<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ROBERTS PHARMACEUTICAL CORPORATION
----------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2429994
---------- ----------
(State of incorporation (IRS Employer
or organization) Identification No.)
Meridian Center II
4 Industrial Way West
Eatontown, New Jersey 07724
--------------------- -----
(Address of principal (Zip Code)
executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------------
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Rights
------
(Title of Class)
<PAGE>
ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On December 16, 1996, the Board of Directors of Roberts Pharmaceutical
Corporation (the "Company") declared a dividend distribution of one Right for
each outstanding share of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), to shareholders of record at the close of business on
February 6, 1997. Each Right entitles the registered holder to purchase from
the Company for $80 (the "Purchase Price") one one-hundredth of a share of Class
B - Series A Junior Participating Preferred Stock, par value $.10 per share (the
"Preferred Stock") with economic terms similar to that of one share of Common
Stock. The description and terms of the Rights are forth in a Rights Agreement
(the "Rights Agreement") between the Company and Continental Stock Transfer &
Trust Company as Rights Agent.
Rights Certificate; Distribution Date
- -------------------------------------
Initially, the Rights will be attached to all Common Stock of the Company
then outstanding, and no separate Rights Certificates will be distributed.
Except as described below, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earliest of any of the following events:
(i) 10 business days following a public announcement that a person or
group of affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the shares of Common Stock then
outstanding (an "Acquiring Person");
(ii) 10 business days 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 outstanding shares of Common Stock (or such later date as may be
determined by the Board of Directors prior to any person becoming an Acquiring
Person);
(iii) 10 business days after a person or group of affiliated or associated
persons (other than an Acquiring Person) which is the beneficial owner of 15% or
more of the outstanding Common Stock has engaged in certain self-dealing
transactions with the Company as described below (a "Subject Person").
Neither the acquisition of Common Stock by Yamanouchi Pharmaceutical Co.,
Ltd. or its affiliates or associates ("Yamanouchi") nor a tender offer for all
of the outstanding shares of Common Stock by Yamanouchi will result in the
occurrence of a Distribution Date or cause Yamanouchi to be an Acquiring Person,
provided that at all times after the date of the Rights Agreement, Yamanouchi
(i) remains the beneficial owner of not less than 15% of the outstanding Common
Stock on a fully diluted basis and (ii) does not (except pursuant to a tender
offer for all of the outstanding Common Stock) acquire Common Stock if after
such acquisition it would be the beneficial owner of more than 30% of the
outstanding Common Stock.
<PAGE>
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after February 6, 1997
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. Pursuant to the Rights Agreement,
the Company reserves the right to require that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
Exercise of Rights
- ------------------
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 16, 2006, unless they are earlier redeemed
by the Company or expire in accordance with other provisions of the Rights
Agreement as described below.
Flip-In Events
- --------------
In the event that, at any time following the Distribution Date, (i) a
Person becomes an Acquiring Person or (ii) a holder of 15% or more of the
outstanding Common Stock (other than an Acquiring Person) engages in certain
self dealing transactions (as described below), each holder of a Right will
thereafter have the right to receive, upon exercise, a number of shares of
Common Stock (or in certain instances, cash, properties or other securities of
the Company) having a then current market value of twice the Purchase Price.
Notwithstanding any of the foregoing, following the occurrence of any of the
events described in (i) and (ii) above ("Flip-In Events"), all Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or a Subject Person will be null and
void.
For example, at a Purchase Price of $80 per Right, each Right not owned by
an Acquiring Person or by a Subject Person (or by certain related parties)
following a Flip-In Event would entitle its holder to purchase $160 worth of
Common Stock (or other consideration, as noted above) for $80. Assuming that
the Common Stock had a per share value of $16 at such time, the holder of each
valid Right would be entitled to purchase 10 shares of Common Stock for $80.
The self dealing transactions which will result in the occurrence of a
Flip-In Event if engaged by a beneficial owner (other than an Acquiring Person)
of more than 15% of the outstanding Common Stock (a "15% Shareholder") or its
affiliates or associates include: (i) certain transfers of assets to the Company
or its subsidiaries in exchange for capital stock or securities convertible into
capital stock of the Company or its subsidiaries, (ii) certain other
<PAGE>
acquisitions of capital stock or securities convertible into capital stock of
the Company or its subsidiaries, (iii) sales, purchases, leases, exchanges,
mortgages or transfers of assets, including securities, on terms less favorable
to the Company than the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (iv) the receipt of compensation
from the Company other than compensation which is consistent with past practice
or approved by a majority of the members of the Compensation Committee of the
Company's Board of Directors who are not such 15% Shareholder or
representatives, nominees, affiliates or associates of such 15% Shareholder, (v)
the receipt of the benefits of any loans, advances, guarantees or other
financial assistance or any tax credits or other tax advantages provided by the
Company, (vi) a reorganization or recapitalization of the Company in which the
shares of Common Stock owned by such 15% Shareholder or its affiliates or
associates are treated differently than the other outstanding shares of Common
Stock, or (vii) a merger with or into the Company in a transaction in which the
Company is the surviving entity, unless any such transaction described in (i)
through (vii) is approved prior to the consummation thereof by a majority of the
members of the Board of Directors who are not such 15% Shareholder or
representatives, nominees, affiliates or associates of such 15% Shareholder.
Flip-Over Events
- ----------------
In the event that (i) the Company is acquired in a merger or consolidation
in which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation of a merger or consolidation in which all or a part of the
outstanding shares of Common Stock are converted into or exchanged for stock or
securities of another entity or cash, (iii) a corporation shall acquire,
pursuant to a plan of exchange (other than a tender offer for all of the
outstanding shares of Common Stock which is not the subject of shareholder
approval), all of the outstanding Common Stock, or (iv) more than 50% of the
Company's assets, cash flow or earning power is sold or transferred (events (i),
(ii), (iii) and (iv) are referred to as "Flip-Over Events" and together with
Flip-In Events, the "Triggering Events") each holder of a Right which has not
yet been exercised (except Rights which previously have been voided as described
above) shall thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the Purchase Price of
the Right.
Exchange Provisions
- -------------------
After any Person becomes an Acquiring Person or a Subject Person, the Board
of Directors (by action of a majority of directors who are not representatives,
nominees, affiliates or associates of the Acquiring Person), may determine to
exchange for any or all Rights (other than Rights held by the Acquiring Person
or Subject Person and certain transferees) Preferred Stock at an exchange ratio
of 1/100th of a share of Preferred Stock per Right. Such exchange shall be on a
pro rata basis if less than all Rights are to be exchanged.
Anti-Dilution Provisions
- ------------------------
The Purchase Price payable, and the number of one one-hundredths of a share
of
<PAGE>
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) 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 holders of the Preferred Stock of
evidences of indebtedness 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.
Redemption of the Rights
- ------------------------
The Company may, at its option, at any time prior to the earlier of the
first occurrence of a Triggering Event or December 16, 2006, redeem the Rights
in whole, but not in part, at a price of $.01 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of Directors). Any
decision to redeem the Rights must be approved by a majority of directors who
are not a 15% Shareholder or representatives, nominees or affiliates of a 15%
Shareholder. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
No Rights as Shareholders
- -------------------------
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Taxes
- -----
While the distribution of the Rights will not be taxable to shareholders or
to the Company, shareholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common Stock
of the Company (or for other consideration) or for common stock of an acquiring
company as set forth above.
Amendment of Terms of Rights
- ----------------------------
The Company may from time to time, with the approval of a majority of the
members of the Board of Directors who are not 15% Shareholders or
representatives, nominees or affiliates of any 15% Shareholder, amend the Rights
Agreement to cure any ambiguity or inconsistency or to make any other provisions
with respect to the Rights which the Company may deem necessary or desirable.
After the occurrence of a Flip-In Event, the Rights Agreement may not be amended
in any manner which would adversely affect the interests of the holders of the
Rights. At any time prior to such time as a person becomes an Acquiring Person,
the Company may lower the 15% threshold used to determine the existence of an
<PAGE>
Acquiring Person, but in no event lower than the greater of (a) the percentage
of Common Stock owned by the holder of the greatest number of outstanding shares
of Common Stock (other than Yamanouchi) plus .001% or (b) 10%.
ITEM 2. EXHIBITS.
1 Rights Agreement, dated as of December 16, 1996, between
Roberts Pharmaceutical Corporation and Continental Stock
Transfer & Trust Company, including the Amended and Restated
Certificate of Incorporation of Roberts Pharmaceutical
Corporation, the form of Rights Certificate and the Summary of
Rights to Purchase Roberts Pharmaceutical Corporation Preferred
Stock attached thereto as Exhibits A, B and C, respectively.
<PAGE>
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.
ROBERTS PHARMACEUTICAL CORPORATION
Date: January 30, 1997 By: /s/ Robert A. Vukovich
------------------------------
ROBERT A. VUKOVICH, President
and Chief Executive Officer
<PAGE>
ROBERTS PHARMACEUTICAL CORPORATION
REGISTRATION STATEMENT ON FORM 8-A
EXHIBIT INDEX
Exhibit
No. Exhibit
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1 Rights Agreement, dated as of December 16, 1996, between Roberts
Pharmaceutical Corporation and Continental Stock Transfer & Trust
Company, including the Amended and Restated Certificate of
Incorporation of Roberts Pharmaceutical Corporation, the form of
Rights Certificate and the Summary of Rights to Purchase Roberts
Pharmaceutical Corporation Preferred Stock attached thereto as
Exhibits A, B and C, respectively.
<PAGE>
EXHIBIT 1
ROBERTS PHARMACEUTICAL CORPORATION
and
Continental Stock Transfer & Trust Company
Rights Agent
RIGHTS AGREEMENT
Dated as of December 16, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
1 Certain Definitions................................................... 1
2 Appointment of Rights Agent........................................... 5
3 Issue of Rights Certificates.......................................... 5
4 Form of Rights Certificates........................................... 7
5 Countersignature and Registration..................................... 8
6 Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.............. 9
7 Exercise of Rights; Purchase Price; Expiration Date of Rights......... 10
8 Cancellation and Destruction of Rights Certificates................... 12
9 Reservation and Availability of Capital Stock......................... 13
10 Preferred Stock Record Date........................................... 14
11 Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights............................................................. 14
12 Certificate of Adjusted Purchase Price or Number of Shares............ 22
13 Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
Earning Power......................................................... 22
14 Fractional Rights and Fractional Shares............................... 25
15 Rights of Action...................................................... 26
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
16 Agreement of Rights Holders................................. 26
17 Rights Certificate Holder Not Deemed a Shareholder.......... 27
18 Concerning the Rights Agent................................. 27
19 Merger or Consolidation or Change of Name of Rights Agent... 27
20 Duties of Rights Agent...................................... 28
21 Change of Rights Agent...................................... 30
22 Issuance of New Rights Certificates......................... 31
23 Redemption and Termination.................................. 31
24 Exchange.................................................... 32
25 Notice of Certain Events.................................... 32
26 Notices..................................................... 33
27 Supplements and Amendments.................................. 34
28 Successors.................................................. 34
29 Determinations and Actions by the Board of Directors, etc... 34
30 Benefits of this Agreement.................................. 35
31 Severability................................................ 35
32 Governing Law............................................... 35
33 Counterparts................................................ 35
34 Descriptive Headings........................................ 36
</TABLE>
iii
<PAGE>
Exhibit A -- Amended and Restated Certificate of Incorporation
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
iv
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RIGHTS AGREEMENT
RIGHTS AGREEMENT dated as of December 16, 1996 (the "Agreement"), between
Roberts Pharmaceutical Corporation, a New Jersey corporation (the "Company") and
Continental Stock Transfer & Trust Company, a New Jersey corporation (the
"Rights Agent").
W I T N E S S E T H:
WHEREAS, on December 16, 1996 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as such term is hereinafter defined) for each share
of common stock, par value $.01 per share, of the Company (the "Common Stock")
outstanding at the close of business on February 6, 1997 (the "Record Date"),
and has authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date (as
such term is defined in Section 3 hereof), each Right initially representing the
right to purchase one one-hundredth of a share of Class B - Series A Junior
Participating Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Amended and Restated Certificate of
Incorporation of the Company attached hereto as Exhibit "A" upon the terms and
subject to the conditions set forth in this Agreement (the "Rights");
NOW, THEREFORE, in consideration of the premises and 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 and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan, or (ii) Yamanouchi or any of its Affiliates or Associates,
provided that at all times subsequent to the date of this Rights Agreement and
- --------
through the time of determination, (A) Yamanouchi and its Affiliates and
Associates Beneficially Own at least 15% of the outstanding shares of Common
Stock on a fully diluted basis and (B) Yamanouchi and its Affiliates and
Associates do not Beneficially Own in excess of 30% of the outstanding shares of
Common Stock on a fully diluted basis, unless each acquisition of Common Stock
by Yamanouchi or its Affiliates or Associates that results in Yamanouchi and its
Affiliates and Associates Beneficially Owning in excess of 30% of the
outstanding shares of Common Stock on a fully diluted basis (including any
acquisition which is made after Yamanouchi and its Affiliates and Associates
have become the Beneficial Owner of in excess of 30% of the outstanding shares
of Common Stock on a fully diluted basis) is made pursuant to a tender offer for
all of the outstanding shares of Common Stock. Notwithstanding the foregoing,
(x) no Person shall become an Acquiring Person as the result of an acquisition
of Common Shares by
<PAGE>
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the shares of Common Stock then outstanding, provided that if a Person would
--------
be an Acquiring Person except for the foregoing provisions of this clause (x)
and shall, after such share acquisitions by the Company, become the Beneficial
Owner of any additional shares of Common Stock of the Company, then such Person
shall be deemed to be an Acquiring Person, and (y) if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be an
Acquiring Person has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an Acquiring Person, then such Person shall not
be deemed to be an Acquiring Person.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such term in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase or
exchange, or (B) securities which a Person or any of such Person's Affiliates or
Associates may be deemed to have the right to acquire pursuant to any merger or
other acquisition agreement between the Company and such Person (or one or more
of its Affiliates or Associates) if such agreement has been approved by the
Board of Directors of the Company prior to there being an Acquiring Person, or
(C) securities issuable upon exercise of Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
2
<PAGE>
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company; provided, however, that nothing in this paragraph (d)
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.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New Jersey are authorized or
obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M., New
Jersey time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New Jersey time, on the next succeeding
Business Day.
(g) "Common Stock" shall mean the common stock, par value $.01 per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first mentioned Person.
(h) "Common stock equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Current market price" shall have the meaning set forth in Section
11(d)(i) hereof.
(j) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement.
(m) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(n) "15% Shareholder" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, any Subsidiary
3
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of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan or (ii) any Acquiring
Person.
(o) "Final Expiration Date" shall mean the close of business on
December 16, 2006.
(p) "NASDAQ" shall have the meaning set forth in Section 11(d)(i)
hereof.
(q) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(r) "Preferred Stock" shall mean shares of Class B - Series A Junior
Participating Preferred Stock, par value $.10 per share, of the Company, and, to
the extent that there are not a sufficient number of shares of Series A Junior
Participating Preferred Stock authorized to permit the full exercise of the
Rights, any other series of Preferred Stock, par value $.10 per share, of the
Company designated for such purpose containing terms substantially similar to
the terms of the Series A Junior Participating Preferred Stock.
(s) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(t) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(u) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(v) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(w) "Rights" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(x) "Rights Agent" shall have the meaning set forth in the parties
clause at the beginning of this Agreement.
(y) "Rights Certificates" shall have the meaning set forth in Section
3(a) hereof.
(z) "Rights Dividend Declaration Date" shall have the meaning set
forth in the WHEREAS clause at the beginning of this Agreement.
(aa) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A) or (B) hereof.
(bb) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.
4
<PAGE>
(cc) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
(dd) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ee) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(ff) "Subject Person" shall mean a 15% Shareholder who or which engages
in (or any Affiliate or Associate of whom or which engages in) any transaction
described in Section 11(a)(ii)(B).
(gg) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(hh) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ii) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(jj) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
(kk) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(ll) "Yamanouchi" means Yamanouchi Pharmaceutical Co., Ltd.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
----------------------------
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Rights Certificates.
-----------------------------
(a) Until the date that is the earliest of:
(i) the close of business on the tenth Business Day after the Stock
Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date
occurs before the Record Date, the close of business on the Record Date),
5
<PAGE>
(ii) the close of business on the tenth Business Day (or such later
date as may be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) after the date that a tender or
exchange offer by any Person for shares of Common Stock is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, any Person
would be an Acquiring Person, or
(iii) the close of business on the tenth Business Day after any Person
becomes a Subject Person (or, if the tenth Business Day after a Person becomes a
Subject Person occurs before the Record Date, the close of business on the
Record Date),
(the earliest of (i), (ii) or (iii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not be separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). 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 the 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 B hereto (the "Rights Certificates"), evidencing one Right for
each share of Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per share of Common
Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company shall 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 C (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of the 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 the
Common Stock that were outstanding as of the Record Date or were issued
subsequent to the Record Date, unless and until the Distribution Date shall
occur, the Rights will be evidenced by such certificates for the Common Stock
and the registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of the Distribution Date or
the Expiration Date, the transfer of any certificates representing shares of
Common Stock in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
that are issued (whether originally issued or from the Company's treasury) after
the Record Date but prior to
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<PAGE>
the earlier of the Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall also be deemed to be certificates
for Rights and shall bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER THEREOF TO CERTAIN
RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN ROBERTS PHARMACEUTICAL
CORPORATION, A NEW JERSEY CORPORATION (THE "COMPANY"), AND CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, A NEW JERSEY CORPORATION, (THE "RIGHTS
AGENT"), DATED AS OF DECEMBER 16, 1996 (THE "RIGHTS AGREEMENT"), THE TERMS
OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL 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, A SUBJECT PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD
BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL
AND VOID.
With respect to such certificates bearing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of 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 Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
----------------------------
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may
7
<PAGE>
be required to comply with any applicable law or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 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 one one-hundredths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per one one-
hundredth of a share, the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificates issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person,
a Subject Person, any Associate or Affiliate of an Acquiring Person or a Subject
Person, (ii) a transferee of an Acquiring Person, a Subject Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring Person
or Subject Person becomes such, or (iii) a transferee of an Acquiring Person or
a Subject Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person or Subject Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person or Subject Person
to holders of equity interests in such Acquiring Person or Subject Person or to
any Person with whom such Acquiring Person or Subject Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON, A SUBJECT PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR A SUBJECT PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.
Section 5. Countersignature and Registration.
----------------------------------
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof, which shall be attested by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer
8
<PAGE>
of the Company, either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned (or by facsimile if permitted by
law) by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place 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 names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
- -----------------------------------------------------------------------
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date, any
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 one one-hundredths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitles such holder (or former holder in the
case of a transfer) 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 principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
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
9
<PAGE>
or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificates, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
--------------------------------------------------------------
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) 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 principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of one one-hundredths of a share (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the close of business on the
Final Expiration Date, or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the earlier of (i) and (ii) being herein referred
to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $80,
--
and shall be subject to adjustment from time to time as provided in Sections 11
and 13(a) hereof and shall be payable in accordance with paragraph (c) below.
(c) 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 per one one-hundredth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-hundredths of a share of Preferred Stock to be purchased and
the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a share of
Preferred Stock as are to be purchased (in which case certificates
10
<PAGE>
for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company will
direct the depositary agent to comply with such request, (ii) 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 certificates
or depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt thereof,
deliver such cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) hall be made by certified bank
check or money order payable to the order of the Company or the Rights Agent.
In the event that the Company is obligated to issue other securities (including
Common Stock) of the Company, pay cash and/or distribute other property pursuant
to Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate. The Company
reserves the right to require prior to the occurrence of a Triggering Event
that, upon exercise of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to 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 registered 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 a Section 11(a)(ii) Event, any Rights
beneficially owned by or otherwise distributable to (i) an Acquiring Person, a
Subject Person, or an Associate or Affiliate of an Acquiring Person or a Subject
Person, (ii) a transferee of an Acquiring Person or a Subject Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring Person
or Subject Person becomes such, or (iii) a transferee of an Acquiring Person or
a Subject Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person or Subject Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person or Subject Person
to holders of equity interests in such Acquiring Person or Subject Person or to
any Person with whom the Acquiring Person or Subject Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or a Subject Person or any of their respective Affiliates,
11
<PAGE>
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All Rights
----------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Rights Certificates to the Company or shall, at the written
request of the Company, destroy such cancelled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
----------------------------------------------
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Act, with respect
12
<PAGE>
to the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be necessary to comply
with the Act or the Exchange Act or as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the 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. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all one one-hundredths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-hundredths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax 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 for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be
13
<PAGE>
deemed to have become the holder of record of such fractional shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
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 all 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 Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
----------------------------------------------------------
Number of Rights. The Purchase Price, the number and kind of shares covered by
- -----------------
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the 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) and Section 7(e) hereof, 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, 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 and at a time when the
Preferred Stock transfer books of the Company were open, the holder of such
Right would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Person becomes an Acquiring Person, or
14
<PAGE>
(B) any 15% Shareholder or any Associate or Affiliate of any 15%
Shareholder, at any time after the date of this Agreement, directly or
indirectly, (1) shall, in one or more transactions, other than in connection
with the exercise of Rights or in connection with the exercise or conversion of
securities exercisable or convertible into capital stock of the Company or any
of its Subsidiaries, transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of any class of
capital stock of the Company or any of its Subsidiaries or for securities
exercisable for or convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries or otherwise obtain from the Company or any
of its Subsidiaries, with or without consideration, any additional shares of any
class of capital stock of the Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries (other than (x) as part of a pro rata
distribution to all holders of Common Stock or (y) stock options or stock
appreciation rights granted or awards of capital stock made to a 15% Shareholder
which prior to such grant or award are approved by a majority of the members of
the Compensation Committee of the Company's Board of Directors who are not such
15% Shareholder or representatives, nominees, Affiliates or Associates of such
15% Shareholder), (2) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose (in one or more transactions), to, from or with,
as the case may be, the Company or any of its Subsidiaries, assets, including
securities, on terms and conditions less favorable to the Company than the
Company would be able to obtain in arm's-length negotiation with an unaffiliated
third party, (3) shall receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-time employment as a
regular employee in accordance with the Company's (or its Subsidiaries') past
practices or any compensation which is approved by a majority of the members of
the Compensation Committee of the Company's Board of Directors who are not such
15% Shareholder or representatives, nominees, Affiliates or Associates of such
15% Shareholder, (4) shall receive the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or other tax advantages
provided by the Company, (5) shall merge with or into the Company or otherwise
combine with the Company in a transaction in which the Company is the surviving
entity, or (6) shall, in any recapitalization or reorganization of the Company,
receive (or retain), with respect to the Common Stock owned by such 15%
Shareholder, securities or property (including cash) of a type or in a pro rata
amount which differs from the securities or property (including cash) which are
received (or retained) by the other holders of the outstanding Common Stock,
unless in the case of any transaction described in clauses (1) through (6), such
transaction is approved prior to the consummation thereof by a majority of the
members of the Board of Directors who are not representatives, nominees,
Affiliates or Associates of such 15% Shareholder,
then, promptly following the occurrence of an event described in this
Section 11(a)(ii) (a "Section 11(a)(ii) Event"), each holder of a Right
(including, in the event that the Record Date shall not yet have occurred, each
Person who is entitled to receive a Right on the Record Date) shall thereafter
have the right to receive (except as provided below and in Section 7(e) hereof),
upon exercise thereof at the then current Purchase Price multiplied by the
number of one-one hundredths of a share of Preferred Stock for which a Right is
then
15
<PAGE>
exercisable in accordance with the terms of this Agreement, in lieu of Preferred
Stock, such number of shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the occurrence of the Section 11(a)(ii) Event,
and (y) dividing that product by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date of such
occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock that are
authorized by the Company's Amended and Restated Certificate of Incorporation
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a),
the Company shall: (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, the "Spread"), and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of Preferred Stock that the Board of
Directors based upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors has determined in good faith to have the
same value as shares of Common Stock (such shares of Preferred Stock, "common
stock equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined in good faith by
the Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of the
Company; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30) days
following the first occurrence of a Section 11(a)(ii) Event (the date of such
11(a)(ii) Event being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price, shares
of Common Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not mor than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action needs be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement
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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. For purposes of this Section 11(a)(iii), the value of a share of Common
Stock shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock on the Section 11(a)(ii) Trigger Date and
the value of any "common stock equivalent" shall be deemed to have the same
value as the Common 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 (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the 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 11(d) hereof)
per share of 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 number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock that 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 the Board of Directors of the Company, whose determination shall be
described in a statement filed with th 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 shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price that 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 Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record
17
<PAGE>
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 the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or
indebtedness so to be distributed or of such subscription rights or warrants
applicable to 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 that would
have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the current
market price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the requisite thirty (30) Trading Day or ten (10)
Trading Day Period, as set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the "current market price"
shall be properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular way, or, in the
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
NASDAQ Stock Market ("NASDAQ") or such other system then in use, or, if on any
such date the shares of Common Stock are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be used.
The term "Trading Day" shall
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<PAGE>
mean a day on which the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Stock is 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 the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(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 the Common Stock in clause (i) of this Section 11(d) (other
than the last 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 number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the current market price per share of
the Common Stock. If neither the Common Stock nor the 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 the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the "current market price" of
one one-hundredth of a share 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 one percent (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 ten-thousandth of a share of Common Stock
or other share or one-millionth 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
(3) years from the date of the transaction that mandates such adjustment, or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 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), (e), (g), (h), (i), (j), (k) 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.
19
<PAGE>
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-hundredths of a share of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one-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 the 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 (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights 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 adjutment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted 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
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<PAGE>
of one one-hundredths of a share 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 one one-hundredth of a share and the
number of one one-hundredths of a share that 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 stated or par value, if any, of the number of
one one-hundredths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action that may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue as fully paid and nonassessable shares such number of one one-hundredths
of a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) 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 the Board of Directors of the
Company 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 that 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 shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Triggering Event, (i) consolidate with any other Person, (ii) merge
with or into any other Person, or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets, cash flow or earning power aggregating more than 50% of
the assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons, 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
that would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or
21
<PAGE>
immediately after such consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Triggering Event,
it will not, except as permitted by Section 23, 24 or Section 27 hereof, take
(or permit any Subsidiary or controlled Affiliates 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 Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of 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 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
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.
Section 13. Consolidation, Merger, or Sale or Transfer of Assets, Cash Flow
---------------------------------------------------------------
or Earning Power.
- -----------------
(a) In the event that, directly or indirectly, (w) the Company shall
consolidate with, or merge with and into, any other Person, and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (x) any Person 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 (other than a transaction described in Section
11(a)(ii)(B)(5) with a 15% Shareholder or any Affiliate or Associate of a 15%
Shareholder which
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is approved prior to the consummation thereof by a majority of the members of
the Board of Directors who are not such 15% Shareholder or representatives,
nominees, Affiliates or Associates of such 15% Shareholder) and, in connection
with such consolidation or merger, all or part of the outstanding shares of
Common Stock shall be changed or converted into or exchanged for stock or other
securities of any other Person or the Company or cash or any other property, (y)
a corporation shall acquire, pursuant to a plan of exchange (other than a tender
offer for all of the outstanding shares of Common Stock which is not the subject
of shareholder approval), all of the outstanding shares of Common Stock, or (z)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets, cash flow or earning power aggregating more than 50% of
the assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons, proper provision shall be made so
that: (i) each holder of a Right (including, in the event that the Record Date
shall not have occurred, each Person who is entitled to receive a Right on the
Record Date) shall have the right to receive, upon the exercise thereof at a
price equal to the then current Purchase Price multiplied by the number of one-
one hundredths of a share of Preferred Stock for which a Right is then
exercisable in accrdance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, non-assessable and freely tradeable
shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-hundredths
of a share 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 one one-hundredths of a share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and (2) dividing that product by 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock
of such Principal Party on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of
23
<PAGE>
Common Stock of the Company are converted in such merger or consolidation, and
if no securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets, cash flow or earning power transferred pursuant
to such transaction or transactions;
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 (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(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 that 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, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that comply in all
respects with the requirements for registration on Form 10 under the Exchange
Act.
The Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which as
a result of the consummation of such transaction would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. 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 that have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
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<PAGE>
Section 14. Fractional Rights and Fractional Shares.
----------------------------------------
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would have been
otherwise issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company may, but shall not be required to, issue fractions of
shares of Preferred Stock (other than fractions that are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates that evidence fractional shares of Preferred Stock
(other than fractions that are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
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 the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one (1) share of Common Stock. For purposes of this
Section 14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the
25
<PAGE>
Trading Day immediately prior to the date of such exercise.
(d) 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 are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the 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 the 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 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. Each 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 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 principal office or offices 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 fully 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 Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person
26
<PAGE>
as a result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. 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 one one-hundredths of a
share of Preferred Stock or any other securities of the Company that 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
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 24 hereof),
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.
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 and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(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 Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
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
27
<PAGE>
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 stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, 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 Certificate 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 or Adverse
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 herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, 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; 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.
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<PAGE>
(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 be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible 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 actual notice of any such adjustment); 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 Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, 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 with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents,
29
<PAGE>
and the Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any 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 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.
Section 21. Change of Rights Agent. The Rights Agent or any successor
-----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred 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 (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit 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 of any state
of the United States, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with
the same poers, 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
30
<PAGE>
with the predecessor Rights Agent and each transfer agent of the Common Stock
and the Preferred 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, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
------------------------------------
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the earlier of (x) the occurrence of any Triggering Event, and
(y) the redemption or expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement outstanding, granted or
awarded as of the Distribution Date, 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 the Board of Directors of the
Company or a Committee thereof, 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 Certificates shall be issued if, and to the extent that, appropriate
adjustments shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
---------------------------
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the first occurrence of a Triggering Event, 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
hereinafter referred to as the "Redemption Price"); provided, however, that any
-------- -------
decision by the Board of Directors to redeem the Rights shall be approved by a
majority of the members of the Board of Directors who are not 15% Shareholders
or representatives, nominees, Affiliates or Associates of a 15% Shareholder.
The Company may, at its option, pay the Redemption Price in cash, shares of
Common Stock (based on the "current market price", as defined in Section
11(d)(i) hereof, of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights
31
<PAGE>
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.
Promptly after the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the Rights Agent
and 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 Common Stock. Any notice that 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.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
---------
its option, at any time after any Person becomes an Acquiring Person or a
Subject Person, by action of a majority of the Board of Directors (and a
majority of directors who are not 15% Shareholders or representatives, nominees,
Affiliates or Associates of any Acquiring Person, Subject Person or 15%
Shareholder) exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 11(a)(ii) hereof) for shares of Preferred Stock at an exchange ratio
of one one-hundredth of a share of Preferred Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of one one-hundredth of a share
of Preferred Stock 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 will state the method by which the exchange of the shares of
Preferred Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) and Section
11(a)(ii) hereof) held by each holder of Rights.
Section 25. Notice of Certain Events.
-------------------------
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in 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
32
<PAGE>
dividend out of earnings or retained earnings of the Company), or (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, or (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 transaction or a series of related transactions,
of more than 50% of the assets, cash flow or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons, 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 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, 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.
(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 26
hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights, and (ii) all references
in the preceding paragraph to Preferred Stock shall be deemed thereafter to
refer to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to be
--------
given or made by the Rights Agent or by the holder of any Rights Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Roberts Pharmaceutical Corporation
Meridian Center II
4 Industrial Way West
Eatontown, New Jersey 07724
Attention: Robert A. Vukovich, Ph.D.
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given by the Company or by the holder of any Rights Certificate
to or on the Rights Agent shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
33
<PAGE>
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
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 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 27. Supplements and Amendments. The Company may from time to time,
---------------------------
with the approval of a majority of the Board of Directors (and a majority of the
members of the Board of Directors who are not 15% Shareholders or
representatives, nominees, Affiliates or Associates of any 15% Shareholder),
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with respect to the
Rights which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after the occurrence of any Section
-------- -------
11(a)(ii) Event, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights. Without limiting the
foregoing, the Company (by such vote of the Board of Directors) may at any time
prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the 15% thresholds set forth in Section 1(a) to not less than
the greater of (i) the sum of .001% and the percentage obtained by dividing (A)
the number of Common Shares then beneficially owned by the Person (other than
any Person excluded from the definition of "Acquiring Person" by reason of
clauses (i) or (ii) of Section 1(a) hereof) then known to the Company to be
holder of the largest number of Common Shares by (B) the number of Common Shares
then outstanding and (ii) 10%.
Section 28. Successors. All the covenants and provisions of this Agreement
-----------
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc. For
----------------------------------------------------------
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act, except in such instances where a calculation is to be
made on a "fully diluted basis," in which case the total number of shares
outstanding shall include shares subject to any outstanding options, warrants or
other securities convertible into or exchangeable for Common Stock (other than
the Rights). Subject to the last sentence of this
34
<PAGE>
Section 29, the Board of Directors of the Company (with, where specifically
provided for herein, the concurrence of those directors who are not certain
Persons or nominees, representatives, Affiliates or Associates of certain
Persons) shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board (with, where specifically provided for herein, the concurrence of those
directors who are not certain Persons or nominees, representatives, Affiliates
or Associates of certain Persons) or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
(with, where specifically provided for herein, the concurrence of such
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 directors to any liability to the holders of
the Rights. Except as otherwise provided by law, the Board of Directors may
designate a committee of not less than 3 directors to exercise its power and
authority to administer this Agreement (subject in all cases, where required
under this Agreement, to the concurrence of those directors who are not
nominees, representatives, Affiliates or Associates of certain Persons).
Section 30. 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 the 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 the Common Stock).
Section 31. Severability. If any term, provision, covenant or restriction
-------------
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each Right and each Rights
--------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New Jersey and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
-------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
35
<PAGE>
Section 34. Descriptive Headings. Descriptive headings of the several
---------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
ATTEST: ROBERTS PHARMACEUTICAL CORPORATION
/s/ Anthony A. Rascio By: /s/ Dr. Robert A. Vukovich
________________________________ ___________________________________
Anthony A. Rascio, Secretary Dr. Robert A. Vukovich, President
ATTEST: CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
/s/ Thomas Jennings By: /s/ Roger Bernhammer
________________________________ ___________________________________
Thomas Jennings, Asst. Secretary Roger Bernhammer, Vice President
36
<PAGE>
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ROBERTS PHARMACEUTICAL CORPORATION
Roberts Pharmaceutical Corporation, a corporation organized under the laws
of the State of New Jersey (the "Corporation"), pursuant to N.J.S.A. 14A:9-5 of
the New Jersey Business Corporation Act, hereby adopts an amended and restated
certificate of incorporation.
ARTICLE ONE
NAME
1.01. The name of the Corporation is Roberts Pharmaceutical Corporation.
ARTICLE TWO
REGISTERED OFFICE AND AGENT
2.01. The address of the Corporation's registered office is Meridian
Center II, Four Industrial Way West, Eatontown, New Jersey 07724 and the name of
the Corporation's registered agent at that address is Anthony A. Rascio.
ARTICLE THREE
PURPOSE
3.01. The purpose of the Corporation is to engage in any activity within
the purposes for which corporations may be organized under the New Jersey
Business Corporation Act.
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<PAGE>
ARTICLE FOUR
STOCK
4.01. The total number of shares of stock, which the Corporation shall
have authority to issue is one hundred ten million (110,000,000) shares. Of
these shares, one hundred million (100,000,000) shares are classified as Common
Stock, par value $.01 per share, and ten million (10,000,000) shares are
classified as Class B Preferred Stock, par value $.01 per share.
PREFERRED STOCK
4.02. Deleted
4.03. Class B Preferred Stock.
------------------------
(A) Power to Issue Shares in Series. The Board of Directors of the
--------------------------------
Corporation is hereby authorized to issue, from time to time, shares of Class B
Preferred Stock in series and to fix the number of shares in each series; the
designations, powers, preferences and relative, participating, optional or other
special rights thereof and the qualifications, limitations, or restrictions
thereon; including, subject to any limitation hereinafter set forth but
otherwise without limitation, any of the following: (i) provisions relating to
voting rights of each share in such series, including multiple or fractional
votes per share; (ii) provisions relating to the call or redemption thereof,
including, without limitation, the times and prices for such calls or
redemptions and provisions relating to sinking funds therefor and the retirement
thereof, if any; (iii) provisions relating to the right to receive dividends,
including, without limitation, the rate of such dividends, whether such
dividends shall be cumulative or non-cumulative and, if cumulative, the
conditions on which such dividends shall be accrued and paid, and any
preferential rights thereto or rights in relation to dividends payable on any
other classes or series of stock of the Corporation; (iv) the rights thereof
upon the dissolution of, or upon any distribution of the assets of, the
Corporation; and (v) except as otherwise explicitly prohibited by this
Certificate of Incorporation, provisions relating to the conversion thereof
into, or the exchange thereof for, shares of any class or any other series of
the same class of stock of the Corporation or exchange for any other security of
the Corporation or any other company.
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<PAGE>
(B) 5% Convertible Preferred Stock. The Board of Directors of the
-------------------------------
Corporation has established a series of the Class B Preferred Stock designated
as "5% Convertible Preferred Stock." The number of shares of such series shall
be 5,500,000. The rights and preferences of such series (the "5% Preferred")
and the limitations and restrictions thereon shall be as follows:
(1) Dividends.
----------
(a) The holders of the 5% Preferred shall be entitled to receive out of any
assets legally available therefor cumulative dividends at the rate of $1.25 per
share per annum, payable quarterly on March 31, June 30, September 30 and
December 31 of each year, when and as declared by the Board of Directors, in
preference and priority to any payment of any dividend on the Common Stock or
any other class or series of stock of the Corporation. Such dividends shall
accrue on any given share from the day of original issuance of such share and
shall accrue from day to day whether or not earned or declared. If at any time
dividends on the outstanding 5% Preferred at the rate set forth above shall not
have been paid or declared and set apart for payment with respect to all
preceding periods, the amount of the deficiency shall be fully paid or declared
and set apart for payment, but without interest, before any distribution,
whether by way of dividend or otherwise, shall be declared or paid upon or set
apart for the shares of any other class or series of stock of the Corporation.
(b) Any dividend payable on a dividend payment date more than 90 days
after the date of issuance may be paid, at the option of the Corporation,
either (i) in cash or (ii) in shares of 5% Preferred value at $25 per share
if the Common Stock issuable upon conversion of such shares has been
registered for resale under the Securities Act of 1933, as amended (the
"Act"), and the registration statement including a current prospectus with
respect thereto remains in effect at the date of delivery of such shares,
and if the Corporation shall have given written notice of its intention to
pay such dividend in stock to all holders of the 5% Preferred at least 10
days before the record date for such dividend. No holder that is a bank
holding company or subsidiary thereof shall be required to accept 5%
Preferred in lieu of cash in payment of a dividend unless after giving
effect thereto the provisions of Section 4.03(B)(10) hereof would permit
one share of 5% Preferred to be converted by such holder.
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<PAGE>
(2) Liquidation Preference.
-----------------------
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the 5%
Preferred shall be entitled to receive, prior and in preference to any
distribution of any assets of the Corporation to the holders of any other
class or series of shares, the amount of $25 per share plus any accrued but
unpaid dividends (the "Liquidation Preference").
(b) A consolidation or merger of the Corporation with or into any other
corporation or corporations, or a sale of all or substantially all of the
assets of the Corporation, shall, at the option of the holders of the 5%
Preferred, be deemed a liquidation, dissolution or winding up within the
meaning of this Section 4.03(B)(2) if the shares of stock of the
Corporation outstanding immediately prior to such transaction represent
immediately after such transaction less than a majority of the voting power
of the surviving corporation (or of the acquiror of the Corporation's
assets in the case of a sale of assets). Such option may be exercised by
the vote or written consent of holders of a majority of the 5% Preferred at
any time within thirty calendar days after written notice (which shall be
given promptly) of the essential terms of such transaction shall have been
given to the holders of the 5% Preferred in the manner provided by law for
the giving of notice of meetings of shareholders.
(3) Forced Conversion.
------------------
(a) The Company at its option may cause all outstanding shares of the 5%
Preferred to be converted into Common Stock at any time beginning twelve
months after the date of issuance, on at least 20 days' notice, at a
conversion price determined as set forth in Section 4.03(B)(4) hereof (the
"Conversion Price") as of the date specified in such notice (the
"Conversion Date") and otherwise on the terms set forth in said Section
4.03(B)(4); provided, that the Corporation may not exercise such right of
conversion unless (i) the Closing Price (last trade price) of the Common
Stock as reported by NASDAQ for the 20 consecutive trading days prior to
the date the Conversion Notice is mailed has not on any day been less than
120% of the Conversion Cap (as defined in
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<PAGE>
Section 4.03(B)(4)(c)(ii) hereof)(subject to adjustment for stock
dividends, stock splits and reverse stock splits), and (ii) the shares
issuable upon conversion of the 5% Preferred are registered for resale by
an effective registration statement ("Registration Statement") under the
Act which became effective not more than 90 days after the date of issuance
of the 5% Preferred, and a current prospectus meeting the requirements of
Section 4.03(B)(10) of the Act is available for delivery at the Conversion
Date.
(b) At least 20 days prior to the Conversion Date, written notice (the
"Conversion Notice") shall be mailed, first class postage prepaid, by the
Corporation to each holder of record of the 5% Preferred, at the address
last shown on the records of the Corporation for such holder, notifying
such holder of the conversion which is to be effected, specifying the
Conversion Date and calling upon each such holder to surrender to the
Corporation, in the manner and at the place designated, a certificate or
certificates representing the number of shares of 5% Preferred held by such
holder. Subject to the provisions of Section 4.03(B)(3)(c), on or after
the Conversion Date, each holder of 5% Preferred shall surrender to the
Corporation the certificate or certificates representing the shares of 5%
Preferred owned by such holder as of the Conversion Date, in the manner and
at the place designated in the Conversion Notice, and thereupon the shares
issuable upon such conversion shall be delivered as provided in Section
4.03(B)(4)(b) hereof.
(c) If at the Conversion Date the registration condition specified in
clause (ii) of subsection (a) shall not be satisfied, then no shares shall
be converted and the Conversion Notice shall be deemed to be withdrawn. In
such event, any certificates for 5% Preferred which have been surrendered
for conversion shall be returned to the persons surrendering the same;
provided, however, that if a holder shall have received shares of Common
Stock upon conversion of 5% Preferred after the Conversion Notice was given
but before the Conversion Date, such holder may elect either to retain such
Common Stock or rescind such conversion by tendering such shares of Common
Stock to the Corporation.
(d) On the second anniversary of the Closing Date, all then outstanding
shares of 5% Preferred shall be automatically converted into Common Stock
at
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<PAGE>
the Conversion Price and otherwise pursuant to the applicable provisions
set forth in Section 4.03(B)(4) hereof.
(4) Optional Conversion. The holders of the 5% Preferred shall have
--------------------
optional conversion rights as follows:
(a) Right to Convert. At any time after the earlier of (i) the date at
-----------------
which a Registration Statement has been declared effective and the requisite
shareholder approval referred to in subsection (l) of this Section 4.03(B)(4)
has been obtained, or (ii) the close of business on the 91st day following the
Closing Date, each share of 5% Preferred shall be convertible, at the option of
the holder thereof, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing (x) the Liquidation Preference of the
5% Preferred determined pursuant to Section 4.03(B)(2) hereof on the date the
notice of conversion is given, by (y) the Conversion Price determined as
hereinafter provided in effect on said date.
(b) Mechanics of Conversion. To convert shares of 5% Preferred into
------------------------
shares of Common Stock, the holder shall give written notice to the
Corporation (which notice may be given by facsimile transmission) that such
holder elects to convert the same and shall state therein the number of
shares to be converted and the name or names in which such holder wishes
the certificate or certificates for shares of Common Stock to be issued.
Promptly thereafter the holder shall surrender the certificate or
certificates representing the shares to be converted, duly endorsed, at the
office of the Corporation or of any transfer agent for such shares, or at
such other place designated by the Corporation. The Corporation shall,
immediately upon receipt of such notice, issue and deliver to or upon the
order of such holder, against delivery of the certificates representing the
shares which have been converted, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled.
The Corporation shall effect such issuance within two (2) business days and
shall transmit the certificates by messenger or overnight delivery service
to reach the address designated by such holder within two (2) business days
after the receipt of such notice. Notice of conversion may be given by a
holder at any time during the day up to midnight New York time and such
conversion shall be deemed to have been made immediately prior to the close
of business on the date such notice of conversion is given. The
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<PAGE>
person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock at the close of business on such
date.
(c) Determination of Conversion Price.
----------------------------------
(i) At any date following the earlier of (x) the date at which a
Registration Statement is declared effective, or (ii) the 90th day
following the Closing Date subject to the provisions of subparagraph
(ii) below, the Conversion Price shall be 90% of the lowest trade
price of the Common Stock as reported by NASDAQ during a specified
period of consecutive trading days immediately preceding such date,
which periods are set forth in the table below:
Period during which such Period of consecutive trading
date occurs: days preceding such date:
Through the 120th day after Closing 5 days
121st to 150th day after Closing 6 days
151st to 180th day after Closing 7 days
181st to 210th day after Closing 8 days
211th to 240th day after Closing 9 days
241st to 270th day after Closing 10 days
271st to 300th day after Closing 11 days
301st to 330th day after Closing 12 days
331st day after Closing or later 13 days
(ii) The Conversion Price shall not be greater than the Conversion Cap. The
Conversion Cap shall be calculated as follows: the mean between the
closing bid price and closing ask price (as reported on NASDAQ) for
each trading day during the 90-day period following the Closing Date
(not including the Closing Date) shall be averaged; the Conversion Cap
shall be equal to 115% of the resulting average.
(iii) The "lowest trade price" of the Common Stock on any day shall be the
lowest reported sale price of the Common Stock on NASDAQ or any
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<PAGE>
other principal securities price quotation system or market on which
prices of the Common Stock are reported. The term "trading day" means
a day on which trading is reported on the principal quotation system
or market on which prices of the Common Stock are reported.
(iv) If during any period of consecutive trading days provided for above,
the Corporation shall declare or pay any dividend on the Common Stock
payable in Common Stock or in rights to acquire Common Stock, or shall
effect a stock split or reverse stock split, or a combination,
consolidation or reclassification of the Common Stock, then the
Conversion Price shall be proportionately decreased or increased, as
appropriate, to give effect to such event. If any such event occurs
after the Conversion Cap has been determined, the Conversion Cap shall
be proportionately decreased or increased, as appropriate, to give
effect to such event.
(d) Distributions. If the Corporation shall at any time or from time to
--------------
time make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation or any of its subsidiaries other
than additional shares of Common Stock, then in each such event provision
shall be made so that the holders of 5% Preferred shall receive, upon the
conversion thereof, the securities of the Corporation which they would have
received had they been the owners on the date of such event of the number
of shares of Common Stock issuable to them upon conversion.
(e) Certificates as to Adjustments. Upon the occurrence of any
-------------------------------
adjustment or readjustment of the Conversion Price or the Conversion Cap
pursuant to this Section 4.03(B)(4), the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the
terms hereof and cause the independent public accountants regularly
employed to audit the financial statements of the Corporation to verify
such computation and prepare and furnish to each holder of 5% Preferred a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written
-8-
<PAGE>
request at any time of any holder of 5% Preferred, furnish or cause to be
furnished to such holder a like certificate prepared by the Corporation
setting forth (i) such adjustments and readjustments, and (ii) the number
of other securities and the amount, if any, of other property which at the
time would be received upon the conversion of 5% Preferred with respect to
each shares of Common Stock received upon such conversion.
(f) Notice of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any security
or right convertible into or entitling the holder thereof to receive
additional shares of Common Stock, or any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Corporation
shall mail to each holder of 5% Preferred at least 10 days prior to the
date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution,
security or right and the amount and character of such dividend,
distribution, security or right.
(g) Issue Taxes. The Corporation shall pay any and all issue and other
------------
taxes, excluding any income, franchise or similar taxes, that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of shares of 5% Preferred pursuant hereto; provided, however,
that the Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any
such conversion.
(h) Reservation of Stock Issuable Upon Conversion. The Corporation shall
----------------------------------------------
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion
of the shares of the 5% Preferred, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of
all outstanding shares of the 5% Preferred, subject to the limitation set
forth in Section 4.03(B)(4)(1) below, and if at any time the number of
authorized but unissued shares of Common stock shall not be sufficient to
effect the conversion of all
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<PAGE>
then outstanding shares of the 5% Preferred, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number
of shares as shall be sufficient for such purpose, including, without
limitation, engaging in best efforts to obtain the requisite shareholder
approval.
(i) Fractional Shares. No fractional shares shall be issued upon the
------------------
conversion of any share or shares of 5% Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than
one share of 5% Preferred by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of issuing any fractional share, pay
the holder otherwise entitled to such fraction a sum in cash equal to the
fair market value of such fraction on the date of conversion (as determined
in good faith by the Board of Directors of the Corporation).
(j) Notices. Any notice required by the provisions of this Section to be
--------
given to the holders of shares of 5% Preferred shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at its address appearing on the books of the Corporation.
(k) Reorganization or Merger. In case of any reorganization or any
-------------------------
reclassification of the capital stock of the Corporation or any
consolidation or merger of the Corporation with or into any other
corporation or corporations or a sale of all or substantially all of the
assets of the Corporation to any other person, and the holders of 5%
Preferred do not elect to treat such transaction as a liquidation,
dissolution or winding up as provided in Section 4.03(B)(2), then, as part
of such reorganization, consolidation, merger or sale, provision shall be
made so that each share of 5% Preferred shall thereafter be convertible
into the number of shares of stock or other securities or property
(including cash) to which a holder of the number of shares of Common Stock
deliverable upon conversion of such share of 5% Preferred would have been
entitled upon the record date of (or date of, if no record date is fixed)
such event and, in any case, appropriate adjustment (as determined by the
Board of
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<PAGE>
Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the holders of
the 5% Preferred, to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as equivalent as is practicable, in
relation to any shares of stock or the securities or property (including
cash) thereafter deliverable upon the conversion of the shares of 5%
Preferred.
(l) Limitation on Number of Conversion Shares. The Corporation shall not
------------------------------------------
be obligated to issue, in the aggregate, more than 3,717,529 shares of
Common Stock as presently constituted (the "NASDAQ Cap") upon (1)
conversion of the 5% Preferred, (2) exercise of the warrants issued to
Cappello & Laffer Capital Corp. or its designees in connection with the
sale of the 5% Preferred and the sale of stock to entities advised by
Dimensional Fund Advisors, and (3) the issuance of 600,000 shares on or
about July 17, 1996 to entities advised by Dimensional Fund Advisors, if
issuance of a larger number of shares would constitute a breach of the
Corporation's obligations under its agreements with the NASD or NASDAQ or
the rules of such organizations. Subject to the obligation to effect
certain redemptions pursuant to the last three sentences of this Section
4.03(B)(4)(1), if further issuances of shares of Common Stock pursuant to
clauses (1) through (3) would constitute a breach of the Corporation's
obligations under any applicable agreements with the NASD or NASDAQ or the
rules of such organizations (i.e., all of the shares permitted to be issued
under the NASDAQ Cap shall have been so issued), then so long thereafter as
such limitation shall continue to be applicable and any shares of 5%
Preferred are submitted for conversion, such shares shall receive in cash
an amount equal to the greater of (i) 111.11% of the Liquidation Preference
of such shares or (ii) the current value of the Common Stock which such
shares would otherwise be entitled to receive upon conversion (such value
per share to be the closing price of such shares as reported by NASDAQ on
the Conversion Date), in lieu of the Common Stock which such shares would
otherwise be entitled to receive upon conversion, and such shares will be
deemed cancelled. Payment of said cash amount shall be made no later than
one business day after the time specified in Section 4.03(B)(4)(b) for the
delivery of Common Stock upon conversion, and shall bear daily interest
thereafter at the rate of one-tenth of one percent per day until paid. Such
maximum number of shares of Common Stock shall be
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<PAGE>
proportionately and equitably adjusted in the event of stock splits, stock
dividends, reverse stock splits, reclassifications or other such events, in
such manner as the Board of Directors of the Corporation shall reasonably
determine. If the Corporation is unable to obtain the requisite shareholder
approval concerning the issuance of shares of Common Stock in connection
with the events specified in clauses (1) through (3) above to satisfy all
NAS and NASDAQ requirements prior to 91 days after the date of issuance
(the "Redemption Date"), the Corporation shall then redeem, at a "Special
Redemption Price" equal to 111.11% of the Liquidation Preference of such
shares, a number of shares equal to $75,000,000 (plus any earnings
accumulated thereon from the Closing Date until the Redemption Date)
divided by the Special Redemption Price. Any redemption effected pursuant
to the preceding sentence shall require no notice except the notification
of pro rata allocation provided for in the following sentence. Such
redemption shall be made pro rata based on the number of shares of the 5%
Preferred outstanding at 11:59 p.m. on the day prior to the Redemption
Date, and as early as practicable on the Redemption Date the Corporation
shall notify each holder of 5% Preferred by the most rapid means of
communication available to the Corporation, which may be facsimile
transmission, of the pro rata number of shares to be redeemed from each
holder. Such notice shall be binding upon holders who have submitted their
stock certificates for redemption prior to the receipt of such notice, as
well as on holders who submit their stock certificates thereafter. If there
shall be a default in payment of the Special Redemption Price, the amount
so payable shall bear daily interest from and after the Redemption Date at
the rate of one-tenth of one percent per day until paid. Shares so redeemed
shall be deemed to have been redeemed at the opening of business on the
Redemption Date and shall no longer be treated as outstanding shares except
for purposes of receiving the Special Redemption Price. If the requisite
shareholder approval is obtained before the Redemption Date, no shares
shall be redeemed and any certificates submitted shall be returned to their
respective holders.
(m) Reissuance of Certificates. In the event of an optional conversion
---------------------------
of 5% Preferred pursuant to Section 4.03(B)(4)(a) hereof or a redemption of
5% Preferred pursuant to Section 4.03(B)(4)(1) hereof in which less than
all of the shares of 5% Preferred of a particular certificate are converted
or redeemed,
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<PAGE>
as the case may be, the Corporation shall promptly cause to be issued and
delivered to the holder of such certificate, a certificate representing the
remaining shares of 5% Preferred which have not been so converted or
redeemed.
(5) Other Provisions. For all purposes of this Resolution, the term
-----------------
"date of issuance" and the terms "Closing" or "Closing Date" shall mean the
day on which shares of the 5% Preferred are first issued by the
Corporation. Any provision herein which conflicts with or violates any
applicable usury law shall be deemed modified to the extent necessary to
avoid such conflict or violation. The term "NASDAQ" herein refers to the
principal market on which the Common Stock of the Company is traded. If the
Common Stock is listed on a securities exchange, or if another market
becomes the principal market on which the Common Stock is traded or through
which price quotations for the Common Stock are reported, the term "NASDAQ"
shall be deemed to refer to such exchange or other principal market.
(6) Restrictions and Limitations. The Corporation shall not undertake the
-----------------------------
following actions without the consent of the holders of a majority of the
5% Preferred: (i) modify its Certificate of Incorporation or Bylaws so as
to amend or change any of the rights, preferences or privileges of the 5%
Preferred, (ii) authorize or issue any other preferred equity security
senior to or on a parity with the 5% Preferred, as to dividends,
liquidation, preferences, conversion rights, redemption rights or other
rights, preferences or privileges, or (iii) purchase or otherwise acquire
for value any Common Stock or other equity security of the Corporation
either junior or senior to or on a parity with the 5% Preferred while there
exists any arrearage in the payment of cumulative dividends hereunder.
(7) Voting Rights. Except as provided herein or as provided by law, the
--------------
5% Preferred shall have no voting rights.
(8) Attorneys' Fees. Any holder of 5% Preferred shall be entitled to
----------------
recover from the Corporation the reasonable attorneys' fees and expenses
incurred by such holder in connection with enforcement by such holder of
any obligation of the Corporation hereunder.
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<PAGE>
(9) No Adverse Actions. The Corporation shall not in any manner,
-------------------
whether by amendment of the Certificate of Incorporation (including,
without limitation, any Certificate of Designation), merger,
reorganization, recapitalization, consolidation, sales of assets, sale of
stock, tender offer, dissolution or otherwise, take any action, or permit
any action to be taken, solely or primarily for the purpose of increasing
the value of any class of stock of the Corporation if the effect of such
action is to reduce the value or security of the Preferred Stock.
(10) Limits on Conversion of 5% Preferred Stock. Notwithstanding any
-------------------------------------------
right of conversion of 5% Preferred Stock provided for above, no such
shares of 5% Preferred Stock originally issued by the Corporation to a bank
holding company or an affiliate of a bank holding company shall be
converted into shares of Common Stock or any other class or series of
voting stock by the original holder or any direct or indirect transferee
thereof such that immediately after such conversion such person and its
affiliates (which term, for avoidance of doubt, includes such bank holding
company, any such transferee and their respective affiliates) would own
more than 4.9% of any class of voting securities of the Corporation, unless
such shares are being distributed, disposed of or sold in any one of the
following transactions (each a "Conversion Event"):
(a) an initial public offering or other widely-dispersed public
distribution of the shares of the Company;
(b) transfers in small amounts pursuant to Rule 144 under the Securities
Act of 1933;
(c) a transfer to a single purchaser (or a group acting in concert) which
controls or which has negotiated the purchase of at least a majority of the
Company's voting stock held by persons other than the bank holding company
investor;
(d) a private sale of such equity so long as no purchaser acquires more
than 2% of the total equity outstanding upon conversion; or
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<PAGE>
(e) such shares are being sold in any other manner permitted by the Federal
Reserve Board.
For purposes of this Section 4.03(B)(10), "persons" shall include any natural
-------
person and any corporation, partnership, joint venture, trust, unincorporated
organization and any other entity or organization and percentages of the
Corporation's outstanding voting securities shall include shares issuable upon
exercise or conversion of 5% Preferred Stock and other convertible securities,
options, warrants or other similar instruments owned by such bank holding
company, its transferees and their respective affiliates, but shall not include
shares issuable upon exercise or conversion of convertible securities, options,
warrants or other similar instruments owned by any other person. The provisions
of this Section 4.03(B)(10) shall not limit or affect the right of the
Corporation to force conversion pursuant to Section 4.03(B)(3)(a) hereof nor the
automatic conversion provided for in Section 4.03(B)(3)(d) hereof. The
Corporation shall have no obligation to monitor compliance with the limits set
forth in this Section 4.03(B)(10) or the holdings of any shareholder, and shall
have no liability for the failure of any person to comply with such limits.
(C) Series A Junior Participating Preferred Stock. The Board of
----------------------------------------------
Directors of the Corporation has established a series of the Class B Preferred
Stock designated as "Series A Junior Participating Preferred Stock." The number
of shares of such series shall be 500,000. The rights, preferences, privileges
and restrictions relating to the Series A Junior Participating Preferred Stock
shall be as follows:
(1) Dividends and Distributions.
----------------------------
(a) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the last day of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating
-15-
<PAGE>
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to,
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends and 100 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at any time
after December 16, 1996 (the "Rights Declaration Date") (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend on the Series A Junior
Participating Preferred Stock as provided in Section 4.03(C)(1)(a) immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled
-16-
<PAGE>
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
bear not interest. Dividends paid on the shares of Series A Junior
Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Series A Junior Participating 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 shares of Series A Junior
--------------
Participating Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock
or (ii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of the shareholders of the Corporation.
-17-
<PAGE>
(c) Except as required by law, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
(3) Certain Restrictions.
---------------------
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 4.03(C)(1) are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding 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 stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior Participating
Preferred Stock;
-18-
<PAGE>
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock ranking on
a parity with the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under Section 4.03(C)(3)(a), purchase
or otherwise acquire such shares at such time and in such manner.
(4) Reacquired Shares. Any shares of Series A Junior Participating
------------------
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock 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 liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
-19-
<PAGE>
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) the Adjustment Number (as defined in Section 4.03(C)(5)(c)).
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with
respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(b) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(c) The Adjustment Number shall be 100; provided however, that in the
event that the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
-20-
<PAGE>
(7) Consolidation, Merger, etc. In case the Corporation shall enter
---------------------------
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(8) No Redemption. The shares of Series A Junior Participating
--------------
Preferred Stock shall not be redeemable.
(9) Ranking. The Series A Junior Participating Preferred Stock shall
--------
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
(10) Amendment. The Amended and Restated Certificate of Incorporation
----------
of the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
-21-
<PAGE>
(11) Fractional Shares. Series A Junior Participating Preferred Stock
------------------
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
4.04 Deleted
4.05 Preemptive Rights. A Holder of any shares of capital stock of
------------------
the Corporation shall have preemptive rights to subscribe to or purchase any
issuances of capital stock of the Corporation only to the extent that, and on
the terms and conditions upon which, the Corporation's Board of Directors
expressly grants such rights in a written agreement between such holder and the
Corporation. The Board of Directors of the Corporation is hereby empowered from
time to time to authorize the granting of such preemptive rights to any holders
of its capital stock.
ARTICLE FIVE
BUSINESS COMBINATIONS
5.01. In addition to any affirmative vote required by law, a Business
Combination (as hereinafter defined) shall require the affirmative vote of not
less than sixty-six and two-thirds (66-2/3%) percent of all votes cast by the
holders of all the then outstanding shares of the Corporation's capital stock
entitled to vote in respect of the proposed Business Combination, with all such
holders voting together without regard to class. The number of votes which each
share shall be entitled to cast shall be determined by this Certificate of
Incorporation.
The term "Business Combination" shall mean (a) any merger or
consolidation of the Corporation with or into any other corporation except any
merger or consolidation not requiring prior shareholder approval under the New
Jersey Business Corporation Act; (b) any merger or consolidation of any other
corporation with or into the Corporation except any merger or consolidation not
requiring prior shareholder approval under the New Jersey Business Corporation
Act; (c) the sale, lease, exchange, or other disposition of all, or
substantially all, of the assets of the Corporation if not in the usual and
regular course of business as conducted by the Corporation; (d) the acquisition
in exchange for shares, obligations or other securities of the Corporation for
some or all of the outstanding shares of
-22-
<PAGE>
another corporation, or for some or all of the assets of a corporation, a
business trust, a business proprietorship or a business partnership if such
acquisition in exchange requires prior shareholder approval under the New Jersey
Business Corporation Act; (e) the adoption of any plan or proposal for
liquidation or dissolution of the Corporation; and (f) of any agreement,
contract or other arrangement providing for any one or more of the actions
specified in the foregoing clauses (a) through (e).
A majority of the members of the Board of Directors shall have the
power and duty to determine for purposes of this Article Five, on the basis of
information known to them after reasonable inquiry, all questions arising under
this Article Five, including, without limitation, whether the assets that are
the subject of any Business Combination constitute substantially all of the
assets of the Corporation or whether any sale, lease, exchange or other
disposition of the assets of the Corporation is in the usual and regular course
of business as conducted by the Corporation. Any such determination made in
good faith shall be binding and conclusive on all shareholders.
A provision inconsistent with this Article Five of the Certificate of
Incorporation of Roberts Pharmaceuticals Corporation may be adopted only upon
the affirmative vote of not less than sixty-six and two-thirds (66-2/3%) percent
of the votes cast by the holders of all the then outstanding shares of the
Corporation's capital stock entitled to vote in respect of a proposed Business
Combination, with all such holders voting together without regard to class. The
number of votes which each share shall be entitled to cast shall be determined
by this Certificate of Incorporation.
ARTICLE SIX
DURATION
6.01. The Corporation is to have a perpetual existence.
ARTICLE SEVEN
LIMITATION ON LIABILITY OF DIRECTORS AND OFFICERS
7.01. To the fullest extent permitted by the laws of the State of New
Jersey, as they exist or may hereafter be amended, the Directors and Officers of
the Corporation shall not be personally liable to the Corporation or its
shareholders for damages for breach of any duty owed to the Corporation or its
shareholders, except that the provisions of this Article Seven
-23-
<PAGE>
shall not relieve a director or officer from liability for any breach of duty
based upon an act or omission (a) in breach of such person's duty of loyalty to
the Corporation or its shareholders, (b) not in good faith or involving a
knowing violation of law or (c) resulting in receipt by such person of an
improper personal benefit. This Section 7.01 shall apply with respect to acts
or omissions occurring prior to or after the date of its adoption.
ARTICLE EIGHT
SHAREHOLDER MEETINGS
8.01. Meetings of shareholders may be held outside the State of New
Jersey, if the by-laws so provide. The books of the Corporation may be kept
(subject to any provisions contained in the statutes) outside the State of New
Jersey at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation. Elections of directors
need not be by ballot unless the by-laws of the Corporation shall so provide.
ARTICLE NINE
AMENDMENTS
9.01. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon shareholders herein are granted
subject to this reservation.
ARTICLE TEN
DIRECTORS
10.01. The number of directors constituting the current board of
directors is nine and the names and addresses of such directors are:
Name Address
---- -------
Robert A. Vukovich Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
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<PAGE>
Anthony A. Rascio Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
Robert M. Loy Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
John T. Spitznagel Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
Peter M. Rogalin Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
Digby W. Barrios Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
Akihiko Matsubara Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
Takao Miyamoto Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
Zola P. Horovitz Meridian Center II
Four Industrial Way West
Eatontown, NJ 07724
-25-
<PAGE>
IN WITNESS WHEREOF, Roberts Pharmaceutical Corporation has caused its
duly authorized officer to execute this Amended and Restated Certificate of
Incorporation of Roberts Pharmaceutical Corporation on this 30th day of January,
1997.
ROBERTS PHARMACEUTICAL CORPORATION
By: /s/ Anthony A. Rascio
_______________________________________
ANTHONY A. RASCIO, Vice President
-26-
<PAGE>
CERTIFICATE OF ADOPTION OF AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
OF ROBERTS PHARMACEUTICAL CORPORATION
TO: Secretary of State
State of New Jersey
Pursuant to Section 14A:9-5 of the New Jersey Business Corporation Act, the
undersigned certifies as follows:
1 The name of the Corporation is Roberts Pharmaceutical Corporation (the
"Corporation").
2 The Amended and Restated Certificate of Incorporation of Roberts
Pharmaceutical Corporation (the "Amended and Restated Certificate of
Incorporation"), attached hereto, was adopted by the Board of Directors of
the Corporation on December 16, 1996.
3 The Certificate of Incorporation of Roberts Pharmaceutical Corporation
and all its amendments and supplements (the "Certificate of Incorporation")
are superseded by the Amended and Restated Certificate of Incorporation,
which amends and restates the entire text of the Certificate of
Incorporation.
IN WITNESS WHEREOF, I have hereunto set my hand, this 30th day of January,
1997.
ROBERTS PHARMACEUTICAL CORPORATION
ANTHONY A. RASCIO
Vice President
-27-
<PAGE>
Exhibit B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER DECEMBER 16, 2006 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR SUBJECT
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING PERSON OR A SUBJECT PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR A SUBJECT PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.]/1/
Rights Certificate
ROBERTS PHARMACEUTICAL CORPORATION
This certifies that _________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of December 16, 1996 (the "Agreement"), between
Roberts Pharmaceutical Corporation, a New Jersey corporation (the "Company"),
and Continental Stock Transfer & Trust Company, a New Jersey corporation (the
"Rights Agent"), to purchase from the Company at any time prior to 5:00 P.M.
(New York City time) on December 16, 2006 at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one one-
hundredth of a fully paid, nonassessable share of Class B - Series A Junior
Participating Preferred Stock (the "Preferred Stock") of the Company, at a
purchase price of $80 per one-hundredth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of shares that may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of December 16,
1996, based on the Preferred Stock as constituted at such date. The Company
reserves the
---------------
/1/The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
<PAGE>
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.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person, a Subject Person or an Affiliate
or Associate of any such Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Subject Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, a Subject Person, or an Affiliate or Associate of an Acquiring
Person or a Subject Person, such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities that 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
Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, 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 office of the Rights Agent and
are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-hundredth's of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.01 per Right at any time prior to the earlier of the close
of business on (a) the first occurrence of a Triggering Event, and (b) the Final
Expiration Date, or (ii) may be exchanged by the Company in whole or in part for
shares of Preferred Stock.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than, except the possible
requirement that prior to the occurrence
<PAGE>
of a Triggering Event only whole shares of Preferred Stock be issued, fractions
that are integral multiples of one one-hundredth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts),
but in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company that may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors upon any matter submitted to shareholders at any meeting thereof, or
to give or withhold consent to any corporate action, or, to receive notice of
meetings or other actions affecting shareowners (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of _______________, 19__
ATTEST: ROBERTS PHARMACEUTICAL CORPORATION
_________________________ By:______________________________
Name: Name:
Title: Title
Countersigned: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
_________________________ By:______________________________
Name: Name:
Title: Title
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificate.)
FOR VALUE RECEIVED
--------------------------------------------------
hereby sells, assigns and transfers unto
--------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________, 19__
Signature
________________________
Signature Guaranteed:
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes 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, a
Subject Person or an Affiliate or Associate of any such Person (as such terms
are defined pursuant to the Rights Agreement);
(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, a Subject
Person or an Affiliate or Associate of any such Acquiring Person or Subject
Person.
Dated: _______________, 19__
Signature
_________________________
Signature Guaranteed:
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.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: ROBERTS PHARMACEUTICAL CORPORATION
The undersigned hereby irrevocably elects to exercise _______ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upn the exercise of the Rights (or such other securities of the Company
or of any other person which may be issuable upon the exercise of the Rights)
and requests that certificates for such shares be issued in the name of and
delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:________________, 19__
Signature
________________________
Signature guaranteed:
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person, a
Subject Person or an Affiliate or Associate of any such Acquiring Person or
Subject Person (as such terms are defined pursuant to the Rights Agreement);
(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 became an Acquiring Person, a Subject Person or an
Affiliate or Associate of any such Acquiring Person or Subject Person.
Dated:________________, 19__
Signature
________________________
Signature guaranteed:
NOTICE
The signature to the foregoing Election to Purchase 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.
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
ROBERTS PHARMACEUTICAL CORPORATION PREFERRED STOCK
Distribution of Rights
- ----------------------
On December 16, 1996, the Board of Directors of Roberts Pharmaceutical
Corporation (the "Company") declared a dividend distribution of one Right for
each outstanding share of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), to shareholders of record at the close of business on
February 6, 1997. Each Right entitles the registered holder to purchase from
the Company for $80 (the "Purchase Price") one one-hundredth of a share of Class
B - Series A Junior Participating Preferred Stock, par value $.10 per share (the
"Preferred Stock") with economic terms similar to that of one share of Common
Stock. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Continental Stock
Transfer & Trust Company, as Rights Agent.
Rights Certificate; Distribution Date
- -------------------------------------
Initially, the Rights will be attached to all Common Stock of the Company
then outstanding, and no separate Rights Certificates will be distributed.
Except as described below, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earliest of any of the following events:
(i) 10 business days following a public announcement that a person or
group of affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the shares of Common Stock then
outstanding (an "Acquiring Person");
(ii) 10 business days 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 outstanding shares of Common Stock (or such later date as may be
determined by the Board of Directors prior to any person becoming an Acquiring
Person);
(iii) 10 business days after a person or group of affiliated or associated
persons (other than an Acquiring Person) which is the beneficial owner of 15% or
more of the outstanding Common Stock has engaged in certain self-dealing
transactions with the Company as described below (a "Subject Person").
Neither the acquisition of Common Stock by Yamanouchi Pharmaceutical Co.,
Ltd. or its affiliates or associates ("Yamanouchi") nor a tender offer for all
of the outstanding shares
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<PAGE>
of Common Stock by Yamanouchi will result in the occurrence of a Distribution
Date or cause Yamanouchi to be an Acquiring Person, provided that at all times
after the date of the Rights Agreement, Yamanouchi (i) remains the beneficial
owner of not less than 15% of the outstanding Common Stock on a fully diluted
basis and (ii) does not (except pursuant to a tender offer for all of the
outstanding Common Stock) acquire Common Stock if after such acquisition it
would be the beneficial owner of more than 30% of the outstanding Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after February 6, 1997
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. Pursuant to the Rights Agreement,
the Company reserves the right to require that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
Exercise of Rights
- ------------------
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 16, 2006, unless they are earlier redeemed
by the Company or expire in accordance with other provisions of the Rights
Agreement as described below.
Flip-In Events
- --------------
In the event that, at any time following the Distribution Date, (i) a
Person becomes an Acquiring Person or (ii) a holder of 15% or more of the
outstanding Common Stock (other than an Acquiring Person) engages in certain
self dealing transactions (as described below), each holder of a Right will
thereafter have the right to receive, upon exercise, a number of shares of
Common Stock (or in certain instances, cash, properties or other securities of
the Company) having a then current market value of twice the Purchase Price.
Notwithstanding any of the foregoing, following the occurrence of any of the
events described in (i) and (ii) above ("Flip-In Events"), all Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or a Subject Person will be null and
void.
For example, at a Purchase Price of $80 per Right, each Right not owned by
an
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<PAGE>
Acquiring Person or by a Subject Person (or by certain related parties)
following a Flip-In Event would entitle its holder to purchase $160 worth of
Common Stock (or other consideration, as noted above) for $80. Assuming that
the Common Stock had a per share value of $16 at such time, the holder of each
valid Right would be entitled to purchase 10 shares of Common Stock for $80.
The self dealing transactions which will result in the occurrence of a
Flip-In Event if engaged by a beneficial owner (other than an Acquiring Person)
of more than 15% of the outstanding Common Stock (a "15% Shareholder") or its
affiliates or associates include: (i) certain transfers of assets to the Company
or its subsidiaries in exchange for capital stock or securities convertible into
capital stock of the Company or its subsidiaries, (ii) certain other
acquisitions of capital stock or securities convertible into capital stock of
the Company or its subsidiaries, (iii) sales, purchases, leases, exchanges,
mortgages or transfers of assets, including securities, on terms less favorable
to the Company than the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (iv) the receipt of compensation
from the Company other than compensation which is consistent with past practice
or approved by a majority of the members of the Compensation Committee of the
Company's Board of Directors who are not such 15% Shareholder or
representatives, nominees, affiliates or associates of such 15% Shareholder, (v)
the receipt of the benefits of any loans, advances, guarantees or other
financial assistance or any tax credits or other tax advantages provided by the
Company, (vi) a reorganization or recapitilization of the Company in which the
shares of Common Stock owned by such 15% Shareholder or its affiliates or
associates are treated differently than the other outstanding shares of Common
Stock, or (vii) a merger with or into the Company in a transaction in which the
Company is the surviving entity, unless any such transaction described in (i)
through (vii) is approved prior to the consummation thereof by a majority of the
members of the Board of Directors who are not such 15% Shareholder or
representatives, nominees, affiliates or associates of such 15% Shareholder.
Flip-Over Events
- ----------------
In the event that (i) the Company is acquired in a merger or consolidation
in which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation of a merger or consolidation in which all or a part of the
outstanding shares of Common Stock are converted into or exchanged for stock or
securities of another entity or cash, (iii) a corporaton shall acquire, pursuant
to a plan of exchange (other than a tender offer for all of the outstanding
shares of Common Stock which is not the subject of shareholder approval), all of
the outstanding Common Stock, or (iv) more than 50% of the Company's assets,
cash flow or earning power is sold or transferred (events (i), (ii), (iii) and
(iv) are referred to as "Flip-Over Events" and together with Flip-In Events, the
"Triggering Events") each holder of a Right which has not yet been exercised
(except Rights which previously have been voided as described above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company
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<PAGE>
having a value equal to two times the Purchase Price of the Right.
Exchange Provisions
- -------------------
After any Person becomes an Acquiring Person or a Subject Person, the Board
of Directors (by action of a majority of directors who are not representatives,
nominees, affiliates or associates of the Acquiring Person), may determine to
exchange for any or all Rights (other than Rights held by the Acquiring Person
or Subject Person and certain transferees) Preferred Stock at an exchange ratio
of 1/100th of a share of Preferred Stock per Right. Such exchange shall be on a
pro rata basis if less than all Rights are to be exchanged.
Anti-Dilution Provisions
- ------------------------
The Purchase Price payable, and the number of one one-hundredths of a share
of Preferred Stock or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) 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 holders of the Preferred Stock of
evidences of indebtedness 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.
Redemption of the Rights
- ------------------------
The Company may, at its option, at any time prior to the earlier of the
first occurrence of a Triggering Event or December 16,, 2006, redeem the Rights
in whole, but not in part, at a price of $.01 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of Directors).
Any decision to redeem the Rights must be approved by a majority of directors
who are not a 15% Shareholder or representatives, nominees or affiliates of a
15% Shareholder. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
No Rights as Shareholders
- -------------------------
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive
-4-
<PAGE>
dividends.
Taxes
- -----
While the distribution of the Rights will not be taxable to shareholders or
to the Company, shareholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common Stock
of the Company (or for other consideration) or for common stock of an acquiring
company as set forth above.
Amendment of Terms of Rights
- ----------------------------
The Company may from time to time, with the approval of a majority of the
members of the Board of Directors who are not 15% Shareholders or
representatives, nominees or affiliates of any 15% Shareholder, amend the Rights
Agreement to cure any ambiguity or inconsistency or to make any other provisions
with respect to the Rights which the Company may deem necessary or desirable.
After the occurrence of a Flip-In Event, the Rights Agreement may not be amended
in any manner which would adversely affect the interests of the holders of the
Rights. At any time prior to such time as a person becomes an Acquiring Person,
the Company may lower the 15% threshold used to determine the existence of an
Acquiring Person, but in no event lower than the greater of (a) the percentage
of Common Stock owned by the holder of the greatest number of outstanding shares
of Common Stock (other than Yamanouchi) plus .001% or (b) 10%.
Copies of Rights Agreement
- --------------------------
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
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