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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
ZONAGEN, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0233274
(State of incorporation or organization) (I.R.S. Employer Identification No.)
2408 TIMBERLOCH PLACE, SUITE B-4
THE WOODLANDS, TEXAS 77380
(Address of principal executive office) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered: each class is to be registered:
Rights to purchase Series One Pacific Stock Exchange
Junior Participating Preferred Stock
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A(c), check the following box. /X/
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A(d), check the following box. |_|
Securities Act registration statement file number to which this form relates:
not applicable.
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:
Rights to purchase Series One Nasdaq National Market
Junior Participating Preferred Stock
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The authorized capital stock of Zonagen, Inc. (the "Company") consists of
20,000,000 shares of common stock, par value $.001 per share (the "Common
Stock"), and 5,000,000 shares of preferred stock, par value $.001 per share, of
which 500,000 shares are designated the Series One Junior Participating
Preferred Stock (the "Preferred Stock").
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On September 1, 1999, the Board of Directors of the Company declared a
dividend distribution of one preferred stock purchase right (a "Right") for each
outstanding share of Common Stock. The distribution is payable on September 13,
1999 (the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder thereof to purchase from the Company one
one-hundredth of a share of Preferred Stock at a price of $20.00, subject to
adjustment. The following is a summary of the Rights; the full description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Harris Trust and Savings Bank, as rights agent (the
"Rights Agent").
Copies of the Rights Agreement and the Certificate of Designation are
available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation for the Preferred Stock, including the
definitions therein of certain terms, which Rights Agreement and Certificate of
Designation are incorporated herein by reference.
Initially, the Rights will attach to all certificates representing shares
of outstanding Company Common Stock, and no separate Rights Certificates will be
distributed. The Rights will separate from the Company Common Stock and the
Distribution Date will occur upon the earlier of (i) 10 days following the date
of public announcement that a person or group of persons has become an Acquiring
Person (as hereinafter defined) or (ii) 10 business days (or such later date as
may be determined by action of the Board of Directors prior to the time a person
becomes an Acquiring Person) following the commencement of, or the announcement
of an intention to make, a tender offer or exchange offer upon consummation of
which the offeror would, if successful, become an Acquiring Person (the earlier
of such dates being called the "Distribution Date"). The term "Acquiring Person"
means any person who or which, together with all of its affiliates and
associates, shall be the beneficial owner of 20% or more of the outstanding
Common Stock, but shall not include the Company or any Subsidiary of the Company
or any employee benefit plan of the Company.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, 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 Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 13, 2002 (the "Expiration Date").
The Purchase Price payable, and the number of one one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock
of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to in (ii) above).
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The number of outstanding Rights and the number of one one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Shares Acquisition Date (the date of public
announcement that an Acquiring Person has become such) the Company is acquired
in a merger or other business combination transaction or more than 50% of its
consolidated assets or earning power are sold, proper provision will be made so
that each holder of a Right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of the
Right (the "Flip-Over Right").
In the event that a person (other than an Exempt Person) becomes an
Acquiring Person, proper provision shall be made so that each holder of a Right
(other than the Acquiring Person and its affiliates and associates) will
thereafter have the right to receive upon exercise that number of shares of
Common Stock (or, under certain circumstances, cash, other equity securities or
property of the Company) having a market value equal to two times the Purchase
Price of the Rights (the "Flip-In Right"). Upon the occurrence of the foregoing
event giving rise to the exercisability of the Rights, any Rights that are or
were at any time owned by an Acquiring Person shall become void.
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. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock; cash will be paid in lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston, Texas
time on the 10th day after the Shares Acquisition Date or (ii) the expiration of
the Rights, the Company may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right (the "Redemption Price"); provided, that (i) if the
Board of Directors authorizes redemption on or after the time a person becomes
an Acquiring Person, then such authorization must be by Board Approval (as
hereinafter defined) and (ii) the period for redemption may, upon Board
Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company.
Immediately upon any redemption of the Rights described in this paragraph, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors without
the consent of the holders of the Rights at any time and from time to time
provided that such amendment does not adversely affect the interests of the
holders of the Rights. In addition, during any time that the Rights are subject
to redemption, the terms of the Rights may be amended by Board Approval,
including an amendment that adversely affects the interests of the holders of
the Rights, without the consent of the holders of Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Preferred Stock (or other consideration).
DESCRIPTION OF PREFERRED STOCK
Each one-hundredth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be
issued by the Company.
Each Preferred Share Fraction will have a minimum preferential quarterly
dividend rate of $0.01 per Preferred Share Fraction but will, in any event, be
entitled to a dividend equal to the per share dividend declared on the Company
Common Stock.
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In the event of liquidation, the holder of a Preferred Share Fraction will
receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
Each Preferred Share Fraction will have one vote, voting together with the
Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Preferred Share Fraction will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Preferred Share Fraction that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of the Company's Common Stock.
Additional information regarding the Rights is set forth in the Rights
Agreement which is filed herewith as Exhibit 1 and incorporated herein by
reference.
ITEM 2. EXHIBITS
3.1 Certificate of Designation of Series One Junior Participating
Preferred Stock dated September 2, 1999 (attached as Exhibit A to
the Rights Agreement filed as Exhibit 4.1 hereto).
4.1 Rights Agreement, dated September 1, 1999, between the Company and
Harris Trust and Savings Bank, as Rights Agent.
4.2 Form of Rights Certificate (attached as Exhibit B to the Rights
Agreement filed as Exhibit 4.1 hereto).
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this Registration Statement
on Form 8-A to be signed on its behalf by the undersigned, thereunto duly
authorized.
ZONAGEN, INC.
By: /s/ JOSEPH S. PODOLSKI
----------------------------
Joseph S. Podolski
President and
Chief Executive Officer
Dated: September 2, 1999
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EXHIBIT INDEX
Exhibit No.
3.1 Certificate of Designation of Series One Junior Participating
Preferred Stock dated September 2, 1999 (attached as Exhibit A to
the Rights Agreement filed as Exhibit 4.1 hereto).
4.1 Rights Agreement, dated September 1, 1999, between the Company and
Harris Trust and Savings Bank, as Rights Agent.
4.2 Form of Rights Certificate (attached as Exhibit B to the Rights
Agreement filed as Exhibit 4.1 hereto).
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ZONAGEN, INC.
AND
HARRIS TRUST AND SAVINGS BANK, AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 1, 1999
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Certain Definitions .................................................. 1
Section 2. Appointment of Rights Agent .......................................... 7
Section 3. Issue of Right Certificates .......................................... 7
Section 4. Form of Right Certificates ........................................... 10
Section 5. Countersignature and Registration .................................... 10
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates .............. 11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights ........ 13
Section 8. Cancellation and Destruction of Right Certificates ................... 15
Section 9. Availability of Preferred Shares ..................................... 15
Section 10. Preferred Shares Record Date ........................................ 17
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights .. 18
Section 12. Certificate of Adjusted Purchase Price or Number of Shares .......... 32
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 32
Section 14. Fractional Rights and Fractional Shares ............................. 38
Section 15. Rights of Action .................................................... 40
Section 16. Agreement of Right Holders .......................................... 41
Section 17. Right Certificate Holder Not Deemed a Stockholder ................... 42
Section 18. Concerning the Rights Agent ......................................... 42
Section 19. Merger or Consolidation or Change of Name of Rights Agent ........... 43
Section 20. Duties of Rights Agent .............................................. 44
Section 21. Change of Rights Agent .............................................. 48
</TABLE>
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<TABLE>
<S> <C>
Section 22. Issuance of New Right Certificates .................................. 50
Section 23. Redemption .......................................................... 50
Section 24. Exchange ............................................................ 51
Section 25. Notice of Certain Events ............................................ 54
Section 26. Notices ............................................................. 55
Section 27. Supplements and Amendments .......................................... 56
Section 28. Successors .......................................................... 57
Section 29. Benefits of this Agreement .......................................... 57
Section 30. Determination and Actions by the Board of Directors ................. 57
Section 31. Severability ........................................................ 58
Section 32. Governing Law ....................................................... 58
Section 33. Counterparts ........................................................ 58
Section 34. Descriptive Headings ................................................ 58
</TABLE>
Exhibits: A - Certificate of Designations
B - Form of Right Certificate
C - Summary of Rights to Purchase Preferred Shares
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RIGHTS AGREEMENT
This Agreement, dated as of September 1, 1999 ("Agreement"), between
Zonagen, Inc., a Delaware corporation (the "Company"), and Harris Trust and
Savings Bank, an Illinois banking corporation, as rights agent (the "Rights
Agent").
R E C I T A L S:
WHEREAS, at a meeting of the Board of Directors of the Company duly called
and held on September 1, 1999, at which a quorum was present and acting
throughout, such Board of Directors has authorized and declared a dividend of
one preferred share purchase right (a "Right") for each share of Common Stock
(as such term is hereinafter defined) of the Company outstanding at the close of
business on September 13, 1999 (the "Record Date"), each Right representing the
right to purchase one one-hundredth of a Preferred Share, upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each share of Common Stock
that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner (as such
term is hereinafter defined) of 20% or more of the shares of Common Stock
then outstanding, but shall not include an
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Exempt Person; provided, however, that if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
"Acquiring Person" has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially owned
a percentage of Common Stock that would otherwise cause such Person to be
an "Acquiring Person" or (ii) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but was unaware of the consequences
of such Beneficial Ownership under this Agreement) and without any
intention of changing or influencing control of the Company, and such
Person, as promptly as practicable after being advised of such
determination divested or divests himself or itself of Beneficial
Ownership of a sufficient number of shares of Common Stock so that such
Person would no longer be an Acquiring Person, then such Person shall not
be deemed to be or to have become an "Acquiring Person" for any purposes
of this Agreement. Notwithstanding the foregoing, no Person shall become
an "Acquiring Person" as the result of an acquisition of Common Stock by
the Company which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to
20% or more of the Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 20% or more
of the Common Stock of the Company then outstanding by reason of the share
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Stock of the
Company, then such Person shall be deemed to be an "Acquiring Person"
unless upon the consummation of the acquisition of such additional shares
of Common Stock such Person does not own 20% or more of the shares of
Common Stock then outstanding.
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(b) "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement.
(c) "Associate" shall have the meaning ascribed to such term in Rule
l2b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and, shall be
deemed to have "Beneficial Ownership" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon
the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, (I) 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 (II) securities which such
Person has a right to acquire upon the exercise of Rights at any
time prior to the time a Person becomes an Acquiring Person; or (B)
the right to vote pursuant to any agreement, arrangement
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or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security
by reason of such an agreement, arrangement or understanding if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to such Person
in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act (as such term is hereinafter
defined) and (2) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to
Section 1(d)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership
to the contrary, the phrase "then outstanding," when used with reference
to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together
with the number of such securities not then issued and outstanding which
such Person would be deemed to own beneficially hereunder.
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(e) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in Illinois are authorized
or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Houston, Texas time, on such date; provided, however, that, if such date
is not a Business Day, it shall mean 5:00 P.M., Houston, Texas time, on
the next succeeding Business Day.
(g) "Common Stock" when used with reference to the Company shall
mean the common stock, par value $0.001 per share, of the Company. "Common
Shares" when used with reference to the Company shall mean shares of
Common Stock. "Common Stock" when used with reference to any Person other
then the Company shall mean the capital stock (or, in the case of an
unincorporated entity, the equivalent equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary
of another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(h) "Common Stock equivalent" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Company" shall have the meaning set forth in the preamble
hereof.
(j) "current per share market price" shall have the meaning set
forth in Section 11(d) hereof.
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(l) "Distribution Date" shall have the meaning set forth in Section
3 hereof.
(m) "Equivalent Preferred Shares" shall have the meaning set forth
in Section 11(b) hereof.
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(n) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(o) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(p) "Exempt Person" shall mean the Company or any Subsidiary (as
such term is hereinafter defined) of the Company or any employee benefit
plan of the Company.
(q) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(r) "Nasdaq" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.
(s) "Person" shall mean any individual, firm, corporation, limited
liability company, partnership, limited partnership or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(t) "Preferred Stock" shall mean the Series One Junior Participating
Preferred Stock, par value $0.001 per share, of the Company having the
rights and preferences set forth in the Form of Certificate of
Designations attached to this Agreement as Exhibit A. "Preferred Shares"
shall mean shares of the Preferred Stock.
(u) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(v) "Purchase Price" shall have the meaning set forth in Section
7(b) hereof.
(w) "Record Date" shall have the meaning set forth in the second
paragraph hereof.
(x) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(y) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(z) "Rights Agent" shall have the meaning set forth in the preamble
hereof.
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(aa) "Right" shall have the meaning set forth in the second
paragraph hereof.
(ab) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(ac) "Section 11(a)(iii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(ad) "Security" shall have the meaning set forth in Section 11(d)
hereof.
(ae) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(af) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
(ag) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ah) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(ai) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall, prior to the Distribution Date, also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the
tenth day after the Shares Acquisition Date or (ii) the tenth business day (or
such later date as may be determined by action of the Board of Directors of the
Company prior to such time as any Person becomes an
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Acquiring Person) after the date of the commencement by any Person of, or of the
first public announcement of the intention of any Person to commence, a tender
or exchange offer the consummation of which would result in any Person becoming
an Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the Rights will be transferable only in connection
with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, at the expense of the Company, send) by first-class,
insured, postage prepaid mail, to each record holder of Common Shares as of the
close of business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right for each share of
Common Stock so held. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights
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attached thereto. Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c) that are subsequently issued or distributed by the Company)
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 Zonagen, Inc.
and Harris Trust and Savings Bank, as Rights Agent (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 Zonagen, Inc. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be redeemed or be evidenced by separate
certificates and no longer be evidenced by this certificate. Zonagen, Inc.
will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights owned by or
transferred to any Person who becomes an Acquiring Person or an Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement),
and certain transferees thereof, will become null and void and will no
longer be transferable.
With respect to such certificate containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and
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retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11, 13 and 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, but the number of such one
one-hundredths of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may
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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 Certificates although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the
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principal office of the Rights Agent. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon, the Rights Agent shall countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment 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.
(b) Subject to the provisions of Section 11(a)(ii) hereof, at any time
after the Distribution Date and prior to the close of business on the earlier of
the Redemption Date and the Final Expiration Date, 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
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) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein), in whole or in part, at
any time after the Distribution Date, upon surrender of the
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Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the Rights
Agent, together with payment of the Purchase Price for each one one-hundredth of
a Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on September 13, 2002 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date") and (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
purchasable pursuant to the exercise of a Right shall initially be $20.00, and
shall be subject to adjustment from time to time as provided in Section 11 or 13
hereof (the "Purchase Price") 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 to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests, or (B) 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 of the Preferred Shares
with such depositary agent) and the Company hereby directs such depositary agent
to comply with such request; (ii) when appropriate, requisition from
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the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof; (iii) 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 (iv) when
appropriate, after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered holder of
any Right Certificate shall exercise less than all the Rights evidenced thereby,
a new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Right Certificate or to his duly authorized assigns, subject to the provisions
of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
transfer or exercise of Rights pursuant to Section 6 hereof or this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
transfer or exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) thereof as the Company
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 canceled 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
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this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, 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. Availability of Preferred Shares. (a) The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
(b) So long as the shares of Preferred Stock (and, following the time that
a Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on any national securities exchange or 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 or
admitted to trading on any such exchange or quotation system upon official
notice of issuance upon such exercise.
(c) From and after such time as the Rights become exercisable, the Company
shall use its best efforts, if then necessary to permit the issuance of shares
of Preferred Stock (and following the time that a Person first becomes an
Acquiring Person, shares of Common Stock and other
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<PAGE> 19
securities) upon the exercise of Rights, to register and qualify such shares of
Preferred Stock (and following the time that a Person first becomes an Acquiring
Person, shares of Common Stock and other securities) under the Securities Act
and any applicable state securities or "Blue Sky" laws (to the extent exemptions
therefrom are not available), cause such registration statement and
qualifications to become effective as soon as possible after such filing and
keep such registration and qualifications effective until the earlier of the
date as of which the Rights are no longer exercisable for such securities and
the Final Expiration Date. The Company may temporarily suspend, for a period of
time not to exceed 90 days, the exercisability of the Rights in order to prepare
and file a registration statement under the Securities Act and permit it to
become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement under the Securities Act (if required) shall have been
declared effective.
(d) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights
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<PAGE> 20
until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares or other securities
or property covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide
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the outstanding Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of Preferred Shares or (D) issue any shares
of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred
Share transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right.
(ii) Subject to Sections 23 and 24 of this Agreement, in the event
any Person becomes an Acquiring Person, then (A) the Purchase Price shall
be adjusted to be the Purchase Price in effect immediately prior to such
Person becoming an Acquiring Person multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such Person becoming an Acquiring Person, whether or
not such Right was then exercisable, and (B) each holder of a Right,
except as otherwise provided in this Section 11(a)(ii) and Subsection
11(a)(iii) hereof, shall thereafter have the right to receive, upon
exercise at a price equal to the Purchase Price (as so adjusted), in
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accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of shares of Common Stock of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase
Price by the 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 Stock (determined
pursuant to Section 11(d) hereof) on the date such Person became an
Acquiring Person; provided, however, that the Purchase Price and the
number of shares of Common Stock so receivable upon exercise of a Right
shall thereafter be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof. Notwithstanding anything in this
Agreement to the contrary, however, from and after the time (the
"Invalidation Time") when any Person first becomes an Acquiring Person,
any Rights that are beneficially owned by (x) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (y) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the Invalidation Time or (z) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a
transferee prior to or concurrently with the Invalidation Time pursuant to
either (I) a transfer from the Acquiring Person to holders of its equity
securities or to any person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (II) a
transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding
the provisions of this paragraph, and subsequent transferees of such
Persons, shall be void without any further action and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such
Rights under any provision of this Agreement. The Company shall use all
reasonable efforts to ensure that the provisions of
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this Section 11(a)(ii) 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. From and after the
Invalidation Time, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 hereof that represents Rights that are or have
become void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of this paragraph shall be
canceled. From and after the occurrence of an event specified in Section
13(a) hereof, any Rights that theretofore have not been exercised pursuant
to this Section 11(a)(ii) shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this Section 11(a)(ii).
Notwithstanding the occurrence of an adjustment in accordance with this
Section 11(a)(ii), the Rights (other than those that have been invalidated
pursuant to this Section 11(a)(ii)), shall remain subject to redemption
pursuant to Section 23 hereof on the terms set forth herein.
(iii) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to
permit the exercise in full of the Rights in accordance with the
subparagraph (ii) of this Section 11(a), the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock
for issuance upon exercise of the Rights. In the event the Company shall,
after good faith effort, be unable to take all such action as may be
necessary to authorize such additional shares of Common Stock the Company
shall, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, (A) determine
the excess of (1) the value of the shares of Common Stock issuable upon
the exercise of a Right in
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accordance with the foregoing subparagraph (ii) (the "Current Value") over
(2) the then current Purchase Price multiplied by the number of one
one-hundredths of Preferred Shares for which a Right was exercisable
immediately prior to the time that the Acquiring Person became such (such
excess, the "Spread"), and (B) with respect to each Right (other than
Rights which have become void pursuant to Section 11(a)(ii)), make
adequate provision to substitute for the shares of Common Stock issuable
in accordance with subparagraph (ii) upon exercise of the Right and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Preferred Shares or other equity securities of the
Company (including, without limitation, shares or fractions of shares of
preferred stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the shares of
Common Stock, are deemed in good faith by the Board of Directors to have
substantially the same value as the shares of Common Stock (such shares of
preferred stock and shares or fractions of shares of preferred stock are
hereinafter referred to as "Common Stock equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having a value which, when added to the value of the shares of
Common Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been
determined by the Board of Directors upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors; provided, however, that if the Company shall not make adequate
provision to deliver value pursuant to clause (B) above within 30 days
following the date that the Acquiring Person became such (the "Section
11(a)(iii) Trigger Date"), then the Company shall be obligated to deliver,
to the extent permitted by applicable law and any
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material agreements then in effect to which the Company is a party, upon
the surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available), and
then, if necessary, such number of fractions of shares of Preferred Stock
(to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If, upon the date
any Person becomes an Acquiring Person, the Board of Directors shall
determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in
full of the Rights, then, if the Board of Directors so elects, the 30-day
period set forth above may be extended to the extent necessary, but not
more than 90 days after the Section 11(a)(iii) Trigger Date, in order that
the Company may seek stockholder approval for the authorization of such
additional shares (such 30-day period, as it may be extended, is herein
called the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the second and/or
third sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 11(a)(ii) hereof and the last sentence of this Section
11(a)(iii) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form
of distribution to be made pursuant to such second sentence and to
determine the value thereof. In the event of 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. For
purposes of this Section 11(a)(iii), the value of the shares of Common
Stock shall be the current per share market price (as determined pursuant
to Section 11(d)(i)) on the Section
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11(a)(iii) Trigger Date and the per share or fractional value of any "Common
Stock equivalent" shall be deemed to equal the current per share market price
of the Common Stock. The Board of Directors of the Company may, but shall not
be required to, establish procedures to allocate the right to receive shares of
Common Stock upon the exercise of the Rights among holders of Rights pursuant
to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
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Company issuable upon exercise of one Right. In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent. Preferred Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
that would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments
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shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification then, and in each such
case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way in either case, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use, or, if on any such date
the Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Security selected by the Board of Directors of
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the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder, the "current per share
market price" of the Preferred Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Preferred Shares are not publicly
traded, the "current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof), multiplied by 100. If neither the Common Shares nor the
Preferred Shares is publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth 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 require such adjustment and (ii)
the date of the expiration of the right to exercise any Rights.
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(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one ten-thousandth of a Preferred
Share) obtained by (A) 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 (B) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights in substitution for any adjustment
in the number of one one-hundredths of a Preferred Share purchasable upon the
exercise of a Right. Each of the
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Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths of a Preferred Share for which
a Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, such record date shall be at
least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall he entitled after such adjustment.
Right Certificates to be so distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a Preferred Share issuable upon the exercise of
the Rights, the Right Certificates
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theretofore and thereafter issued may continue to express the Purchase Price and
the number of one one-hundredths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares 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 nonassessable 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 until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of
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Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Stock payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of shares of Common Stock, then in any such case
the Rights associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such event by a fraction,
of which the numerator shall be equal to the number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and of which the
denominator shall be equal to the total number of shares of Common Stock
outstanding immediately following the occurrence of such event. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Stock or the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 23 hereof. The
Rights Agent shall be fully
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protected in relying on any such certificate and on any adjustment therein
contained and shall not be obligated or responsible for calculating any
adjustment nor shall it be deemed to have knowledge of such adjustment unless
and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. (a) In the event, directly or indirectly, at any time after a Person has
become 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 shall be changed into or exchanged for
stock or other securities of any other Person (or 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
other Person (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 (other than Rights that have become void
pursuant to Section 11(a)(ii)) 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 issued, fully paid and
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as defined herein) not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall equal the result obtained by (I)
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 (II) 50% of the then current
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per share market price of the Common Stock of such Principal Party (determined
in accordance with Section 11(d)(i) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided that the Purchase Price and
the number of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in Section 11(f) of
this Agreement to reflect any events occurring in respect of such Principal
Party after the date of such consolidation, merger, sale or transfer; (B) such
Principal Party 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 Principal Party; and (D) such Principal Party shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock in accordance with Section 9 hereof) in
connection with such consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; provided that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13(a), such cash,
shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned the
Common Stock of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property.
(b) As used in this Section 13, "Principal Party" shall mean
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(i) in the case of any transaction described in clause (i) or (ii)
of the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which the shares of Common Stock are
converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer the shares of Common Stock of which have the
greatest aggregate market value of shares outstanding, or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger, if such Person survives said merger, or, if there is more than one
such Person, the Person the shares of Common Stock of which have the
greatest aggregate market value of shares outstanding or (y) if the Person
that is the other party to the merger does not survive the merger, the
Person that does survive the merger (including the Company if it survives)
or (z) the Person resulting from the consolidation; and
(ii) in the case of any transaction described in clause (iii) of the
first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot be determined,
whichever of such Persons as is the issuer of Common Stock having the
greatest aggregate market value of shares outstanding; provided, however,
that in any such case described in the foregoing clause (b)(i) or (b)(ii),
if the Common Stock of such Person is not at such time or has not been
continuously over the preceding 12-month period registered under Section
12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person,
or (2) if such Person is a Subsidiary, directly or indirectly, of more
than one Person, and the Common Stock of
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of all of such persons have been so registered, the term "Principal
Party" shall refer to whichever of such Persons is the issuer of Common
Stock having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and
(2) above shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a Subsidiary of
both or all of such joint venturers, and the Principal Party in each
such case shall bear the obligations set forth in this Section 13 in
the same ratio as its interest in such Person bears to the total of
such interests.
(c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof
and providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
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Securities Act) until the Final Expiration Date, and similarly comply
with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall be listed or admitted to trading on a national
securities exchange, to list or admit to trading (or continue the
listing of) the Rights and the securities purchasable upon exercise of
the Rights such securities exchange, or, if the Common Stock of the
Principal Party shall not be listed or admitted to trading on a
national securities exchange, to cause the Rights and the securities
receivable upon exercise of the Rights to be reported by such other
system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of Common
Stock of such Principal Party at less than the then current market price per
share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price, or (ii) providing for any special
payment, tax or similar
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provision in connection with the issuance of the Common Stock of such Principal
Party pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been canceled,
waived or amended, or that the authorized securities shall be redeemed, so that
the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time
after a Person first becomes an Acquiring Person enter into any transaction of
the type contemplated by any of clauses (i)-(iii) of Section 13(a) hereof if (x)
at the time of or immediately after such consolidation, merger, sale, transfer
or other transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights, (y) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the stockholders of
the Person who constitutes, or would constitute, the Principal Party for
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates or (z)
the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal
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to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such 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 on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of 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
such depositary receipts shall have all the rights, privileges and preferences
to which they
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are entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the closing price
of a Preferred Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock (as determined in
accordance with Section 14(a) hereof) for the Trading Day immediately prior to
the date of such exercise or exchange.
(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).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the
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Distribution Date, of the Common Stock), without the consent of the Rights Agent
or of the holder of any other Right Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right thus:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal 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 Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the
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associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly. The
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indemnification provided for hereunder shall survive the expiration of the
Rights and the termination of this Agreement. The costs and expenses incurred in
enforcing this right of indemnification shall also be paid by the Company.
(b) The Rights Agent may conclusively rely upon and shall be protected
and shall incur no liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this Agreement in
reliance upon any Right Certificate or certificate for the Preferred Stock or
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof. Notwithstanding anything in this
Agreement to the contrary, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
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Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations 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, and no implied duties or
obligations shall be read into this Agreement against the Rights Agent:
(a) Before the Rights Agent acts or refrains from acting, it
may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
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(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 be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights
becoming void in accordance with Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or
amount thereof)
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provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any Preferred Shares to be issued pursuant to this Agreement or any
Right Certificate or as to whether any Preferred Shares will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Secretary or
the Treasurer of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Agreement and the
date on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date
specified
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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) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct.
(j) If, with respect to any Rights 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 not been completed to
certify the holder is not an Acquiring Person (or an Affiliate or
Associate thereof), the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first
consulting with the Company.
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(k) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(l) The Rights Agent shall not be required to take notice or
be deemed to have notice of any fact, event or determination
(including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person,
Affiliate, Associate or Subsidiary) under this Agreement unless and
until the rights Agent shall be specifically notified in writing by the
Company of such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and, at
the expense of the Company, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock or Preferred Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the
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Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court
shall be a corporation organized and doing business under the laws of the United
States (or of any state of the United States so long as such corporation is
authorized to do business as a banking institution in such state), in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the
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provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Stock following the Distribution Date and prior to the earlier of
the Redemption Date and the Final Expiration Date, the Company may with respect
to shares of Common Stock so issued or sold pursuant to (i) the exercise of
stock options, (ii) under any employee plan or arrangement, (iii) upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company or (iv) a contractual obligation of the Company in each case
existing prior to the Distribution Date, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale.
Section 23. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to the Close of Business on the 10th business
day after the Shares Acquisition Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $0.01 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 redemption of the Rights by the
Board of Directors of the Company may be made effective at such time, on such
basis and with such conditions as the Board of Directors of the Company, in its
sole discretion may establish. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the current market
price of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23 (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
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thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after such action of the
Board of Directors of the Company ordering the redemption of the Rights, the
Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 hereof, and other than in connection with the
purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after any Person first becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors of the Company shall not
be empowered to effect such exchange at any time after any Person (other than an
Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding. From and after the
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occurrence of an event specified in Section 13(a) hereof, any Rights that
theretofore have not been exchanged pursuant to this Section 24(a) shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 24(a). The exchange of the Rights by the
Board of Directors may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights hold by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock 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
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authorize additional shares of Common Stock for issuance upon exchange of the
Rights. In the event the Company shall, after good faith effort, be unable to
take all such action as may be necessary to authorize such additional Common
Stock, the Company shall substitute, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of Preferred Shares or
fraction thereof such that the current per share market price of one Preferred
Share multiplied by such number or fraction is equal to the current per share
market price of one share of Common Stock as of the date of issuance of such
Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of a share of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such shares of fractional Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this Section 24(d), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall at
any time after the earlier of the Distribution Date and the Shares Acquisition
Date propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants to subscribe for
or to purchase any additional Preferred Shares or shares of stock 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
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subdivision or combination of outstanding Preferred Shares), (iv) to effect any
consolidation or merger with or into, 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 Stock payable in Common
Shares or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in Common
Shares), then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification. consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Stock and/or Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Stock and/or Preferred Stock, whichever shall be the
earlier.
(b) In case the event set forth in Section 11(a)(ii) or Section 13
hereof shall occur, then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate (or if occurring prior to the
Distribution Date, the holders of the Common Shares), in accordance with Section
26 hereof, a notice of the occurrence of such event, which notice shall describe
such event
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and the consequences of such event to holders of Rights under Section 11(a)(ii)
or Section 13 hereof, as the case may be.
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 registered
or certified mail and deemed given upon receipt, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Zonagen, Inc.
2408 Timberloch Place, B-4
The Woodlands, Texas 77380
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sent by registered or
certified mail and shall be deemed given upon receipt, and addressed (until
another address is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
700 Louisiana, Suite 3350
Houston, TX 77002
Attention: Vice President
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. Except as otherwise provided in
this Section 27, for so long as the Rights are then redeemable, the Company may
in its sole and absolute discretion, and the Rights Agent shall if the Company
so directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of the Rights, including, without
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limitation, as long as the Rights are then redeemable, to extend the period
during which the Rights may be redeemed. At any time when the Rights are no
longer redeemable, except as otherwise provided in this Section 27, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Rights Certificates in
order to (i) cure any ambiguity, (ii) correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv)
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable; provided that no such supplement or amendment
shall adversely affect the interests of the holders of Rights as such (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
and no such amendment may cause the rights again to become redeemable or cause
the Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment shall be made which decreases the Redemption Price.
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights Agent
under this Agreement will be effective against the Rights Agent without the
execution of such supplement or amendment by the Rights Agent.
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.
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Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
Section 30. Determination and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the 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 Delaware and for all purposes
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shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
Section 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
ZONAGEN, INC.
By: /s/ Joseph S. Podolski
-------------------------------------
Name: Joseph S. Podolski
Title: President and Chief Executive
Officer
HARRIS TRUST AND SAVINGS BANK
as Rights Agent
By: /s/ Lorraine Rodewald
-------------------------------------
Name: Lorraine Rodewald
Title: Vice President
<PAGE> 61
EXHIBIT A
CERTIFICATE OF DESIGNATION OF
SERIES ONE JUNIOR PARTICIPATING
PREFERRED STOCK OF ZONAGEN, INC.
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Zonagen, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Company"),
hereby certifies that the following resolution was duly adopted by the Board of
Directors of the Company as required by Section 151 of the General Corporation
Law of the State of Delaware at a meeting duly called and held on September 1,
1999:
WHEREAS, the Company's Restated Certificate of Incorporation, as amended
(hereinafter called the "Certificate of Incorporation"), authorizes a total of
25,000,000 shares of capital stock, consisting of 5,000,000 shares of preferred
stock, par value $0.001 per share (the "Preferred Stock"), issuable from time to
time in one or more series, and 20,000,000 shares of common stock, par value
$0.001 per share (the "Common Stock"), issuable from time to time; and
WHEREAS, pursuant to the authority vested in the Board of Directors of the
Company in accordance with the General Corporation Law of the State of Delaware
and the Company's Certificate of Incorporation, the Board of Directors is
authorized by resolution duly adopted, to designate shares of Preferred Stock to
be issued, in one or more series, to provide for the designation thereof of the
powers, designations, preferences and relative, participating, optional or other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof;
NOW, THEREFORE BE IT 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
Delaware General Corporation Law and the Certificate of Incorporation, a Series
One Junior Participating Preferred Stock of the Corporation is hereby created,
with the designations thereof and the powers, designations, preferences and
relative, participating, optional or other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof as set forth
below:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series One Junior Participating Preferred Stock" (the "Series One
Preferred Stock") and the number of shares constituting the Series One Preferred
Stock shall be 500,000. 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 One Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise
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of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Series One
Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the Series One Preferred Stock
with respect to dividends, the holders of shares of Series One Preferred Stock,
in preference to the holders of Common Stock, par value $0.001 per share, of the
Company (the "Common Stock") and of any other stock of the Company ranking
junior to the Series One Preferred Stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available
therefor, quarterly dividends payable in cash on the last day of January, April,
July, and October in each year (each such date being referred to herein as a
"Dividend Payment Date"), commencing on the first Dividend Payment Date after
the first issuance of a share or fraction of a share of Series One Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00, 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,
declared on the Common Stock since the immediately preceding Dividend Payment
Date or, with respect to the first Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series One Preferred Stock. In
the event that the Company shall at any time after September 13, 1999, 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
One Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Company shall declare a dividend or distribution on the Series One
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Dividend Payment Date and the next subsequent Dividend
Payment Date, a dividend of $1.00 per share on the Series One Preferred Stock
shall nevertheless be payable, when, as and if declared, on such subsequent
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series One Preferred Stock from the
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
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
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series One Preferred Stock entitled to receive a
quarterly dividend and before such
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Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series One
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 One 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 One Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Certificate of Incorporation or required by
law, each share of Series One Preferred Stock shall entitle the holder thereof
to 100 votes on all matters upon which the holders of the Common Stock of the
Company are entitled to vote. In the event the Company shall at any time after
September 13, 1999 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series One 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 the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by law,
the holders of shares of Series One 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
stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law or the
Certificate of Incorporation, holders of Series One 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 One Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not earned or declared, on shares of Series One
Preferred Stock outstanding shall have been paid in full, the Company shall not:
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(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (as to dividends) to the Series One
Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (as to dividends) with the Series One
Preferred Stock, except dividends paid ratably on the Series One 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 One 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 and upon dissolution, liquidation
or winding up) to the Series One Preferred Stock or rights, warrants or
options to acquire such junior stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series One 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 One 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, 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 One Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such shares
shall upon their retirement become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject to any
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (A) to
the holders of the Common Stock or of shares of any other stock of the Company
ranking junior, upon liquidation, dissolution or winding up, to the Series One
Preferred Stock unless, prior thereto, the holders of shares of Series One
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividend distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series One Preferred Stock shall be entitled to
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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 upon liquidation, dissolution or winding up with
the Series One Preferred Stock, except distributions made ratably on the Series
One 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, however, that there are not sufficient
assets available to permit payment in full of the Series One Preferred Stock
liquidation preference and the liquidation preferences of all other classes and
series of stock of the Company, if any, that rank on a parity with the Series
One Preferred Stock in respect thereof, then the assets available for such
distribution shall be distributed ratably to the holders of the Series One
Preferred Stock and the holders of such parity shares in the proportion to their
respective liquidation preferences. In the event the Company shall at any time
after September 13, 1999 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 One 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 the case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are converted into, exchanged for or changed into other
stock or securities, cash and/or any property, then in any such case each share
of Series One Preferred Stock shall at the same time be similarly converted
into, exchanged for 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
converted, exchanged or converted. In the event the Company shall at any time
after September 13, 1999 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 conversion,
exchange or change of shares of Series One 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.
Section 8. No Redemption. The shares of Series One Preferred Stock shall
not be redeemable from any holder.
Section 9. Rank. The Series One Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Company, junior to all other series of
Preferred Stock and senior to the Common Stock.
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Section 10. Amendment. If any proposed amendment to the Certificate of
Incorporation (including this Certificate of Designations) would alter, change
or repeal any of the preferences, powers or special rights given to the Series
One Preferred Stock so as to affect the Series One Preferred Stock adversely,
then the holders of the Series One Preferred Stock shall be entitled to vote
separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series One Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
Section 11. Fractional Shares. Series One Preferred Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series One Preferred Stock.
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IN WITNESS WHEREOF, this Certificate of Designations has been executed on
behalf of the Company by its President and Chief Executive Officer and attested
by its Secretary this 2 day of September, 1999.
ZONAGEN, INC.
By: /s/ JOSEPH S. PODOLSKI
--------------------------------
Joseph S. Podolski
President and Chief Executive
Officer
Attest:
/s/ F. SCOTT REDING
- -----------------------------
F. Scott Reding
Chief Financial Officer and Secretary
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EXHIBIT B
Form of Right Certificate
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 13, 2002 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Zonagen, 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 September 1, 1999 (the "Rights Agreement"),
between Zonagen, Inc., a Delaware corporation (the "Company"), and Harris Trust
and Savings Bank, an Illinois banking corporation as rights agent (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.,
Houston, Texas time, on September 13, 2002 at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one-hundredth of a
fully paid non-assessable share of Series One Junior Participating Preferred
Stock, par value $0.001 per share, of the Company (the "Preferred Shares") at a
purchase price of $20.00 (subject to adjustment as provided in the Rights
Agreement) per 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-hundredths of a Preferred Share which may be
purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of September 13, 1999, based
on the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of 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, 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 offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
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Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate (i) may be redeemed by the Company at a redemption price
of $0.01 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Shares, par value $0.001 per share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one-hundredth of a Preferred Share, which may, at the election of
the Company, be evidenced by depositary receipts), but, in lieu thereof, a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholder of the Company at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the 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 facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ______________, _______.
ZONAGEN, INC.
ATTEST:
By
___________________________________ ________________________________
Name: F. Scott Reding Name: Joseph S. Podolski
Title: Chief Financial Officer and Title: President and Chief
Secretary Executive Officer
Countersigned: HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By
_________________________________
Name:____________________________
Title:___________________________
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FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers onto ___________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:___________ , ________
Signature__________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
_______________________________________________________________________________
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature__________________________
_______________________________________________________________________________
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<PAGE> 71
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE - CONTINUED
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: Zonagen, Inc.
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security _______________________
or other identifying number _______________________
______________________ _______________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security _______________________
or other identifying number _______________________
______________________ _______________________
(Please print name and address)
Dated: ________________, __________
Signature__________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
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<PAGE> 72
(Form of Reverse Side of Right Certificate -- continued)
_______________________________________________________________________________
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature__________________________
_______________________________________________________________________________
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<PAGE> 73
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On September 1, 1999, the Board of Directors of Zonagen, Inc. (the
"Company") declared a dividend distribution of one preferred stock purchase
right (a "Right") for each outstanding share of common stock, par value $0.001
per share ("Common Stock"), of the Company. The distribution is payable on
September 13, 1999 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder thereof to purchase from the
Company one one-hundredth of a share of Series One Junior Participating
Preferred Stock, par value $0.001 per share, of the Company (the "Preferred
Stock") at a price of $20.00, subject to adjustment. The following is a summary
of the Rights; the full description and terms of the Rights are set forth in a
Stockholder Rights Agreement (the "Rights Agreement") between the Company and
Harris Trust and Savings Bank, as Rights Agent (the "Rights Agent").
Copies of the Rights Agreement and the Certificate of Designation are
available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation, including the definitions therein of certain
terms, which Rights Agreement and Certificate of Designation are incorporated
herein by reference.
THE RIGHTS AGREEMENT
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the Distribution Date will occur upon the earlier of (i) 10 days following the
date of public announcement that a person or group of persons has become an
Acquiring Person (as hereinafter defined) or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to the
time a person becomes an Acquiring Person) following the commencement of, or the
announcement of an intention to make, a tender offer or exchange offer upon
consummation of which the offeror would, if successful, beneficially own 20% or
more of the outstanding Common Stock (the earlier of such dates being called the
"Distribution Date").
The term "Acquiring Person" means any person who or which, together
with all of its affiliates and associates, shall be the beneficial owner of 20%
or more of the outstanding Common Stock, but shall not include the Company, any
Subsidiary of the Company or any employee benefit plan of the Company.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, 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 Stock, outstanding as of the
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Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Rights Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 13, 2002 (the "Expiration Date").
The Purchase Price payable, and the number of one one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock
of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to in (ii) above).
The number of outstanding Rights and the number of one one-hundredths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Shares Acquisition Date (the date of
public announcement that an Acquiring Person has become such) the Company is
acquired in a merger or other business combination transaction or more than 50%
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right (the "Flip-Over Right").
In the event that a person becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right (other than the Acquiring
Person and its affiliates and associates) will thereafter have the right to
receive upon exercise that number of shares of Common Stock (or, under certain
circumstances, cash, other equity securities or property of the Company) having
a market value equal to two times the Purchase Price of the Rights (the "Flip-In
Right"). Upon the occurrence of the foregoing event giving rise to the
exercisability of the Rights, any Rights that are or were at any time owned by
an Acquiring Person shall become void.
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. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are
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integral multiples of one one-hundredth of a share of Preferred Stock; cash will
be paid in lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-hundredth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston,
Texas time on the 10th day after the Shares Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "Redemption Price"); provided, that (i)
if the Board of Directors authorizes redemption on or after the time a person
becomes an Acquiring Person, then such authorization must be by Board Approval
(as hereinafter defined) and (ii) the period for redemption may, upon Board
Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company.
Immediately upon any redemption of the Rights described in this paragraph, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights at any time and from time to
time provided that such amendment does not adversely affect the interests of the
holders of the Rights. In addition, during any time that the Rights are subject
to redemption, the terms of the Rights may be amended by Board Approval,
including an amendment that adversely affects the interests of the holders of
the Rights, without the consent of the holders of Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Preferred Stock (or other consideration).
DESCRIPTION OF PREFERRED STOCK
Each one-hundredth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be
issued by the Company.
Each Preferred Share Fraction will have a minimum preferential
quarterly dividend rate of $0.01 per Preferred Share Fraction but will, in any
event, be entitled to a dividend equal to the per share dividend declared on the
Company Common Stock.
In the event of liquidation, the holder of a Preferred Share Fraction
will receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
Each Preferred Share Fraction will have one vote, voting together with
the Company Common Stock.
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In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Preferred Share Fraction will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Preferred Share Fraction that may
be acquired upon the exercise of each Right should approximate the economic
value of one share of the Company's Common Stock.
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