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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PHARMCHEM LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0187280
(State of incorporation or organization) (IRS Employer Identification No.)
1505-A O'BRIEN DRIVE, MENLO PARK, CALIFORNIA 94025
(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities
and is effective upon filing pursuant to General Instruction A.(c)(1), please
check the following box. [ ]
If this Form relates to the registration of a class of debt securities
and is to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [ ]
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
- -------------------------------- -----------------------------------
Preferred Share Purchase Rights Nasdaq National Market
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ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On November 30, 1999, the Board of Directors of PharmChem Laboratories,
Inc., a California corporation (the "Company"), declared a dividend of one
preferred share purchase right ("Right") on each outstanding share of the
Company's common stock(the "Common Shares"), payable to shareholders of record
as of the close of business on November 30, 1999 (the "Record Date"). Except as
described below, each Right, when exercisable, entitles the holder thereof to
purchase from the Company one one-hundredth of a share of Series B Junior
Participating Preferred Shares (the "Preferred Shares") of the Company at an
exercise price of $35.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group has become an "Acquiring Person" (as defined
below) or (ii) 10 business days (or such later date as may be determined by
action of the Board of Directors prior to such time as any person or group
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in a person or group (other than certain exempt persons) becoming
an Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced by Common Share certificates.
An "Acquiring Person" is a person or group of affiliated or associated
persons who have acquired beneficial ownership of 15% or more of the aggregate
number of Common Shares of the Company then outstanding; provided, however that
(i) in no event shall the Company, any subsidiary of the Company, or any
employee benefit plan of the Company or its subsidiaries be deemed to be an
Acquiring Person, (ii) no person who or which, together with all affiliates and
associates of such person, was the beneficial owner of 15% or more of the
aggregate number of Common Shares of the Company issued and outstanding as of
5:00 p.m., California time, on November 30, 1999 shall be deemed to be an
"Acquiring Person"; provided, however, that if such person together with any
affiliates and associates of such person, after 5:00 p.m., California time, on
November 30, 1999, (A) acquires, in one or more transactions, beneficial
ownership of an additional number of Common Shares, and (B) beneficially owns
after such acquisition 25% or more of Common Shares of the Company then
outstanding, then such person shall be deemed to be an "Acquiring Person," (iii)
no person shall become an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company which, by reducing the number of the Company's
Common Shares outstanding, increases the proportionate number of shares
beneficially owned by such person to 15% (or, as in the case of persons
described in clause (ii) of this paragraph, 25%) or more of the Common Shares
then outstanding; provided, however, that if a person shall become the
beneficial owner of 15% (or, as in the case of persons described in clause (ii)
of this paragraph, 25%) or more of the Common Shares of the Company then
outstanding by reason of share acquisitions by the Company and shall, after such
share acquisitions by the Company, (A) acquire, in one or more transactions,
beneficial ownership of an additional number of Common Shares which exceeds the
lesser of 10,000 Common Shares or 0.25% of the then-outstanding Common Shares
and (B) beneficially own after such acquisition 15% (or, as in the case of
persons described in clause (ii) of this paragraph, 25%) or more of the
aggregate number of Common Shares of the Company then outstanding, then such
person shall
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be deemed to be an "Acquiring Person," and (iv) if the Board of Directors
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 Common Shares so that such person would no
longer be an Acquiring Person, then such person shall not be deemed to be an
"Acquiring Person".
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date will contain a notation incorporating the Rights Agreement
by reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any certificates for Common Shares
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on November 30, 2009 (the "Final Expiration Date"), unless the
Rights are earlier redeemed or exchanged by the Company, as described below.
The Purchase Price payable, and the number of Preferred Shares 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 share
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness,
assets or capital stock (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to above). With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. The Company will not be required to issue fractional Common Shares or
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
may be made based on the market price of the Common Shares or Preferred Shares
on the last trading day prior to the date of exercise.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share. Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to the greater of (1) a
preferential quarterly dividend payment of $1.00 per share, or (2) an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the
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holders of the Preferred Shares will be entitled to a preferential liquidation
payment of $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of Preferred Shares shall be entitled to receive an
aggregate amount per share equal to 100 times the aggregate amount to be
distributed per share of common stock. Each Preferred Share will have 100 votes,
voting together with the Common Shares except as otherwise required by law.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
100 times the amount received per Common Share. These rights are protected by
customary antidilution provisions.
If any person or group becomes an Acquiring Person, then each holder of
a Right (other than Rights beneficially owned by the Acquiring Person, any
Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement), and certain transferees thereof, which will be void) will have the
right to receive upon exercise of such Right that number of Common Shares (or,
in certain circumstances, cash, property or other securities of the Company)
having a market value of two times the exercise price of the Right.
If at any time after the time that any person or group becomes an
Acquiring Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
(other than Rights beneficially owned by the Acquiring Person, any Associate or
Affiliate thereof, and certain transferees thereof, which will be void) will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Right.
At any time after the time that any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights beneficially owned by such person or
group, any Associate or Affiliate thereof, and certain transferees thereof,
which will be void), in whole or in part, at an exchange ratio of one Common
Share or one one-hundredth of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges) per Right (subject to adjustment).
At any time prior to the time that any person becomes an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right, subject to adjustment (the
"Redemption Price"), which may (at the option of the Company) be paid in cash,
Common Shares or other consideration deemed appropriate by the Board of
Directors. The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish; provided, however, that no redemption will be
permitted or required after the time that any person becomes an Acquiring
Person. Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of the Rights will be to
receive the Redemption Price.
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The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as any person becomes an Acquiring Person no such amendment may
make the Rights redeemable if the Rights are not then redeemable in accordance
with the terms of the Rights Agreement or may adversely affect the interests of
the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights will have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors.
The Rights Agreement between the Company and the Rights Agent which
includes as exhibits thereto the form of Certificate of Determination of the
Series B Junior Participating Preferred Stock, the form of Rights Certificate
(separate Certificates for the Rights will not be issued until after the
Distribution Date) and the Summary of the Stockholder Rights Agreement,
specifying the terms of the Rights is attached hereto as an exhibit and is
incorporated herein by reference. The foregoing description of the Rights is
qualified by reference to such exhibits.
ITEM 2. EXHIBITS.
1. Rights Agreement, dated as of November 30, 1999, between PharmChem
Laboratories, Inc. and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent, which includes (i) as Exhibit A thereto the form of Certificate of
Determination of the Series B Junior Participating Preferred Stock, (ii) as
Exhibit B thereto the form of Right certificate (separate certificates for the
Rights will not be issued until after the Distribution Date) and (iii) as
Exhibit C thereto the Summary of Shareholder Rights Agreement.
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Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
PHARMCHEM LABORATORIES, INC.
Dated: December 1, 1999 By: /s/ DAVID A. LATTANZIO
-----------------------------------
David A. Lattanzio
Chief Financial Officer and Vice
President, Finance and Administration
(Principal Financial and Accounting
Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------------
<S> <C>
1 Rights Agreement, dated as of November 30, 1999, between
PharmChem Laboratories, Inc. and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, which includes (i) as
Exhibit A thereto the form of Certificate of Determination of
the Series B Junior Participating Preferred Stock, (ii) as
Exhibit B thereto the form of Right certificate (separate
certificates for the Rights will not be issued until after the
Distribution Date) and (iii) as Exhibit C thereto the Summary
of Shareholder Rights Agreement.
</TABLE>
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Exhibit 1
================================================================================
Pharmchem Laboratories, Inc.
and
ChaseMellon Shareholder Services, L.L.C.
as Rights Agent
Rights Agreement
dated as of November 30, 1999
================================================================================
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Section 1. Certain Definitions.............................................................1
Section 2. Appointment of Rights Agent.....................................................8
Section 3. Issue of Right Certificates.....................................................8
Section 4. Form of Right Certificates.....................................................11
Section 5. Countersignature and Registration..............................................11
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates...................................13
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..................14
Section 8. Cancellation and Destruction of Right Certificates.............................18
Section 9. Reservation and Availability of Shares.........................................18
Section 10. Preferred Shares Record Date...................................................20
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.............21
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................35
Section 13. Consolidation, Merger, Sale or Transfer of Assets or Earning Power.............36
Section 14. Fractional Rights and Fractional Shares........................................39
Section 15. Rights of Action...............................................................42
Section 16. Agreement of Right Holders.....................................................42
Section 17. Right Certificate Holder Not Deemed a Shareholder..............................44
Section 18. Concerning the Rights Agent....................................................44
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................46
Section 20. Duties of Rights Agent.........................................................47
Section 21. Change of Rights Agent.........................................................51
Section 22. Issuance of New Right Certificates.............................................52
Section 23. Redemption.....................................................................53
Section 24. Exchange.......................................................................54
Section 25. Notice of Certain Events.......................................................57
Section 26. Notices........................................................................58
Section 27. Supplements and Amendments.....................................................59
Section 28. Successors.....................................................................60
Section 29. Determinations and Actions by the Board of Directors...........................60
Section 30. Benefits of this Agreement.....................................................61
Section 31. Severability...................................................................61
Section 32. Governing Law..................................................................61
Section 33. Counterparts...................................................................62
Section 34. Descriptive Headings...........................................................62
Exhibit A Form of Certificate of Determination.............................................63
Exhibit B Form of Rights Certificate.......................................................68
Exhibit C Summary of Shareholder Rights Agreement..........................................75
</TABLE>
i
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RIGHTS AGREEMENT
Rights Agreement, dated as of November 30, 1999 (the "Agreement"), between
Pharmchem Laboratories Inc., a California corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability company
(the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Preferred Share Purchase Right (a "Right") for each Common Share
(as defined in Section 1 hereof) of the Company outstanding on the Record Date
(as defined in Section 1 hereof), each Right representing the right to purchase
one one-hundredth of a Preferred Share (as defined in Section 1 hereof) of the
Company, upon the terms and subject to the conditions set forth in this
Agreement, and has further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each Common Share
that shall become outstanding (i) between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are defined in Sections 3 and 7 hereof) or (ii) between the
Distribution Date and the earlier of the Redemption Date and the Final
Expiration Date as a result of the conversion into Common Shares of any
convertible securities of the Company or any of its Subsidiaries or as a result
of the exercise of any options, warrants or other rights to purchase Common
Shares of the Company, which convertible securities, options, warrants or other
rights were outstanding on the Distribution Date.
Accordingly, in consideration of the mutual agreements set forth in this
Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
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(a) "Acquiring Person" means 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 aggregate number of Common Shares of the
Company then outstanding; provided, however that (i) in no event shall any
Exempt Person be deemed to be an Acquiring Person, (ii) no Person who or
which, together with all Affiliates and Associates of such Person, was the
Beneficial Owner of 15% or more of the aggregate number of Common Shares
of the Company issued and outstanding as of 5:00 p.m., California time, on
November 30, 1999 shall be deemed to be an "Acquiring Person" for purposes
of this Agreement; provided, however, that if such Person together with
any Affiliates and Associates of such Person, after 5:00 p.m., California
time, on November 30, 1999, (A) acquires in one or more transactions,
Beneficial Ownership of an additional number of Common Shares, and (B)
beneficially owns after such acquisition 25% or more of Common Shares of
the Company then outstanding, then such Person shall be deemed to be an
"Acquiring Person," (iii) no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by
reducing the number of the Company's Common Shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to
15% (or, in the case of Persons described in clause (ii) of this
paragraph, 25%) or more of the Common Shares then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% (or, in
the case of Persons described in clause (ii) of this paragraph, 25%) or
more of the Common Shares of the Company then outstanding by reason of
share acquisitions by the Company and shall, after such share acquisitions
by the Company, (A) acquire, in one or more transactions, beneficial
ownership of an additional number of Common Shares which exceeds the
lesser
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of 10,000 Common Shares or 0.25% of the then-outstanding Common Shares and
(B) beneficially own after such acquisition 15% (or, in the case of
Persons described in clause (ii) of this paragraph, 25%) or more of the
aggregate number of Common Shares of the Company then outstanding, then
such Person shall be deemed to be an "Acquiring Person," and (iv) if the
Board of Directors determines in good faith that a Person who would
otherwise be an Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, as
defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
of the SEC under the Exchange Act, as in effect on the date of this
Agreement, provided that, notwithstanding any provision of such Rule 12b-2
to the contrary, neither the Company nor any Subsidiary of the Company
shall be deemed, and none of their respective directors, officers and
agents shall be deemed solely by virtue of their relationship with the
Company or a Subsidiary of the Company, to be an "Affiliate" or an
"Associate" of any shareholder of the Company for purposes of this
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
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(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (other than
customary agreements with and among underwriters and selling group
members with respect to a bona fide public offering of securities),
whether or not in writing, or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants
or options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase
or exchange; or (B) the right to vote (whether such right is
exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person or any of such
Person's Affiliates or Associates in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the SEC promulgated under the
Exchange Act and (2) is not then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate of such other
Person) with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or
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understanding (other than customary agreements with and among
underwriters and selling group members with respect to a bona fide
public offering of securities), whether or not in writing, for the
purpose of acquiring, holding, voting (other than pursuant to a
revocable proxy or consent as described in the proviso to Section
1(c)(ii)(B) hereof) or disposing of any securities of the Company.
Notwithstanding anything in this definition of "Beneficial Ownership" to
the contrary, the phrases "then outstanding" or "issued and outstanding,"
when used with reference to a Person's Beneficial Ownership of securities
of the Company, means the number of such securities then issued and
outstanding together with the number of such securities not then issued
and outstanding which such Person would be deemed to beneficially own
hereunder.
(d) "Board of Directors" means the Board of Directors of the
Company.
(e) "Business Day" means any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of California or the
state in which the principal office of the Rights Agent is located are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date means 5:00 p.m.,
California time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 p.m., California time, on the next
succeeding Business Day.
(g) "Common Shares", when used with reference to the Company, means
the shares of common stock of the Company, no par value, or, when used
with reference to any Person other than the Company, means the shares of
capital stock (or other equity interest) with the greatest voting power of
such other Person or, if such Person is a
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Subsidiary of another Person, of the Person or Persons which ultimately
controls or control such first-mentioned Person.
(h) "Company" means Pharmchem Laboratories, Inc., a California
corporation.
(i) "Distribution Date" is defined in Section 3.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Exempt Person" means (i) the Company, (ii) any Subsidiary of
the Company, and (iii) any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares of the
Company for or pursuant to the terms of any such plan or related trust.
(l) "Final Expiration Date" is defined in Section 7.
(m) "Person" means any individual, firm, corporation, limited
liability company, partnership or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(n) "Preferred Shares" means the Series B Junior Participating
Preferred Stock of the Company, no par value, having the rights,
preferences and limitations thereof set forth in the Form of Certificate
of Determination attached to this Agreement as Exhibit A.
(o) "Purchase Price" is defined in Section 4.
(p) "Record Date" means the Close of Business on November 30, 1999.
(q) "Redemption Date" is defined in Section 7.
(r) "Redemption Price" is defined in Section 23.
(s) "Right Certificate" is defined in Section 3(a).
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(t) "Rights Agent" means ChaseMellon Shareholder Services, L.L.C.
(u) "SEC" means the Securities and Exchange Commission.
(v) "Securities Act" means the Securities Act of 1933, as amended.
(w) "Shares Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a filing with the SEC pursuant to Section 13(d) or
13(g) under the Exchange Act) by the Company or an Acquiring Person (or
any Affiliate or Associate of such Acquiring Person) that an Acquiring
Person has become such.
(x) "Subsidiary" of any Person means any corporation or other
entity of which a majority of either the voting power of the voting equity
securities or the equity interest is owned, directly or indirectly, by
such Person.
(y) "Summary of Rights" is defined in Section 3(b).
(z) The term "Trading Day" means a day on which the principal
national securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business or, if the
Common Shares are not listed or admitted to trading on any national
securities exchange, a day on which the Common Shares are quoted on the
Nasdaq Stock Market ("Nasdaq") or such other system then in use or, if the
Common Shares are not quoted by any such system, a Business Day.
(y) "Triggering Event" means any event described in Section
11(a)(ii) or Section 13(a) of this Agreement.
Any determination or interpretation required in connection with any of the
definitions contained in this Section 1 shall be made by the Board of Directors
in its good faith judgment, which determination shall be final and binding.
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Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable, the respective duties of which shall be determined by
the Company. The Rights Agent shall have no duty to supervise, and in no event
shall be liable for, the acts or omissions of any such co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth day
after the Shares Acquisition Date or (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 taken before any Person becomes an Acquiring
Person) after the date of the commencement of, or the first public
announcement of the intent to commence, a tender or exchange offer by any
Person (other than any Exempt Person), the consummation of which would
result in any Person becoming an Acquiring Person (including with respect
to both clauses (i) and (ii) any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the Close of Business
on the earlier of such dates 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 Common Shares
registered in the names of the holders thereof (which certificates shall
also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the Rights will be transferable only in connection
with and will be transferred by the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if
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<PAGE> 11
requested by the Company and provided with all necessary information,
send) by first-class, insured, postage prepaid mail, to each record holder
of Common Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company or the
transfer agent or registrar for the Common Shares, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each Common Share so held, subject to adjustment
as provided in this Agreement. As of and after the Close of Business on
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
The Company shall promptly notify the Rights Agent in writing upon
the occurrence of the Distribution Date and, if such notification is given
orally, the Company shall confirm the same in writing on or prior to the
Business Day next following. Until such notice is received by the Rights
Agent, the Rights Agent may presume conclusively for all purpose that the
Distribution Date has not occurred.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Shareholder Rights Agreement, in
substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company or the transfer
agent or registrar for the Common Shares. With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for Common Shares
registered in the names of the holders thereof together with a copy of the
Summary of Rights. Until the Close of Business on the Distribution Date
(or, if earlier than the Distribution Date, the earlier of the Redemption
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<PAGE> 12
Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Shares represented
thereby.
(c) Certificates issued for Common Shares (including, without
limitation, certificates issued in respect of reacquired Common Shares
referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Pharmchem
Laboratories, Inc., a California corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company (the "Rights Agent"), dated as of November 30,
1999 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at
the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder
of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS HELD BY A
PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF, WHETHER CURRENTLY HELD
BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL
BECOME NULL AND VOID.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Final Expiration
Date, the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also
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<PAGE> 13
constitute the transfer of the Rights associated with the Common Shares
represented thereby. If the Company purchases or otherwise acquires any
Common Shares after the Record Date but before the Distribution Date, any
Rights associated with such Common Shares shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate (which do
not affect the duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or inter-dealer
quotation system on which the Rights may from time to time be listed or traded,
or to conform to usage. Subject to the provisions of Section 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase such number of
one one-hundredths of a Preferred Share as shall be set forth therein at the
price per one one-hundredth of a Preferred Share set forth therein (the
"Purchase Price"), but the number and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President, any of its Vice
Presidents or its Chief Financial
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<PAGE> 14
Officer, either manually or by facsimile signature, and have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either manually
or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. If any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such
Person was not such an officer.
(b) Following the Distribution Date, receipt by the Rights Agent of
notice to that effect and all other relevant information referred to in
Section 3(a), the Rights Agent will keep or cause to be kept, at an office
or agency designated for such purpose, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates,
the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
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<PAGE> 15
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 11(a)(iii) and Section 14
of this Agreement, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the earlier
of the Redemption Date or the Final Expiration Date, any Right Certificate
or Certificates (other than Right Certificates representing Rights that
have been exchanged pursuant to Section 24 of this Agreement) may be
transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a Preferred Share (or, following the
occurrence of a Triggering Event, Common Shares, and/or other securities,
cash or other property, as the case may be) as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged
at the office or agency of the Rights Agent designated for such purpose.
The Right Certificates are transferable only on the registry books of the
Rights Agent. Notwithstanding anything in this Agreement to the contrary,
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) thereof and of the Rights
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<PAGE> 16
evidenced thereof and the Affiliates and Associates of such Beneficial
Owner (or former Beneficial Owner) thereof as the Company or the Rights
Agent shall reasonably request. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested, registered in
such name or may be designated by the surrendering registered holder. The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates. The Rights Agent
shall promptly forward any such sum collected by it to the Company or to
such Persons as the Company shall specify by written notice. The Rights
Agent shall have no duty or obligation under this Section unless and until
it is satisfied that all such taxes and/or governmental charges have been
paid.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and, at the Company's request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Right Certificate if mutilated,
the Company will make and deliver a new Right Certificate of like tenor to
the Rights Agent for countersignature delivery to the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to the provisions of Section 11(a)(iii) of this
Agreement, the registered holder of any Right Certificate may exercise the
Rights evidenced thereby
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<PAGE> 17
(except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the office or agency of the
Rights Agent designated for such purpose, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share (or,
following the occurrence of a Triggering Event, Common Shares and/or other
securities, cash or other property, as the case may be) as to which the
Rights are exercised and an amount equal to any tax or charge required to
be paid under Section 9 hereof by certified check, cashier's check, bank
draft or money order payable to the order the Company at or prior to the
earliest of the Close of Business on (i) November 30, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 of this Agreement (the "Redemption Date"), or (iii)
the time at which such Rights are exchanged as provided in Section 24 of
this Agreement.
(b) The Purchase Price for each one one-hundredth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be
$35.00, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) of this Section
7.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied
by payment of the Purchase Price for the shares (or, following the
occurrence of a Triggering Event, Common Shares and/or other securities,
cash or other property, as the case may be) to be purchased and an amount
equal to any applicable tax or charge required to be paid by the holder of
such
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<PAGE> 18
Right Certificate in accordance with Section 9 hereof by certified check,
cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is
the transfer agent) certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, (ii) if the Company shall have elected
to deposit the Preferred Shares issuable upon exercise of the Rights with
a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a Preferred
Share as are to be purchased in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent and the Company hereby directs the
depositary agent to comply with such request, (iii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iv)
promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be
designated by such holder and (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder
of such Right Certificate. If the Company elects or is obligated to issue
other securities (including Common Shares) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) of this Agreement, the
Company will make all arrangements necessary so that such other
securities, cash and/or property are available for distribution by the
Rights Agent, if and when appropriate.
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<PAGE> 19
(d) If the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder
of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Sections 11(a)(iii) and 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7 until the
registered holder shall have completed and signed the certificate
contained in the form of election to purchase on the reverse side of the
Rights Certificate surrendered for such exercise and the Company shall
have been provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) thereof and of the Rights
evidenced thereby and of the Affiliates or Associates of such Beneficial
Owner (or former Beneficial Owner) as the Company or the Rights Agent
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The
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<PAGE> 20
Rights Agent shall deliver all cancelled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Shares. The Company will use
its best efforts to cause to be reserved and kept available for the exercise of
Rights, out of its authorized but unissued Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities) or any
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) held in its treasury, such number of Preferred
Shares (and, following the occurrence of a Triggering Event, Common Shares
and/or other securities) as will be sufficient to permit the exercise in full of
all outstanding Rights.
So long as any securities purchasable upon the exercise of Rights are
listed or traded on any stock exchange or inter-dealer quotation system, 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 or approved for listing on such exchange or inter-dealer quotation
system upon official notice of issuance.
The Company shall use its best efforts to (i) file, as soon as practicable
after the occurrence of a Triggering Event pursuant to Section 11(a)(ii) for
which the consideration to be delivered by the Company upon the exercise of the
Rights has been determined in accordance with Section 11(a)(iv) hereof, or as
soon as required by law following the Distribution Date, a registration
statement on an appropriate form under the Securities Act with respect to the
securities purchasable upon exercise of the Rights, (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
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<PAGE> 21
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable or (B) the Final Expiration Date. The Company will also take
such action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercise of the Rights. The Company may temporarily suspend, for a period of
time not to exceed 120 days after the Distribution Date, 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. The Company shall notify the Rights Agent
whenever it makes a public announcement pursuant to this Section 9 and give the
Rights Agent a copy of such announcement. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite registration or qualification in such
jurisdiction shall have been obtained.
The Company will take all such action as may be necessary to ensure that
all Preferred Shares (or Common Shares and/or other securities, as the case may
be) delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (or Common Shares and/or other
securities, as the case may be), subject to payment of the Purchase Price, be
duly and validly authorized and issued and fully paid and non-assessable.
The Company will pay when due and payable any and all federal and state
taxes and charges which may be payable in respect of the issuance or delivery of
the Right Certificates or of any Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any tax or charge which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than,
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<PAGE> 22
or the issuance or delivery of certificates or depositary receipts for the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
in a name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise, or to issue or deliver any
certificates or depositary receipts for Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the exercise of any Rights
until any such tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's or the Rights Agent's reasonable
satisfaction that no such tax or charge is due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable taxes or governmental charges) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Shares (or Common Shares 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 or securities on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Shares
(or Common Shares 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 Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares (or Common Shares and/or other securities, as the case may be)
for which the Rights shall be exercisable, including, without
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<PAGE> 23
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares purchasable upon the
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, or in securities convertible into, or
exercisable for, Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine or consolidate the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided
in this Section 11(a), then the Purchase Price in effect
immediately prior to the time of the record date for such dividend
or of the effective date of such subdivision, combination,
consolidation or reclassification, and the number and kind of
shares of capital stock then issuable upon the exercise of a Right
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock (or securities
convertible into, or exercisable for, capital stock) which, if such
Right had been exercised immediately prior to such time and at a
time when the Preferred Shares
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<PAGE> 24
transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination, consolidation or
reclassification; provided, however, that if the capital stock has
par value, in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of
one Right. If an event occurs that would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) of this
Agreement, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made before, any adjustment
required pursuant to Section 11(a)(ii) of this Agreement.
(ii) Subject to Section 24 of this Agreement, if any
Person, either alone or together with its Affiliates and
Associates, shall become an Acquiring Person, then each holder of a
Right (except as provided below) shall thereafter have a right to
receive, upon exercise thereof and in lieu of Preferred Shares, at
a price equal to the then-current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right
is then exercisable in accordance with the terms of this Agreement,
such number of Common Shares of the Company as shall equal the
result obtained by (x) multiplying the then-current Purchase Price
by the number of one one-hundredths of a Preferred Share for which
a Right is then exercisable and dividing that product by (y) 50% of
the then-current per share market price of the Company's Common
Shares (determined pursuant to Section 11(d) of this Agreement) on
the date of the occurrence of such event. In the event that any
Person shall become an Acquiring Person and the Rights shall then
be
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<PAGE> 25
outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the
Rights.
(iii) Notwithstanding any other provisions of this
Agreement to the contrary, from and after the occurrence of a
Triggering Event, any Rights that are beneficially owned by (A) an
Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (B) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (C) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who became a
transferee prior to or concurrently with the Acquiring Person
becoming such and received such Rights pursuant to either (x) a
transfer (whether or not for consideration) from the Acquiring
Person (or of any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or of any such Associate or
Affiliate) or to any Person with whom the Acquiring Person (or of
any such Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or
(y) a transfer which the Board of Directors has reasonably
determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section
11(a)(iii), shall become null and void without any further action
and no holder of such Rights shall thereafter have any right to
exercise such Rights under any provision of this Agreement. No
Right Certificate shall be issued at any time upon the transfer of
any Rights to any Person whose Rights would be null and void
pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Person, Associate or Affiliate;
and any Right Certificate delivered
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<PAGE> 26
to the Rights Agent for transfer to any Person whose Rights would
be null and void pursuant to the preceding sentence shall be
cancelled.
The Company may require (or cause the Rights Agent to
require) any Person who purports to exercise any Rights to
establish to the reasonable satisfaction of the Company that he,
she or it is not a Person whose Rights would be null and void
pursuant to the first sentence of the preceding paragraph of this
Section 11(a)(iii).
The Company shall use all reasonable efforts to insure that
the provisions of this Section 11(a)(iii) are complied with, but
shall have no liability to any holder of Right Certificates or
other Person as a result of its failure to make any determinations
with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
The Company shall give the Rights Agent written notice of
the identity of any such Acquiring Person, Associate or Affiliate,
or the nominee of any of the foregoing, and the Rights Agent may
rely on such notice in carrying out its duties under this Agreement
and shall be deemed not to have any knowledge of the identity of
any such Acquiring Person, Associate or Affiliate, or the nominee
of any of the foregoing unless and until it shall have received
such notice.
(iv) In lieu of issuing Common Shares of the Company in
accordance with Section 11(a)(ii) hereof, the Company may, in the
sole discretion of the Board of Directors, elect to (and, in the
event that the Board of Directors has not exercised the exchange
right contained in Section 24 hereof and there are not sufficient
issued but not outstanding and authorized but unissued Common
Shares to permit the
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<PAGE> 27
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall) take all such action as may
be necessary to authorize, issue or pay, upon the exercise of the
Rights, cash (including by way of a reduction of the Purchase
Price), property, other securities or any combination thereof
having an aggregate value equal to the value of the Common Shares
of the Company which otherwise would have been issuable pursuant to
Section 11(a)(ii), which aggregate value shall be determined by a
majority of the Board of Directors. For purposes of the preceding
sentence, the value of the Common Shares shall be determined
pursuant to Section 11(d) hereof and the value of any equity
securities which a majority of the Board of Directors determines to
be a "common stock equivalent" (including the Preferred Shares, in
such ratio as the Board of Directors shall determine) shall be
deemed to have the same value as the Common Shares. Any such
election by the Board of Directors must be made and publicly
announced within 60 days following the date on which the event
described in Section 11(a)(ii) shall have occurred. Following the
occurrence of the event described in Section 11(a)(ii), a majority
of the Board of Directors then in office may suspend the
exercisability of the Rights for a period of up to 60 days
following the date on which the event described in Section
11(a)(ii) shall have occurred to the extent that such directors
have not determined whether to exercise the Company's right of
election under this Section 11(a)(iv). In the event of any such
suspension, the Company shall promptly deliver written notice
thereof to the Rights Agent and shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended.
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<PAGE> 28
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares
("equivalent preference shares")) or securities convertible into Preferred
Shares or equivalent preference shares (or having a conversion price per
share, if a security convertible into Preferred Shares or equivalent
preference shares) less than the then-current per share market price of
the Preferred Shares (determined pursuant to Section 11(d) of this
Agreement) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator
of which shall be the number of Preferred Shares and equivalent preference
shares outstanding on such record date plus the number of Preferred Shares
and equivalent preference shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preference shares so to
be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of Preferred
Shares and equivalent preference shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent
preference shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible); provided, however, that if the capital stock has par value,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. If such
subscription price may be paid in a consideration part or all
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of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed
with the Rights Agent. Preferred Shares and equivalent preference shares
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed; and if such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness, assets or shares of capital stock (other than a regular cash
dividend or a dividend payable in Preferred Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b) of this
Agreement), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the then-current per share market price of the Preferred
Shares (as defined in Section 11(d) of this Agreement) on such record
date, less the fair market value (as determined in good faith by the Board
of Directors, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the evidences of indebtedness,
assets or shares of capital stock so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price (as
defined in Section 11(d) of this Agreement) of the
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Preferred Shares; provided, however, that if the capital stock has par
value, in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is fixed; and if
such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
under Section 11(a)(iv), the "current per share market price" of
any security (a "Security") for the purpose of this Section 11(d))
on any date shall be deemed to be the average of the daily closing
prices per share equivalent of such Security for the 30 consecutive
Trading Days immediately prior to such date, and for purposes of
Section 11(a)(iv) hereof, the "current per share market price" of a
Security on any date shall be deemed to be the average of the daily
closing prices per share equivalent of such Security for the 30
consecutive Trading Days immediately following such date; provided,
however, that if the current per share equivalent market price of
the Security is determined with respect to a date, which date
follows the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in such Security
or securities convertible into such Security (other than the
Rights) or (B) any subdivision, combination or reclassification of
such Security, and which date precedes the expiration of 30 Trading
Days after but not including the ex-dividend date for such dividend
or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
current per share market price shall
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be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, if 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 a
Security listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported on the Nasdaq Stock Market or
such other system then in use, or, if on any such date the Security
is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors.
If on any such date no market maker is making a market in the
Security, the fair value of such Security on such date as
determined in good faith by the Board of Directors shall be used.
If the Security is not publicly held or not so listed or traded,
"current per share market price" shall mean the fair value per
share equivalent as determined in good faith by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the
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method set forth in Section 11(d)(i) (other than the last sentence
thereof). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i) (other
than the last sentence thereof) (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one thousand. If neither the
Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent.
(e) Notwithstanding any provision of this Agreement to the
contrary, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
one ten-millionth of a Preferred Share or one ten-thousandth of any other
share or security as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a) of this Agreement, the holder of any Right thereafter
exercised shall become
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entitled to receive any Common Shares or other securities of the Company
other than Preferred Shares, thereafter the number of such other shares or
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Preferred Shares
contained in this Section 11 and the provisions of Sections 7, 9, 10, 13
and 14 of this Agreement with respect to the Preferred Shares shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment
as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-hundredths of a Preferred Share (calculated to the
nearest one ten-millionth of a Preferred Share) 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.
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<PAGE> 34
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price as a result of the calculations made in Section 11(b)
and (c) to adjust the number of Rights, in substitution for any adjustment
pursuant to Section 11(h), in the number of one one-hundredths of a
Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
hundred-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement (with prompt written notice
thereof to the Rights Agent) of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at
the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 of this Agreement,
the additional Rights to which such holders shall be entitled as a result
of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the
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<PAGE> 35
date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to
be distributed shall be issued, executed and delivered by the Company, and
countersigned and delivered by the Rights Agent, 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 Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
Preferred Shares or other shares of capital stock issuable upon exercise
of the Rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and non-assessable Preferred Shares
or other such shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer (with prompt written
notice thereof to the Rights Agent) until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of the Company, if
any,
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issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) After the earlier of the time that any Person becomes an
Acquiring Person and the Distribution Date, the Company will not, except
as permitted by Sections 23, 24 and 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(n) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such adjustments in the Purchase
Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any Preferred Shares at less
than the current market price, issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, dividends on Preferred Shares payable
in Preferred Shares or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders
of its Preferred Shares shall not be taxable to such shareholders.
(o) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay
any dividend on the Common Shares payable in Common Shares or (ii) effect
a subdivision, combination or
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<PAGE> 37
consolidation of the Common Shares (by reclassification or otherwise than
by payment of dividends in Common Shares) into a greater or lesser number
of Common Shares, then in any such case (A) the number of one
one-hundredths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the
number of one one-hundredths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is
the number of Common Shares outstanding immediately before such event and
the denominator of which is the number of Common Shares outstanding
immediately after such event, and (B) each Common Share outstanding
immediately after such event shall have issued with respect to it that
number of Rights which each Common Share outstanding immediately prior to
such event had issued with respect to it. The adjustments provided for in
this Section 11(o) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts and computations accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Common Shares or the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment or statement therein contained and shall
have no duty or liability with respect to, and shall not be deemed to have
knowledge of, any such adjustment unless and until it shall have received such
certificate.
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Section 13. Consolidation, Merger, Sale or Transfer of Assets or Earning
Power.
(a) If, directly or indirectly, at any time after the time that any
Person becomes an Acquiring Person, (i) the Company shall consolidate
with, or merge with and into, any other Person, (ii) any Person shall
consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common Shares of
the Company shall be changed into or exchanged for stock or other
securities of any other Person (or of the Company) or cash or any other
property, or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or one or more of
its wholly-owned Subsidiaries), then, and in each such case, proper
provision shall be made so that (A) each holder of a Right (except any
Person whose Rights shall have become null and void pursuant to Section
11(a)(iii) of this Agreement) shall thereafter 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 Preferred Share
for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid, non-assessable and freely tradable
Common Shares of the Principal Party (as hereinafter defined), free and
clear of all liens, rights of call or first refusal, encumbrances or other
adverse claims, as shall be equal to the result obtained by (x)
multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the time that any
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<PAGE> 39
Person became an Acquiring Person and dividing that product by (y) 50% of
the current per share market price of the Common Shares of such Principal
Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (B) the
issuer of such Common Shares shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (C) the
term "Company" shall thereafter be deemed to refer to such issuer; and (D)
such issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or consolidations
or sales or other transfers.
(b) The Company shall not enter into any transaction of the kind
listed in Section 13(a) 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 substantially diminish or eliminate the benefits
intended to be afforded by the Rights.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and such issuer
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
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practicable after the date of any consolidation, merger, sale or transfer
mentioned in paragraph (a) of this Section 13, such issuer will:
(i) prepare and file a registration statement on an
appropriate form under the Securities Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights,
and will use its best efforts to cause such registration statement
to (A) become effective as soon as practicable after such filing
and (B) remain effective (with a prospectus at all times meeting
the requirements of the Securities Act) until the Expiration Date;
(ii) deliver to holders of the Rights historical financial
statements for such issuer and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10
under the Exchange Act; and
(iii) take such actions as may be necessary or appropriate
under the blue sky laws of the various states.
(d) "Principal Party" means:
(i) in the case of any transaction described in clauses (i)
or (ii) of the first sentence of Section 13(a), the Person that is
the issuer of any securities into which Common Shares of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the surviving entity
of such merger or consolidation (including the Company if
applicable); and
(ii) in the case of any transaction described in clause
(iii) of the first sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
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<PAGE> 41
provided, however, that in any such case described in clauses (d)(i) or (d)(ii)
of this Section 13: (x) if the Common Shares of such Person are not at such time
and have not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (y) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares 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
Common Shares having the greatest aggregate market value; and (z) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (x) and (y) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such Person were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there may be paid to the registered
holders of the Right Certificates with regard to which such fractional
Rights would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.
The closing price for any day shall be the last sale
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<PAGE> 42
price, regular way, or, if 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. 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 shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other
than fractions which are integral multiples of one one-hundredth of a
Preferred Share). Fractions of Preferred Shares in integral multiples of
one one-hundredth of a Preferred Share may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
that such agreement shall provide that the holders of
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<PAGE> 43
such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the
Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one
one-hundredth of a Preferred Share, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this Section
14(b), the current market value of a Preferred Share shall be the closing
price of a Preferred Share (as determined pursuant to Section 11(d)
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 Common Shares upon exercise of
the Rights or to distribute certificates which evidence fractional Common
Shares. In lieu of fractional Common Shares, the Company may pay the
registered holders of Right Certificates at the time such Rights are
exercised as provided herein an amount in cash equal to the same fraction
of the current market value of one Common Share. For purposes of this
Section 14(c), the current market value of one Common Share shall be the
closing price of one Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior
to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
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Section 15. Rights of Action.
(a) All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent under Section 18 and
Section 20 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
to enforce, and may otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy
at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual
or threatened violations of the obligations of any Person subject to, this
Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, judgment, decree or ruling
(whether interlocutory or final) issued by a court or by a governmental,
regulatory, self-regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or
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otherwise restraining performance of such obligation; provided, however,
that the Company must use all reasonable efforts to have any such
injunction, order, judgment, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or agency of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Common Shares certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company
nor the Rights Agent shall be affected by any notice to the contrary.
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree or ruling issued
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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
injunction, order, decree or ruling lifted or otherwise overturned as soon
as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 of this Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the preparation, delivery,
amendment, 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, damage,
judgment, fine, penalty, claim, demand, settlement, cost or expense (including
without
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limitation, the reasonable fees and expenses of legal counsel), incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent (which gross negligence, bad faith or willful misconduct must be
determined by a final, non-appealable order, judgment decree or ruling of a
court of competent jurisdiction ) for any action taken, suffered, done or
omitted by the Rights Agent in connection with the acceptance, administration,
exercise and performance of its duties under this Agreement, including the costs
and expenses of defending against any claim of liability in the premises. The
indemnity provided for herein shall survive the termination of this Agreement
and the exercise or expiration of the Rights. The costs and expenses incurred in
enforcing this right of indemnification shall be paid by the Company. Anything
to the contrary notwithstanding, in no event shall the Rights Agent be liable
for special, punitive, indirect, consequential or incidental loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage. Any
liability of the Rights Agent under this Rights Agreement will be limited to the
amount of fees paid by the Company to the Rights Agent.
The Rights Agent shall be authorized and protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its acceptance and administration of this Agreement and the
exercise and performance of its duties hereunder, in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of its counsel as set
forth in Section 20 hereof.
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Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any Person succeeding to the shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such Person
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. If at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
If at any time the name of the Rights Agent shall be changed and at such
time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
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Section 20. Duties of Rights Agent. The Rights Agent undertakes to perform
only the duties and obligations expressly imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company or an employee of the Rights Agent), and the
advice or opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in good faith and in accordance with such advice or 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 an Acquiring Person
and the determination of the current per share market price of any
security) be proved or established by the Company prior to taking,
suffering or omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, a Vice-President, the Chief Financial
Officer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full and complete authorization and
protection the Rights Agent and the Rights Agent shall incur no liability
for or in respect of any action taken, suffered or omitted in good faith
by it under the provisions of this Agreement in reliance upon such
certificate.
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(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not have any liability for or be under
any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any changes in the exercisability of the Rights (including
the Rights becoming null and void pursuant to Section 11(a)(iii) of this
Agreement) or any adjustments in the terms of the Rights (including the
manner, method or amount thereof) provided for in Sections 3, 11, 13, 23
or 24 of this Agreement or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after receipt of the
certificate described in Section 12 hereof, upon which the Rights Agent
may rely after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to
be issued pursuant to this Agreement or any Right Certificate or as to
whether any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and non-assessable.
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(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, a Vice President, the Secretary or the Chief Financial Officer
of the Company, and to apply to such officers for advice or instructions
in connection with its duties, and such instructions shall be full
authorization and protection to the Rights Agent and the Rights Agent
shall not be liable for or in respect of any action taken, suffered or
omitted by it in good faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions.
The Rights Agent shall be fully authorized and protected in relying upon
the most recent instructions received by any such officer. Any application
by the Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action proposed to be
taken, suffered or omitted by the Rights Agent under this Rights Agreement
and the date on and/or after which such action shall be taken or suffered
or such omission shall be effective. The Rights Agent shall not be liable
for any action taken or suffered by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after
the date specified in such application (which date shall not be less than
five Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date)
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unless, prior to taking any such action (or the effective date in the case
of an omission), the Rights Agent shall have received written instructions
in response to such application specifying the action to be taken,
suffered or omitted.
(h) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the
reverse thereof, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 or 2 thereof, the Rights
Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.
(i) The Rights Agent and any shareholder, affiliate, 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 or any such shareholder, affiliate,
director, officer or employee from acting in any other capacity for the
Company or for any other legal entity.
(j) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself
(through its directors, officers and employees) or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company or any other Person
resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct, in the selection and
continued employment thereof.
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(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be,
has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer without first
consulting with the Company.
(l) 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 it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured
to it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares known to the Rights Agent by registered
or certified mail, and to the registered holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified mail, and to the
registered holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning
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or incapacitated Rights Agent or by the holder of a Right Certificate (who
shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a Person organized and doing business under the laws of the United
States, or of any state of the United States, in good standing, authorized under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million or (b) an affiliate of a Person described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by the Board of Directors
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to reflect any adjustment or change in the Purchase Price per share and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption.
(a) The Board of Directors may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01
per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
The Company may, at its option, pay the Redemption Price in cash, Common
Shares (based on the current per share market price of the Common Shares
at the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors. The redemption of the Rights by the
Board of Directors may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.
(b) Subject to the last sentence of Section 23(a) of this
Agreement, immediately upon the action of the Board of Directors ordering
the redemption of the Rights pursuant to Section 23(a) (or at such later
time as the Board of Directors may establish for the effectiveness of such
redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price. The
Company shall promptly give public notice of any such redemption (with
prompt written notice thereof to the Rights Agent); provided, however,
that the failure to give, or any defect in,
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any such notice shall not affect the legality or validity of such
redemption. Within 10 days after the action of the Board of Directors
ordering the redemption of the Rights or the effectiveness of the
redemption of the Rights pursuant to Section 23(a), as the case may be,
the Company shall mail a notice of such redemption to all the holders of
the then outstanding Rights at their last addresses as they appear upon
the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. Except in connection with the purchase of Common
Shares prior to the Distribution Date, neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 of this Agreement.
Section 24. Exchange.
(a) The Board of Directors may, at its option, at any time after
the occurrence of a Triggering Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(iii) of this
Agreement) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date of this Agreement (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person
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(other an Exempt Person) together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to Section 24(a) and without any
further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares 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 (with
prompt written notice thereof the Rights Agent); provided, however, that
the failure to give, or any defect in, such notice shall not affect
legality or 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 Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(iii) of this
Agreement) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Shares (or equivalent preference
shares, as such term is defined in Section 11(b) hereof) or any other
equity securities which a majority of the Board of Directors determines to
be a Common Share equivalent, for Common Shares exchangeable
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for Rights, at the initial rate of one one-hundredth of a Preferred Share
(or equivalent preference share or other equity security determined to be
a Common Share equivalent) for each Common Share, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred
Shares pursuant to the terms thereof, so that the fraction of a Preferred
Share delivered in lieu of each Common Share shall have the same voting
rights as one Common Share.
(d) If there shall not be sufficient Common Shares or Preferred
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common
Shares upon any exchange of Rights. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) of this Agreement) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
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Section 25. Notice of Certain Events.
(a) If the Company shall propose at any time after the Distribution
Date (i) to declare any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the
holders of its Preferred Shares (other than a regular cash dividend), (ii)
to offer to the holders of its Preferred Shares rights or warrants to
subscribe for or to purchase any additional Preferred Shares or shares of
any class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv) to
effect any consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to, any other Person, (v) to effect the liquidation, dissolution
or winding up of the Company, or (vi) to declare or pay any dividend on
the Common Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then, in each
such case, the Company shall give to each holder of a Right Certificate,
in accordance with Section 26 of this Agreement, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 20
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days prior to the record date for determining holders of the Preferred
Shares for purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the Common
Shares and/or Preferred Shares, whichever shall be the earlier. Failure to
give any notice provided for in this Section 25, however, or any defect
therein, shall not affect the legality or validity of any such action
taken by the Company.
(b) If any of the events set forth in Section 11(a)(ii) or Section
13(a) of this Agreement shall occur, then, in any such case, the Company
shall as soon as practicable thereafter give to the Rights Agent and to
each holder of a Right Certificate, in accordance with Section 26 of this
Agreement, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13(a) of this Agreement.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Pharmchem Laboratories, Inc.
1505-A O'Brien Drive
Menlo Park, California 94025
Attention: Chief Financial Officer
Subject to the provisions of Section 21 of this Agreement, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
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Chase Mellon Shareholder Services, L.L.C.
235 Montgomery Street
San Francisco, California 94104
Attention: Gloria Pouncil
with a copy to:
Chase Mellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, New Jersey 07660-2108
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
(a) The Company may from time to time supplement or amend this
Agreement without the approval of the Rights Agent, any holders of Common
Shares or 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; provided, however, (i) that no such amendment
or supplement shall be effected without the written consent of the Rights
Agent if it would affect any right, duty, obligation or immunity of the
Rights Agent under this Agreement and (ii) that from and after such time
as any Person becomes an Acquiring Person, this Agreement shall not be
amended (A) so as to make the Rights redeemable if the Rights are not then
redeemable in accordance with Section 23(a) of this Agreement or (b) in
any manner which would adversely affect the interests of the holders of
Rights (other
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than holders of Rights which have become void pursuant to Section
11(a)(iii) of this Agreement).
(b) To effect any amendment or supplement pursuant to this Section
27, the Company shall deliver to the Rights Agent a copy, certified by the
Secretary or any Assistant Secretary of the Company, of resolutions of the
Board of Directors adopting such amendment or supplement and a certificate
from an appropriate officer of the Company that states that the proposed
supplement or amendment complies with this Section 27. Upon such delivery,
the amendment or supplement shall be deemed effective and shall be
administered by the Rights Agent as part of this Agreement in accordance
with its terms.
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. The
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors, or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (a) interpret the provisions of this Agreement, and (b) 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 purpose of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Right Certificates and all other interested
parties, and (y) not subject the
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Board of Directors to any liability to the holders of the Right Certificates.
The Rights Agent is entitled always to assume the Company's Board of Directors
acted in good faith and shall be fully protected and incur no liability in
reliance thereon.
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 Right Certificates (and, prior to the Distribution
Date, the Common Shares) (and, after the Distribution Date, also the holders of
(i) securities of the Company or any of its Subsidiaries convertible into Common
Shares and (ii) any options, warrants or other rights to purchase Common Shares,
which convertible securities, options, warrants or other rights were outstanding
on the Distribution Date) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) (and,
after the Distribution Date, also any holder of any such convertible securities,
options, warrants or other rights).
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 and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of California and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State; provided, however,
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that all provisions regarding the rights, duties and obligations of the Rights
Agent shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed entirely
within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 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.
[This space intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
PHARMCHEM LABORATORIES, INC.
By: /s/ Joseph W. Halligan
Joseph W. Halligan
President
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Gloria Pouncil
Name: Gloria Pouncil
Title: Relationship Manager
as Rights Agent
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EXHIBIT A
FORM
OF
CERTIFICATE OF DETERMINATION
OF
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
PHARMCHEM LABORATORIES, INC.
(Pursuant to Section 401 of the
California General Corporation Law)
------------------
The undersigned, Joseph W. Halligan and David A. Lattanzio, as
President and Secretary, respectively, of PharmChem Laboratories, Inc., a
corporation organized and existing under the General Corporation Law of the
State of California (hereinafter called the "Company"), hereby certify as
follows:
1. The following resolution was adopted by the Board of Directors
of the Company as required by Section 401 of the General Corporation Law at a
meeting duly called and held on November 30, 1999:
"RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Amended and
Restated Articles of Incorporation, as amended to date (hereinafter called the
"Articles of Incorporation"), the Board of Directors hereby creates a series of
Preferred Shares, no par value (the "Preferred Stock"), of the Company and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series B Junior Participating Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting the Series B Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series B Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (the "Preferred Stock") of the Company or
Preferred Stock (or any similar stock) ranking prior and superior to the
Series B Preferred Stock with respect to dividends, the holders of shares
of Series B
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Preferred Stock, in preference to the holders of Common Stock (the "Common
Stock") of the Company, and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in
cash on the first day of January, April, July and October 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 B Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all
cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share
of Series B Preferred Stock. In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
to which holders of shares of Series B 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) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series B
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series B 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 B
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior
to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series B Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the shareholders of the
Company. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which
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holders of shares of Series B Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Determination creating a series of Preferred Stock or Preferred Stock
or any similar stock, or by law, the holders of shares of Series B
Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of shareholders
of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series
B Preferred Stock outstanding shall have been paid in full, the Company
shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series B Preferred Stock, except dividends paid ratably on
the Series B Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Company ranking
junior (as to dividends or upon dissolution, liquidation and
winding up) to the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock, or any shares
of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B 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 Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could,
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under paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the Company 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
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, or in any other Certificate of Determination creating
a series of Preferred Stock or any similar stock or as otherwise required by
law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B Preferred Stock
unless, prior thereto, the holders of shares of Series B Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Series B Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of shares of Common Stock, or (B)
to the holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series B Preferred Stock,
except distributions made ratably on the Series B Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Company shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series B Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any 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 Company shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series B 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.
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Section 8. No Redemption. The shares of Series B Preferred Stock
shall not be redeemable.
Section 9. Rank. The Series B Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Company's Preferred Stock.
Section 10. Amendment. If any proposed amendment to the Articles of
Incorporation would materially alter or change the preferences, special rights
or powers given to the Series B Preferred Stock so as to affect the Series B
Preferred Stock adversely, then the holders of the Series B Preferred Stock
shall be entitled to vote as a series upon such amendment, and the affirmative
vote of two-thirds of the outstanding shares of Series B Preferred Stock shall
be necessary to the adoption thereof, in addition to such other vote as may be
required by the General Corporation Law of the State of California.
Section 11. Fractional Shares. Fractional shares of Series B
Preferred Stock may be issued, but, unless the Board of Directors of the Company
shall otherwise determine, only in multiples of one one-hundredth of a share.
The holder of any fractional share of Series B Preferred Stock shall be entitled
to receive dividends, participate in distributions, exercise voting rights and
have the benefit of all other powers, preferences and rights relating to Series
B Preferred Stock in the same proportion as such fractional share bears to a
whole share of Series B Preferred Stock."
2. The number of shares constituting the Series B Preferred Stock
is 100,000.
3. None of the Series B Preferred Stock has been issued.
IN WITNESS WHEREOF, this Certificate of Determination is executed
by the undersigned this 30th day of November, 1999.
-----------------------------------------
Joseph W. Halligan
President, PharmChem Laboratories, Inc.
-----------------------------------------
David A. Lattanzio
Secretary, PharmChem Laboratories, Inc.
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EXHIBIT B
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER NOVEMBER 30, 2009 OR EARLIER IF REDEEMED OR
EXCHANGED IN ACCORDANCE WITH THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS HELD BY A PERSON
WHO IS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON
OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND VOID.
Rights Certificate
Pharmchem Laboratories, Inc.
This certifies that , or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement dated as
of November 30, 1999 (the "Rights Agreement") between Pharmchem Laboratories,
Inc., a California corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement), and prior to 5:00 p.m., California
time, on November 30, 2009 at the office or agency of the Rights Agent
designated for such purpose, or of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series B Junior
Participating Preferred Stock (a "Preferred Share") of the Company, at a
purchase price of $35.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-hundredths of a
Preferred Share which 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 November 30, 1999, based on the Preferred Shares as constituted at
such date, and are subject to adjustment as provided in the Rights Agreement.
Upon the occurrence of a Triggering Event, if the Rights evidenced by this
Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee from an Acquiring Person or an Affiliate or
Associate of an Acquiring Person who becomes a transferee
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after the Acquiring Person becomes such, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee from an Acquiring Person or an
Affiliate or Associate of an Acquiring Person who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such, such Rights shall
become null and void and no holder thereof shall have any right with respect to
such Rights from and after the occurrence of any such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, as the same may be amended from time to
time, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and the above-mentioned
office or agency of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.01 per Right, (ii) entitle the holder to purchase the
number of Common Shares and/or, under certain circumstances, the number of
Preferred Shares, cash, other property or other securities with a value of twice
the exercise price, or (iii) may be exchanged, in whole or in part, by the
Company at its option for the number of Preferred Shares, Common Shares or other
securities with a market value equal to 50% of fair market value.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a 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
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to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company and its
corporate seal. Dated as of November 30, 1999.
ATTEST: PHARMCHEM LABORATORIES, INC.
By _________________________________
Name:
Title: Secretary
Countersigned:
____________________________________
as Rights Agent
By _________________________________
Authorized Signature
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To PHARMCHEM LABORATORIES, INC.:
The undersigned hereby irrevocably elects to exercise Rights represented
by this Right Certificate to purchase the Preferred Shares issuable upon the
exercise of such Rights (or such other securities of the Company or of any other
Person which may be issuable upon exercise of the Rights) and requests that
certificates for such securities 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 Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert Social Security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _____________________, __
Signature
Signature Guaranteed:
(Signature must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.)
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Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are/ [ ] are not
being exercised by or on behalf of a person who is, was or became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did/ [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate thereof.
Signature
Signature Guaranteed:
(Signature must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.)
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[Form of Reverse Side of Right Certificate--continued]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________ hereby sells, assigns
and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _________________,___
Signature
Signature Guaranteed:
(Signature must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.)
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is/ [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is, was or became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did/ [ ] did not purchase or otherwise acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate thereof.
Signature
Signature Guaranteed:
(Signature must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.)
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<PAGE> 77
NOTICE
Each signature to the foregoing Form of Assignment, the Form of Election
to Purchase, and the related Certificates, as the case may be, must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
If the Certificate set forth above in the Form of Assignment or the Form
of Election to Purchase, as the case may be, is not completed and signed, the
Company and the Rights Agent will deem the Rights evidenced by this Right
Certificate to be void as provided in Section 11(a)(iii) of the Rights Agreement
and such Form of Assignment or Form of Election to Purchase will not be honored.
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EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS HELD
BY A PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF, WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND VOID.
PHARMCHEM LABORATORIES, INC.
SUMMARY OF SHAREHOLDER RIGHTS AGREEMENT
Background. On November 30, 1999, the Board of Directors of Pharmchem
Laboratories, Inc., a California corporation (the "Company"), declared a
dividend of one preferred share purchase right ("Right") on each outstanding
share of the Company's common stock (the "Common Shares") payable to
shareholders of record at the close of business on November 30, 1999 (the
"Record Date"). Except as described below, each Right, when exercisable,
entitles the holder thereof to purchase from the Company one one-hundredth of a
share of Series B Junior Participating Preferred Shares (the "Preferred Shares")
of the Company at an exercise price of $35.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
Distribution Date. Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
has become an "Acquiring Person" (as defined below) or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group
becoming an Acquiring Person (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by Common Share certificates.
Acquiring Person. An "Acquiring Person" is a person or group of affiliated
or associated persons who have acquired beneficial ownership of 15% or more of
the aggregate number of Common Shares of the Company then outstanding; provided,
however that (i) in no event shall the Company, any subsidiary of the Company,
or any employee benefit plan of the Company or its subsidiaries be deemed to be
an Acquiring Person, (ii) no Person who or which, together with all affiliates
and associates of such person, was the beneficial owner of 15% or more of the
aggregate number of Common Shares of the Company issued and outstanding as of
5:00 p.m., California time, on November 30, 1999 shall be deemed to be an
"Acquiring Person"; provided, however, that if such person together with any
affiliates and associates of such person, after 5:00 p.m., California time, on
November 30, 1999, (A) acquires, in one or more transactions, beneficial
ownership of an additional number of Common Shares, and (B) beneficially owns
after such acquisitions 25% or more of Common Shares of the Company then
outstanding, then such person shall be deemed to be an "Acquiring Person," (iii)
no person shall become an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company which, by reducing the number of the Company's
Common Shares outstanding, increases the proportionate number of shares
beneficially owned by such person to 15% (or, in the case of persons described
in clause (ii) of this paragraph, 25%) or
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more of the Common Shares then outstanding; provided, however, that if a person
shall become the beneficial owner of 15% (or, in the case of persons described
in clause (ii) of this paragraph, 25%) or more of the Common Shares of the
Company then outstanding by reason of share acquisitions by the Company and
shall, after such share acquisitions by the Company, (A) acquire, in one or more
transactions, beneficial ownership of an additional number of Common Shares
which exceeds the lesser of 10,000 Common Shares or 0.25% of the
then-outstanding Common Shares and (B) beneficially own after such acquisition
15% (or, in the case of persons described in clause (ii) of this paragraph, 25%)
or more of the aggregate number of Common Shares of the Company then
outstanding, then such person shall be deemed to be an "Acquiring Person," and
(iv) if the Board of Directors 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 Common Shares so that
such person would no longer be an Acquiring Person, then such person shall not
be deemed to be an "Acquiring Person."
Trading of Rights. The Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of the Rights), the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Common Shares will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
Exercisability. The Rights are not exercisable until the Distribution
Date. The Rights will expire on November 30, 2009 (the "Final Expiration Date"),
unless the Rights are earlier redeemed or exchanged by the Company, as described
below.
Exercise Price. The Purchase Price payable, and the number of Preferred
Shares 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 Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then-current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of
indebtedness, assets or capital stock (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those referred to
above). With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. The Company will not be required to issue fractional Common
Shares or Preferred Shares (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash may be made based on the market price of the Common Shares or Preferred
Shares on the last trading day prior to the date of exercise.
Preferred Shares. Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Common Share. Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preferred Share will be entitled to the
greater of (1) a preferential quarterly dividend payment of $1.00 per share, or
(2) an aggregate dividend of 100 times the dividend declared per Common Share.
In the event of liquidation, the holders of the Preferred Shares will be
entitled to a preferential liquidation payment of $100 per share, plus an amount
equal to accrued and
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unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, provided that the holders of Preferred Shares shall be entitled
to receive an aggregate amount per share equal to 100 times the aggregate amount
to be distributed per share of common stock. Each Preferred Share will have 100
votes, voting together with the Common Shares except as otherwise required by
law. Finally, in the event of any merger, consolidation or other transaction in
which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Flip-In. If any person or group becomes an Acquiring Person, then each
holder of a Right (other than Rights beneficially owned by the Acquiring Person,
any Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement), and certain transferees thereof, which will be void) will have the
right to receive upon exercise of such Right that number of Common Shares (or,
in certain circumstances, cash, property or other securities of the Company)
having a market value of two times the exercise price of the Right.
Flip-Over. If at any time after the time that any person or group becomes
an Acquiring Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
(other than Rights beneficially owned by the Acquiring Person, any Associate or
Affiliate thereof, and certain transferees thereof, which will be void) will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Right.
Exchange of Rights. At any time after the time that any person or group
becomes an Acquiring Person and prior to the acquisition by such person or group
of 50% or more of the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (other than Rights beneficially owned by such
person or group, any Associate or Affiliate thereof, and certain transferees
thereof, which will be void), in whole or in part, at an exchange ratio of one
Common Share or one one-hundredth of a Preferred Share (or of a share of a class
or series of the Company's preferred stock having equivalent rights, preferences
and privileges) per Right (subject to adjustment).
Redemption of Rights. At any time prior to the time that any person
becomes an Acquiring Person, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right, subject to
adjustment (the "Redemption Price"), which may (at the option of the Company) be
paid in cash, Common Shares or other consideration deemed appropriate by the
Board of Directors. The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish; provided, however, that no redemption will be
permitted or required after the time that any person becomes an Acquiring
Person. Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of the Rights will be to
receive the Redemption Price.
Amendment. The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
except that from and after such time as any person becomes an Acquiring Person
no such amendment may make the Rights redeemable if the Rights are not then
redeemable in accordance with the terms of the Rights Agreement or may adversely
affect the interests of the holders of the Rights.
No Rights as Shareholder. 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.
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Rights Agreement Governs. This Summary is subject to all of the terms,
provisions and conditions of the Rights Agreement, as the same may be amended
from time to time, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. 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 dated December 1, 1999.
Copies of the Rights Agreement are also on file at the principal executive
offices of the Company and the office of the Rights Agent.
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