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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 1999
HOLLIS-EDEN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-24672 13-3697002
--------------------------- --------------------------------------
(Commission File No.) (IRS Employer Identification No.)
9333 Genesee Avenue, Suite 200
San Diego, California 92121
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (858) 587-9333
-------------------------
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Item 5. Other Events.
On November 15, 1999 the Board of Directors of Hollis-Eden Pharmaceuticals,
Inc. (the "Company") approved the adoption of a Share Purchase Rights Plan (the
"Plan"). Terms of the Plan provide for a dividend distribution of one preferred
share purchase right (a "Right") for each outstanding share of common stock, par
value $.01 per share (the "Common Shares"), of the Company. The dividend is
payable on November 29, 1999 (the "Record Date") to the stockholders of record
on that date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series B Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Shares"), at a price of $100.00
per one one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. Each one one-hundredth of a share of Preferred Shares has
designations and powers, preferences and rights, and the qualifications,
limitations and restrictions which make its value approximately equal to the
value of a Common Share. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement"), dated as of November 15, 1999
entered into between the Company and American Stock Transfer and Trust Company,
as rights agent (the "Rights Agent").
Initially, the Rights will be evidenced by the stock certificates
representing the Common Shares then outstanding, and no separate Right
Certificates, as defined, will be distributed. Until the earlier to occur of
(i) the date of a public announcement that a person, entity or group of
affiliated or associated persons have acquired beneficial ownership of 15% or
more of the outstanding Common Shares (an "Acquiring Person") or (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person or entity becomes an Acquiring
Person) following the commencement of, or public announcement of an intention to
commence, a tender offer or exchange offer the consummation of which would
result in any person or entity becoming an Acquiring Person (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate with or without a copy of the Summary of
Rights, which is included in the Rights Agreement as Exhibit C thereof (the
"Summary of Rights").
Until the Distribution Date, the Rights will be transferable with and only
with the Common Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share certificates issued after the Record
Date, upon transfer or new issuance of Common Shares, will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender or transfer
of any certificates for Common Shares outstanding as of the Record Date, even
without such notation or a copy of the Summary of Rights being attached thereto,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
1.
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The Rights are not exercisable until the Distribution Date. The Rights
will expire on November 14, 2009 (the "Final Expiration Date"), unless the
Rights are earlier redeemed or exchanged by the Company, in each case, as
described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or other property, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above). The exercise of Rights
for Preferred Shares is at all times subject to the availability of a sufficient
number of authorized but unissued Preferred Shares.
The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidation or combinations of the Common Shares occurring, in any case, prior
to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares would be entitled to a minimum
preferential liquidation payment of $100 per share, but would be entitled to
receive an aggregate payment equal to 100 times the payment made per Common
Share. Each Preferred Share will have 100 votes, voting together with the
Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 100 times the amount of consideration received per Common
Share. These rights are protected by customary anti-dilution provisions.
Because of the nature of the Preferred Shares' dividend and liquidation rights,
the value of one one-hundredth of a Preferred Share should approximate the value
of one Common Share. The Preferred Shares would rank junior to any other series
of the Company's preferred stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person and its
associates and affiliates (which will thereafter be void), will for a 60-day
period have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right (or, if such
number of shares is not and cannot be authorized, the Company may issue
Preferred Shares, cash, debt, stock or a combination thereof in exchange for the
Rights). This right will terminate 60 days after the date on which the Rights
become nonredeemable (as described below), unless there is an injunction or
similar obstacle to exercise of the Rights, in which event this right will
terminate 60 days after the date on which the Rights again become exercisable.
2.
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Generally, under the Plan, an "Acquiring Person" shall not be deemed to
include (i) the Company, (ii) a subsidiary of the Company, (iii) any employee
benefit or compensation plan of the Company, (iv) any entity holding Common
Shares for or pursuant to the terms of any such employee benefit or compensation
plan, or (v) a Grandfathered Stockholder (as such term is hereinafter defined).
In addition, except under limited circumstances, no person or entity shall
become an Acquiring Person as the result of the acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such person or entity to
15% or more of the Common Shares then outstanding. Further, except under
certain circumstances, no person shall become an Acquiring Person due to the
acquisition of Common Shares directly from the Company. Richard B. Hollis and
his associates and affiliates will be a "Grandfathered Stockholder" provided
that he and his affiliates and associates do not become the beneficial owner of
more than an additional 1,000,000 Common Shares not already beneficially owned
by him and his affiliates and associates as of the record date without the prior
approval of the Board of Directors of the Company, and provided further that
Common Shares acquired by Richard Hollis and his affiliates and associates
pursuant to the exercise of stock options on other rights to acquire Common
Shares shall not be counted towards the additional 1,000,000 Common Shares.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, its associates or affiliates or certain
other persons in which such persons have an interest, 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.
At any time after an Acquiring Person becomes an Acquiring Person and prior
to the acquisition by such Acquiring Person of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which have become void), in
whole or in part, at an exchange ratio of one Common Share, or one one-hundredth
of a Preferred Share, per Right (or, at the election of the Company, the Company
may issue cash, debt, stock or a combination thereof in exchange for the
Rights), subject to adjustment.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of the number of one one-hundredths of a
Preferred Share issuable upon the exercise of one Right, which may, at the
election of the Company, be evidenced by depositary receipts), and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of exercise.
At any time prior to the earliest of (i) the day of the first public
announcement that a person has become an Acquiring Person or (ii) the Final
Expiration Date, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right (the "Redemption Price").
Following the expiration of the above periods, the Rights become
3.
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nonredeemable. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as the rights are distributed no such amendment may adversely
affect the interest of the holders of the Rights excluding the interests of an
Acquiring Person.
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.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors since the Rights may be amended to permit such acquisition or
redeemed by the Company at $.01 per Right prior to the earliest of (i) the time
that a person or group has acquired beneficial ownership of 15% or more of the
Common Shares or (ii) the Final Expiration Date.
Item 7. Exhibits.
4.1 Registrant's Certificate of Designation of Series B Junior
Participating Preferred Stock.
99.1 Press Release, dated as of November 16, 1999 entitled "Hollis-Eden
Pharmaceuticals, Inc. Adopts Stockholder Rights Plan."
99.2 Rights Agreement dated as of November 15, 1999 among Registrant and
American Stock Transfer and Trust Company.
99.3 Form of Rights Certificate.
4.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HOLLIS-EDEN PHARMACEUTICALS, INC.
Dated: November 23, 1999 By: /s/ Eric J. Loumeau
----------------------------------
Eric J. Loumeau
Vice President, Corporate General
Counsel
5.
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INDEX TO EXHIBITS
4.1 Certificate of Designation of Series B Junior Participating Preferred
Stock.
99.1 Press Release, dated as of November 16, 1999 entitled "Hollis-Eden
Pharmaceuticals, Inc. Adopts Stockholder Rights Plan."
99.2 Rights Agreement dated as of November 15, 1999 among Registrant and
American Stock Transfer and Trust Company
99.3 Form of Rights Certificate.
6.
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EXHIBIT 4.1
Certificate of Designation
of
Series B Junior Participating Preferred Stock
of
Hollis-Eden Pharmaceuticals, Inc.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Hollis-Eden Pharmaceuticals, 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 adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on November 15, 1999.
Resolved, that pursuant to the authority granted to and vested in the Board
of Directors of the Company in accordance with the provisions of its
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of
Preferred Stock, par value $.01 per share, of the Company and hereby states
the designation and number of shares, and fixes the relative designations
and the powers, preferences and rights, and the qualifications, limitations
and restrictions thereof (in addition to the provisions set forth in the
Certificate of Incorporation of the Company, which are applicable to the
Preferred Stock of all classes and series), as follows:
Section 1. Designation and Amount. Three hundred thousand (300,000)
shares of Preferred Stock, $.01 par value, are designated "Series B Junior
Participating Preferred Stock" with the designations and the powers, preferences
and rights, and the qualifications, limitations and restrictions specified
herein (the "Junior Preferred Stock"). 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 Junior Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of
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outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Junior Preferred
Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Junior
Preferred Stock with respect to dividends, the holders of shares of Junior
Preferred Stock, in preference to the holders of Common Stock, par value $.01
per share (the "Common Stock"), of the Company, and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on the first day of April, July, October and January in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Junior Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $l.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 or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Company shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Junior
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 Junior
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided, that in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Junior
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Junior
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Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Junior 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 Junior 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 Junior Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Junior Preferred Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of the Company. In the
event the Company shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Junior Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior 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, holders of
Junior 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 Junior Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Junior Preferred Stock outstanding shall have been
paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock;
3
<PAGE>
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
dividends paid ratably on the Junior 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 Junior 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
(either as to dividends or upon dissolution, liquidation or winding up) to the
Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Junior 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 Junior Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in the Amended and
Restated Certificate of Incorporation, or in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (1) to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Junior Preferred Stock shall be entitled
to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all such parity
stock in proportion to the total amounts to which
4
<PAGE>
the holders of all such shares are entitled upon such liquidation, dissolution
or winding up. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Junior 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 Junior Preferred Stock shall not
be redeemable.
Section 9. Rank. The Junior Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Company's Preferred Stock.
Section 10. Amendment. The Amended and Restated Certificate of
Incorporation of the Company shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Junior Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the outstanding shares of Junior
Preferred Stock, voting together as a single class.
5
<PAGE>
In Witness Whereof, the undersigned have executed this certificate as of
November 15, 1999.
/s/ Daniel D. Burgess
------------------------------------------
Daniel D. Burgess, Chief Financial Officer
/s/ Eric J. Loumeau
------------------------------------------
Eric J. Loumeau, Secretary
6
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EXHIBIT 99.1
Tuesday November 16, 8:05 am Eastern Time
Company Press Release
SOURCE: Hollis Eden Pharmaceuticals, Inc.
Hollis-Eden Pharmaceuticals Adopts Stockholder
Rights Plan
SAN DIEGO, Nov. 16 /PRNewswire/ -- Hollis Eden Pharmaceuticals, Inc. (Nasdaq:
HEPH - news) today announced the adoption of a Stockholder Rights Plan by its
Board of Directors under which all stockholders of record as of November 29,
1999 will receive rights to purchase shares of a new series of Preferred Stock.
The Rights Plan is designed to enable all of the Company's shareholders to
realize the full value of their investment and to provide fair and equal
treatment for all stockholders in the event that an unsolicited attempt is made
to acquire Hollis-Eden. Hambrecht & Quist LLC advised the board of Hollis-Eden
with respect to the adoption of this plan. The adoption of the Rights Plan is
intended as a means to guard against abusive takeover tactics and is not in
response to any particular proposal.
The rights will be distributed as a non-taxable dividend and will expire in ten
years from the record date. The rights may be exercised only if an individual or
group acquires 15% or more of the Company's Common Stock or announces a tender
offer for 15% or more of the Company's Common Stock. If an individual or entity
acquires 15% or more of Hollis-Eden's Common Stock, all other rights holders
become entitled to acquire Hollis-Eden Common Stock at a discount. The effect
will be to discourage acquisitions of 15% or more of Hollis-Eden's Common Stock
without negotiations with the Company's Board of Directors.
The rights will trade with the Company's Common Stock, unless and until they are
separated upon the occurrence of certain future events. The rights distribution
is not taxable to the stockholders. Hollis-Eden's Board of Directors may
terminate the Rights Plan at any time or redeem the rights prior to the time a
person acquires more than 15% of the Company's Common Stock. Additional details
regarding the Rights Plan will be outlined in a summary to be mailed to all
stockholders following the record date.
Hollis-Eden Pharmaceuticals, Inc. is a development-stage pharmaceutical company
engaged in the development of products for the treatment of infectious diseases
and immune systems disorders. The company is currently testing its lead drug
candidate, HE2000, in HIV/AIDS patients both in South Africa and the United
States. HE2000 appears to act by a novel mechanism that targets the host cell
and may alter the immune system in HIV-positive patients rather than directly
acting on the virus. For more information regarding Hollis-Eden, contact the
company's website at www.holliseden.com.
Statements made in this press release may constitute forward-looking statements
and are subject to numerous risks and uncertainties, including the failure to
successfully complete pivotal
1.
<PAGE>
clinical trials, the Company's future capital needs, the Company's ability to
obtain additional funding and required regulatory approvals, the development of
competitive products by other companies, and other risks detailed from time to
time in the Company's filings with the Securities and Exchange Commission. The
actual results may differ materially from those contained in this press release.
2.
<PAGE>
EXHIBIT 99.2
___________________________________________________________
Hollis-Eden Pharmaceuticals, Inc.
and
American Stock Transfer and Trust Company
as Rights Agent
Rights Agreement
Dated as of November 15, 1999
__________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1 Certain Definitions................................................................................ 1
Section 2 Appointment of Rights Agent........................................................................ 5
Section 3. Issue of Right Certificates........................................................................ 5
Section 4. Form of Right Certificates......................................................................... 7
Section 5. Countersignature and Registration.................................................................. 8
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates.......................................................................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...................................... 9
Section 8. Cancellation and Destruction of Right Certificates................................................. 11
Section 9. Availability of Preferred Shares................................................................... 12
Section 10. Preferred Shares Record Date....................................................................... 13
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights................................. 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......................................... 22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............................... 22
Section 14. Fractional Rights and Fractional Shares............................................................ 26
Section 15. Rights of Action................................................................................... 27
Section 16. Agreement of Right Holders......................................................................... 28
Section 17. Right Certificate Holder Not Deemed a Stockholder.................................................. 28
Section 18. Concerning the Rights Agent........................................................................ 29
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......................................... 29
Section 20. Duties of Rights Agent............................................................................. 30
Section 21. Change of Rights Agent............................................................................. 32
Section 22. Issuance of New Right Certificates................................................................. 33
Section 23. Redemption......................................................................................... 34
Section 24. Exchange........................................................................................... 36
Section 25. Notice of Certain Events........................................................................... 38
Section 26. Notices............................................................................................ 39
Section 27. Supplements and Amendments......................................................................... 39
</TABLE>
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
<S> <C>
Section 28. Determination and Actions by the Board of Directors, etc........................................... 40
Section 29. Successors......................................................................................... 40
Section 30. Benefits of this Agreement......................................................................... 40
Section 31. Severability....................................................................................... 41
Section 32. Governing Law...................................................................................... 41
Section 33. Counterparts....................................................................................... 41
Section 34. Descriptive Headings............................................................................... 41
Exhibit A - Certificate of Designation
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
</TABLE>
<PAGE>
Rights Agreement
This Rights Agreement ("Agreement"), dated as of November 15, 1999, between
HOLLIS-EDEN PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and
AMERICAN STOCK TRANSFER AND TRUST COMPANY ("Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as such term is hereinafter defined) outstanding at the close of business on
November 29, 1999 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a Preferred Share (as such term is hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest to occur of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined); provided, however, that
Rights may be issued with respect to Common Shares that shall become outstanding
after the Distribution Date and prior to the earlier of the Redemption Date and
the Final Expiration Date in accordance with the provisions of Section 22
hereof.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the
Common Shares then outstanding. Notwithstanding the
foregoing, (A) the term Acquiring Person shall not include
(i) an Exempt Person (as such term is hereinafter defined),
or (ii) a Grandfathered Stockholder (as such term is
hereinafter defined), and (B) no Person shall become an
"Acquiring Person" either (x) as the result of an acquisition
of Common Shares by the Company which, by reducing the number
of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more of
the Common Shares then outstanding; provided, however, that
if a Person shall become the Beneficial Owner of 15% or more
of the Common Shares then outstanding by reason of share
purchases by the Company and shall, following written notice
from, or public disclosure by the Company of such share
purchases by the Company, become the Beneficial Owner of any
additional Common Shares without the prior consent of the
Company and shall then Beneficially Own more than 15% of the
Common Shares then outstanding, then such Person shall be
deemed to be an "Acquiring Person," (y) as a result of the
acquisition of Common Shares directly from
1.
<PAGE>
the Company; provided however, that if a Person shall become
the Beneficial Owner of 15% or more of the Common Shares then
outstanding by reason of share purchases directly from the
Company and shall, after that date, become the Beneficial
Owner of any additional Common Shares without the prior
written consent of the Company and shall then Beneficially
Own more than 15% of the Common Shares then outstanding, then
such Person shall be deemed to be an "Acquiring Person," or
(z) if the Board of Directors determines in good faith that a
Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently (including
without limitation because (A) such Person was unaware that
it beneficially owned a percentage of Common Shares that
would otherwise cause such Person to be an "Acquiring Person"
or (B) such Person was aware that it was the Beneficial Owner
of 15% or more of the Common Shares then outstanding but had
no actual knowledge of the consequences of being a Beneficial
Owner of 15% or more of the Common Shares then outstanding
under this Agreement), and without any intention of changing
or influencing control of the Company, and such Person
divests, as promptly as practicable (as determined in good
faith by the Board of Directors), but in any event within
five Business Days, following receipt of written notice from
the Company of such event, of Beneficial Ownership of a
sufficient number of Common Shares so that such Person would
no longer be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person
shall no longer be deemed to be an "Acquiring Person" for
purposes of this Agreement; provided, however, that if such
Person shall again become the Beneficial Owner of 15% or more
of the Common Shares then outstanding, such Person shall be
deemed an "Acquiring Person," subject to the exceptions set
forth in this Section 1(a).
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as in effect on the
date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person"s Affiliates or
Associates is deemed to beneficially own, within the
meaning of Rule 13d-3 of the General Rules and
Regulations under the
Exchange Act as in effect on the date of this Agreement;
(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, only after the passage
of time, compliance with regulatory requirements,
fulfillment of a condition or otherwise)
2.
<PAGE>
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 the Rights contemplated hereunder), warrants
or options, or otherwise; provided, howe ver, that a
Person shall not be deemed the Beneficial Owner of, or
to beneficially own, (1) 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, (2) securities which such person has the
right to acquire upon the exercise of Rights at any time
prior to the time that any Person becomes an Acquiring
Person, (3) securities issuable upon the exercise of
Rights from and after the time that any Person becomes
an Acquiring Person if such Rights were acquired by such
Person or any of such Person"s Affiliates or Associates
prior to the Distribution Date or pursuant to Section
3(a), Section 22 or Section 11 with respect to an
adjustment of original Rights, or (4) securities which
such Person or such Person"s Affiliates or Associates
may acquire, does or do acquire or may be deemed to have
the right to acquire, pursuant to any merger or other
acquisition agreement between the Company and such
Person (or one or more of his Affiliates or Associates)
if such agreement has been approved by the Board of
Directors of the Company prior to such Person becoming
an Acquiring Person; or (B) the right to vote pursuant
to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a revocable
proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2)
is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such
Person"s Affiliates or Associates has any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling
group members with respect to a bona fide public
offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by
the proviso to Section 1(c)(ii)(B) hereof) or disposing
of any securities of the Company; provided, however, an
agreement, arrangement or understanding for purposes of
this Section 1(c)(iii) shall not be deemed to include
actions, including any agreement, arrangement
3.
<PAGE>
or understanding, or statements by any member of the
Company"s Board of Directors on the date of this
Agreement, any subsequent directors of the Company (the
"Successor Directors"), or by any Person of whom such a
director is an Affiliate or Associate, provided, however
that this exception shall not apply to a particular
Person or Persons if and to the extent that such Person
or Persons, after the date of this Agreement, acquires
Beneficial Ownership of more than an additional 5% of
the then outstanding Common Shares of the Company unless
(A) the shares are acquired directly from the Company or
as part of an employee benefit or compensation plan of
the Company or a subsidiary of the Company or (B) the
Person establishes to the satisfaction of the directors
of the Company that it is acting on its own behalf and
not in concert with any other Person and will not, upon
completion of any purchases, be the Beneficial Owner of
15% or more of the outstanding Common Shares.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase, "then outstanding,"
when used with reference to a Person"s Beneficial Ownership
of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the
number of such securities not then actually issued and
outstanding which such Person would be deemed to own
beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State
of California or New York are authorized or obligated by law
or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 p.m.,
Pacific Time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 p.m., Pacific
Time, on the next succeeding Business Day.
(f) "Common Shares" shall mean the shares of common stock, par
value $.01 per share, of the Company; provided, however,
that, "Common Shares," when used in this Agreement in
connection with a specific reference to any Person other than
the Company, shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-
mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Exempt Person" shall mean each of (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit or
compensation plan of the Company or any Subsidiary of the
Company, and (iv) any entity holding
4.
<PAGE>
Common Shares for or pursuant to the terms of any employee
benefit or compensation plan of the Company or any Subsidiary
of the Company.
(i) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(j) "Grandfathered Stockholder" shall mean Richard B. Hollis
(including his Affiliates and Associates); provided, however,
that Richard B. Hollis (including his Affiliates and
Associates) shall not be a Grandfathered Stockholder if he
(including his Affiliates and Associates) becomes the
Beneficial Owner of more than an additional 1,000,000 Common
Shares (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the
date hereof) not already beneficially owned (as determined
pursuant to Section 1(c)) by him (including his Affiliates
and Associates) as of the record date without the approval of
the Board of Directors of the Company; provided, further,
that Common Shares acquired by the Grandfathered Stockholder
(including his Affiliates and Associates) after the date
hereof pursuant to the exercise of stock options or other
rights to acquire Common Stock that are or have been approved
by the Board of Directors of the Company shall not be counted
in determining whether the Grandfathered Stockholder has
become the Beneficial Owner of more than an additional
1,000,000 Common Shares.
(k) "Interested Stockholder" shall mean any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or any
other Person in which any such Acquiring Person, Affiliate or
Associate has an interest, or any other Person acting
directly or indirectly on behalf of or in concert with any
such Acquiring Person, Affiliate or Associate.
(l) "Person" shall mean any individual, firm, partnership,
limited liability company, trust, corporation or other
entity, and shall include any successor (by merger or
otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Series B Junior
Participating Preferred Stock, of the Company having the
designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions set forth in the
Form of Certificate of Designation attached to this Agreement
as Exhibit A.
(n) "Purchase Price" shall have the meaning set forth in Section
7(b) hereof.
(o) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(p) "Shares Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall
include, without limitation, the filing of a report pursuant
to Section 13(d) of the Exchange Act or pursuant to a
comparable successor statute) by the
5.
<PAGE>
Company or an Acquiring Person that an Acquiring Person has
become such or that discloses information which reveals the
existence of an Acquiring Person or such earlier date as a
majority of the Board of Directors shall become aware of the
existence of an Acquiring Person; provided, however that, if
such Person is determined by the Board of Directors of the
Company not to have become an Acquiring Person pursuant to
subsections 1(a)(B)(x), 1(a)(B)(y) or 1(a)(B)(z) hereof, then
no Shares Acquisition Date shall be deemed to have occurred.
(q) "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.
(r) "Transaction" shall mean any merger, consolidation or sale of
assets described in Section 13(a) hereof or any acquisition
of Common Shares which would result in a Person becoming an
Acquiring Person or a Principal Party (as such term is
hereinafter defined).
(s) "Transaction Person" with respect to a Transaction shall mean
(i) any Person who (x) is or will become an Acquiring Person
or a Principal Party (as such term is hereinafter defined) if
the Transaction were to be consummated and (y) directly or
indirectly proposed or nominated a director of the Company
which director is in office at the time of consideration of
the Transaction, or (ii) an Affiliate or Associate of such
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-
Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Shares Acquisition Date or (ii)
the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such
time as any Person becomes an Acquiring Person) after the
date of the commencement (determined in accordance with Rule
14d-2 under the Exchange Act) by any Person (other than an
Exempt Person) of, or of the first public announcement of the
intention of any Person (other than an Exempt Person) to
commence, a tender or exchange offer (which intention to
commence remains in effect for five Business Days after such
announcement), 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 date and the
Shares Acquisition Date being herein referred to as the
"Distribution Date"), (x) the Rights
6.
<PAGE>
will be evidenced 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
(and the right to receive Right Certificates therefor) will
be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially
the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each Common Share so held, subject
to the adjustment provisions of Section 11 of this Rights
Agreement. 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 (directly or through the Rights Agent or
its transfer agent) 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. Until the Distribution Date (or the earlier
of the Redemption Date and the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares
outstanding on the Record Date 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 second to last sentence of this paragraph
(c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
"This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between Hollis-Eden Pharmaceuticals, Inc. (the
"Corporation") and American Stock Transfer and Trust
Company, as Rights Agent (the "Rights Agent"), dated as
of November 15, 1999, as amended from time to time (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is
on
7.
<PAGE>
file at the principal executive offices of the
Corporation. Under certain circumstances, as set forth
in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced
by this certificate. The Corporation will mail to the
holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written
request therefor addressed to the Secretary of the
Corporation. As described in the Rights Agreement,
Rights issued to any Person who becomes an Acquiring
Person or an Affiliate or Associate thereof (as defined
in the Rights Agreement) and certain related persons,
whether currently held by or on behalf of such Person or
by any subsequent holder, shall become null and void."
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated
with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases
or acquires any Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer
outstanding. Notwithstanding this Section 3(c), the omission
of a legend on any certificate for Common Shares shall not
affect the enforceability of any part of this Agreement or
the rights of any holder of the Rights.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the form of election to purchase
Preferred Shares, the form of assignment and the form of
certification 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 or quotation system on which the Rights may from
time to time be listed, or to conform to usage. Subject to
the provisions of Sections 7, 11 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 (the "Purchase
Price"), but the number of such one one-hundredths of a
Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.
8.
<PAGE>
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights which are null and
void pursuant to Section 11(a)(ii) hereof and any Right
Certificate issued purs uant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of
any other Right Certificate referred to in this sentence
shall contain (to the extent feasible) the following legend:
"The Rights represented by this Right Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby are null and void."
The provisions of Section 11(a)(ii) hereof shall be operative
whether or not the foregoing legend is contained on any such
Right Certificate.
Section 5. Countersignature and Registration. The Right Certificates shall be
executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, its Vice Chairman of the
Board, its Chief Financial Officer, or any of its Vice Presidents,
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 be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of
the Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company
to sign such Right Certificate, although at the date of the
execution of this Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purpose, books
for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject to
the provisions of Section 11(a)(ii), Section 14 and Section 24
hereof, at any time after
9.
<PAGE>
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
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 office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered 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,
subject to Section 11(a)(ii), Section 14 and Section 24 hereof,
countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of
Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to
them, 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 issue, execute and
deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered holder in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.
Notwithstanding any other provisions hereof, the Company and the
Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights
evidenced by Rights Certificates.
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 Right Certificate,
with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-hundredth of a
Preferred Share (or such other
10.
<PAGE>
number of shares or other securities) as to which the Rights are
exercised, at or prior to the earliest of (i) the Close of
Business on November 14, 2009 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section
23 hereof (the "Redemption Date"), (iii) the closing of any
merger or other acquisition transaction involving the Company
pursuant to an agreement of the type contemplated by Section
13(e), at which time the Rights are terminated, or (iv) the time
at which such Rights are exchanged as provided in Section 24
hereof.
(b) The purchase price (the "Purchase Price") for each one one-
hundredth of a Preferred Share pursuant to the exercise of a
Right shall initially be $100 and shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(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, bank draft or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent for the Preferred Shares
certificates for the number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Company, in its
sole discretion, shall have elected to deposit the Preferred
Shares issuable upon exercise of the Rights hereunder into a
depository, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or 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. In the
event that the Company is obligated to issue securities of the
Company other than Preferred Shares (including Common Shares) of
the Company pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when
appropriate.
11.
<PAGE>
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii) hereof, the Rights Agent shall
return such Right Certificate to the registered holder thereof
after imprinting, stamping or otherwise indicating thereon that
the rights represented by such Right Certificate no longer
include the rights provided by Section 11(a)(ii) hereof, and, if
fewer than all the Rights represented by such Right Certificate
were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which
continue to include the rights provided by Section 11(a)(ii)
hereof.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.
(e) The Company 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
this Section 7.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section
7 unless such registered holder shall have (i) completed and
signed the certification following the form of election to
purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates 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 delivered or
surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any
other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at
the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
12.
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Section 9. Availability of Preferred Shares. The Company covenants and agrees
that so long as the Preferred Shares (and, after the time a person
becomes an Acquiring Person, Common Shares or any other securities)
issuable upon the exercise of the Rights may be listed 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 on such exchange or quotation system upon official notice
of issuance upon such exercise.
The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares (or Common
Shares and other securities, as the case may be) delivered upon
exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable shares or other securities.
The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the
Right Certificates or of any Preferred Shares upon the exercise of
Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the
Preferred Shares in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise
or to issue or to deliver any certificates or depositary receipts
for Preferred Shares upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder
of such Right Certificate at the time of surrender) or until it has
been established to the Company?s reasonable satisfaction that no
such tax is due.
As soon as practicable after the Distribution Date, the Company
shall use its best efforts to:
(i) prepare and file a registration statement under the
Securities Act of 1933, as amended (the "Act"), with
respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form,
will use its best efforts to cause such registration
statement to become effective as soon as practicable
after such filing and will use its best efforts to
cause such registration statement to remain
effective (with a prospectus at all times meeting
the requirements of the Act) until the Final
Expiration Date; and
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise
of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate.
13.
<PAGE>
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 the foregoing, 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.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares or other securities is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares or other
securities represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered with the forms of election and
certification duly executed 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 or other securities 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 or other
securities transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right
Certificate, as such, shall not be entitled to any rights of a
holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital
stock in a 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 Company), 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
14.
<PAGE>
of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books
of the Company were open, 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. If an event
occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 hereof and the provisions of
the next paragraph of this Section 11(a)(ii), in the event
any Person shall become an Acquiring Person, each holder of
a Right shall, for a period of 60 days after the later of
such time any Person becomes an Acquiring Person or the
effective date of an appropriate registration statement
filed under the Act pursuant to Section 9 hereof (provided,
however that, if at any time prior to the expiration or
termination of the Rights there shall be a temporary
restraining order, a preliminary injunction, an injunction,
or temporary suspension by the Board of Directors, or
similar obstacle to exercise of the Rights (the
"Injunction") which prevents exercise of the Rights, a new
60-day period shall commence on the date the Injunction is
removed), have a right to receive, upon 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 Common Shares as shall equal the result
obtained by (A) 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 (B) 50% of the then current per share market price of the
Common Shares (determined pursuant to Section 11(d) hereof)
on the date such Person became an Acquiring Person;
provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only
the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company
shall not take any action which
15.
<PAGE>
would eliminate or diminish the benefits intended to be
afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary,
from and after the time any Person becomes an Acquiring
Person, any Rights beneficially owned by (i) such Acquiring
Person or an Associate or Affiliate of such Acquiring
Person, (ii) a transferee of such Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person became such, or (iii) a
transferee of such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person's becoming such and
receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose
or effect the avoidance of this Section 11(a)(ii), shall
become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable
efforts to insure that the provisions of this Section
11(a)(ii) and Section 4(b) hereof 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. No Right
Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the preceding
sentence shall be canceled.
(iii) In lieu of issuing Common Shares in accordance with Section
11(a)(ii) hereof, the Company may, if a majority of the
Board of Directors then in office determines that such
action is necessary or appropriate and not contrary to the
interests of holders of Rights, elect to (and, in the event
that the Board of Directors has not exercised the exchange
right contained in Section 24(c) hereof and there are not
sufficient treasury shares and authorized but unissued
Common Shares to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii), the
Company
16.
<PAGE>
shall) take all such action as may be necessary to
authorize, issue or pay, upon the exercise of the Rights,
cash (including by way of a reduction of the Purchase
Price), property, Common Shares, other securities or any
combination thereof having an aggregate value equal to the
value of the Common Shares which otherwise would have been
issuable pursuant to Section 11(a)(ii) hereof, which
aggregate value shall be determined by a nationally
recognized investment banking firm selected by a majority of
the Board of Directors then in office. For purposes of the
preceding sentence, the value of the Common Shares shall be
determined pursuant to Section 11(d) hereof. Any such
election by the Board of Directors must be made within 60
days following the date on which the event described in
Section 11(a)(ii) hereof shall have occurred. Following the
occurrence of the event described in Section 11(a)(ii)
hereof, a majority of the Board of Directors then in office
may suspend the exercisability of the Rights for a period of
up to 60 days following the date on which the event
described in Section 11(a)(ii) hereof shall have occurred to
the extent that such directors have not determined whether
to exercise their rights of election under this Section
11(a)(iii). 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.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares
entitling them to subscribe for or purchase Preferred Shares (or
shares having the same designations and the powers, preferences
and rights, and the qualifications, limitations and restrictions
as the Preferred Shares (?equivalent preferred shares?)) or
securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent
preferred shares) less than the then current per share market
price of the Preferred Shares (as such term is hereinafter
defined) 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
17.
<PAGE>
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise
of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the then current per share market price of the Preferred Shares
(as such term is hereinafter defined) on such record date, less
the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable
to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon
exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive
Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in
18.
<PAGE>
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 shares of
such Security, or (B) any subdivision, combination or
reclassification of such Security or securities convertible
into shares of such Security, or (C) any subdivision,
combination or reclassification of such Security and prior
to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price
shall be appropriately adjusted to reflect the current
market price per share equivalent of such Security. The
closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted
to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Security is listed or
admitted to trading or as reported on the Nasdaq National
Market or, if the Security is not listed or admitted to
trading on any national securities exchange or reported on
the Nasdaq National Market, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations
System ("Nasdaq") or such other system then in use, or, if
on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of
the Company or, if on any such date no professional market
maker is making a market in the Security, the price as
determined in good faith by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the
Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in
Section 11(d)(i) hereof. If the Preferred Shares are not
publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed
19.
<PAGE>
to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) hereof
(appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof) multiplied by one hundred. If neither the Common
Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall
mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(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 one-hundredth of a Preferred
Share or one ten-thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number of such other
shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11(a) through 11(c) hereof,
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14
hereof 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) below, upon each adjustment of the Purchase Price as
a result of the calculations made in Section 11(b) and Section
11(c) hereof, 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
20.
<PAGE>
(calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a Preferred Share covered by a Right
immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of
one one-hundredths of a Preferred Share purchasable upon
the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect
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, this 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 be
entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one one-
hundredths of a Preferred Share which were expressed in the
initial Right Certificates issued hereunder.
21.
<PAGE>
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the
then par value, if any, of the Preferred Shares issuable
upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Preferred Shares
at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise 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) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by
Section 23 or Section 27 hereof, take (or permit any
Subsidiary to take) any action the purpose of which is to,
or if at the time such action is taken it is reasonably
foreseeable that the effect of such action is to,
materially diminish or eliminate the benefits intended to
be afforded by the Rights. Any such action taken by the
Company during any period after any Person becomes an
Acquiring Person but prior to the Distribution Date shall
be null and void unless such action could be taken under
this Section 11(m) from and after the Distribution Date.
(n) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall
determine to be advisable in order that any consolidation
or subdivision of the Preferred Shares, issuance wholly for
cash of any Preferred Shares at less than the current
market price, issuance wholly for cash of Preferred Shares
or securities which by their terms are convertible into or
exchangeable for Preferred Shares, dividends on Preferred
Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such stockholders.
(o) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Common Shares
payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends
in Common Shares) into a greater or lesser number of Common
Shares, then in any
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such case (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a Preferred Share so
purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares
outstanding immediately before such event and the
denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall
have issued with respect to it that number of Rights which
each Common Share outstanding immediately prior to such
event had issued with respect to it. The adjustments
provided for in this Section 11(o) shall be made
successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is
effected.
(p) The exercise of Rights under Section 11(a)(ii) hereof shall
only result in the loss of rights under Section 11(a)(ii)
hereof to the extent so exercised and shall not otherwise
affect the rights represented by the Rights under this
Agreement, including the rights represented by Section 13
hereof.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall promptly (a) prepare a certificate
setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent and
with each transfer agent for the Common Shares or the Preferred
Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Shares Acquisition Date or,
if a Transaction is proposed, the Distribution Date, directly
or indirectly (x) the Company shall consolidate with, or
merge with and into, any Interested Stockholder, or if in
such merger or consolidation all holders of Common Shares are
not treated alike, any other Person, (y) any Interested
Stockholder, or if in such merger or consolidation all
holders of Common Shares are not treated alike, any other
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 (other than, in the case
of either transaction described in (x) or (y), a merger or
consolidation which would result in all of the voting power
represented by the securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities
of the surviving entity) all of the voting power represented
by the securities of the Company or such surviving entity
outstanding
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immediately after such merger or consolidation and the
holders of such securities not having changed as a result of
such merger or consolidation), or (z) the Company shall sell,
mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer), in
one or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any Interested
Stockholder or Interested Stockholders, or if in such
transaction all holders of Common Shares are not treated
alike, any other Person, (other than the Company or any
Subsidiary of the Company in one or more transactions each of
which individually and in the aggregate does not violate
Section 13(d) hereof) then, and in each such case, proper
provision shall be made so that (i) each holder of a Right,
subject to Section 11(a)(ii) hereof, shall have the right to
receive, upon the exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one
one-hundredths of a 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 freely
tradable Common Shares of the Principal Party (as such term
is hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims,
as shall be equal to the result obtained by (A) multiplying
the then current Purchase Price by the number of one one-
hundredths of a Preferred Share for which a Right is then
exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) hereof) and
dividing that product by (B) 50% of the then current per
share market price of the Common Shares of such Principal
Party (determined pursuant to Section 11(d) hereof) on the
date of consummation of such consolidation, merger, sale or
transfer; (ii) 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; (iii)
the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply to such Principal
Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of shares of its Common Shares in
accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) hereof,
the Person that is the issuer of any securities into
which Common Shares are converted in such merger or
consolidation or, if there is more than one such issuer,
the issuer the Common Shares of which have the greatest
24.
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aggregate market value of shares outstanding, and if no
securities are so issued, the Person that is the other
party to the merger or consolidation (or, if applicable,
the Company, if it is the surviving corporation), or, if
there is more than one such Person, the Person the
Common Shares of which have the greatest aggregate
market value of shares outstanding, or 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 the Person
resulting from the consolidation; and
(ii) in the case of any transaction described in (z) of the
first sentence of 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;
provided, however, that in any case, (1) if the Common Shares
of such Person are not at such time and have not been
continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary or Affiliate of another Person
the Common Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person; (2) if
such Person is a Subsidiary, directly or indirectly, or
Affiliate of more than one Person, the Common Shares of two or
more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer
of the Common Shares having the greatest aggregate market
value; and (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 (1) and (2) above shall apply
to each of the chains of ownership having an interest in such
joint venture as if such party were a "Subsidiary" of both or
all of such joint venturers and the Principal Parties in each
such chain shall bear the obligations set forth in this
Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have
a sufficient number of authorized Common Shares that have not
been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and each Principal Party and
each other Person who may become a Principal Party as a result
of such consolidation, merger, sale or transfer shall have (i)
executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a)
and (b) of this Section 13 and (ii) prepared, filed and had
declared and remain effective a registration statement under
the Act on the appropriate form with respect to the Rights and
the securities exercisable upon exercise of the Rights and
further providing that, as soon as practicable after the date
of any consolidation,
25.
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merger, sale or transfer of assets mentioned in paragraph (a)
of this Section 13, the Principal Party at its own expense
will:
(i) cause the registration statement filed under the Act
with respect to the Rights and the securities
purchasable upon exercise of the Rights on an
appropriate form to remain effective (with a prospectus
at all times meeting the requirements of the Act) until
the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as
may be necessary or appropriate;
(iii) list the Rights and the securities purchasable upon
exercise of the Rights on each national securities
exchange on which the Common Shares were listed prior to
the consummation of such consolidation, merger, sale or
transfer of assets or on the Nasdaq National Market if
the Common Shares were listed on the Nasdaq National
Market or, if the Common Shares were not listed on a
national securities exchange or the Nasdaq National
Market prior to the consummation of the consolidation,
merger, sale or transfer of assets, on a national
securities exchange or the Nasdaq National Market; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its
Affiliates which comply in all material respects with
the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
(d) After the Distribution Date, the Company covenants and agrees
that it shall not (i) consolidate with, (ii) merge with or
into, or (iii) sell or transfer to, in one or more
transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole, any other Person (other than a
Subsidiary of the Company in a transaction which does not
violate Section 11(m) hereof), if (x) at the time of or after
such consolidation, merger or sale there are any charter or
bylaw provisions or any rights, warrants or other instruments
or securities outstanding, agreements in effect or any other
action taken which would diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such
consolidation, merger or sale, the 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 and
26.
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Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto
the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 13(d).
(e) Notwithstanding anything contained herein to the contrary, in
the event of any transaction contemplated by clause (x), (y)
or (z) of the first sentence of Section 13(a) between the
Company and any Person (or one or more of such Person?s
Affiliates or Associates) which transaction has been approved
by the Board of Directors of the Company prior to any Person
becoming an Acquiring Person, this Agreement and the rights
of holders of Rights hereunder shall be terminated in
accordance with Section 7(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right.
For the purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the
Rights 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 or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Rights are listed or
admitted to trading or as reported on the Nasdaq National
Market or, if the Rights are not listed or admitted to
trading on any national securities exchange or reported on
the Nasdaq National Market, 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
27.
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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; provided, however, that
holders of such depositary receipts shall have all of the
designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions to which they
are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples
of one one-hundredth of a Preferred Share, the Company shall
pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market
value of one Preferred Share. For the purposes of this
Section 14(b), the current market value of a Preferred Share
shall be the current per share market price of the Preferred
Shares (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 (or, if not publicly
traded, in accordance with Section 11(d)(ii) hereof).
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to
receive Common Shares, capital stock equivalents (other than
Preferred Shares) or other securities upon the exercise of a
Right, the Company shall not be required to issue fractions
of Common Shares or units of such Common Shares, capital
stock equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence
fractional Common Shares, capital stock equivalents or other
securities. In lieu of fractional Common Shares, capital
stock equivalents or other securities, 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 Common Share or unit of such Common Shares, capital
stock equivalents or other securities. For purposes of this
Section 14(c), the current market value shall be the current
per share market price (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the
date of such exercise and, if such capital stock equivalent
is not traded, each such capital stock equivalent shall have
the value of one one-hundredth of a Preferred Share.
(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 or exchange 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 Sections 18 and 20 hereof, are vested in the respective
registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares) and
any
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registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares), may, in
his own behalf and for his own benefit, enforce, and may institute
and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights,
it is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this
Agreement. Holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys fees, incurred
by them in any action to enforce the provisions of 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 that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable (subject to the provisions of this Rights
Agreement) only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer;
and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common
Shares certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any
notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as
such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred
Shares or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to
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receive notice of meetings or other actions affecting stockholders
(except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against
any claim of liability in the premises. The indemnity provided
herein shall survive the expiration of the Rights and the
termination of this Agreement.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it
in connection with, its administration of this Agreement in
reliance upon any Right Certificate or certificate for the
Preferred Shares or Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
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. In no case will the Rights Agent be liable for special,
indirect, incidental or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of such loss or damage.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the shareholder services or corporate
trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency
created by this Agreement any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Right
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Certificates either in the name of the predecessor Rights Agent or
in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its choice
(who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter 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, the Chief
Financial Officer, 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; provided however, that in the event such
certificate is signed by a Grandfathered Stockholder as
defined in Section 1(j) hereof, then such certificate must
also be countersigned by one of the Chairman of the Board,
the Chief Executive Officer, the President, the Chief
Financial Officer, any Vice President, the Treasurer or the
Secretary of the Company who is not themselves a
Grandfathered Stockholder.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this
Agreement or in the Right
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Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of
any Right Certificate (except its countersignature thereof);
nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or
any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Sections 3,
11, 13, 23 or 24 hereof, or the ascertaining of the existence
of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a certificate pursuant to
Section 12 hereof describing such change or adjustment); 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, the Chief Financial
Officer, any Vice President, the Secretary or the Treasurer
of the Company (except to the extent such person is a
Grandfathered Stockholder), 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 with respect to its
duties or obligations under this Agreement and the date on
and/or after which such action shall be taken or omitted and
the Rights Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such
application on or after the date specified therein (which
date shall not be less than three Business Days after the
date
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indicated in such application unless any such officer shall
have consented in writing to an earlier date) unless, prior
to taking or omitting any such action, the Rights Agent has
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 powehereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment
thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has not been executed, the
Rights Agent shall not take any further action with respect
to such requested exercise of transfer without first
consulting with the Company.
(l) At any time and from time to time after the Distribution
Date, upon the request of the Company, the Rights Agent shall
promptly deliver to the Company a list, as of the most recent
practicable date (or as of such earlier date as may be
specified by the Company), of the holders of record of
Rights.
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 for the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in
writing,
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mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent for the Common Shares or
Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be either (a) a corporation business
trust or limited liability company organized and doing business
under the laws of the United States or of any other state of the
United States which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50 million or (b) a direct or
indirect wholly owned subsidiary of such an entity or its wholly-
owning parent. 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 for the Common Shares or Preferred
Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with
the issuance or sale of Common Shares following the Distribution
Date and prior to the earlier of the Redemption Date and the Final
Expiration Date, the Company (a) shall with respect to Common
Shares so issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement in existence prior to the
Distribution Date, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Company and in
existence prior to the Distribution Date, and (b) may, in any other
case, if deemed necessary or
34.
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appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i)
the Company shall not be obligated to issue any such Right
Certificates if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no
Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board of
Directors pursuant to Section 23(b) hereof and shall not be
redeemed in any other manner.
(b) (i) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of such time as any
Person becoming an Acquiring Person or the Final
Expiration Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"), and the Company
may, at its option, pay the Redemption Price in Common
Shares (based on the "current per-share market price," as
such term is defined in Section 11(d) hereof, of the
Common Shares at the time of redemption), cash or any
other form of consideration deemed appropriate by the
Board of Directors of the Company. The redemption of the
Rights by the Board of Directors of the Company may be
made effective at such time, on such basis and subject to
such conditions as the Board of Directors in its sole
discretion may establish. Notwithstanding anything
contained in this Agreement to the contrary, the Rights
shall not be exercisable pursuant to Section 11(a)(ii)
hereof prior to the expiration or termination of the
Company's right of redemption under this Section
23(b)(i).
(ii) In addition, the Board of Directors of the Company may,
at its option, at any time after the time a Person
becomes an Acquiring Person and the expiration of any
period during which the holder of Rights may exercise the
rights under Section 11(a)(ii) hereof but prior to any
event described in clause (x), (y) or (z) of the first
sentence of Section 13(a) hereof, redeem all but not less
than all of the then outstanding Rights at the Redemption
Price (x) in connection with any merger, consolidation or
sale or other transfer (in one transaction or in a series
of related transactions) of assets or earning power
aggregating 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) in
35.
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which all holders of Common Shares are treated alike and not
involving (other than as a holder of Common Shares being
treated like all other such holders) an Interested
Stockholder or a Transaction Person or (y)(A) if and for so
long as the Acquiring Person is not thereafter the
Beneficial Owner of 15% or more of the then outstanding
Common Shares, and (B) at the time of redemption no other
Persons are Acquiring Persons.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to Section
23(b) hereof, and without any further action and without any
notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give
public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after such
action of the Board of Directors ordering the redemption of the
Rights pursuant to Section 23(b) hereof, the Company shall mail a
notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Shares,
provided, however, that failure to give, or any defect in, any
such notice shall not affect the validity of such redemption. 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.
(d) The Company may, at its option, discharge all of its obligations
with respect to any redemption of the Rights by (i) issuing a
press release announcing the manner of redemption of the Rights
and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as they
appear on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent
for the Common Shares, and upon such action, all outstanding
Right Certificates shall be null and void without any further
action by the Company.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which
shall not include Rights
36.
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that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (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.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section
24(a) hereof and without any further action and without any
notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange;
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; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. Any notice which
is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.
(c) In lieu of issuing Common Shares in accordance with Section 24(a)
hereof, the Company may, if a majority of the Board of Directors
then in office determines that such action is necessary or
appropriate and not contrary to the interests of the holders of
Rights, elect to (and, in the event that there are not sufficient
treasury shares and authorized but unissued Common Shares to
permit any exchange of the Rights in accordance with Section
24(a) hereof, the Company shall) take all such action as may be
necessary to authorize, issue or pay, upon the exchange of the
Rights, cash (including by way of a reduction of the Purchase
Price), property, Common Shares, other securities or any
combination thereof having an aggregate value equal to the value
of the Common Shares which otherwise would have been issuable
pursuant to Section 24(a) hereof, which aggregate value shall be
determined by a nationally recognized investment banking firm
selected by a majority of the Board of Directors then in
37.
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office. For purposes of the preceding sentence, the value of the
Common Shares shall be determined pursuant to Section 11(d)
hereof. Any election pursuant to this Section 24(c) by the Board
of Directors must be made within 60 days following the date on
which the event described in Section 11(a)(ii) hereof shall have
occurred. Following the occurrence on the event described in
Section 11(a)(ii) hereof, a majority of the Board of Directors
then in office may suspend the exercisability of the Rights for a
period of up to 60 days following the date on which the event
described in Section 11(a)(ii) hereof shall have occurred to the
extent that such directors have not determined whether to
exercise their rights of election under this Section 24(c). 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.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares
would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Common Share.
For the purposes of this Section 24(d), the current market value
of a whole Common Share shall be the closing price of a Common
Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately after the date
of the first public announcement by the Company that an exchange
is to be effected pursuant to this Section 24.
(e) 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 exchange 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; provided, however, that holders of such
depositary receipts shall have all of the designations and the
powers, preferences and rights, and the qualifications,
limitations and restrictions to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that
are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the purposes of
this Section 24(e), the current market value of a Preferred Share
shall be one hundred (100) times the closing price of a Common
Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately after the date
of
38.
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the first public announcement by the Company that an exchange is
to be effected pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose at any time after the earlier
of the Shares Acquisition Date and the Distribution Date (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 subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of
the assets or earning power of the Company and its Subsidiaries
(taken as a whole), to any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then,
in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice
of such proposed action, which shall specify the record date for
the purpose of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or the Preferred
Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to
the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or
the Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11(a)(ii) hereof.
39.
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Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent)
as follows:
Hollis-Eden Pharmaceuticals, Inc.
9333 Genesee Ave., Suite 200
San Diego, California 92121
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer and Trust Company
40 Wall Street
New York, New York 10005
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. Prior to the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the
approval of any holders of the Rights. From and after the
Distribution Date, the Company and the Rights Agent shall, if the
Company so directs, from time to time supplement or amend any
provision of this Agreement without the approval of any holders
of Right 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, or
(iii) change any other provisions with respect to the Rights
which the Company may deem necessary or desirable; provided,
however, that no such supplement or amendment shall be made which
would adversely affect the interests of the holders of Rights
(other than the interests of an Acquiring Person or its
Affiliates or Associates). Any supplement or amendment adopted
during any period after any Person has become an Acquiring Person
but prior to the Distribution Date shall become null and void
unless such supplement or amendment could have been adopted by
the Company from and after the Distribution Date. Any such
supplement or amendment shall be evidenced by a writing signed by
the Company and the Rights Agent. Upon 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
40.
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shall execute such supplement or amendment unless the Rights
Agent shall have determined in good faith that such supplement or
amendment would adversely affect its interest under this
Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares.
Section 28. Determination and Actions by the Company's Board of Directors,
etc. For all purposes of this Agreement, any calculation of the
number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage
of such outstanding Common Shares or any other securities of
which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement. The Board of Directors of the
Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the Company, or
the Company, or as may be necessary or advisable in the
administration of this Agreement, including without limitation,
the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made
by the Board in good faith, shall (x) be final, conclusive and
binding on the Rights Agent and the holders of the Rights, and
(y) not subject the Board to any liability to the holders of the
Rights.
Section 29. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and
assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).
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
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for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made
and performed entirely within such State.
Section 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.
42.
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In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
Attest: Hollis-Eden Pharmaceuticals, Inc.
/s/ Robert W. Weber /s/ Daniel D. Burgess
- -------------------------------- ----------------------------------
Print Name: Robert W. Weber Name: Daniel D. Burgess
-------------------- -----------------------------
Title: Vice President-Controller Title: Chief Operating Officer
-------------------------
and Chief Financial Officer
---------------------------
Attest: American Stock Transfer and Trust
Company
By: /s/ Susan Silber By: /s/ Herbert J. Lemmer
---------------------------- ------------------------------
Print Name: Susan Silber Print Name: Herbert J. Lemmer
-------------------- -----------------------
Title: Assistant Secretary Title: Vice President
------------------------- ---------------------
43.
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Exhibit A
Certificate of Designation
of
Series B Junior Participating Preferred Stock
of
Hollis-Eden Pharmaceuticals, Inc.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Hollis-Eden Pharmaceuticals, 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 adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on November 15, 1999.
Resolved, that pursuant to the authority granted to and vested in the
Board of Directors of the Company in accordance with the provisions of
its Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the Board of Directors hereby creates
a series of Preferred Stock, par value $.01 per share, of the Company
and hereby states the designation and number of shares, and fixes the
relative designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions thereof (in addition to
the provisions set forth in the Certificate of Incorporation of the
Company, which are applicable to the Preferred Stock of all classes
and series), as follows:
SECTION 1. Designation and Amount. Three hundred thousand (300,000) shares
of Preferred Stock, $.01 par value, are designated "Series B Junior
Participating Preferred Stock" with the designations and the powers, preferences
and rights, and the qualifications, limitations and restrictions specified
herein (the "Junior Preferred Stock"). 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 Junior Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of
A-1
<PAGE>
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Junior Preferred
Stock.
SECTION 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Junior Preferred Stock with respect to dividends, the holders of shares of
Junior Preferred Stock, in preference to the holders of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of April, July, October and January in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Junior Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $l.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 or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Company shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Junior
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
Junior Preferred Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided, that in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Junior
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Junior
A-2
<PAGE>
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Junior 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 Junior 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 Junior Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Junior Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Company. In
the event the Company shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior 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,
holders of Junior 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 Junior Preferred Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(I) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Junior Preferred Stock;
A-3
<PAGE>
(II) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except dividends paid ratably on the Junior 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 Junior 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
(either as to dividends or upon dissolution, liquidation or winding up) to the
Junior Preferred Stock; or
(IV) redeem or purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Junior 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 Junior Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in the Amended and
Restated Certificate of Incorporation, or in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
SECTION 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (1) to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Junior Preferred Stock shall be entitled
to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all such parity
stock in proportion to the total amounts to which
A-4
<PAGE>
the holders of all such shares are entitled upon such liquidation, dissolution
or winding up. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
SECTION 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Junior 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 Junior Preferred Stock shall not
be redeemable.
SECTION 9. Rank. The Junior Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Company's Preferred Stock.
SECTION 10. Amendment. The Amended and Restated Certificate of
Incorporation of the Company shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Junior Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the outstanding shares of Junior
Preferred Stock, voting together as a single class.
A-5
<PAGE>
In Witness Whereof, the undersigned have executed this certificate as of
November 15, 1999.
__________________________________________
Daniel D. Burgess, Chief Financial Officer
__________________________________________
Eric J. Loumeau, Secretary
A-6
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- ----- Rights
NOT EXERCISABLE AFTER NOVEMBER 14, 2009 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND
TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
Hollis-Eden Pharmaceuticals, Inc.
This certifies that ___________________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of November 15, 1999 (the "Rights Agreement"), between
Hollis-Eden Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer and Trust Co. (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., Pacific Time, on November 14, 2009 at
the office of the Rights Agent designated for such purpose, or at the office of
its successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series B Junior Participating Preferred Stock, par value $.01 per share
(the "Preferred Shares"), of the Company, at a purchase price of $100 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of one one-hundredths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of November 29, 1999, based on the Preferred
Shares as constituted at such date.
From and after the time any Person becomes an Acquiring Person, (as such
terms are defined in the Rights Agreement), if the Rights evidenced by this
Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate who becomes a transferee after the Acquiring Person
becomes such, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of any such Acquiring Person, Associate or Affiliate who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and
B-1
<PAGE>
void without any further action and no holder hereof shall have any right with
respect to such Rights from and after the time any Person becomes an Acquiring
Person.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, as amended from time to time, which terms,
provisions and conditions are hereby incorporated herein by reference and made a
part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $.01 per share, or, upon circumstances set
forth in the Rights Agreement, cash, property or other securities of the
Company, including fractions of a share of Preferred Stock.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts) but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
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<PAGE>
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 _________, 1999.
Attest: Hollis-Eden Pharmaceuticals, Inc.
By:____________________________ By:____________________________
Title:_________________________ Title:_________________________
Countersigned:
American Stock Transfer and Trust Company
as Rights Agent
By:______________________________________
Print Name:______________________________
Title:__________________________________
B-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells,
assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________ this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ________________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________________
________________________________
Signature
Form of Reverse Side of Right Certificate -- continued
B-4
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
- -------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person, an Interested Stockholder or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement); and (2) after due inquiry and to the best of the knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person, an Interested
Stockholder, or an Affiliate or Associate thereof.
_________________________________
Signature
B-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To American Stock Transfer and Trust Company;
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
Form of Reverse Side of Right Certificate -- continued
B-6
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
- ---------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not beneficially owned by nor are they being exercised on
behalf of an Acquiring Person, an Interested Stockholder or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement); and (2)
after due inquiry and to the best of the knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate from
any Person who is or was an Acquiring Person, an Interested Stockholder, or an
Affiliate or Associate thereof.
________________________________
Signature
- ------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as
the case may be, must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
B-7
<PAGE>
Exhibit C
Hollis-Eden Pharmaceuticals, Inc.
Summary Of Rights To Purchase
Preffered Shares
On November 15, 1999, the Board of Directors of Hollis-Eden
Pharmaceuticals, Inc. (the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$.01 per share (the "Common Shares"), of the Company. The dividend is effective
as of November 29, 1999 (the "Record Date") with respect to the stockholders of
record on that date. The Rights will also attach to new Common Shares issued
after the Record Date. Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series B Junior Participating
Preferred Stock, par value $.01 per share (the "Preferred Shares"), of the
Company at a price of $100 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. Each Preferred Share is designed to be
the economic equivalent of 100 Common Shares. The description and terms of the
Rights are set forth in a Rights Agreement dated as of November 15, 1999 (the
"Rights Agreement"), between the Company and American Stock Transfer and Trust
Co. (the "Rights Agent").
Detachment and Transfer of Rights
Initially, the Rights will be evidenced by the stock certificates
representing Common Shares then outstanding, and no separate Right Certificates
will be distributed. Until the earlier to occur of (i) a public announcement
that a person or group of affiliated or associated persons, has become an
"Acquiring Person" (as such term is defined in the Rights Agreement) or such
earlier date that the Company's Board of Directors becomes aware of the
existence of an Acquiring Person or (ii) 10 business days (or such later date as
the Board may determine) following the commencement of, or announcement of an
intention to commence, a tender offer or exchange offer which would result in
the beneficial ownership by an Acquiring Person of 15% or more of the
outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate. In general, an "Acquiring Person" is a person, the affiliates
or associates of such person, or a group, which has acquired beneficial
ownership of 15% or more of the outstanding Common Shares; provided that certain
"Grandfathered Stockholders" as defined in the Rights Agreement may hold the
Common Shares they beneficially owned as of the record date (which exceeded 15%
of the outstanding Common Shares) and not be considered an "Acquiring Person",
but are considered an "Acquiring Person" if they become the beneficial owner of
more than an additional specified number of Common Shares without the prior
approval of the Company's Board of Directors.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferable with
and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares
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<PAGE>
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights) the
surrender or transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
Exercisability of Rights
The Rights are not exercisable until the Distribution Date. The Rights will
expire on November 14, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below. 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.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable or payable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution. The number of
outstanding Rights and the number of one one-hundredths of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares, or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date. With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares will be issued (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share, which may, at
the election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of exercise.
Terms of Preferred Shares
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $l per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by customary
anti-dilution provisions. Because of the nature of the Preferred Shares'
dividend, liquidation and voting rights, the value of the one one-hundredth
interest in a Preferred Share purchasable upon exercise of each Right should
approximate the
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<PAGE>
value of one Common Share. The Preferred Shares would rank junior to any other
series of the Company's preferred stock.
Trigger of Flip-In and Flip-Over Rights
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person or any
affiliate or associate thereof (which will thereafter be void), will thereafter
have the right to receive upon exercise, that number of Common Shares having a
market value of two times the exercise price of the Right. This right will
commence on the date of public announcement that a person has become an
Acquiring Person (or the effective date of a registration statement relating to
distribution of the rights, if later) and terminate 60 days later (subject to
adjustment in the event exercise of the rights is enjoined).
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, its affiliates or associates or certain
other persons in which such persons have an interest, proper provision will be
made so that each such 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.
Redemption and Exchange of Rights
At any time prior to the earliest of (i) the close of business on the
day of the first public announcement that a person has become an Acquiring
Person, or (ii) the Final Expiration Date, the Board of Directors of the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). In general, the redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
At any time after any Person becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one Common Share, or, under circumstances
set forth in the Rights Agreement, cash, property or other securities of the
Company, including fractions of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent designations and the
powers, preferences and rights, and the qualifications, limitations and
restrictions), per Right (with value equal to such Common Shares).
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<PAGE>
Amendment of Rights
The terms of the Rights generally may be amended by the Board of Directors
of the Company without the consent of the holders of the Rights, except that
from and after such time as the Rights are distributed no such amendment may
adversely affect the interests of the holders of the Rights (excluding the
interest of any Acquiring Person).
Additional Information
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated November
23, 1999. A copy of the Rights Agreement is available from the Company by
writing to: Hollis-Eden Pharmaceuticals, Inc., 9333 Genesee Ave., Suite 200, San
Diego, CA 92121, Attn: Corporate Secretary. This summary description of the
Rights is not intended to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference.
C-4
<PAGE>
EXHIBIT 99.3
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER NOVEMBER 14, 2009 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND
TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
Hollis-Eden Pharmaceuticals, Inc.
This certifies that ___________________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of November 15, 1999 (the "Rights Agreement"), between
Hollis-Eden Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer and Trust Co. (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., Pacific Time, on November 14, 2009 at
the office of the Rights Agent designated for such purpose, or at the office of
its successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series B Junior Participating Preferred Stock, par value $.01 per share
(the "Preferred Shares"), of the Company, at a purchase price of $100 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of one one-hundredths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of November 29, 1999, based on the Preferred
Shares as constituted at such date.
From and after the time any Person becomes an Acquiring Person, (as such
terms are defined in the Rights Agreement), if the Rights evidenced by this
Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate who becomes a transferee after the Acquiring Person
becomes such, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of any such Acquiring Person, Associate or Affiliate who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and
1
<PAGE>
void without any further action and no holder hereof shall have any right with
respect to such Rights from and after the time any Person becomes an Acquiring
Person.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, as amended from time to time, which terms,
provisions and conditions are hereby incorporated herein by reference and made a
part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $.01 per share, or, upon circumstances set
forth in the Rights Agreement, cash, property or other securities of the
Company, including fractions of a share of Preferred Stock.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts) but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
2
<PAGE>
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 _______ __, 1999.
Attest: Hollis-Eden Pharmaceuticals, Inc.
By:______________________________ By: ____________________________
Title: __________________________ Title: _________________________
Countersigned:
American Stock Transfer and Trust Company
as Rights Agent
By: _______________________________
Print Name: _______________________
Title: ____________________________
3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells,
assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________ this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ________________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________________
________________________________
Signature
Form of Reverse Side of Right Certificate -- continued
4
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
- ---------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person, an Interested Stockholder or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement); and (2) after due inquiry and to the best of the knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person, an Interested
Stockholder, or an Affiliate or Associate thereof.
________________________________
Signature
5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To American Stock Transfer and Trust Company;
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
Form of Reverse Side of Right Certificate -- continued
6
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934,
as amended.
- -------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not beneficially owned by nor are they being exercised on
behalf of an Acquiring Person, an Interested Stockholder or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement); and (2)
after due inquiry and to the best of the knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate from
any Person who is or was an Acquiring Person, an Interested Stockholder, or an
Affiliate or Associate thereof.
________________________________
Signature
- -------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as
the case may be, must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
7
