines that such redemption is, in their judgment, in the best
interests of
C-3
<PAGE>
the Company and its stockholders. The Redemption of the
Rights may be made effective at such time on such basis with such
conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The Rights will not become exercisable in connection with a
"Qualifying Offer," which is an all-cash tender offer for all
outstanding Common Shares that is fully financed, remains open for a
period of at least 45 business days, assures a prompt second-step
acquisition of shares not purchased in the initial offer at the same
price as the initial offer and meets certain other requirements.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the
Rights, except that from and after a Distribution Date no such
amendment may adversely affect the interests of the holders of the
Rights.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
A copy of the Rights Amendment has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated March 5, 1996. A copy of the Rights
Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which
is hereby incorporated herein by reference.
