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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF
SECURITIES PURSUANT TO SECTION 12(B) OR 12(G) OF
THE SECURITIES EXCHANGE ACT OF 1934
ATRIX LABORATORIES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 84-1043826
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(State of Incorporation (IRS Employer
or Organization) Identification No.)
2579 MIDPOINT DRIVE
FORT COLLINS, COLORADO 80525
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(Address of Principal Executive Offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), please check the following box. [ ]
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), please check the following box. [X]
Securities Act registration statement file number to which this form relates (if
applicable):
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Securities to be registered pursuant to Section 12(g) of the Act:
SERIES A PREFERRED STOCK PURCHASE RIGHTS
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(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
OVERVIEW
On September 25, 1998 the Board of Directors of Atrix Laboratories,
Inc. (the "Company") declared a dividend distribution of one Right for each
outstanding share of its Common Stock, par value $.001 per share (the "Company
Common Stock"), to stockholders of record at the close of business on September
25, 1998 (the "Record Date"), and authorized the issuance of one Right with
each share of Company Common Stock issued (including shares distributed from
Treasury) by the Company thereafter between the Record Date and the
Distribution Date (as defined below). Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share (a "Unit") of
Series A Preferred Stock, par value $.001 per share (the "Preferred Stock"), at
a purchase price of $67.50 per Unit, subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement between the Company
and American Stock Transfer & Trust Company, as Rights Agent, dated as of
September 25, 1998, as amended from time to time (the "Rights Agreement").
THE RIGHTS AGREEMENT
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) ten business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
has acquired or otherwise obtained beneficial ownership of 15% or more of the
then outstanding shares of Company Common Stock (an "Acquiring Person"), and
(ii) ten business days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 15% or more of the then
outstanding shares of Company Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by
Company Common Stock certificates and will be transferred with and only with
such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (also including shares distributed
from Treasury) will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates
representing outstanding Company Common Stock will also constitute the transfer
of the Rights associated with the Company Common Stock represented by such
certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on September 25, 2008 unless earlier redeemed
or exchanged by the
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Company as described below. Under certain circumstances the exercisability of
the Rights may be suspended. In no event, however, will the Rights be
exercisable prior to the expiration of the period in which the Rights may be
redeemed.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
In the event that a person becomes an Acquiring Person, then, in such
case, each holder of a Right will thereafter have the right to receive, upon
exercise, shares of Company Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right. The exercise price is the purchase price
multiplied by the number of Units of Preferred Stock issuable upon exercise of
a Right prior to the event described in this paragraph. Notwithstanding any of
the foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will be
null and void.
In the event that, at any time following the date that any person
becomes an Acquiring Person, (i) the Company is acquired in a merger or other
business combination transaction and the Company is not the surviving
corporation, (ii) any person merges with the Company and all or part of the
Company Common Stock is converted or exchanged for securities, cash or property
of the Company or any other person or (iii) 50% or more of the Company's assets
or earning power is sold or transferred, each holder of a Right (except Rights
which previously have been voided as described above) shall thereafter have the
right to receive, upon exercise, common stock of the Acquiring Person having a
value equal to two times the exercise price of the Right.
The purchase price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the
current market price of the Preferred Stock, or (iii) upon the distribution to
the holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least 1% of the purchase
price. The Company is not required to issue fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock which may be evidenced by depositary receipts).
In lieu thereof, an adjustment in cash may be made based on the current market
price of a share of Preferred Stock on the day of exercise.
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At any time until ten business days following the Stock Acquisition
Date, a majority of the Board of Directors (including, following the date on
which there is an Acquiring Person, the majority of the Independent Directors)
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(subject to adjustment in certain events) (the "Redemption Price") payable, at
the election of the majority of the Board of Directors (including a majority of
the Independent Directors), in cash or shares of Company Common Stock.
Immediately upon the action of a majority of the Board of Directors (including,
following the date on which there is an Acquiring Person, a majority of the
Independent Directors) ordering the redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Company may at any time after there is an Acquiring Person, by
action of a majority of the Board of Directors (including a majority of the
Independent Directors), exchange all or part of the then outstanding and
exercisable Rights (other than Rights that shall have become null and void) for
shares of Company Common Stock pursuant to a one-for-one exchange ratio, as
adjusted.
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. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Units of Preferred Stock (or other
consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of .001% and the largest
percentage of the outstanding shares of Company Common Stock then known to the
Company to be beneficially owned by any person or group of affiliated or
associated persons, and (ii) 10%. After the Distribution Date, the provisions
of the Rights Agreement may be amended in order to cure any ambiguity, defect
or inconsistency, to make changes which do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust (i) the time period governing redemption
shall be made at such time as the Rights are not redeemable or (ii) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the Rights of and/or benefiting, the holders of Rights. In
addition, after a person becomes an Acquiring Person, no amendment or
supplement may be made without the approval of a majority of the Board of
Directors (including a majority of the Independent Directors).
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DESCRIPTION OF PREFERRED STOCK
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential
quarterly dividend of $.01 per Unit or any higher per share dividend declared
on the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $.01 per
Unit and the per share amount paid in respect of a share of the Company Common
Stock.
Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock.
In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Unit of Preferred
Stock will be entitled to receive the per share amount paid in respect of each
share of Company Common Stock.
The rights of holders of the Preferred Stock with respect to
dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock that may
be acquired upon the exercise of each Right should approximate the economic
value of one share of Company Common Stock.
The Rights Agreement, which includes the form of Right Certificate as
an exhibit thereto, and the forms of press release and letter to shareholders
announcing the declaration of the dividend distribution of the Rights are
attached hereto as exhibits and are incorporated herein by this reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such exhibits.
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ITEM 2. EXHIBITS.
3.1 Certificate of Designation of the Series A Preferred Stock filed on
September 25, 1998.
4.1 Rights Agreement (including Form of Right Certificate, as Exhibit A,
and form of Summary of Rights, as Exhibit B).
99.1 Form of press release dated September 25, 1998.
99.2 Form of letter to shareholders.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
ATRIX LABORATORIES, INC.
By /s/ BRIAN G. RICHMOND
----------------------------------
Brian G. Richmond
Vice President, Finance
Dated: September 30, 1998
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INDEX TO EXHIBITS
EXHIBIT
3.1 Certificate of Designation of the Series A Preferred Stock filed on
September 25, 1998.
4.1 Rights Agreement (including Form of Right Certificate, as Exhibit A, and
form of Summary of Rights, as Exhibit B).
99.1 Form of press release dated September 25, 1998.
99.2 Form of letter to shareholders.
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EXHIBIT 3.1
ATRIX LABORATORIES, INC.
CERTIFICATE OF DESIGNATION
OF THE
SERIES A PREFERRED STOCK
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Pursuant to Section 151 of the General Corporation Law of the State of Delaware
---------------------------------------
The undersigned officers of Atrix Laboratories, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors
of the Corporation by its Amended and Restated Certificate of Incorporation
(the "Certificate"), the said Board of Directors, at a duly called meeting held
on August 2, 1998, at which a quorum was present and acted throughout, adopted
the following resolution, which resolution remains in full force and effect on
the date hereof creating a series of Series A shares of preferred stock having
a par value of $.001 per share, designated as Series A Preferred Stock (the
"Series A Preferred Stock") out of the class of 5,000,000 shares of preferred
stock, par value $.001 per share (the "Preferred Stock"):
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the provisions of its Certificate, the Board of
Directors does hereby create, authorize and provide for the issuance of 200,000
shares of its authorized Preferred Stock to be designated and issued as the
Series A Preferred Stock, having the voting powers, designation, relative,
participating, optional and other special rights, preferences and
qualifications, limitations and restrictions that are set forth as follows:
1. Dividends and Distributions. (A) Subject to the prior and
superior rights of the holders of any shares of any other series of Preferred
Stock or any other shares of stock of the Corporation ranking prior and
superior to the shares of Series A Preferred Stock with respect to dividends,
each holder of one one-hundredth (1/100) of a share (a "Unit") of Series A
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for that purpose, (i)
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of such Unit of Series A Preferred Stock, in an amount per Unit
(rounded to the nearest cent) equal to the greater
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of (a) $.01 or (b) subject to the provision for adjustment hereinafter set
forth, the aggregate per share amount of all cash dividends declared on shares
of the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of a Unit of Series A Preferred Stock, and (ii) subject to the
provision for adjustment hereinafter set forth, quarterly distributions
(payable in kind) on each Quarterly Dividend Payment Date in an amount per Unit
equal to the aggregate per share amount 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 shares of Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or with respect to the first Quarterly
Dividend Payment Date, since the first issuance of a Unit of Series A Preferred
Stock. In the event that the Corporation shall at any time after September 25,
1998 (the "Rights Declaration Date") (i) declare any dividend on outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock or (iii) combine outstanding shares of
Common Stock into a smaller number of shares, then in each such case the amount
to which the holder of a Unit of Series A Preferred Stock was 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 shall be the number of shares of Common Stock that are outstanding
immediately after such event and the denominator of which shall be 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 Units
of Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the shares of Common Stock
(other than a dividend payable in shares of Common Stock); provided, however,
that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $.01 per
Unit on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on each
outstanding Unit of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issuance of such Unit of Series A Preferred
Stock, unless the date of issuance of such Unit is prior to the record date for
the first Quarterly Dividend Payment Date, in which case, dividends on such Unit
shall begin to accrue from the date of issuance of such Unit, or unless the date
of issuance is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of Units 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 Units
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of Series A Preferred Stock in an amount less than the aggregate amount of all
such dividends at the time accrued and payable on such Units shall be allocated
pro rata on a unit-by-unit basis among all Units of Series A Preferred Stock at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of Units of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
2. Voting Rights. The holders of Units of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each Unit of Series A Preferred Stock shall entitle the holder thereof to one
vote on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide outstanding shares of Common Stock or
(iii) combine the outstanding shares of Common Stock into a smaller number of
shares, then in each such case the number of votes per Unit to which holders of
Units 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 shall be the number of shares of Common Stock outstanding immediately
after such event and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such event; and
(B) Except as otherwise provided herein, in the Certificate or the
Bylaws of the Corporation or as required by law, the holders of Units of Series
A Preferred Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders of the
Corporation, and such holders shall have no special voting rights and their
consents shall not be required for taking any corporate action.
3. Certain Restrictions. (A) Whenever quarterly dividends or other
dividends or distributions payable on Units of Series A Preferred Stock as
provided herein are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding Units of
Series A Preferred Stock shall have been paid in full, the Corporation shall
not (i) declare or pay dividends on, make any other distributions on, or redeem
or purchase or otherwise acquire for consideration any shares of junior stock;
(ii) declare or pay dividends on or make any other distributions on any shares
of parity stock, except dividends paid ratably on Units of Series A Preferred
Stock and shares of all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of such Units
and all such shares are then entitled; (iii) redeem or purchase or otherwise
acquire for consideration shares of any parity stock, provided, however, that
the Corporation may at any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of any junior stock; (iv) purchase
or otherwise acquire for consideration any Units of 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 Units.
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(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
3, purchase or otherwise acquire such shares at such time and in such manner.
4. Reacquired Shares. Any Units of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such Units
shall, upon their cancellation, become authorized but unissued shares (or
fractions of shares) of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
5. Liquidation, Dissolution or Winding Up. (A) Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of junior stock unless
the holders of Units of Series A Preferred Stock shall have received, subject
to adjustment as hereinafter provided in paragraph (B), the greater of either
(a) $.01 per Unit plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date of such
payment, or (b) the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii) to the holders of
shares of parity stock, unless simultaneously therewith distributions are made
ratably on Units of Series A Preferred Stock and all other shares of such
parity stock in proportion to the total amounts to which the holders of Units
of Series A Preferred Stock are entitled under clause (i)(a) of this sentence
and to which the holders of shares of such parity stock are entitled, in each
case upon such liquidation, dissolution or winding up.
(B) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock, or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, then in each such case the aggregate amount to which holders
of Units of Series A Preferred Stock were entitled immediately prior to such
event pursuant to clause (i)(b) of paragraph (A) of this Section 5 shall be
adjusted by multiplying such amount by a fraction the numerator of which shall
be the number of shares of Common Stock that are outstanding immediately after
such event and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
6. 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 converted into other stock or
securities, cash and/or any other property, then in any such case Units of
Series A Preferred Stock shall at the same time be similarly exchanged for or
converted into an amount per Unit (subject to the provision for adjustment
hereinafter set forth) equal to the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for
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which each share of Common Stock is converted or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the immediately preceding sentence with respect to
the exchange or conversion of Units of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which shall
be the number of shares of Common Stock that are outstanding immediately after
such event and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
7. Redemption. The Units of Series A Preferred Stock and shares of
Series A Preferred Stock shall not be redeemable.
8. Ranking. The Units of Series A Preferred Stock and shares of
Series A Preferred Stock shall rank junior to all other series of the Preferred
Stock and to any other class of Preferred Stock that hereafter may be issued by
the Corporation as to the payment of dividends and the distribution of assets,
unless the terms of any such series or class shall provide otherwise.
9. Fractional Shares. The Series A Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall entitle the
holder, in proportion to such holder's units or fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Stock.
10. Certain Definitions. As used in this resolution with respect to
the Series A Preferred Stock, the following terms shall have the following
meanings:
(A) The term "Common Stock" shall mean the class of stock designated
as the common stock, par value $.001 per share, of the Corporation at the date
hereof or any other class of stock resulting from successive changes or
reclassification of the common stock.
(B) The term "junior stock" (i) as used in Section 3 shall mean the
Common Stock and any other class or series of capital stock of the Corporation
hereafter authorized or issued over which the Series A Preferred Stock has
preference or priority as to the payment of dividends and (ii) as used in
Section 5, shall mean the Common Stock and any other class or series of capital
stock of the Corporation over which the Series A Preferred Stock has preference
or priority in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
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(C) The term "parity stock" (i) as used in Section 3 shall mean any
class or series of stock of the Corporation hereafter authorized or issued
ranking pari passu with the Series A Preferred Stock as to dividends and (ii)
as used in Section 5, shall mean any class or series of capital stock ranking
pari passu with the Series A Preferred Stock in the distribution of assets on
any liquidation, dissolution or winding up.
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IN WITNESS WHEREOF, Atrix Laboratories, Inc. has
caused this Certificate to be signed by its Assistant Secretary and Vice
President Finance this 24th day of September, 1998.
ATRIX LABORATORIES, INC.
By: /s/ Brian G. Richmond
-----------------------------------------
Name: Brian G. Richmond
Title: Assistant Secretary and
Vice-President-Finance
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EXHIBIT 4.1
ATRIX LABORATORIES, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
RIGHTS AGREEMENT
Dated as of September 25, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C> <C>
Section 1. Certain Definitions ................................................................ 1
Section 2. Appointment of Rights Agent ........................................................ 6
Section 3. Issue of Rights Certificates ....................................................... 6
Section 4. Form of Rights Certificates ........................................................ 7
Section 5. Countersignature and Registration .................................................. 8
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates ....................................................................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights ...................... 9
Section 8. Cancellation and Destruction of Rights Certificates ................................ 11
Section 9. Reservation and Availability of Capital Stock ...................................... 11
Section 10. Preferred Stock Record Date ........................................................ 13
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights ................................................................... 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares ......................... 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power ............... 21
Section 14. Fractional Rights and Fractional Shares ............................................ 25
Section 15. Rights of Action ................................................................... 26
Section 16. Agreement of Rights Holders ........................................................ 26
Section 17. Rights Certificate Holder Not Deemed a Stockholder ................................. 27
Section 18. Concerning the Rights Agent ........................................................ 27
Section 19. Merger or Consolidation or Change of Name of Rights Agent .......................... 28
Section 20. Duties of Rights Agent ............................................................. 28
Section 21. Change of Rights Agent ............................................................. 31
</TABLE>
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<TABLE>
<S> <C> <C>
Section 22. Issuance of New Rights Certificates ................................................ 31
Section 23. Redemption and Termination ......................................................... 32
Section 24. Notice of Certain Events ........................................................... 33
Section 25. Notices ............................................................................ 33
Section 26. Supplements and Amendments ......................................................... 34
Section 27. Successors ......................................................................... 35
Section 28. Determinations and Actions by the Board of Directors, etc. ......................... 35
Section 29. Benefits of this Agreement ......................................................... 35
Section 30. Severability ....................................................................... 35
Section 31. Governing Law ...................................................................... 36
Section 32. Counterparts ....................................................................... 36
Section 33. Descriptive Headings ............................................................... 36
Section 34. Exchange ........................................................................... 36
Exhibit A Form of Rights Certificate Form of Summary of Rights ............................... A-1
Exhibit B Form of Summary of Rights .......................................................... B-1
Exhibit C Certificate of Designation ......................................................... C-1
</TABLE>
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 25, 1998 (the "Agreement"),
between Atrix Laboratories, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company, a New York corporation (the "Rights
Agent").
WHEREAS, effective September 25, 1998 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (i) authorized and declared a
dividend distribution of one Right for each share of the Company's common
stock, par value $.001 per share (the "Company Common Stock") outstanding at
the Close of Business on September 25, 1998 (the "Record Date"), and (ii)
authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant hereto) for each share of Company Common Stock issued between
the Record Date (whether originally issued or delivered from the Company's
treasury) and, except as otherwise provided in Section 22, the Distribution
Date, with each Right initially representing the right to purchase upon the
terms and subject to the conditions hereinafter set forth one Unit of Series A
Preferred Stock (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates or Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Company Common Stock
then outstanding. Notwithstanding the foregoing: (i) an "Acquiring
Person" shall not include: (A) the Company; (B) any Subsidiary of the
Company; (C) any employee benefit plan maintained by the Company or any
of its Subsidiaries; (D) any trustee or fiduciary with respect to such
employee benefit plan acting in such capacity or a trustee or fiduciary
holding shares of Company Common Stock for the purpose of funding any
such plan or employee benefits; (E) any Person if the Board of Directors
of the Company determines in good faith that such Person who would
otherwise be an "Acquiring Person" became such inadvertently (including,
without limitation, because (x) such Person was unaware that it
beneficially owned a percentage of Company Common Stock that would
otherwise cause such Person to be an "Acquiring Person" or (y) such
Person was aware of the extent of its Beneficial Ownership of Company
Common Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company, and if such Person does
not acquire any additional shares of Company Common Stock and as promptly
as practicable divested or divests itself of Beneficial Ownership of a
sufficient number of shares of Company Common Stock so that such Person
would no longer be an "Acquiring Person;" or (F) any Person who becomes
the Beneficial Owner of 15% or more of the then outstanding shares of
Company Common Stock as a result of the acquisition of shares of Company
Common Stock directly from the Company in one or more transactions
approved by a majority of
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<PAGE> 5
the Board of Directors, and (ii) no Person shall be deemed an "Acquiring
Person" as a result of the acquisition of shares of Company Common Stock
by the Company which, by reducing the number of shares of Company Common
Stock outstanding, increases the proportional number of shares
beneficially owned by such Person; provided, however, that if (A) a
Person would become an Acquiring Person (but for the operation of this
subclause (ii)) as a result of the acquisition of shares of Company
Common Stock by the Company and (B) after such share acquisition by the
Company, such Person becomes the Beneficial Owner of any additional
shares of Company Common Stock, then such Person shall be deemed an
Acquiring Person unless upon becoming the Beneficial Owner of such
additional shares such Person is the Beneficial Owner of less than 15% of
the then outstanding shares of Company Common Stock. Each Person
identified in subclauses (A), (B), (C) and (D) of this Section (1)(a) is
individually an "Exempt Person" and collectively "Exempt Persons."
(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 hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to have "Beneficial Ownership" of and to "beneficially own",
any securities:
(i) of which such Person or any of such Person's Affiliates
or Associates is considered to be a "beneficial owner" under Rule
13d-3 of the General Rules and Regulations under the Exchange Act
(the "Exchange Act Regulations") as in effect on the date hereof;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own", any securities
under this subparagraph (i) as a result of an agreement,
arrangement or understanding to vote such securities if such
agreement, arrangement or understanding (A) arises solely from a
revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the Exchange Act
Regulations, and (B) is not reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor report);
(ii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such other
Person) with which such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as
described in the proviso to subparagraph (i) of this paragraph (c))
or disposing of such securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time or upon the satisfaction of
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<PAGE> 6
conditions) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that under this paragraph (c) a Person shall not be
deemed the "Beneficial Owner" of, to have "Beneficial Ownership" of, or
to "beneficially own", (A) securities tendered pursuant to a tender or
exchange offer made in accordance with Exchange Act Regulations by such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (B) securities
that may be issued upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) securities that may be issued
upon exercise of Rights from and after the occurrence of a Triggering
Event, which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(c) or Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) hereof in connection with an adjustment made with respect
to any Original Rights; and further provided, however, that (x) nothing
in this paragraph (c) shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition, (y) no
decision reached, or action taken, by the Board of Directors of the
Company or any committee thereof shall cause any Person (or any Affiliate
or Associate of such Person) who is a member of the Board of Directors of
the Company or such committee to be deemed, for the purposes of this
Agreement, to be a Beneficial Owner of any securities beneficially owned
by any other Person (or any Affiliate or Associate of such Person) who is
a member of the Board of Directors of the Company or any committee
thereof solely by reason of such membership of the Board of Directors or
any committee thereof or participation in the decisions or actions
thereof on the part of either or both of such Persons and (z) no Person
who is an officer, director or employee of an Exempt Person shall be
deemed, solely by reason of such Person's status or authority as such, to
be the "Beneficial Owner" of, to have "Beneficial Ownership" of or to
"beneficially own" any securities that are "beneficially owned" (as
defined in this paragraph (c)), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer,
director or employee of an Exempt Person.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the city of Denver,
Colorado are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Colorado time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., Colorado time, on the next
succeeding Business Day.
(f) "Common Stock" of any Person other than the Company shall mean
the capital stock of such Person with the greatest voting power, or, if
such Person shall have
3
<PAGE> 7
no capital stock, the equity securities or other equity interest having
power to control or direct the management of such Person.
(g) "Company" means Atrix Laboratories, Inc., a Delaware
corporation, and also means a Principal Party to the extent provided in
Section 13(a).
(h) "Company Common Stock" has the meaning set forth in the
Whereas Clause.
(i) "Distribution Date" has the meaning set forth in Section 3(a).
(j) "Expiration Date" has the meaning set forth in Section 7(a).
(k) "Independent Director" shall mean a member of the Board of
Directors of the Company who is not, and has never been, an officer or
employee of the Company, who is not an Acquiring Person or an Affiliate
or Associate of an Acquiring Person and who either (i) was a member of
the Board of Directors of the Company immediately prior to the first
occurrence of a Section 11(a)(ii) Event or (ii) subsequently became a
director of the Company and whose election or nomination for election is
approved or recommended by a vote of a majority of the Board of Directors
of the Company, which majority includes a majority of the Independent
Directors then on the Board of Directors.
(l) "Person" shall mean any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act as in effect on the date hereof.
(m) "Preferred Stock" shall mean the Series A Preferred Stock, par
value $.001 per share, of the Company having the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions described
in the Certificate of Designation set forth as Exhibit C hereto and as
amended from time to time.
(n) "Purchase Price" has the meaning set forth in Section 7(b).
(o) "Record Date" has the meaning set forth in the Whereas Clause.
(p) "Right" has the meaning set forth in the Whereas Clause.
(q) "Rights Certificate" has the meaning set forth in Section
3(a).
(r) "Rights Dividend Declaration Date" has the meaning set forth
in the Whereas Clause.
(s) "Section 11(a)(ii) Event" shall mean the event described in
Section 11(a)(ii) hereof.
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<PAGE> 8
(t) "Section 13 Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof.
(u) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) of the Exchange Act (or any comparable or
successor report)) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(v) "Subsidiary" shall mean, with reference to any Person, any
other Person of which an amount of voting securities or equity interests
sufficient to elect at least a majority of the directors or equivalent
governing body of such other Person is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such
first-mentioned Person.
(w) "Summary of Rights" has the meaning set forth in Section 3(b).
(x) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
(y) "Unit" has the meaning set forth in Section 7(b).
In addition, the following terms are defined in the Sections
indicated below:
<TABLE>
<CAPTION>
Defined Term Section Number
------------ --------------
<S> <C>
Adjustment Shares 11(a)(ii)
Adjustment Spread 34(a)
common stock equivalents 11(a)(iii)
Current Value 11(a)(iii)
Depositary Agent 7(c)
Distribution Date 3(a)
Equivalent Preferred Stock 11(b)
Exchange Act 1(b)
Exchange Act Regulations 1(c)
Exchange Ratio 34(a)
Exempt Person 1(a)
Expiration Date 7(a)
Final Expiration Date 7(a)
Nasdaq 11(d)(i)
Original Rights 1(c)
Purchase Price 7(b)
Redemption Price 23(a)
Registered Common Stock 13(b)(ii)
Registration Date 9(c)
Registration Statement 9(c)
Rights Certificates 3(a)
Section 11(a)(ii) Event 11(a)(ii)(C)
Section 11(a)(iii) Trigger Date 11(a)(iii)
Section 13 Event 13(a)
Securities Act 9(c)
Spread 11(a)(iii)
Summary of Rights 3(b)
Trading Day 11(d)(i)
Unit 7(b)
</TABLE>
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<PAGE> 9
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, the Company may from time to time appoint such
co-rights agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates. (a) Until the earlier of (i)
the Close of Business on the tenth Business Day after the Stock Acquisition
Date, and (ii) the Close of Business on the tenth Business Day (or such later
date as may be determined by action of a majority of the Board of Directors of
the Company prior to the occurrence of a Section 11(a)(ii) Event) after the
date that a tender or exchange offer by any Person (other than an Exempt
Person) is first published or sent or given within the meaning of Rule 14d-4(a)
of the Exchange Act Regulations or any successor rule, if upon consummation
thereof such Person would be an Acquiring Person (including, in the case of
both clause (i) and (ii), any such date which is after the date of this
Agreement and prior to the issuance of the Rights)(the earlier of (i) and (ii)
above being the "Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of paragraph (b) of this Section 3) by the certificates for
shares of Company Common Stock registered in the names of the holders of shares
of Company Common Stock as of and subsequent to the Record Date (which
certificates for shares of Company Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Company Common Stock including a transfer to the Company; provided,
however, that if a tender or exchange offer is terminated prior to the
occurrence of a Distribution Date, then no Distribution Date shall occur as a
result of such tender or exchange offer. As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, insured, postage
prepaid mail, to each record holder of shares of Company Common Stock as of the
Close of Business on the Distribution Date, at the address of such holder shown
on the records of the Company, one or more rights certificates, in
substantially the form of Exhibit A hereto (the "Rights Certificates"),
evidencing one Right for each share of Company Common Stock so held, subject to
adjustment as provided herein.
In the event that an adjustment in the number of Rights per share of
Company Common Stock has been made pursuant to Section 11(p) hereof, at the
time of distribution of the Rights Certificates, the Company may make the
necessary and appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage prepaid mail, to
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<PAGE> 10
each record holder of shares of Company Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for Company Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders
thereof together with the Summary of Rights. Until the Distribution Date (or,
if earlier, the Expiration Date), the surrender for transfer of any such
certificate for Company Common Stock outstanding as of the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the transfer of
the Rights associated with the Company Common Stock represented thereby.
(c) Rights shall, without any further action, be issued in respect
of all shares of Company Common Stock which are issued (including any shares of
Company Common Stock held in treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates,
representing such shares of Company Common Stock, issued after the Record Date
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Atrix Laboratories,
Inc. (the "Company") and American Stock Transfer & Trust Company (the
"Rights Agent") dated as of September 25, 1998, as amended from time to
time (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal office
of the stock transfer administration office of the Rights Agent. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request
therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF
OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
With respect to certificates representing shares of Company Common Stock that
bear the foregoing legend until the earlier of the Distribution Date and the
Expiration Date, the Rights associated with the shares of Company Common Stock
represented by such certificates shall be evidenced by such certificates alone
and registered holders of the shares of Company Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
Section 4. Form of Rights Certificates. (a) The Rights Certificates (and
the forms of election to purchase, assignment and certificate to be printed on
the reverse thereof) shall each be substantially in the form set forth in
Exhibit A hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company
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<PAGE> 11
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 any rule
or regulation thereunder or with any rule or regulation of any stock exchange
or automated quotation system on which the Rights may from time to time be
listed or to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of Units of Preferred Stock as shall be set forth
therein at the price set forth therein, but the amount and type of securities,
cash or other assets that may be acquired upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration . (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman, the President or
one of its Vice Presidents under its corporate seal reproduced thereon attested
by its Secretary, Treasurer or one of its Assistant Secretaries. The signature
of any of these officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of the
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the countersignature of such Rights Certificates
or did not hold such offices at the date of such Rights Certificates. No Rights
Certificate shall be entitled to any benefit under this Agreement or be valid
for any purpose unless there appears on such Rights Certificate a
countersignature duly executed by the Rights Agent by manual signature of an
authorized signatory, and such countersignature upon any Rights Certificate
shall be conclusive evidence, and the only evidence, that such Rights
Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4, 7(e) and 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of
Units of Preferred Stock (or, following a Triggering Event, other securities,
cash or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder shall have
completed and executed the certificate set forth in the form of assignment on
the reverse side of such Rights Certificate
8
<PAGE> 12
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) of the Rights represented by such
Rights Certificate or Affiliates or Associates thereof as the Company shall
reasonably request; whereupon the Rights Agent shall, subject to the provisions
of Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) Subject to Section 7(e) hereof, if a Rights Certificate shall
be mutilated, lost, stolen or destroyed, upon request by the registered holder
of the Rights represented thereby and upon payment to the Company and the
Rights Agent of all reasonable expenses incident thereto, there shall be
issued, in exchange for and upon cancellation of the mutilated Rights
Certificate, or in substitution for the lost, stolen or destroyed Rights
Certificate, a new Rights Certificate, in substantially the form of the prior
Rights Certificate, of like tenor and representing the equivalent number of
Rights, but, in the case of loss, theft or destruction, only upon receipt of
evidence satisfactory to the Company and the Rights Agent of such loss, theft
or destruction of such Rights Certificate and, if requested by the Company or
the Rights Agent, indemnity also satisfactory to it.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Prior to the earlier of (i) the Close of Business on the tenth anniversary
hereof (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof and (iii) the time at which the
Rights are exchanged as provided in Section 34 hereof (the earlier of (i), (ii)
and (iii) being the "Expiration Date"), the registered holder of any Rights
Certificate may, subject to the provisions of Sections 7(e) and 9(c) hereof,
exercise the Rights evidenced thereby, in whole or in part, at any time after
the Distribution Date upon surrender of the Rights Certificate, with the form
of election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price (as
hereinafter defined) for the number of Units of Preferred Stock (or, following
a Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-hundredth of a share (each
such one one-hundredth of a share being a "Unit") of Preferred Stock upon
exercise of Rights shall be $67.50, subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted,
being the "Purchase Price"), and shall be payable in accordance with paragraph
(c) below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with the Rights Agent or other
corporation in good standing organized under the laws of the United States or
any State of the United States, 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 (such institution being the
"Depositary Agent"), certificates representing the shares of Preferred Stock
that may be acquired upon
9
<PAGE> 13
exercise of the Rights and shall cause such Depositary Agent to enter into an
agreement pursuant to which the Depositary Agent shall issue receipts
representing interests in the shares of Preferred Stock so deposited. Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price for the
Units of Preferred Stock (or, following a Triggering Event, other securities,
cash or other assets, as the case may be) to be purchased thereby as set forth
below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) requisition from the
Depositary Agent depositary receipts representing such number of Units of
Preferred Stock as are to be purchased and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash,
if any, to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue Company Common
Stock, other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such Company Common Stock, other securities,
cash and/or other property are available for distribution by the Rights Agent,
if and when appropriate. The payment of the Purchase Price (as such amount may
be reduced pursuant to Section 11(a)(iii) hereof) may be made in cash or by
certified or bank check or money order payable to the order of the Company.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and which receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person
with whom the Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer which
the Board of Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall be null and void without any further action, and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any
10
<PAGE> 14
provision of this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) hereof are complied
with, but shall have no liability to any holder of Rights or any other Person
as a result of its failure to make any determination under this Section 7(e)
with respect to an Acquiring Person or its Affiliates, Associates or
transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company shall at all times prior to the Expiration Date cause to be reserved
and kept available, out of its authorized and unissued shares of preferred
stock, the number of shares of Preferred Stock that, as provided in this
Agreement, will be sufficient to permit the exercise in full of all outstanding
Rights. Upon the occurrence of any events resulting in an increase in the
aggregate number of shares of Preferred Stock (or other equity securities of
the Company) issuable upon exercise of all outstanding Rights above the number
then reserved, the Company shall make appropriate increases in the number of
shares so reserved to the extent practicable.
(b) If the shares of Preferred Stock to be issued and delivered
upon the exercise of the Rights may be listed on any national securities
exchange or automated quotation system, the Company shall during the period
from the Distribution Date through the Expiration Date use its best efforts to
cause all securities reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) as soon as
practicable following the occurrence of a Section 11(a)(ii) Event and a
determination by the Company in accordance with Section 11(a)(iii) hereof of
the consideration to be delivered by the Company upon exercise of the Rights
or, if so required by law, as soon as practicable following the Distribution
Date (such
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<PAGE> 15
date being the "Registration Date"), to file a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities that may be acquired upon exercise of the
Rights (the "Registration Statement"), (ii) to cause the Registration Statement
to become effective as soon as practicable after such filing, (iii) to cause
the Registration Statement to continue to be effective (and to include a
prospectus complying with the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable for
the securities covered by the Registration Statement, and (B) the Expiration
Date, and (iv) to take as soon as practicable following the Registration Date
such action as may be required to ensure that any acquisition of securities
upon exercise of the Rights complies with any applicable state securities or
"blue sky" laws. The Company may temporarily suspend, for a period of time not
to exceed one hundred twenty (120) days after the date set forth in clause (i)
of the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is
no longer in effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or a registration statement shall not have been
declared effective.
(d) The Company shall take such action as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates or depositary
receipts for such securities (subject to payment of the Purchase Price), duly
and validly authorized and issued and fully paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; provided, however, the Company shall not be
required to pay any such tax imposed in connection with the issuance or
delivery of Units of Preferred Stock, or any certificates or depositary
receipts for such Units of Preferred Stock (or, following the occurrence of a
Triggering Event, any other securities, cash or assets, as the case may be) to
any person other than the registered holder of the Rights Certificates
evidencing the Rights surrendered for exercise. The Company shall not be
required to issue or deliver any certificates or depositary receipts for Units
of Preferred Stock (or, following the occurrence of a Triggering Event, any
other securities, cash or assets, as the case may be) to, or in a name other
than that of, the registered holder upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established
to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate or depositary receipt for Units of Preferred Stock (or, following
the occurrence of a Triggering
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<PAGE> 16
Event, other securities) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Units of
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or, following the occurrence
of a Triggering Event, other securities) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) transfer books of the Company are open and,
further provided, however, that if delivery of Units of Preferred Stock is
delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have
become the record holders of such Units of Preferred Stock only when such Units
first become deliverable. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any rights
of a stockholder of the Company with respect to securities for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of securities
purchasable upon exercise of each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a reclassification
of the Preferred Stock (including any such reclassification in connection
with a consolidation 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 Preferred Stock or
capital stock, as the case may be, issuable on such date upon exercise of
the Rights, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date, such holder
would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon the exercise of one Right.
If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for
in this
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<PAGE> 17
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person shall become an Acquiring Person,
other than pursuant to any transaction set forth in Section 13(a) hereof,
then, immediately upon the occurrence of such event (a "Section 11(a)(ii)
Event"), proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall, subject to
Section 34 hereof, thereafter have the right to receive, upon exercise of
such Right at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of the number of Units of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of
a Section 11(a)(ii) Event (whether or not such Right was then
exercisable), such number of Units of Preferred Stock as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the
then number of Units of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event
(whether or not such Right was then exercisable) (such product thereafter
being, for all purposes of this Agreement, other than Section 13 hereof,
the "Purchase Price"), and (y) dividing that product by 50% of the then
current market price (determined pursuant to Section 11(d) hereof) per
Unit of Preferred Stock on the date of such first occurrence (such Units
of Preferred Stock being the "Adjustment Shares"); provided, however, that
the Purchase Price and the number of Units of Preferred Stock so
receivable upon exercise of a Right, following the Section 11(a)(ii)
Event, shall be subject to further adjustment as appropriate in accordance
with Section 11 hereof. Notwithstanding the foregoing, the Rights shall
not be exercisable pursuant to this Section 11(a)(ii) until the time
period during which the Rights may be redeemed pursuant to Section 23
hereof shall have expired.
(iii) The Company, by the vote of a majority of the Board of
Directors (including, following a Section 11(a)(ii) Event, a majority of
the Independent Directors), may at its option substitute for a Unit of
Preferred Stock issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii), shares of Company Common Stock or
fractions thereof having a current market price (as determined by Section
11(d) hereof) equal to the current market price of a Unit of Preferred
Stock on the date of the Section 11(a)(ii) Event. In the event that the
number of shares of Preferred Stock which are authorized by the Company's
Amended and Restated Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights
is not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company, by the vote of a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent
Directors), shall to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party or by
which it is bound: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess being the "Spread"), and
(B) with respect to each Right (other than Rights which have become void
pursuant to Section 7(e)), make adequate provision to substitute, in whole
or in part, for such Adjustment Shares, upon exercise of a Right and
payment of the applicable
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<PAGE> 18
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
shares of Company Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred
stock (such other shares being "common stock equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value which, when added to the value of the
Units of Preferred Stock actually issued upon exercise of such Right,
shall have an aggregate value equal to the Current Value (less the amount
of any reduction in such Purchase Price), where such aggregate value has
been determined by a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent
Directors), after receiving advice from a nationally recognized investment
banking firm; provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within
thirty days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(iii) Trigger Date"), then,
subject to Section 34 hereof, the Company shall be obligated (to the
extent permitted by applicable law and any material agreements then in
effect to which the Company is a party or by which it is bound) to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, Units of Preferred Stock (to the extent
available) and then, if necessary, shares (or fractions of shares, at the
discretion of the Board) of Company Common Stock, cash or a combination
thereof, which Units of Preferred Stock, shares (or fractions of shares)
of Company Common Stock and/or cash shall have an aggregate value equal to
the Spread; further provided, however, that if the Company is unable to
comply with the immediately foregoing provision within such thirty day
period, then the Company shall (to the extent permitted by law) take all
such action as may be necessary to comply with such provision, including
the calling of a meeting of stockholders to authorize additional shares of
Preferred Stock or Company Common Stock. To the extent that the Company
determines that some action need be taken pursuant to the first sentence
of this Section 11(a)(iii), the Company shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all outstanding
Rights. For purposes of this Section 11(a)(iii), the value of a Unit of
Preferred Stock or share of Company Common Stock shall be the current
market price (as determined pursuant to Section 11(d) hereof) per Unit of
Preferred Stock or share of Company Common Stock, as the case may be, on
the Section 11(a)(iii) Trigger Date and the value of any common stock
equivalent shall be deemed to have the same value as the Preferred Stock
on such date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five
calendar days after such record date) shares of Preferred Stock (or shares
having substantially the same rights, privileges and preferences as shares
of Preferred Stock ("Equivalent Preferred Stock")) or securities
convertible into Preferred Stock or Equivalent Preferred Stock at a price
per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the current
market price (as determined pursuant to Section l1(d) hereof) per share of
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<PAGE> 19
Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the sum of the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of
shares of Preferred Stock and/or Equivalent Preferred Stock so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price,
and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of additional shares
of Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or into which the convertible securities so to
be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form
other than cash, the value of such consideration shall be as determined in
good faith by a majority of the Board of Directors (including a majority
of the Independent Directors), whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or
held for the account of the Company or any Subsidiary shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed, and in the
event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution
to all holders of shares of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend paid out
of funds legally available therefor), assets (other than a dividend
payable in shares of Preferred Stock, but including any dividend payable
in stock other than Preferred Stock) or subscription rights, options or
warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors
(including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors), whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holder of the Rights) of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights, options
or warrants distributable in respect of a share of Preferred Stock and the
denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
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<PAGE> 20
(d) (i) For the purpose of any computation hereunder, the
"current market price" per share of Company Common Stock or Common Stock
on any date shall be deemed to be the average of the daily closing prices
per share of such shares for the ten consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided,
however, if prior to the expiration of such requisite ten Trading Day
period the issuer announces either (A) a dividend or distribution on such
shares payable in such shares or securities convertible into such shares
(other than the Rights), or (B) any subdivision, combination or
reclassification of such shares, then, following the ex-dividend date for
such dividend or the record date for such subdivision, combination or
reclassification, as the case may be, the "current market price" shall be
properly adjusted to take into account such event. The closing price for
each day shall be, if the shares are listed and admitted to trading on a
national securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such shares are listed or
admitted to trading or, if such shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the Nasdaq National Market
("Nasdaq") or such other system then in use, or, if on any such date such
shares are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in such shares selected by a majority of the Board of Directors
(including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors). If on any such date no market maker is making a
market in such shares, the fair value of such shares on such date as
determined in good faith by a majority of the Board of Directors
(including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors) shall be used. If such shares are not publicly held
or not so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by a majority of the
Board of Directors (including, following a Section 11(a)(ii) Event, a
majority of the Independent Directors), whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. The term "Trading Day" shall mean, if such
shares are listed or admitted to trading on any national securities
exchange, a day on which the principal national securities exchange on
which such shares are listed or admitted to trading is open for the
transaction of business or, if such shares are not so listed or admitted,
a Business Day.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined in
the same manner as set forth above for Company Common Stock in clause (i)
of this Section 11(d) (other than the fourth sentence thereof). If the
current market price per share of Preferred Stock cannot be determined in
the manner provided above or if the Preferred Stock is not publicly held
or listed or traded in a manner described in clause (i) of this Section
11(d), the "current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such amount may be
appropriately adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to Company Common Stock occurring after
the date of this Agreement) multiplied by the current market price per
17
<PAGE> 21
share of Company Common Stock. If neither Company Common Stock nor
Preferred Stock is publicly held or so listed or traded, "current market
price" per share of the Preferred Stock shall mean the fair value per
share as determined in good faith by a majority of the Board of Directors
(including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors) whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. For all purposes of this Agreement,
the "current market price" of a Unit of Preferred Stock shall be equal to
the "current market price" of one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one-hundredth of a
share of Company Common Stock or Common Stock or other share or
ten-thousandth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which mandates such
adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j),
(k), (l) and (m), and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Stock shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of Units of
Preferred Stock (or other securities or amount of cash or combination
thereof) that may be acquired from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of Units of Preferred Stock (calculated to the nearest one
ten-thousandth of a Unit) obtained by (i) multiplying (x) the number of
Units of Preferred Stock covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect
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<PAGE> 22
immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Units of Preferred Stock that may be acquired
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
Units of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten days later than the date of such public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of Units of Preferred Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Unit and the number of Units of
Preferred Stock which were expressed in the Initial Rights Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value of the number of
Units of Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue such
fully paid and non-assessable number of Units of Preferred Stock at such
adjusted Purchase Price.
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<PAGE> 23
(1) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date of that number of Units of Preferred Stock and shares of other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Units of Preferred Stock and shares
of other capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such adjustment.
(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 in their good faith judgment a majority of
the Board of Directors (including, following a Section 11(a)(ii) Event, a
majority of the Independent Directors) shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock, shall not
be taxable to such holders or shall reduce the taxes payable by such
holders.
(n) The Company shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a wholly owned
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a
wholly owned Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any
of its Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the Person which constitutes, or
would constitute, the "Principal Party" for purposes of Section 13(a)
hereof shall have distributed or otherwise transferred to its shareholders
or other persons holding an equity interest in such Person Rights
previously owned by such Person or any of its Affiliates and Associates;
provided, however, this Section 11(n) shall not affect the ability of any
wholly owned Subsidiary of the Company to consolidate with, merge with or
into, or sell or transfer assets or earning power to, any other wholly
owned Subsidiary of the Company.
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(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23, Section 26 or Section 34 hereof, take (or permit
any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend
on the outstanding shares of Company Common Stock payable in shares of
Company Common Stock, (ii) subdivide the outstanding shares of Company
Common Stock, (iii) combine the outstanding shares of Company Common Stock
into a smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of Company Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
associated with each share of Company Common Stock then outstanding, or
issued or delivered thereafter prior to the Distribution Date or in
accordance with Section 22 hereof, shall be proportionately adjusted so
that the number of Rights thereafter associated with each share of Company
Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Company
Common Stock immediately prior to such event by a fraction the numerator
of which shall be the total number of shares of Company Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Company Common
Stock outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Company Common Stock) in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the first occurrence of a
Section 11(a)(ii) Event, directly or indirectly, either (x) the Company shall
consolidate with, or merge with and into, any other Person (other than a wholly
owned Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), and the Company shall not be the continuing or surviving
corporation of such
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consolidation or merger, (y) any Person (other than a wholly owned Subsidiary
of the Company in a transaction which compiles with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Company Common Stock shall be changed into or exchanged for stock or
other securities of the Company or any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer) to any Person or Persons
(other than the Company or any of its wholly owned Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) (any such
event being a "Section 13 Event"), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, (other than Rights
which have become void as provided in Section 7(e) hereof), shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price, in accordance with this Agreement and in lieu of Units of
Preferred Stock or shares of Company Common Stock, such number of validly
authorized and issued, fully paid, non-assessable and freely tradable shares of
Common Stock of the Principal Party (as such term is hereinafter defined),
which shares shall not be subject to any liens, encumbrances, rights of call or
first refusal, transfer restrictions or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by
the number of Units of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such Units for which a Right would be
exercisable hereunder but for the occurrence of such Section 11(a)(ii) Event by
the Purchase Price which would be in effect hereunder but for such first
occurrence) and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be the "Purchase Price" for all
purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event, provided,
however, that the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof) and the number of shares of Common Stock of such
Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof to
reflect any events occurring in respect of the Common Stock of such Principal
Party after the occurrence of such Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party in all respects; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with the consummation of any such transaction as may be necessary to assure
that the provisions of this Agreement shall thereafter be applicable, as nearly
as reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights, to its shares of Common Stock;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets,
recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of
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<PAGE> 26
the Purchase Price, such cash, shares, rights, warrants and other property
which such holder would have been entitled to receive had it, at the time of
such transaction, owned the shares of Common Stock of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party shall take
such steps (including, but not limited to, reservation of shares of stock) as
may be necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property; and (v) the provisions of Section 11(a)(ii) hereof shall be of no
further effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), (A) the Person
that is the issuer of any securities into which shares of Company
Common Stock are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer of Common Stock that
has the highest aggregate current market price (determined pursuant
to Section 11(d) hereof) and (B) if no securities are so issued,
the Person that is the other party to such merger or consolidation,
or, if there is more than one such Person, the Person the Common
Stock of which has the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a) hereof, the Person that
is the party receiving the largest portion of the assets or earning
power transferred pursuant to such transaction or transactions, or,
if each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the
Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person the Common Stock of which
has the highest aggregate current market price (determined pursuant
to Section 11(d) hereof); provided, however, that in any such case,
(1) if the Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve- month period
registered under Section 12 of the Exchange Act ("Registered Common
Stock"), or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person that has Registered
Common Stock outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person
but is not a direct or indirect Subsidiary of another Person which
has Registered Common Stock outstanding, "Principal Party" shall
refer to the ultimate parent entity of such first-mentioned Person;
(3) if the Common Stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one
or more of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever of such
other Persons is the issuer of the Registered Common Stock having
the highest
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<PAGE> 27
aggregate current market price (determined pursuant to Section
11(d) hereof); and (4) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and
such Person is directly or indirectly controlled by more than one
Person, and none of such other Persons have Registered Common Stock
outstanding, "Principal Party" shall refer to whichever ultimate
parent entity is the corporation having the greatest shareholders
equity or, if no such ultimate parent entity is a corporation,
shall refer to whichever ultimate parent entity is the entity
having the greatest net assets
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13, and unless prior thereto the
Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that the
Principal Party, at its own expense, shall:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement
under the Securities Act with respect to the Common Stock that may
be acquired upon exercise of the Rights, (B) cause such
registration statement to remain effective (and to include a
prospectus complying with the requirements of the Securities Act)
until the Expiration Date, and (C) as soon as practicable following
the execution of such agreement, take such action as may be
required to assure that any acquisition of such Common Stock upon
the exercise of the Rights complies with any applicable state
securities or "blue sky" laws; and
(ii) as soon as practicable following the execution of such
agreement, deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal
Party at less than the then current market price per share (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than such
then current market price (other than to holders of Rights pursuant to
this Section 13) or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of this Section 13; then, in
such event, the Company shall not consummate any such transaction unless
prior
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thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been cancelled,
waived or amended, or that the authorized securities shall be redeemed, so
that the applicable provision will have no effect in connection with, or
as a consequence of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence
of a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable, in the manner and for the
securities described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of issuing such
fractional Rights, there shall be paid to the Persons to which such fractional
Rights would otherwise be issuable, an amount in cash equal to such fraction of
the market value of a whole Right. For purposes of this Section 14(a), the
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day shall
be, if the Rights are listed or admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by Nasdaq
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by a majority of the Board of Directors (including, following a
Section 11(a)(ii) Event, a majority of the Independent Directors). If on any
such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by a majority of the
Board of Directors (including, following a Section 11(a)(ii) Event, a majority
of the Independent Directors) shall be used and such determination shall be
described in a statement filed with the Rights Agent and the holders of the
Rights.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence such fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock); provided, however, that in lieu of fractions of
shares of Preferred Stock which are integral multiples of one one-hundredth of
a share of Preferred Stock, the Company may provide for the issuance of
depositary receipts pursuant to Section 7(c) hereof. In lieu of such
fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of
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<PAGE> 29
the then current market price of a share of Preferred Stock on the day of
exercise, determined in accordance with Section 11(d) hereof.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of certificates representing shares of Company Common Stock); and any
registered holder of a Rights Certificate (or, prior to the Distribution Date,
of a certificate representing shares of Company Common Stock), without the
consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of a certificate representing shares of
Company Common Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the
Company or any other Person to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Company
Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Company
Common Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent, subject to the last sentence of Section 7 (e) hereof, shall
be affected by any notice to the contrary; and
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(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as
promptly as practicable.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24 hereof,
to receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof. This Section 17 shall also apply to
holders, as such, of Rights prior to the issuance of Rights Certificates.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and 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 reasonable costs and expenses of defending against any claim of liability
hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Preferred Stock or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to have
been signed, executed and, where necessary, verified or acknowledged by the
proper Person or Persons.
(c) The indemnity provided herein shall survive the expiration of
the Rights and the termination of this Agreement. In no case will the Rights
Agent be liable for special,
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<PAGE> 31
indirect, incidental or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the possibility of such loss or damage.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or shareholder services businesses 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 document or any further act on
the part of any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring
Person and the determination of "current market price") be proved or
established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof
be specified herein) may be deemed to be conclusively proved and
established by a certificate signed
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<PAGE> 32
by the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer, any Assistant Treasurer, the Secretary
or any Assistant Secretary of the Company and delivered to the Rights
Agent; provided, however, that so long as any Person is an Acquiring
Person hereunder, such certificate shall be signed and delivered by a
majority of the Board of Directors (including a majority of the
Independent Directors); and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates or be required to verify the same (except as to
its countersignature on such Rights Certificates), but all such statements
and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or for the validity or
execution of any Rights Certificate (except its countersignature thereof);
nor shall it be responsible for any breach by the Company of any covenant
or failure by the Company to satisfy conditions contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11 or Section 13
hereof or for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt by the Rights Agent of the certificate
describing any such adjustment contemplated by Section 12); nor shall it
by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any shares of Preferred Stock or
any other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock or any other
securities will, when so issued, be validly authorized and issued, fully
paid and non-assessable.
(f) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by
the Rights Agent for the performance by the Rights Agent of its duties
under this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance
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with instructions of any such officer; provided, however, that so long as
any Person is an Acquiring Person hereunder, the Rights Agent shall accept
such instructions and advice only from a majority of the Board of
Directors (including a majority of the Independent Directors) and shall
not be liable for any action taken or suffered to be taken by it in good
faith in accordance with such instructions of the majority of the Board of
Directors (including a majority of the Independent Directors). Any
application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective. The Rights Agent shall not be liable for
any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified
in such application (which date shall not be less than five Business Days
after the date any such officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective
date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action
to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or have a pecuniary interest 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.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties or in the exercise of its rights
hereunder if the Rights Agent shall have reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be,
has either not been completed, not signed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer without
first consulting with the Company. If such certificate has been completed
and signed and shows a negative response to clauses 1 and 2 of such
certificate, unless previously instructed otherwise in writing by the
Company (which instructions may impose on the Rights Agent additional
ministerial responsibilities, but no discretionary responsibilities), the
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Rights Agent may assume without further inquiry that the Rights
Certificate is not owned by a Person described in Section 7(e) hereof and
shall not be charged with any knowledge to the contrary.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Stock and the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Rights Certificate (who shall, with such notice, submit
his Rights Certificate for inspection by the Company), then any registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
any state of the United States in good standing, shall be authorized under
applicable laws to exercise corporate trust or stock transfer powers and shall
be subject to supervision or examination by federal or state authorities or (b)
an Affiliate of a corporation described in clause (a). 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 Preferred Stock and the
Company Common Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent Directors)
to reflect any adjustment or change made in accordance with the provisions of
this Agreement in the Purchase Price or the number or kind or class of shares
or other securities or property that may be acquired under the Rights
Certificates. In addition, in connection with the issuance or sale of shares of
Company Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to shares of Company
Common
31
<PAGE> 35
Stock so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case,
if deemed necessary or appropriate by a majority of the Board of Directors
(including, following a Section 11(a)(ii) Event, a majority of the Independent
Directors), issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall
be issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) Subject to Section 30
hereof, the Company may, at its option, by action of a majority of the Board of
Directors (including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors), at any time prior to the earlier of (i) the Close of
Business on the tenth Business Day following the Stock Acquisition Date or (ii)
the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being the
"Redemption Price"). The Company may, at its option, by action of a majority
of the Board of Directors (including, following a Section 11(a)(ii) Event, a
majority of the Independent Directors), pay the Redemption Price either in
shares of Company Common Stock (based on the "current market price", as defined
in Section 11(d) hereof, of the shares of Company Common Stock at the time of
redemption) or cash and the redemption of the Rights shall be effective on the
basis and with such conditions as the Board of Directors (including, following
a Section 11(a)(ii) Event, a majority of the Independent Directors) may in its
sole discretion establish.
(b) Immediately upon the action of a majority of the Board of
Directors (including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors) ordering the redemption of the Rights, evidence of which
shall be filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. 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. Promptly after the action of a majority of the Board of Directors
(including, following a Section 11(a)(ii) Event, a majority of the Independent
Directors) ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder's last address
as it appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Company
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made.
32
<PAGE> 36
Section 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend paid out of funds legally available therefor), (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), (iv)
to effect any consolidation or merger into or with any other Person, 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 more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than a transfer by the
Company and/or any of its wholly owned Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least twenty (20) days prior to the record date
for determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock whichever
shall be the earlier; provided, however, no such notice shall be required
pursuant to this Section 24, if any wholly owned Subsidiary of the Company
effects a consolidation or merger with or into, or effects a sale or other
transfer of assets or earnings power to, any other wholly owned Subsidiary of
the Company.
(b) In case any Triggering Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13 hereof, as the case may be.
Section 25. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company,
at its address at:
Atrix Laboratories, Inc.
2579 Midpoint Drive
Fort Collins, Colorado 80525
Attention: President
33
<PAGE> 37
and if to the Rights Agent, at its address at:
American Stock Transfer & Trust Company
6201 15th Avenue, Floor 3L
Brooklyn, NY 11219
Attention: Relationship Manager
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of certificates representing shares of Company Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) subject to Section 30
hereof, a time period relating to when the Rights may be redeemed at such time
as the Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Without limiting the
foregoing, the Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Agreement to lower the thresholds set forth in
Section 1(a) to not less than the greater of (i) the sum of .001% and the
largest percentage of the outstanding shares of Company Common Stock then known
by the Company to be beneficially owned by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Company Common Stock for or
pursuant to the terms of any such plan), and (ii) 10%. Upon the delivery of a
certificate from an appropriate officer of the Company or, so long as any
Person is an Acquiring Person hereunder, from the majority of the Board of
Directors (including a majority of the Independent Directors) which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, (i) no
supplement or amendment shall be made which changes the Redemption Price, the
Purchase Price, the Expiration Date or the number of Units of Preferred Stock
or other securities or assets
34
<PAGE> 38
for which a Right is exercisable without the approval of a majority of the
Board of Directors (including, following a Section 11(a)(ii) Event, a majority
of the Independent Directors), and (ii) following the occurrence of a Section
11(a)(ii) Event, no supplement or amendment whatsoever shall be made without
the approval of the Board of Directors, including a majority of the Independent
Directors. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Company
Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors of the Company (including, where so
provided, a majority of the Independent Directors) shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board (including, where so provided, a
majority of the Independent Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations deemed necessary or advisable
for the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by
the Board (including, where so provided, a majority of the Independent
Directors) in good faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board or any member thereof to any liability to the holders
of the Rights. Wherever in this Agreement a vote of a majority of the
Independent Directors is required, there shall be present in office at least
one Independent Director.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of shares of Company Common
Stock).
Section 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary,
35
<PAGE> 39
if any such term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and a majority of the Board of
Directors (including, following a Section 11(a)(ii) Event, a majority of the
Independent Directors) determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date
of such determination by a majority of the Board of Directors (including,
following a Section 11(a)(ii) Event, a majority of the Independent Directors).
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely in such State.
Section 32. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
Section 33. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 34. Exchange. (a) The Company, upon resolution of a majority of
the Board of Directors (including a majority of the Independent Directors) may,
at its option, at any time after the first occurrence of a Section 11(a)(ii)
Event, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to Section 7(e)
hereof) for Units of Preferred Stock or shares of Company Common Stock (at the
election of the Board of Directors (including a majority of the Independent
Directors)) at an exchange ratio of one Unit of Preferred Stock or one share of
Company Common Stock, as the case may be, per Right, as appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of shares of Company Common Stock aggregating 50% or more
of the shares of Company Common Stock then outstanding. From and after the
occurrence of a Section 13(a) Event, any Rights that theretofore have not been
exchanged pursuant to this Section 34(a) shall thereafter be exercisable only
in accordance with Section 13 and may not be exchanged pursuant to this Section
34(a). The exchange of the Rights by the Board of Directors (including a
majority of the Independent Directors) may be made effective at such time, on
such basis and with such conditions as the Board of Directors (including a
majority of the Independent Directors) in its sole discretion may establish.
(b) Immediately upon the action of a majority of the Board of
Directors (including a majority of the Independent Directors) ordering the
exchange of any Rights pursuant
36
<PAGE> 40
to Section 34(a) and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of Units of Preferred
Stock or shares of Company Common Stock, as the case may be, equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that 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
shall state the method by which the exchange of Units of Preferred Stock or
shares of Company Common Stock, as the case may be, for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Preferred Stock or
Company Common Stock, as the case may be, which are authorized by the Company's
Amended and Restated Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 34, the Company, upon a resolution of a majority of the Board
of Directors (including a majority of the Independent Directors), shall take
all such action as may be necessary to authorize additional shares of Preferred
Stock or Company Common Stock, as the case may be, for issuance upon exchange
of the Rights or make adequate provision to substitute, in whole or in part,
(1) cash, (2) other equity securities of the Company, (3) debt securities of
the Company, (4) other assets, or (5) any combination of the foregoing, having
an aggregate value for each Right to be exchanged equal to the per share market
price of one Unit of Preferred Stock or share of Company Common Stock, as the
case may be (determined pursuant to Section 11(d) hereof) as of the date of a
Section 11(a)(ii) Event, where such aggregate value has been determined by a
majority of the Board of Directors (including a majority of the Independent
Directors).
(d) The Company shall not be required to issue fractions of Units
of Preferred Stock or fractions of shares of Company Common Stock or to
distribute certificates which evidence fractional Units or fractional shares.
In lieu of issuing fractional Units or fractional shares, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exchanged as herein provided an amount in cash equal to the same fraction of
the current market price (determined pursuant to Section 11(d) hereof) of one
Unit of Preferred Stock or one share of Company Common Stock, as the case may
be, on the Trading Day immediately prior to the date of exchange pursuant to
this Section 34.
37
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the date first above written.
ATRIX LABORATORIES, INC.
By: /s/ John E. Urheim By: /s/ Brian G. Richmond
---------------------------------- ---------------------------------
Name: John E. Urheim Name: Brian G. Richmond
Title: Vice Chairman and Title: Assistant Secretary
Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Susan Silber By: /s/ Herbert J. Lemmer
---------------------------------- ---------------------------------
Name: Susan Silber Name: Herbert J. Lemmer
Title: Assistant Secretary Title: Vice President
38
<PAGE> 42
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
Certificate No.
------
Rights
------
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY
OWNED BY ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Rights Certificate
ATRIX LABORATORIES, INC.
This certifies that ______________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of September 25, 1998, as amended from time to
time (the "Rights Agreement"; terms defined therein are used herein with the
same meaning unless otherwise defined herein) between Atrix Laboratories, Inc.,
a Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company, a New York corporation, as Rights Agent (which term shall include any
successor Rights Agent under the Rights Agreement), to purchase from the Company
at any time after the Distribution Date and prior to the Expiration Date at the
office of the Rights Agent, one one- hundredth of a fully paid and nonassessable
share of Series A Preferred Stock, par value $.001 per share (the ''Preferred
Stock"), of the Company at the Purchase Price initially of $67.50 per one
one-hundredth share of Preferred Stock (each such one one-hundredth of a share
being a "Unit"), upon presentation and surrender of this Rights Certificate with
the Election to Purchase and related certificate duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
Unit set forth above, and the Purchase Price per share set forth above, are the
number and Purchase Price as of September 25, 1998 based on the Preferred Stock
as constituted at such date. The Company reserves the right to require prior to
the occurrence of a Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.
A-1
<PAGE> 43
UPON THE OCCURRENCE OF A SECTION 11(a)(ii) EVENT, IF THE RIGHTS
EVIDENCED BY THIS RIGHTS CERTIFICATE ARE BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF ANY SUCH ACQUIRING PERSON OR, UNDER
CERTAIN CIRCUMSTANCES DESCRIBED IN THE RIGHTS AGREEMENT, A TRANSFEREE OF ANY
SUCH ACQUIRING PERSON, ASSOCIATE OR AFFILIATE, SUCH RIGHTS SHALL BECOME NULL
AND VOID AND NO HOLDER HEREOF SHALL HAVE ANY RIGHT WITH RESPECT TO SUCH RIGHTS
FROM AND AFTER THE OCCURRENCE OF SUCH SECTION 11(a)(ii) EVENT.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase capital
stock of an entity other than the Company or receive common stock, cash or
other assets, all as provided in the Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain
events, including a Triggering Event.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates, which limitations of rights
include the temporary suspension of the exercisability of such Rights under the
specific circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the principal office of the Rights Agent and are
available from the Rights Agent upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company under certain
circumstances at its option at a redemption price of $.01 per Right, at any
time prior to the earlier of the close of business on (i) the tenth business
day following the Stock Acquisition Date (as such time period may be extended
pursuant to the Rights Agreement), and (ii) the Final Expiration Date. In
addition, the Rights may be exchanged, in whole or in part, for shares of the
Company Common Stock or Units of Preferred Stock. Immediately upon the action
of the Board of Directors of the Company authorizing any such exchange, and
without any
A-2
<PAGE> 44
further action or any notice, the Rights (other than Rights which are not
subject to such exchange) will terminate and the Rights will only enable holders
to receive the shares issuable upon such exchange. Under certain circumstances
set forth in the Rights Agreement, the decision to redeem the Rights shall
require the concurrence of a majority of the Independent Directors.
No fractional shares of Preferred Stock 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 share of Preferred Stock or
depositary receipts representing such fractions), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities 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 of subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
A-3
<PAGE> 45
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of September 25, 1998.
ATRIX LABORATORIES, INC.
By:
--------------------------------
Name: John E. Urheim
Title: Vice Chairman and
Chief Executive Officer
By:
--------------------------------
Name: Brian G. Richmond
Title: Assistant Secretary
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
By:
--------------------------------
Name:
Title:
A-4
<PAGE> 46
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and
transfers unto: _________________________________________ (Please print name and
address of transferee) _____________________________ this Rights Certificate,
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _____________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with full power of
substitution.
Dated
-----------------------
---------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes in
(1) and (2) that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated
-----------------------
---------------------------------
Signature
Signature Guaranteed:
A-5
<PAGE> 47
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix
a legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
A-6
<PAGE> 48
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Rights Certificate.)
To: ATRIX LABORATORIES, INC.
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the Units of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:____________________________________________
_______________________________________________________________________________
(Please print name and address) _______________________________ (Please insert
social security or other identifying number).
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:__________________
______________________________________________________________________________
(Please print name and address) ______________________________________ (Please
insert social security or other identifying number).
Dated
-----------------------
---------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes in
(1) and (2) that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not beneficially owned by an Acquiring Person or an Affiliate or an
Associate thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any person who is, was or subsequently became
an Acquiring Person or an Affiliate or Associate thereof.
Dated
-----------------------
---------------------------------
Signature
Signature Guaranteed:
A-7
<PAGE> 49
NOTICE
The signature in the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
A-8
<PAGE> 50
EXHIBIT B
UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN THE RIGHTS AGREEMENT),
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS
(AS DEFINED IN THE RIGHTS AGREEMENT)
OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On September 25, 1998 the Board of Directors of Atrix Laboratories,
Inc. (the "Company") authorized and declared a dividend distribution of one
Right for each outstanding share of its Common Stock, par value $.001 per share
(the "Company Common Stock"), to stockholders of record at the close of
business on September 25, 1998 (the "Record Date"), and authorized the issuance
of one Right with each share of Company Common Stock issued (including shares
distributed from Treasury) by the Company thereafter between the Record Date
and the Distribution Date (as defined below). Each Right entitles the
registered holder, subject to the terms of the Rights Agreement (as defined
below), to purchase from the Company one one-hundredth of a share (a "Unit") of
Series A Preferred Stock, par value $.001 per share (the "Preferred Stock"), at
a purchase price of $67.50 per Unit, subject to adjustment. The purchase price
is payable in cash or by certified or bank check or money order payable to the
order of the Company. The description and terms of the Rights are set forth in
a Rights Agreement between the Company and American Stock Transfer & Trust
Company, as Rights Agent, dated as of September 25, 1998, as amended from time
to time (the "Rights Agreement").
Copies of the Rights Agreement and the Certificate of Designation for
the Preferred Stock have been filed with the Securities and Exchange Commission
as exhibits to a Registration Statement on Form 8-A dated September ___ 1998.
Copies of the Rights Agreement and the Certificate of Designation are available
free of charge from the Company. This summary description of the Rights and
the Preferred Stock does not purport to be complete and is qualified in its
entirety by reference to all of the provisions of the Rights Agreement and the
Certificate of Designation, including the definitions therein of certain terms,
which Rights Agreement and Certificate of Designation are incorporated herein
by reference.
The Rights Agreement
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) ten business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
has acquired or otherwise obtained
B-1
<PAGE> 51
beneficial ownership of 15% or more of the then outstanding shares of Company
Common Stock (an "Acquiring Person"), and (ii) ten business days (or such later
date as may be determined by action of the Board of Directors prior to such
time as any person becomes an Acquiring Person) following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 15% or more of the then outstanding shares of Company
Common Stock. Until the Distribution Date, (i) the Rights will be evidenced by
Company Common Stock certificates and will be transferred with and only with
such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (also including shares distributed
from Treasury) will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates
representing outstanding Company Common Stock will also constitute the transfer
of the Rights associated with the Company Common Stock represented by such
certificates.
An "Acquiring Person" does not include (A) the Company; (B) any
Subsidiary of the Company; (C) any employee benefit plan maintained by the
Company or any of its Subsidiaries; (D) any trustee or fiduciary with respect
to such employee benefit plan acting in such capacity or a trustee or fiduciary
holding shares of Company Common Stock for the purpose of funding any such plan
or employee benefits; (E) any Person if the Board of Directors of the Company
determines in good faith that such Person who would otherwise be an "Acquiring
Person" became such inadvertently (including, without limitation, because (x)
such Person was unaware that it beneficially owned a percentage of Company
Common Stock that would otherwise cause such Person to be an "Acquiring Person"
or (y) such Person was aware of the extent of its Beneficial Ownership of
Company Common Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company, and if such Person does not
acquire any additional shares of Company Common Stock and as promptly as
practicable divested or divests itself of Beneficial Ownership of a sufficient
number of shares of Company Common Stock so that such Person would no longer be
an "Acquiring Person;" or (F) any Person who becomes the Beneficial Owner of
15% or more of the then outstanding shares of Company Common Stock as a result
of the acquisition of shares of Company Common Stock directly from the Company
in one or more transactions approved by a majority of the Board of Directors,
and (ii) no Person shall be deemed an "Acquiring Person" as a result of the
acquisition of shares of Company Common Stock by the Company which, by reducing
the number of shares of Company Common Stock outstanding, increases the
proportional number of shares beneficially owned by such Person; provided,
however, that if (A) a Person would become an Acquiring Person (but for the
operation of this subclause (ii)) as a result of the acquisition of shares of
Company Common Stock by the Company and (B) after such share acquisition by the
Company, such Person becomes the Beneficial Owner of any additional shares of
Company Common Stock, then such Person shall be deemed an Acquiring Person
unless upon becoming the Beneficial Owner of such additional shares such Person
is the Beneficial Owner of less than 15% of the then outstanding shares of
Company Common Stock.
B-2
<PAGE> 52
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights
Agreement unless earlier redeemed or exchanged by the Company as described
below. Under certain circumstances the exercisability of the Rights may be
suspended. In no event, however, will the Rights be exercisable prior to the
expiration of the period in which the Rights may be redeemed.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
In the event that a person becomes an Acquiring Person, then, in such
case, each holder of a Right will thereafter have the right to receive, upon
exercise, shares of Company Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right. The exercise price is the purchase price
multiplied by the number of Units of Preferred Stock issuable upon exercise of
a Right prior to the event described in this paragraph. Notwithstanding any of
the foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will be
null and void.
In the event that, at any time following the date that any person
becomes an Acquiring Person, (i) the Company is acquired in a merger or other
business combination transaction and the Company is not the surviving
corporation, (ii) any person merges with the Company and all or part of the
Company Common Stock is converted or exchanged for securities, cash or property
of the Company or any other person or (iii) 50% or more of the Company's assets
or earning power is sold or transferred, each holder of a Right (except Rights
which previously have been voided as described above) shall thereafter have the
right to receive, upon exercise, common stock of the Acquiring Person having a
value equal to two times the exercise price of the Right.
The purchase price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the
current market price of the Preferred Stock, or (iii) upon the distribution to
the holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least 1% of the purchase
price. The Company is not required to issue fractional shares of Preferred
Stock (other than fractions which are
B-3
<PAGE> 53
integral multiples of one one-hundredth of a share of Preferred Stock which may
be evidenced by depositary receipts). In lieu thereof, an adjustment in cash
may be made based on the current market price of a share of Preferred Stock on
the day of exercise.
At any time until ten business days following the Stock Acquisition
Date, a majority of the Board of Directors (including, following the date on
which there is an Acquiring Person, the majority of the Independent Directors)
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(subject to adjustment in certain events) (the "Redemption Price") payable, at
the election of the majority of the Board of Directors (including a majority of
the Independent Directors), in cash or shares of Company Common Stock.
Immediately upon the action of a majority of the Board of Directors (including,
following the date on which there is an Acquiring Person, a majority of the
Independent Directors) ordering the redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Company may at any time after there is an Acquiring Person, by
action of a majority of the Board of Directors (including a majority of the
Independent Directors), exchange all or part of the then outstanding and
exercisable Rights (other than Rights that shall have become null and void) for
shares of Company Common Stock pursuant to a one-for-one exchange ratio, as
adjusted.
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. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Units of Preferred Stock (or other
consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of .001% and the largest
percentage of the outstanding shares of Company Common Stock then known to the
Company to be beneficially owned by any person or group of affiliated or
associated persons, and (ii) 10%. After the Distribution Date, the provisions
of the Rights Agreement may be amended in order to cure any ambiguity, defect
or inconsistency, to make changes which do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust (i) the time period governing redemption
shall be made at such time as the Rights are not redeemable or (ii) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the Rights of and/or benefiting, the holders of Rights. In
addition, after a person becomes an Acquiring Person, no amendment or
supplement may be made without the approval of a majority of the Board of
Directors (including a majority of the Independent Directors).
B-4
<PAGE> 54
Description of Preferred Stock
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential
quarterly dividend of $.01 per Unit or any higher per share dividend declared
on the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $.01 per
Unit and the per share amount paid in respect of a share of the Company Common
Stock.
Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock.
In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Unit of Preferred
Stock will be entitled to receive the per share amount paid in respect of each
share of Company Common Stock.
The rights of holders of the Preferred Stock with respect to
dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock that may
be acquired upon the exercise of each Right should approximate the economic
value of one share of Company Common Stock.
B-5
<PAGE> 55
EXHIBIT C
(INCLUDED AS EXHIBIT 3.1)
C-1
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE:
COMPANY CONTACTS:
John E. Urheim
Chief Executive Officer
Atrix Laboratories, Inc.
(970) 482-5868
www.atrixlabs.com
Investor Relations Contacts:
Keith Lippert
Lippert/Helishorn & Associates
(212) 838-3777
@lhai.com
ATRIX LABORATORIES, INC.
ADOPTS SHAREHOLDER RIGHTS AGREEMENT
Fort Collins, Colorado, September 25, 1998 - Atrix Laboratories, Inc. (Nasdaq:
ATRX) today announced that its Board of Directors has adopted a Rights
Agreement under which Atrix stockholders will receive a dividend in the form of
preferred stock purchase Rights.
The Rights will be distributed at the rate of one Right for each share of
Common Stock owned by stockholders of record as of September 25, 1998. Each
Right will allow the holder to purchase one one-hundredth of a share (a unit)
of Series A Preferred Stock at an initial exercise price of $67.50 under
certain circumstances as more fully described in a summary of the Rights
Agreement, which will be mailed to all stockholders of record on the record
date. The purchase price, the number of units of Preferred Stock and the type
of securities issuable upon exercise of the Rights are subject to adjustment.
The Rights will expire at the close of business September 25, 2008 unless
earlier redeemed or exchanged. Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of Atrix, including the right to
vote or to receive dividends.
"The Rights Agreement is designed to assure that Atrix's stockholders receive
equal treatment in the event of any proposed takeover of Atrix, and to guard
against partial tender offers, squeeze-outs and other abusive tactics to gain
control of Atrix that could impair the Board's ability to represent
stockholder's interests fully," said John Urheim, Vice Chairman and Chief
Executive Officer.
"The Board believes the Rights Agreement is a sound and reasonable method for
safeguarding stockholders' interests," Urheim added. "It is not intended to
prevent an acquisition of the Company on terms that are favorable, fair and in
the best interests of all
1
<PAGE> 2
stockholders, but rather to encourage any person seeking to acquire Atrix to
negotiate with Atrix's Board."
The Rights will become exercisable only 10 business days after a person or
group acquires beneficial ownership of 15% or more of Atrix's outstanding
Common Stock or commences a tender or exchange offer which would lead to the
beneficial ownership of 15% or more of the outstanding Common Stock, subject to
prior redemption or exchange.
If any person becomes the beneficial owner of 15% or more of Atrix's
outstanding Common Stock, then each Right not owned by a 15% or more
stockholder or certain related parties will entitle its holder to purchase, at
the Right's then-current purchase price, units of the Series A Preferred Stock
or, at the option of Atrix, shares of its Common Stock (or, in certain
circumstances, purchase or receive, cash, property or other securities of
Atrix) having a market value equal to twice the then-current purchase price.
Additionally, if Atrix is involved in a merger or other business combination
transaction with another person in which Atrix's Common Stock gets converted or
exchanged, or if Atrix sells 50% or more of its assets or earning power to
another person, each Right will entitle its holder to purchase, at the Right's
then-current purchase price, shares of common stock of such other person having
a value equal to twice the then-current exercise price.
At any time until 10 business days following the date of the first public
announcement that a person has acquired 15% or more of Atrix's Common Stock, a
majority of the Board of Directors (including, after the date on which such
person first acquires 15% or more of the Common Stock, a majority of the
independent directors) may redeem the Rights in whole at a price of $.01 per
Right, payable in cash or shares of Atrix Common Stock. In addition, after the
date on which a person has acquired 15% or more of the Common Stock, the Board
of Directors (including a majority of the independent directors) may exchange
all or part of the Rights for units of Series A Preferred Stock or shares of
Common Stock on the basis of a one-for-one exchange ratio, as adjusted.
Atrix Laboratories, Inc. develops, manufactures and markets dental,
medical and veterinary products based on its proprietary ATRIGEL(R)
biodegradable polymeric technology.
***
2
<PAGE> 1
EXHIBIT 99.2
September 25, 1998
To Our Stockholders:
Your Board of Directors has approved a rights plan under which Atrix
Laboratories, Inc. (the "Company") has declared a dividend of Rights on its
Common Stock. We believe that this rights plan will provide protection to the
stockholders from takeover abuses prevalent today. The Rights Agreement is more
fully described in the Summary of Rights attached to this letter.
The Rights contain provisions to protect stockholders in the event of
an unsolicited attempt to acquire the Company, including a gradual accumulation
in the open market of shares, a partial or two-tier tender offer that does not
treat all stockholders equally, a squeeze-out merger and other abusive takeover
tactics which are currently prevalent and which the Board believes are not in
the best interests of stockholders. These tactics unfairly pressure
stockholders, squeeze them out of their investment without giving them any real
choice and deprive them of the full value of their shares. Over 2,000 other
companies have issued rights to protect stockholders against these tactics. We
consider the rights to be the best available means of protecting both your right
to retain your equity investment in the Company and the full value of that
investment, while not foreclosing a fair acquisition bid for the Company.
The Rights are not intended to prevent a takeover of the Company and
will not do so. However, they should deter any attempt to acquire the Company in
a manner or on terms not approved by the Board. The Rights are designed to deal
with the very serious problem of another person or company using abusive tactics
to deprive the Company's Board of any real opportunity to determine the destiny
of the Company.
The Rights will trade automatically with shares of the Company's Common
Stock and are not exercisable except as provided in the Rights Agreement.
However, as more fully described in the Summary of Rights attached to this
letter, ten business days after the announcement that a person or group has
acquired 15% or more of the Company's shares, or ten business days (unless such
date has been extended by a majority of the Board who are unaffiliated with the
acquiring person) after the announcement that a person or group has commenced a
tender offer, the consummation of which would result in such person or group
owning 15% or more of the shares (even if no purchases actually occur), the
Rights will become exercisable, and separate certificates representing
1
<PAGE> 2
the Rights will be distributed. We expect that the Rights will begin to trade
independently from the Company's Common Stock at that time. At no time will
the Rights have any voting power.
In instituting this rights plan we have expressed our continued
confidence in the future of the Company and our continued determination that
you, our stockholders, be given every opportunity to participate fully in that
future.
On behalf of the Board of Directors,
John E. Urheim
Vice Chairman and Chief Executive Officer
2
