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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
TARGETED GENETICS CORPORATION
(Exact name of registrant as specified in its charter)
Washington 91-1549568
(State of incorporation or organization) (I.R.S. employer
identification no.)
1100 Olive Way, Suite 100
Seattle, Washington 98101
(Address of principal executive offices) (zip code)
If this form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A(c)(1) please check the
following box. / /
If this form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A(c)(2) please check the following box. / /
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Preferred Stock Purchase Rights
(Title of class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On October 17, 1996, the Board of Directors (the "Board of Directors")
of Targeted Genetics Corporation (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 was payable on October 18, 1996 (the "Record Date") to the Company's
shareholders of record on that date. In addition, the Board of Directors has
authorized the issuance of one Right with respect to each additional Common
Share that becomes outstanding between the Record Date and the earliest of the
Distribution Date, the Expiration Date (as such terms are hereinafter defined),
and the date, if any, on which the Rights are redeemed. Each Right entitles its
registered holder to purchase from the Company one one-hundredth (1/100th) of a
share of Series A Participating Cumulative Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Shares"), at a price of $40 per one
one-hundredth (1/100th) of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, as Rights Agent.
Until the earlier of (i) the close of business on the tenth business
day after a public announcement that a person or group (including any affiliate
or associate of such person or group) has acquired beneficial ownership of 15%
or more of the outstanding Common Shares (such person or group being an
"Acquiring Person") and (ii) such date, if any, as may be designated by the
Board of Directors following the commencement of, or first public disclosure of
an intent to commence, a tender or exchange offer for outstanding Common Shares
which could result in the offeror becoming the beneficial owner of 15% or more
of the outstanding Common Shares (the earlier of such dates being the
"Distribution Date"), the Rights will be evidenced by the certificates for the
Common Shares registered in the names of the holders thereof (which certificates
for Common Shares will also be deemed to be Right Certificates, as defined
below) and not by separate Right Certificates. Therefore, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares.
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 to each initial record holder of certain Common Shares
originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.
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The Rights are not exercisable until the Distribution Date and will expire on
October 18, 2006 (the "Expiration Date"), unless earlier redeemed or exchanged
by the Company as described below.
In order to preserve the actual or potential economic value of the
Rights, the number of Preferred Shares or other securities issuable upon
exercise of a Right, the Purchase Price, the Redemption Price (as hereinafter
defined) and the number of Rights associated with each outstanding Common Share
are all subject to adjustment by the Board of Directors in the event of any
change in the Common Shares or the Preferred Shares, whether by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Shares or Preferred Shares, as the case
may be, or otherwise.
In the event a person becomes an Acquiring Person, the Rights will
entitle each holder of a Right (other than an Acquiring Person (or any affiliate
or associate of such Acquiring Person)) to purchase, for the Purchase Price,
that number of Common Shares equivalent to the number of Common Shares which at
the time of the transaction would have a market value of twice the Purchase
Price. Any Rights that are at any time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring Person) will be null and void and
nontransferable and any holder of any such Right (including any purported
transferee or subsequent holder) will be unable to exercise or transfer any such
Right.
After there is an Acquiring Person, the Board of Directors may elect to
exchange each Right (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the number of Common Shares that would be issuable at such time upon
the exercise of one Right pursuant to the terms of the Rights Agreement, and
without payment of the Purchase Price.
If the Company is acquired in a merger by, or other business
combination with, or 50% or more of its assets or assets accounting for 50% or
more of its net income or revenues are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to, a publicly traded corporation,
each Right will entitle its holder (subject to the next paragraph) to purchase,
for the Purchase Price, that number of shares of common stock of such
corporation which at the time of the transaction would have a market value of
twice the Purchase Price. If the Company is acquired in a merger by, or other
business combination with, or 50% or more of its assets or assets accounting for
50% or more of its net income or revenues are sold, leased,
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exchanged or otherwise transferred (in one or more transactions) to, an entity
that is not a publicly traded corporation, each Right will entitle its holder
(subject to the next paragraph) to purchase, for the Purchase Price, at such
holder's option (i) that number of shares of the surviving corporation in the
transaction (which surviving corporation could be the Company) which at the time
of the transaction would have a book value of twice the Purchase Price, (ii)
that number of shares of the ultimate parent entity of the surviving corporation
which at the time of the transaction would have a book value of twice the
Purchase Price, or (iii) if the acquiring entity has an affiliate which has
publicly traded common shares, that number of common shares of such affiliate
which at the time of the transaction would have a market value of twice the
Purchase Price.
At any time prior to any person or group becoming an Acquiring Person,
the Board of Directors may redeem the Rights in whole, but not in part, at a
price (in cash or Common Shares or other securities of the Company deemed by the
Board of Directors to be at least equivalent in value) of $.01 per Right,
subject to adjustment as provided in the Rights Agreement (the "Redemption
Price").
At any time prior to the Distribution Date the Company may, without the
approval of any holder of the Rights, supplement or amend any provision of the
Rights Agreement (including the date on which the Distribution Date would occur,
the time during which the Rights may be redeemed or the terms of the Preferred
Shares).
The Preferred Shares issuable upon exercise of the Rights will not be
redeemable. The holders of the Preferred Shares will be entitled to a
preferential quarterly dividend payment equal to the greater of (a) $.01 per
share and (b) 100 times the dividend declared per Common Share, if any. In the
event of dissolution, liquidation or winding up of the Company, whether
voluntary or involuntary, the holders of Preferred Shares will be entitled to a
preferential payment per share of all accrued and unpaid dividends and
distributions per share, plus 100 times the distribution to be made per Common
Share. Each Preferred Share will entitle its holder to 100 votes, voting
together with the Common Shares. Finally, in the event of any merger, business
combination, consolidation or other transaction in which the Common Shares are
exchanged, the holders of the Preferred Shares will be entitled to receive per
share 100 times the amount received per Common Share. Because of the nature of
the Preferred Shares' dividend liquidation and voting rights, the value of the
one one-hundredth (1/100th) interest in a Preferred Share issuable upon exercise
of each Right should approximate the value of one Common Share. Customary
antidilution provisions are designed to protect that relationship in the event
of certain changes in the Common Shares and the Preferred Shares. The Preferred
Shares are authorized to be issued in fractions which are an integral multiple
of one one-hundredth (1/100th) of a Preferred Share. The Company may, but is not
required to,
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issue fractional shares upon the exercise of Rights and, in lieu of fractional
shares, the Company may utilize a depository arrangement as provided by the
terms of the Preferred Shares and, in the case of fractions other than one
one-hundredth (1/100th) of a Preferred Share or integral multiples thereof, may
make a cash payment based on the market price of such shares.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or receive dividends.
As of October 1, 1996, there were approximately 20,119,268 Common
Shares of the Company outstanding. Each Common Share of the Company outstanding
at the close of business on October 18, 1996, will receive one Right. The Board
of Directors of the Company has reserved sufficient Preferred Shares for
issuance upon exercise of the Rights.
The Rights have certain antitakeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors. The Rights should not affect
any prospective offeror willing to make an all-cash offer at a full and fair
price, or willing to negotiate with the Board of Directors of the Company. The
Rights will not interfere with any merger or other business combination approved
by the Board of Directors since the Board of Directors may, at its option,
redeem all but not less than all of the then outstanding Rights at the
Redemption Price.
A copy of the Rights Agreement is attached as Exhibit 2.1 hereto. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
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<TABLE>
<CAPTION>
ITEM 2. EXHIBITS
<S> <C> <C>
1.1 Form of Right Certificate, incorporated by reference to Exhibit B
to Exhibit 2.1 filed herewith.
2.1 Rights Agreement dated as of October 17, 1996, between
Targeted Genetics Corporation and ChaseMellon Shareholder
Services, as Rights Agent.
</TABLE>
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended the registrant duly caused this registration statement
to be signed on its behalf by the undersigned, thereto duly authorized.
Date: October 22, 1996
TARGETED GENETICS CORPORATION
By /s/ James A. Johnson
--------------------------------------
James A. Johnson
Vice President-Finance, Secretary
and Treasurer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C> <C>
1.1 Form of Right Certificate, incorporated by reference to
Exhibit B to Exhibit 2.1 filed herewith
2.1 Rights Agreement dated as of October 17, 1996,
between Targeted Genetics Corporation and ChaseMellon
Shareholder Services, as rights agent.
</TABLE>
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EXHIBIT 2.1
RIGHTS AGREEMENT
DATED AS OF OCTOBER 17, 1996
BETWEEN
TARGETED GENETICS CORPORATION
AND
CHASEMELLON SHAREHOLDER SERVICES
AS RIGHTS AGENT
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CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1. CERTAIN DEFINITIONS .................................................................. 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT .......................................................... 7
SECTION 3. ISSUANCE OF RIGHTS AND RIGHT CERTIFICATES ............................................ 7
SECTION 4. FORM OF RIGHT CERTIFICATES ........................................................... 9
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION ......................................... 9
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; LOST,
STOLEN, DESTROYED OR MUTILATED RIGHT CERTIFICATES; UNCERTIFICATED RIGHTS ............. 10
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS ........................................ 11
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES ................................... 12
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES ..................................... 13
SECTION 10. PREFERRED SHARES RECORD DATE ......................................................... 14
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON; EXCHANGE OF
RIGHTS FOR SHARES; BUSINESS COMBINATIONS ............................................. 14
SECTION 12. CERTAIN ADJUSTMENTS .................................................................. 18
SECTION 13. CERTIFICATE OF ADJUSTMENT ............................................................ 19
SECTION 14. ADDITIONAL COVENANTS ................................................................. 19
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES .............................................. 20
SECTION 16. RIGHTS OF ACTION ..................................................................... 21
SECTION 17. AGREEMENT OF RIGHT HOLDERS ........................................................... 21
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER .................................... 22
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 19. CONCERNING THE RIGHTS AGENT .......................................................... 22
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT ............................ 22
SECTION 21. DUTIES OF RIGHTS AGENT ............................................................... 23
SECTION 22. CHANGE OF RIGHTS AGENT ............................................................... 24
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES ................................. 25
SECTION 24. REDEMPTION AND TERMINATION ........................................................... 26
SECTION 25. NOTICES .............................................................................. 26
SECTION 26. SUPPLEMENTS AND AMENDMENTS ........................................................... 27
SECTION 27. SUCCESSORS ........................................................................... 28
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY THE
COMPANY'S BOARD OF DIRECTORS ......................................................... 28
SECTION 29. SEVERABILITY ......................................................................... 28
SECTION 30. GOVERNING LAW ........................................................................ 28
SECTION 31. COUNTERPARTS; EFFECTIVENESS .......................................................... 28
SECTION 32. DESCRIPTIVE HEADINGS ................................................................. 29
</TABLE>
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 17, 1996, between TARGETED
GENETICS CORPORATION, a Washington corporation (the "Company"), and CHASEMELLON
SHAREHOLDER SERVICES, as Rights Agent (the "Rights Agent").
The Company's Board of Directors has authorized and declared a dividend
of one Right (as hereinafter defined) for each share of Common Stock, par value
$.01 per share, of the Company (the "Common Stock") outstanding at the Close of
Business (as hereinafter defined) on October 18, 1996 (the "Record Date") and
has further authorized the issuance of one Right (as such number may hereafter
be adjusted pursuant to the provisions of this Rights Agreement) with respect to
each share of Common Stock that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date and the
Expiration Date (as such terms are hereinafter defined); provided, however, that
Rights may be issued with respect to shares of Common Stock that shall become
outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date in accordance with the provisions of
Section 23. Each Right shall initially represent the right to purchase one
one-hundredth (1/100) of a share of Series A Participating Cumulative Preferred
Stock, par value $.01 per share, of the Company (the "Preferred Shares"), having
the powers, rights and preferences set forth in the Certificate of Designation
(as hereinafter defined) attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual agreements
set forth in this Rights Agreement, the Company and the Rights Agent hereby
agree as follows:
SECTION 1. CERTAIN DEFINITIONS
For purposes of this Rights Agreement, the following terms have the
meanings indicated:
"Acquiring Person" shall mean any Person (as hereinafter defined)
which, alone or together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as
hereinafter defined) of 15% or more of the Common Stock then outstanding, but
shall not include any Subsidiary (as hereinafter defined) of the Company, any
employee benefit plan of the Company or of any of its Subsidiaries, or any
Person holding Common Stock for or pursuant to the terms of any such employee
benefit plan. Notwithstanding the foregoing, no Person shall become an Acquiring
Person as the result of an acquisition of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more of the Common Stock then
outstanding; provided, however, that if a Person shall become the Beneficial
Owner of 15% or more of the Common Stock then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Stock, then such Person
shall be deemed to be an Acquiring Person. Notwithstanding the foregoing, if the
Company's
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Board of Directors determines in good faith that a Person which would
otherwise be an Acquiring Person, as defined pursuant to the foregoing
provisions of this definition, has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares (as
hereinafter defined) so that such Person would no longer be an Acquiring Person,
as defined pursuant to the foregoing provisions of this paragraph, then such
Person shall not be deemed to be an Acquiring Person for any purposes of this
Agreement.
"Affiliate" and "Associate," when used with reference to any Person,
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act (as hereinafter defined),
as in effect on the date of this Rights Agreement.
A Person shall be deemed to be the "Beneficial Owner" of, to
"beneficially own," and to have "Beneficial Ownership" of, any securities:
(a) that 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 Rights Agreement;
(b) that such Person or any of such Person's Affiliates
or Associates have (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed to
be the Beneficial Owner of, to beneficially own, or to have Beneficial Ownership
of, any 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 thereunder or
(ii) the right to vote pursuant to any agreement, arrangement or understanding
(written or oral); provided, however, that a Person shall not be deemed to be
the Beneficial Owner of, to beneficially own, or to have Beneficial Ownership
of, any security if (A) the agreement, arrangement or understanding (written or
oral) to vote such security 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 under
the Exchange Act and (B) the beneficial ownership of such security is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(c) that 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 (written or oral) for
the purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in clause (b)(ii) of this definition) or disposing of any
securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition
shall cause a Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of,
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or to "beneficially own," any securities acquired in a bona fide firm commitment
underwriting pursuant to an underwriting agreement with the Company.
Notwithstanding anything in this definition 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.
"Book Value," when used with reference to Common Shares issued by any
Person, shall mean the amount of such Person's equity applicable to each Common
Share, determined (a) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price per Common Share
that is less than such Book Value before giving effect to such exercise or
conversion (whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (ii) all dividends and other distributions on the
capital stock of such Person declared prior to the date as of which such Book
Value is to be determined and to be paid or made after such date, and (iii) any
other agreement, arrangement or understanding (written or oral), transaction or
other action prior to the date as of which such Book Value is to be determined
that would have the effect of thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in Section
11(d)(i).
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, New York, or Seattle, Washington,
are authorized or obligated by law or executive order to close.
"Certificate of Designation" shall mean the Certificate of Designation
of Series A Participating Cumulative Preferred Stock setting forth the powers,
preferences, rights, qualifications, limitations and restrictions of such series
of Preferred Stock of the Company, a copy of which is attached to this Rights
Agreement as Exhibit A.
"Close of Business" on any given date shall mean 5 p.m., New York City
time, on such date; provided, however, that if such date is not a Business Day,
"Close of Business" shall mean 5 p.m., New York City time, on the next
succeeding Business Day.
"Common Shares," when used with reference to the Company prior to a
Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares," when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a
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corporation) of any class or series, or units of equity interests in such Person
(if such Person is not a corporation) of any class or series, the terms of which
do not limit (as a maximum amount and not merely in proportional terms) the
amount of dividends or income payable or distributable on such class or series
or the amount of assets distributable on such class or series upon any voluntary
or involuntary liquidation, dissolution or winding up of such Person and do not
provide that such class or series is subject to redemption at the option of such
Person, or any shares of capital stock or units of equity interests into which
the foregoing shall be reclassified or changed; provided, however, that, if at
any time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Common Shares" of such Person shall include
all such classes and series substantially in the proportion of the total number
of shares or other units of each such class or series outstanding at such time.
"Common Stock" shall have the meaning set forth in the second paragraph
of this Rights Agreement.
"Company" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement; provided, however, that if there is a
Business Combination, "Company" shall have the meaning set forth in Section
11(d)(iii).
"Control" with respect to any Person shall mean the power to direct the
management and policies of such Person, directly or indirectly, by or through
stock ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more other
Persons by or through stock ownership, agency or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
"Distribution Date" shall have the meaning set forth in Section 3(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect on the date in question, unless otherwise specifically provided in this
Rights Agreement.
"Exchange Consideration" shall have the meaning set forth in Section
11(b)(i).
"Expiration Date" shall have the meaning set forth in Section 7(a).
"Formula Number" shall have the meaning set forth in the Certificate of
Designation.
"Major Part," when used with reference to the assets of the Company and
its Subsidiaries as of any date, shall mean assets (a) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (b) accounting for 50% or more of the total value (net of depreciation
and amortization) of all the assets of the Company and its Subsidiaries (taken
as a whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (c) accounting
for 50% or more of the total amount of net income or revenues of the Company and
its Subsidiaries (taken as a whole) as would be
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shown on a consolidated or combined statement of income of the Company and its
Subsidiaries for the period of 12 months ending on the last day of the Company's
monthly accounting period next preceding the date in question, prepared in
accordance with generally accepted accounting principles then in effect.
"Market Value," when used with reference to any securities on any date,
shall mean the average of the daily per share closing prices of such securities
for the period that is the shorter of (a) 30 consecutive Trading Days (as
hereinafter defined) immediately prior to the date in question and (b) the
number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public announcement of the event requiring a
determination of the Market Value and ending on the Trading Day immediately
prior to the record date of such event; provided, however, that, in the event
that the Market Value of such securities is to be determined in whole or in part
during a period following the announcement by the issuer of such securities of
any action of the type described in Section 12(a) that would require an
adjustment thereunder, then, and in each such case, the Market Value of such
securities shall be appropriately adjusted to reflect the effect of such action
on the market price of such securities. The closing price for each Trading Day
shall be the average of the closing bid and asked quotations with respect to a
share of such securities on the Nasdaq Stock Market or such other system then in
use or, if no such quotations are available, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in such
securities selected by the Company's Board of Directors. If on any such Trading
Day no market maker is making a market in such securities, the closing price of
such securities on such Trading Day shall be deemed to be the fair value of such
securities as determined in good faith by the Company's Board of Directors
(whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent, the holders of Rights and all
other Persons); provided, however, that for the purpose of determining the
closing price of the Preferred Shares for any Trading Day on which there is no
public market for the Preferred Shares or there is no such market maker for the
Preferred Shares, the closing price on such Trading Day shall be deemed to be
the Formula Number times the closing price of the Common Stock on such Trading
Day.
"Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity and
shall include any successor (by merger or otherwise) of such entity.
"Preferred Shares" shall have the meaning set forth in the second
paragraph of this Rights Agreement. Any reference in this Rights Agreement to
Preferred Shares shall be deemed to include any authorized fraction of a
Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person (as hereinafter
defined) in a Business Combination; provided, however, that if such Surviving
Person is a direct or indirect Subsidiary of any other Person, "Principal Party"
shall mean the Person which is the ultimate parent of such Surviving Person and
which is not itself a Subsidiary of another Person. In the
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event ultimate control of such Surviving Person is shared by two or more
Persons, "Principal Party" shall mean that Person which is immediately
controlled by such two or more Persons.
"Purchase Price" with respect to each Right shall mean $40, subject to
adjustment as provided herein, and shall be payable in lawful money of the
United States of America. All references herein to the Purchase Price shall mean
the Purchase Price as in effect at the time in question.
"Record Date" shall have the meaning set forth in the second paragraph
of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
"Redemption Price" with respect to each Right shall mean $.01, as such
amount may from time to time be adjusted in accordance with Section 12. All
references in this Rights Agreement to the Redemption Price shall mean the
Redemption Price as in effect at the time in question.
"Registered Common Shares" shall mean Common Shares that are, as of the
date of consummation of a Business Combination, and have continuously been for
the 12 months immediately preceding such date, registered under Section 12 of
the Exchange Act.
"Right" shall mean the right to purchase Preferred Shares (or other
securities) as provided in this Rights Agreement.
"Right Certificate" shall mean a certificate evidencing a Right in
substantially the form attached to this Rights Agreement as Exhibit B.
"Securities Act" shall mean the Securities Act of 1933, as in effect on
the date in question, unless otherwise specifically provided in this Rights
Agreement.
"Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
"Subsidiary" shall mean a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one or more
other subsidiaries of such other Person or by such other Person or by one or
more other subsidiaries of such other Person.
"Summary of Rights" shall mean the Summary of Rights to Purchase
Preferred Shares in substantially the form of Exhibit C.
"Surviving Person" shall mean (a) the Person which is the continuing or
surviving Person in a consolidation or merger specified in Section 11(d)(i)(A)
or 11(d)(i)(B) or (b) the
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Person to which the Major Part of the assets of the Company and its Subsidiaries
is sold, leased, exchanged or otherwise transferred or disposed of in a
transaction specified in Section 11(d)(i)(C); provided, however, that if the
Major Part of the assets of the Company and its Subsidiaries is sold, leased,
exchanged or otherwise transferred or disposed of in one or more related
transactions specified in Section 11(d)(i)(C) to more than one Person, the
"Surviving Person" in such case shall mean the Person that acquired assets of
the Company and/or its Subsidiaries with the greatest fair market value in such
transaction or transactions.
"Trading Day" shall mean a day on which the principal national
securities exchange (or principal recognized foreign stock exchange, as the case
may be) on which any securities or Rights, as the case may be, are listed or
admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
SECTION 2. APPOINTMENT OF RIGHTS AGENT
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who prior to the Distribution Date shall
also be the holders of the Common Stock) in accordance with the terms and
conditions of this Rights Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint one or more co-Rights
Agents as it may deem necessary or desirable (the term "Rights Agent" being used
in this Rights Agreement to refer, collectively, to the Rights Agent together
with any such co-Rights Agents). In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
SECTION 3. ISSUANCE OF RIGHTS AND RIGHT CERTIFICATES
(a) One Right shall be associated with each share of Common Stock
outstanding on the Record Date, each additional share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Expiration Date and each additional share of
Common Stock with which Rights are issued after the Distribution Date but prior
to the earlier of the Redemption Date and the Expiration Date as provided in
Section 23; provided, however, that if the number of outstanding Rights are
combined into a smaller number of outstanding Rights pursuant to Section 12(a),
the appropriate fractional Right determined pursuant to such Section shall
thereafter be associated with each such share of Common Stock.
(b) Until the earlier of (i) the Close of Business on the tenth
Business Day after the Shares Acquisition Date and (ii) the Close of Business on
such date, if any, as may be designated by the Company's Board of Directors
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any of
its Subsidiaries, or any Person holding Common Stock for or pursuant to the
terms of any such employee benefit plan) for outstanding Common Stock, if upon
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consummation of such tender or exchange offer such Person could be the
Beneficial Owner of 15% or more of the outstanding Common Stock (the Close of
Business on the earlier of such dates being the "Distribution Date"), (y) the
Rights will be evidenced by the certificates for Common Stock registered in the
names of the holders thereof and not by separate Right Certificates and (z) the
Rights, including the right to receive Right Certificates, will be transferable
only in connection with the transfer of Common Stock. 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, if requested, will send) by first-class, postage-prepaid mail to
each record holder of Common Stock as of the Distribution Date, at the address
of such holder shown on the records of the Company, a Right Certificate
evidencing one whole Right for each share of Common Stock (or for the number of
shares of Common Stock with which one whole Right is then associated if the
number of Rights per share of Common Stock held by such record holder has been
adjusted in accordance with the proviso in Section 3(a)). If the number of
Rights associated with each share of Common Stock has been adjusted in
accordance with the proviso in Section 3(a), at the time of distributing the
Right Certificates the Company may make any necessary and appropriate rounding
adjustments so that Right Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Right in accordance
with Section 15(a). As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(c) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights by first-class, postage-prepaid
mail to each record holder of Common Stock as of the close of business on the
Record Date at the address of such holder shown on the records of the Company.
With respect to certificates for Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof, together with a copy of the
Summary of Rights attached thereto. Until the Distribution Date (or the earlier
of the Redemption Date and the Expiration Date), the surrender for transfer of
any certificate for Common Stock outstanding on the Record Date, with or without
a copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
(d) Certificates representing Common Stock issued after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Stock), but prior to the earliest of the Distribution Date, the Redemption Date
and the Expiration Date, shall have 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 the Rights
Agreement dated as of October 17, 1996, as it may be amended
from time to time (the "Rights Agreement"), between Targeted
Genetics Corporation ("Targeted") and Chase Mellon Shareholder
Services, as Rights Agent (or between Targeted and any
successor Rights Agent under the Rights Agreement), the terms
of which are hereby incorporated herein by reference and a
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copy of which is on file at the principal executive offices of
Targeted. 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. Targeted will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Rights
beneficially owned by Acquiring Persons or their Affiliates or
Associates thereof (as such terms are defined in the Rights
Agreement) and by any subsequent holder of such Rights are
null and void and nontransferable.
Notwithstanding the requirements of this paragraph (d), the omission of a legend
shall not affect the enforceability of any part of this Rights Agreement or the
rights of any holder of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES
The Right Certificates (and the form of election to purchase and form
of assignment to be printed on the reverse side thereof) shall be in
substantially the form set forth as Exhibit B 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 Rights Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
Sections 7, 11 and 23, the Right Certificates, whenever issued, shall be dated
as of the Distribution Date, and on their face shall entitle the holders thereof
to purchase such number of Preferred Shares as shall be set forth therein for
the Purchase Price set forth therein.
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION
(a) The Right Certificates shall be executed on behalf of the Company
by the President and Chief Executive Officer, the Chief Financial Officer or a
Vice President (whether preceded by any additional title) of the Company, either
manually or by facsimile signature, shall have affixed thereon the Company's
seal or a facsimile thereof, and shall be attested by the Secretary, an
Assistant Secretary or a Vice President (whether preceded by any additional
title, provided that such Vice President shall not have also executed the Right
Certificates) of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights Agent and shall
not be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such an officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may nevertheless
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 an 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 execution of such Right Certificate,
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shall be a proper officer of the Company to sign such Right Certificate,
although at the date of execution of this Rights Agreement any such person was
not such an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office in Seattle, Washington, books for
registration and transfer of the Right Certificates issued under this Rights
Agreement. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced by each Right
Certificate, the certificate number of each Right Certificate and the date of
each Right Certificate.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
LOST, STOLEN, DESTROYED OR MUTILATED RIGHT CERTIFICATES; UNCERTIFICATED
RIGHTS
(a) Subject to the provisions of Sections 7(e) and 15, at any time
after the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date and the Expiration Date, any Right Certificate or
Right Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 7(e) or that have
been exchanged pursuant to Section 11(b)) 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
principal office of the Rights Agent; provided, however, that neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any Right Certificate surrendered for transfer until
the registered holder shall have completed and signed the certification
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 the provisions of Sections 7(e) and 15, countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split-up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid Right Certificate, and, in case of such loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make a new
Right Certificate of like tenor and deliver such new Right Certificate to the
Rights Agent for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
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(c) Notwithstanding any other provision of this Rights Agreement to the
contrary, 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 Right Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS
(a) Subject to Section 7(e) and except as otherwise provided in this
Rights Agreement (including Section 11), each Right shall entitle the registered
holder thereof, upon exercise thereof as provided in this Rights Agreement, to
purchase for the Purchase Price, at any time after the Distribution Date and at
or prior to the earlier of (i) the Close of Business on October 18, 2006 (the
Close of Business on such date being the "Expiration Date") and (ii) the
Redemption Date, one one-hundredth (1/100) of a Preferred Share, subject to
adjustment from time to time as provided in Sections 11 and l2.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Rights Agreement)
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 principal office of the Rights
Agent in Seattle, Washington, together with payment of the Purchase Price for
each one one-hundredth (1/100) of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Expiration Date, (ii) the
Redemption Date, and (iii) the time at which such Rights are exchanged as
provided in Section 11(b).
(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 Preferred Shares to be purchased, together
with an amount equal to any applicable transfer tax, by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon (i) either (A) promptly requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent) certificates for the number of Preferred Shares to be purchased,
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the
Preferred Shares with a depositary agent under a depositary arrangement,
promptly requisition from the depositary agent depositary receipts representing
the number of one one-hundredths of a Preferred Share to be purchased (in which
case certificates for the Preferred Shares to be represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with all such requests, (ii)
when appropriate, promptly requisition from the Company the amount of cash to be
paid in lieu of the issuance of fractional shares in accordance with Section 15,
(iii) promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.
(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
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Rights remaining unexercised shall be issued by the Rights Agent and delivered
to the registered holder of such Right Certificate or to his or her duly
authorized assigns, subject to the provisions of Section 15.
(e) If the Rights are at any time beneficially owned by an Acquiring
Person or an Affiliate or Associate of an Acquiring Person, such Rights shall be
null and void and nontransferable and the holder of any such Right (including
any purported transferee or subsequent holder) shall not have any right to
exercise or transfer any such Right. 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.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
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.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision in this
Rights Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification under the blue sky or securities
laws of such jurisdiction shall not have been obtained or the exercise of the
Rights shall not be permitted under applicable law.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES
All Right Certificates surrendered or presented for the purpose of
exercise, transfer, split-up, combination or exchange shall, and any Right
Certificate surrendered or presented for any purpose that represents Rights that
have become null and void and nontransferable pursuant to Section 7(e) shall, if
surrendered or presented to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if surrendered
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or presented to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Right Certificate purchased or acquired by the Company. The Rights Agent
shall deliver all canceled Right Certificates to the Company, or shall, at the
Company's written request, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES
(a) The Company shall cause to be reserved and kept available out of
its authorized and unissued Preferred Shares, free from preemptive rights or any
right of first refusal, a number of Preferred Shares sufficient to permit the
exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares
authorized but unissued to permit the exercise or exchange of Rights in
accordance with Section 11, the Company covenants and agrees that it will take
all such action as may be necessary to authorize additional Preferred Shares for
issuance upon the exercise or exchange of Rights pursuant to Section 11.
(c) The Company shall take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise or exchange 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.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are to be listed on the Nasdaq Stock Market or any national
securities exchange, the Company shall use its commercially reasonable best
efforts to cause, from and after such time as the Rights become exercisable or
exchangeable, all Preferred Shares reserved for such issuance to be listed on
the Nasdaq Stock Market or such securities exchange upon official notice of
issuance.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of Right Certificates or of any Preferred Shares upon the exercise
or exchange of Rights. The Company shall not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or in respect of the issuance or delivery
of certificates representing the Preferred Shares in a name other than that of,
the registered holder of the Right Certificate evidencing Rights surrendered for
exercise or exchange or to issue or deliver any certificates representing
Preferred Shares upon the exercise or exchange 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 satisfaction that no such tax is due.
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SECTION 10. PREFERRED SHARES RECORD DATE
Each Person in whose name any certificate for Preferred Shares is
issued upon the exercise or exchange of Rights shall for all purposes be deemed
to have become the holder of record of the Preferred Shares represented thereby
on, and such certificate shall be dated, the date on which the Right Certificate
evidencing such Rights was duly surrendered and payment of any Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date on which the Preferred Shares
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such Preferred Shares on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Shares
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON; EXCHANGE
OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS
(a) Upon a Person's becoming an Acquiring Person, each holder of a
Right, except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of shares of Common Stock as shall
equal the result obtained by multiplying the Purchase Price by a fraction, the
numerator of which is the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and the denominator of which is 50% of the
Market Value of the Common Stock on the date on which a Person becomes an
Acquiring Person. As soon as practicable after a Person becomes an Acquiring
Person (provided the Company shall not have elected to make the exchange
permitted by Section 11(b)(i) for all outstanding Rights), the Company shall use
its commercially reasonable best efforts to:
(i) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the securities purchasable upon
exercise of the Rights;
(ii) cause such registration statement to become effective as soon
as practicable after such filing;
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date; and
(iv) qualify or register the securities purchasable upon exercise
of the Rights under the blue sky or securities laws of such jurisdictions as may
be necessary or appropriate.
(b) (i) The Company's Board of Directors may, at its option, at any
time after a Person becomes an Acquiring Person mandatorily exchange all or part
of the then outstanding
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and exercisable Rights (which shall not include Rights that shall have become
null and void and nontransferable pursuant to the provisions of Section 7(e))
for consideration per Right consisting of one-half of the Common Stock that
would be issuable at such time upon the exercise of one Right in accordance with
Section 11(a) (the consideration issuable per Right pursuant to this Section
11(b)(i) being the "Exchange Consideration"). If the Company's Board of
Directors elects to exchange all the Rights for the Exchange Consideration
pursuant to this Section 11(b)(i) prior to the physical distribution of the
Right Certificates, the Company may distribute the Exchange Consideration in
lieu of distributing Right Certificates, in which case for purposes of this
Rights Agreement holders of Rights shall be deemed to have simultaneously
received and surrendered for exchange Right Certificates on the date of such
distribution.
(ii) Any action of the Company's Board of Directors ordering the
exchange of any Rights pursuant to Section 11(b)(i) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such Right
held by such holder or, if the Exchange Consideration shall not have been paid,
to exercise any such Right pursuant to Section 11(d)(i). 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 holders of such Rights at their last addresses as they appear on the
registry books of the Rights Agent. Any notice that is mailed in the manner
provided in this Rights Agreement shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange shall state the method
by which the exchange of the Rights for the Exchange Consideration will be
effected and, in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights that shall have become null and void and
nontransferable pursuant to the provisions of Section 7(e)) held by each holder
of Rights.
(c) In the event that there shall not be sufficient Common Stock
authorized but unissued to permit the exercise in full of the Rights in
accordance with Section 11(a) or 11(b), the Company shall take all such action
as may be necessary to authorize additional Common Stock for issuance upon
exercise of the Rights. In the event the Company shall, after a good-faith
effort, be unable to take all such action as may be necessary to authorize such
additional Common Stock, the Company shall substitute, for each share of Common
Stock that would otherwise be issuable upon exercise of a Right, that number of
Preferred Shares or fraction thereof such that the current Market Value of one
Preferred Share multiplied by such number or fraction is equal to the current
Market Value of one share of Common Stock as of the date of issuance of such
Preferred Shares or fraction thereof.
(d) (i) In the event that, following a Distribution Date, any
transactions specified in the following clause (A), (B) or (C) of this Section
11(d)(i) (each such transaction being a "Business Combination") shall be
consummated, directly or indirectly:
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(A) the Company shall consolidate with, or merge with and
into, any other Person;
(B) any Person shall consolidate with the Company, or merge
with and into the Company and the Company shall be the Surviving Person
following the merger and, in connection with such merger, all or part of the
Common Stock shall be changed into or exchanged for capital stock or other
securities of the Company or of any other Person, cash or any other property; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange or otherwise transfer or dispose of), in one or more transactions, the
Major Part of the assets of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons other than the Company or one or more of its
wholly owned Subsidiaries,
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, if any Business Combination is consummated at any time after a
Person becomes an Acquiring Person, the securities specified in Section 11(a)):
(1) If the Principal Party in such Business
Combination has Registered Common Shares outstanding, each Right shall
thereafter represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights Agreement, such
number of Registered Common Shares of such Principal Party, free and clear of
all liens, encumbrances or other adverse claims, as shall have an aggregate
Market Value equal to the result obtained by multiplying the Purchase Price by
two; or
(2) If the Principal Party in such Business
Combination does not have Registered Common Shares outstanding, each Right shall
thereafter represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights Agreement, at the
election of the holder of such Right at the time of the exercise thereof, any
of:
(x) such number of Common Shares of the
Surviving Person in such Business Combination as shall have an aggregate Book
Value immediately after giving effect to such Business Combination equal to the
result obtained by multiplying the Purchase Price by two;
(y) such number of Common Shares of the
Principal Party in such Business Combination (if the Principal Party is not also
the Surviving Person in such Business Combination) as shall have an aggregate
Book Value immediately after giving effect to such Business Combination equal to
the result obtained by multiplying the Purchase Price by two; or
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(z) if the Principal Party in such Business
Combination is an Affiliate of one or more Persons which has Registered Common
Shares outstanding, such number of Registered Common Shares of whichever of such
Affiliates of the Principal Party has Registered Common Shares with the greatest
aggregate Market Value on the date of consummation of such Business Combination
as shall have an aggregate Market Value on the date of such Business Combination
equal to the result obtained by multiplying the Purchase Price by two.
(ii) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised, as set
forth in this Section 11(d), shall have sufficient authorized Common Shares that
have not been issued or reserved for issuance (and that shall, when issued upon
exercise thereof in accordance with this Rights Agreement, be validly issued,
fully paid and nonassessable and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof) to permit the exercise in full of the Rights in accordance with this
Section 11(d) and unless prior thereto:
(A) a registration statement under the Securities Act, on
an appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights shall be effective; and
(B) the Company and each such issuer shall have:
(1) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(d) (including the obligation of such
issuer to issue Common Shares upon the exercise of Rights in accordance with the
terms set forth in Sections 11(d)(i) and 11(d)(iii)) and further providing that
such issuer, at its own expense, will use its best efforts to:
(x) cause a registration statement under the
Securities Act, on an appropriate form, with respect to the Rights and the
Common Shares of such issuer purchasable upon exercise of the Rights to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(y) qualify or register the Rights and the
Common Shares of such issuer purchasable upon exercise of the Rights under the
blue sky or securities laws of such jurisdictions as may be necessary or
appropriate; and
(z) list the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights on each national securities
exchange, including the Nasdaq Stock Market, on which the Common Stock was
listed prior to the consummation of the Business Combination or, if the Common
Stock was not listed on a national securities exchange prior to the consummation
of the Business Combination, on a national securities exchange, including the
Nasdaq Stock Market;
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(2) furnished to the Rights Agent a written opinion
of independent counsel stating that such supplemental agreement is a valid,
binding and enforceable agreement of such issuer; and
(3) filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants setting forth the number
of Common Shares of such issuer that may be purchased upon the exercise of each
Right after the consummation of such Business Combination.
(iii) After consummation of any Business Combination and subject to
the provisions of Section 11(d)(ii), (A) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11(d) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (B) the term
"Company" shall thereafter be deemed to refer to such issuer, (C) each such
issuer shall take such steps in connection with such consummation as may be
necessary to ensure that the provisions of this Rights Agreement (including the
provisions of Sections 11(a) and 11(b)) shall thereafter apply, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, and (D) the number of Common Shares of each such
issuer thereafter 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 of Sections 11(a) and 12(a), and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
SECTION 12. CERTAIN ADJUSTMENTS
(a) To preserve the actual or potential economic value of the Rights,
if at any time after the date of this Rights Agreement there shall be any change
in the Common Stock or the Preferred Shares, whether by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Stock or Preferred Shares, as the case
may be (other than the Rights or regular quarterly cash dividends), or
otherwise, then, in each such event the Company's Board of Directors shall make
such appropriate adjustments in the number of Preferred Shares (or the number
and kind of other securities) issuable upon exercise of each Right, the Purchase
Price and Redemption Price in effect at such time and the number of Rights
outstanding at such time (including the number of Rights or fractional Rights
associated with each share of Common Stock) such that following such adjustment
such event shall not have had the effect of reducing or limiting the benefits
the holders of the Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Preferred Shares, then the number of such securities
so receivable upon exercise of any Right thereafter shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11(a) and 12(a), and the provisions of
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Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be possible, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time under this
Rights Agreement upon exercise of the Rights, all subject to further adjustment
as provided in this Rights Agreement.
(d) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms that were expressed in the
initial Right Certificates issued under this Rights Agreement.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the holder of any Right exercised after such record date the
Preferred Shares and/or other securities, if any, issuable upon such exercise
over and above the Preferred Shares and/or other securities, if any, issuable
before giving effect 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 securities upon the
occurrence of the event requiring such adjustment.
SECTION 13. CERTIFICATE OF ADJUSTMENT
Whenever an adjustment is made as provided in Section 11 or 12, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Shares
a copy of such certificate, and (c) mail a brief summary thereof to each holder
of a Right Certificate (or, prior to the Distribution Date, of Common Stock) in
accordance with Section 25.
SECTION 14. ADDITIONAL COVENANTS
(a) Notwithstanding any other provision of this Rights Agreement, no
adjustment to the number of Preferred Shares (or fraction of a share) or other
securities for which a Right is exercisable or the number of Rights outstanding
or associated with each Common Share or any similar or other adjustment shall be
made or be effective if such adjustment would have the effect of reducing or
limiting the benefits the holders of the Rights would have had absent such
adjustment, including, without limitation, the benefits under Sections 11 and
12, unless the terms of this Rights Agreement are amended so as to preserve such
benefits.
(b) The Company shall not, after the Distribution Date, except as
permitted by Section 26, take (or permit any Subsidiary of the Company to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will reduce or otherwise limit the benefits the holders of the
Rights would have had absent such action, including, without
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limitation, the benefits under Sections 11 and 12. Any 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 14(b) from and after the Distribution Date.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Company may, but shall not be required to, issue fractional
Rights or distribute Right Certificates that evidence fractional Rights. In lieu
of such fractional Rights, the Company may pay 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 purposes of this Section 15(a), the current market
value of a whole Right shall be the closing price of the Rights (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractional
Preferred Shares upon exercise of the Rights or distribute certificates that
evidence fractional Preferred Shares. In lieu of fractional Preferred Shares,
the Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Preferred Shares or (ii) in the case of a fractional Preferred
Share (other than one one-hundredth (1/100th) of a Preferred Share or any
integral multiple thereof), pay to the registered holders of Right Certificates
at the time such Rights are exercised as provided in this Rights Agreement an
amount in cash equal to the same fraction of the current market value of one
Preferred Share, if any are outstanding and publicly traded (or the Formula
Number times the current market value of one share of Common Stock if the
Preferred Shares are not outstanding and publicly traded). For purposes of this
Section 15(b), the current market value of a Preferred Share (or share of Common
Stock) shall be the closing price of a Preferred Share (or share of Common
Stock) (as determined pursuant to the second and third sentences of the
definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date of such exercise. If, as a result of an adjustment
made pursuant to Section 12(a), the holder of any Right thereafter exercised
shall become entitled to receive any securities other than Preferred Shares, the
provisions of this Section 15(b) shall apply, as nearly as reasonably may be, on
like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractional
Common Shares upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates that evidence fractional Common Shares. In lieu of such
fractional Common Shares, the Company may pay to the registered holders of 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 one Common Share as of the date on which a Person became an Acquiring
Person.
(d) Each holder of Rights, by accepting the Rights, expressly waives
his or her right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as provided in this Section 15.
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SECTION 16. RIGHTS OF ACTION
(a) All rights of action in respect of this Rights Agreement are vested
in the respective registered holders of the Right Certificates (and, prior to
the Distribution Date, the registered holders of the Common Stock), and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his or her own behalf and for his or her 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 or her right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in the Rights 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 Rights Agreement and shall be entitled to specific
performance of the obligations of any Person under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
SECTION 17. 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 Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the principal office of the Rights Agent in Seattle,
Washington, 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
which name a Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
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SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any 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 that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Rights Agreement or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
shareholder of the Company, including, without limitation, any right to vote for
the election of directors or on any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders, or to
receive dividends or other distributions or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions of this Rights Agreement.
SECTION 19. CONCERNING THE RIGHTS AGENT
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Rights Agreement and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in administering and executing
this Rights Agreement and exercising and performing its duties under this Rights
Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Rights Agreement in reliance on any Right
Certificate or certificate for the Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged by the proper Person or Persons.
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Rights
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Rights Agreement; provided, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 22. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights 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
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that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and, in all such cases, such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and, in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and, in all such cases, such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Rights Agreement upon the following terms and conditions, by all of which the
Company and the holders of the Right Certificates (or, prior to the Distribution
Date, of the Common Stock), by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, refraining from taking or
suffering any action under this Rights Agreement, such fact or matter (unless
other evidence in respect thereof be specifically prescribed in this Rights
Agreement) may be deemed to be conclusively proved and established by a
certificate signed by any one of the President and Chief Executive Officer, the
Chief Financial Officer, a Vice President (whether preceded by any additional
title), 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 Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable under this Rights Agreement 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 Rights Agreement or in the
Right Certificates (except as to 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.
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(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution of this Rights Agreement by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); it shall not be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; it shall not be responsible for any adjustment required
under the provisions of Section 11 or 12 or for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); and
it shall not by any act under this Rights Agreement be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Stock to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any Preferred Shares or Common Stock
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it shall 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 Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Rights
Agreement from any one of the President and Chief Executive Officer, the Chief
Financial Officer, a Vice President (whether preceded by any additional title),
the Secretary or the Treasurer of the Company in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with the instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or 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 the Rights
Agent under this Rights Agreement. Nothing in this Rights Agreement shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty under this Rights Agreement
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.
SECTION 22. CHANGE OF RIGHTS AGENT
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Rights Agreement upon thirty (30) days'
notice in writing mailed to the
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Company and to each transfer agent of the Common Stock and the Preferred Shares
by registered or certified mail, and to the holders of the Right Certificates
(or, prior to the Distribution Date, of the Common Stock) by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock
and the Preferred Shares by registered or certified mail, and to the holders of
the Right Certificates (or, prior to the Distribution Date, of the Common Stock)
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (or, prior to
the Distribution Date, of Common Stock) (who shall, with such notice, submit his
or her Right Certificate or, prior to the Distribution Date, the certificate
representing his or her Common Stock, for inspection by the Company), then the
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock) may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation in good standing
organized and doing business under the laws of the United States or of the state
of Washington (or of any other state of the United States so long as such
corporation is authorized to conduct a stock transfer or corporate trust
business in the state of Washington) and having a principal office in the state
of Washington, which is authorized under such laws to exercise stock transfer or
corporate trust 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 Thirty Million Dollars ($30,000,000).
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; provided, however, that the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it under this Rights Agreement, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates
(or, prior to the Distribution Date, of the Common Stock). Failure to give any
notice provided for in this Section 22, 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 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES
Notwithstanding any of the provisions of this Rights 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 made in accordance with the
provisions of this Rights Agreement. In addition, in connection
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with the issuance or sale of Common Stock following the Distribution Date and
prior to the earlier of the Redemption Date and the Expiration Date, the Company
(a) shall issue, with respect to Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company, and (b) may issue, in any other case, if deemed necessary or
appropriate by the Company's Board of Directors, Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued and (ii) no
such 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 24. REDEMPTION AND TERMINATION
(a) The Company's Board of Directors may, at its option, at any time
prior to such time as any Person becomes an Acquiring Person, order the
redemption of all, but not fewer than all, the then outstanding Rights at the
Redemption Price (the date of such redemption being the "Redemption Date"). The
redemption of the Rights by the Board of Directors may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish.
(b) Immediately upon the action of the Company's Board of Directors
ordering the redemption of the Rights, 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. Within ten (10) Business Days after the action of the Company's Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Each such notice of
redemption will state the method by which payment of the Redemption Price will
be made. The notice, if mailed in the manner provided in this Rights Agreement,
shall be conclusively presumed to have been duly given, whether or not the
holder of Rights receives such notice. In any case, failure to give such notice
by mail, or any defect in the notice, to any particular holder of Rights shall
not affect the sufficiency of the notice to other holders of Rights.
SECTION 25. NOTICES
Notices or demands authorized by this Rights Agreement to be given or
made by the Rights Agent or by the holder of a Right Certificate (or, prior to
the Distribution Date, of Common Stock) 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:
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Targeted Genetics Corporation
1100 Olive Way, Suite 100
Seattle, Washington 98101
Attention: Chief Financial Officer
Subject to the provisions of Section 22, notices or demands authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of Common Stock) 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:
ChaseMellon Shareholder Services
999 Third Avenue
Seattle, Washington 98101
Attention: Stock Transfer Department
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at such
holder's address as shown 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 Stock.
SECTION 26. SUPPLEMENTS AND AMENDMENTS
At any time prior to the Distribution Date and subject to the last
sentence of this Section 26, the Company may, and the Rights Agent shall if the
Company so directs, supplement or amend any provision of this Rights Agreement
(including, without limitation, the date on which the Distribution Date shall
occur, the time during which the Rights may be redeemed pursuant to Section 24
or any provision of the Certificate of Designation) without the approval of any
holder of the Rights. From and after the Distribution Date and subject to
applicable law, the Company may, and the Rights Agent shall if the Company so
directs, amend this Rights Agreement without the approval of any holder of Right
Certificates to (a) cure any ambiguity or correct or supplement any provision
contained in this Rights Agreement that may be defective or inconsistent with
any other provision of this Rights Agreement or (b) make any other provision in
regard to matters or questions arising under this Rights Agreement that the
Company may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person). Any supplement or
amendment adopted during any period after any Person has become an Acquiring
Person but prior to the Distribution Date shall be null and void unless such
supplement or amendment could have been adopted under the prior sentence from
and after the Distribution Date. Any supplement or amendment to this Rights
Agreement duly approved by the Company shall become effective immediately upon
execution by the Company, whether or not also executed by the Rights Agent.
PAGE 27
<PAGE> 31
SECTION 27. SUCCESSORS
All the covenants and provisions of this Rights 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 under this Rights Agreement.
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY THE
COMPANY'S BOARD OF DIRECTORS
(a) Nothing in this Rights Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Stock) any legal or equitable right, remedy or claim under this Rights
Agreement; provided, however, that this Rights 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, of the
Common Stock).
(b) Except as explicitly otherwise provided in this Rights Agreement,
the Company's Board of Directors shall have the exclusive power and authority to
administer this Rights Agreement and to exercise all rights and powers
specifically granted to the Company's Board of Directors or to the Company, or
as may be necessary or advisable in the administration of this Rights Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Rights Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Rights Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or to amend this Rights Agreement and a determination of whether there is
an Acquiring Person).
SECTION 29. SEVERABILITY
If any term, provision, covenant or restriction of this Rights
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 Rights Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.
SECTION 30. GOVERNING LAW
This Rights Agreement and each Right Certificate issued under this
Rights Agreement shall be deemed to be a contract made under the laws of the
state of Washington and for all purposes shall be governed by and construed in
accordance with the law of Washington applicable to contracts to be made and
performed entirely within Washington.
SECTION 31. COUNTERPARTS; EFFECTIVENESS
This Rights Agreement may be executed in any number of counterparts,
each of which shall for all purposes be deemed to be an original, and all of
which shall together constitute but
PAGE 28
<PAGE> 32
one and the same instrument. This Rights Agreement shall be effective as of the
Close of Business on the date of this Rights Agreement first set forth above.
SECTION 32. DESCRIPTIVE HEADINGS
Descriptive headings of the several Sections of this Rights Agreement
are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Rights Agreement.
PAGE 29
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
TARGETED GENETICS CORPORATION
By:/S/James A. Johnson
Name: James A. Johnson
Its: Vice President-Finance,
Secretary and Treasurer
CHASEMELLON SHAREHOLDER SERVICES
By:/S/Pauline F. Skudler
Name: Pauline F. Skudler
Its: Assistant Vice President
PAGE 30
<PAGE> 34
EXHIBIT A
4.3 DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A PARTICIPATING
CUMULATIVE PREFERRED STOCK
The following series of Preferred Stock is hereby designated, which
series shall have the rights, preferences and privileges and limitations set
forth below:
4.3.1 DESIGNATION OF SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK
The shares of such series shall be designated the "Series A
Participating Cumulative Preferred Stock" (the "Series A Preferred Stock"), par
value $.01 per share. The number of shares initially constituting the Series A
Preferred Stock shall be 400,000; provided, however, if more than a total of
400,000 shares of Series A Preferred Stock shall be issuable upon the exercise
of Rights (the "Rights") issued pursuant to the Rights Agreement dated as of
October 17, 1996 between the corporation and Chase Mellon Shareholder Services,
as Rights Agent (the "Rights Agreement"), the corporation's Board of Directors,
pursuant to Section 23B.06.020 of the Revised Code of Washington, shall direct
by resolution or resolutions that Articles of Amendment be properly executed and
filed with the Washington Secretary of State providing for the total number of
shares of Series A Preferred Stock authorized for issuance to be increased (to
the extent that the Restated Articles of Incorporation then permits) to the
largest number of whole shares (rounded up to the nearest whole number) issuable
upon exercise of such Rights. In addition, such number of shares may be
decreased by resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
corporation convertible into Series A Preferred Stock.
4.3.2 DIVIDENDS AND DISTRIBUTIONS
(a) Subject to the prior and superior rights of the holders of
shares of any other series of Preferred Stock or other class of capital stock of
the corporation ranking prior and superior to the shares of Series A Preferred
Stock with respect to dividends, the holders of shares of Series A Preferred
Stock shall be entitled to receive, when, as, and if declared by the Board of
Directors, out of the assets of the corporation legally available therefor,
quarterly dividends payable in cash on the last
PAGE 1
<PAGE> 35
day of each fiscal quarter in each year, or such other dates as the
corporation's Board of Directors shall approve (each such date being referred to
in this Designation as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or a
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (i) $.01 and (ii) the Formula
Number (as hereinafter defined) then in effect times the cash dividends then to
be paid on each share of Common Stock. In addition, if the corporation shall pay
any dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each such case, the
corporation shall simultaneously pay or make on each outstanding whole share of
Series A Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each share
of Common Stock. As used in this Designation and in the Rights Agreement, the
"Formula Number" shall be 100; provided, however, that if at any time after
October 17, 1996 the corporation shall (i) declare or pay any dividend on the
Common Stock payable in shares of Common Stock or make any distribution on the
Common Stock in shares of Common Stock, (ii) subdivide (by a stock split or
otherwise) the outstanding shares of Common Stock into a larger number of shares
of Common Stock, or (iii) combine (by a reverse stock split or otherwise) the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then in each such event the Formula Number shall be adjusted to a number
determined by multiplying the Formula Number in effect immediately prior to such
event by a fraction, the numerator of which is the number of shares of Common
Stock that are outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that are outstanding immediately
prior to such event (and rounding the result to the nearest whole number); and
provided further, that if at any time after October 17, 1996 the corporation
shall issue any shares of its capital stock in a merger, reclassification or
change of the outstanding shares of Common Stock, then in each such event the
Formula Number shall be appropriately adjusted to reflect such merger,
reclassification or change so that each share of Preferred Stock continues to be
the economic equivalent of a Formula Number of shares of Common Stock prior to
such merger, reclassification or change.
(b) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in Section 4.3.2(a) immediately
prior to or at the same time it declares a dividend or distribution on the
Common Stock (other than a dividend or distribution solely in shares of Common
Stock); provided, however, that in the event no dividend or distribution (other
than a dividend or distribution in shares of Common Stock) shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $.01 per share on the Series A Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
PAGE C-2
<PAGE> 36
The Corporation's Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a dividend
or distribution declared thereon, which record date shall be the same as the
record date for any corresponding dividend or distribution on the Common Stock
and which shall not be more than 60 days prior to the date fixed for payment
thereof.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from and after the Quarterly
Dividend Payment Date next preceding the date of original issue of such shares
of Series A Preferred Stock; provided, however, that dividends on such shares
that are originally issued after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend on or prior to the next succeeding Quarterly Dividend Payment Date
shall begin to accrue and be cumulative from and after such Quarterly Dividend
Payment Date. Notwithstanding the foregoing, dividends on shares of Series A
Preferred Stock that are originally issued prior to the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend on or prior to the first Quarterly Dividend Payment
Date shall be calculated as if cumulative from and after the last day of the
fiscal quarter (or such other Quarterly Dividend Payment Date as the
corporation's Board of Directors shall approve) next preceding the date of
original issuance of such shares. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A 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.
(d) So long as any shares of Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 4.3.2 to be declared
on the Series A Preferred Stock shall have been declared.
(e) The holders of shares of Series A Preferred Stock shall
not be entitled to receive any dividends or other distributions except as
provided in this Designation.
4.3.3 VOTING RIGHTS
The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled
to a number of votes equal to the Formula Number then in effect for each share
of Series A Preferred Stock held of record on each matter on which holders of
the Common Stock or shareholders generally are entitled to vote, multiplied by
the
PAGE C-3
<PAGE> 37
maximum number of votes per share that any holders of the Common Stock or
shareholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
(b) Except as otherwise provided in this Designation or by
applicable law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the corporation
having general voting rights shall vote together as one class for the election
of directors of the corporation and on all other matters submitted to a vote of
shareholders of the corporation.
(c) Except as provided in this Designation or by applicable
law, holders of Series A 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 in this Designation) for
authorizing or taking any corporate action.
4.3.4 CERTAIN RESTRICTIONS
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section
4.3.2 are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
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) with the
Series A Preferred Stock; provided, however, that the corporation may
at any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the corporation
ranking junior (either as to dividends or upon dissolution, liquidation
or winding up) to the Series A Preferred Stock; or
PAGE C-4
<PAGE> 38
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
corporation's Board of Directors) to all holders of such shares upon
such terms as the corporation's Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(b) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any shares of
stock of the corporation unless the corporation could, under paragraph (a) of
this Section 4.3.4, purchase or otherwise acquire such shares at such time and
in such manner.
4.3.5 LIQUIDATION RIGHTS
Upon the liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, no distribution shall be made to (a) the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received an amount equal to the greater of (i) $.01 per share and (ii) the
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, plus an aggregate amount per share
equal to the Formula Number then in effect times the aggregate amount to be
distributed per share to holders of Common Stock or (b) the holders of shares
of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up.
4.3.6 CONSOLIDATION, MERGER, ETC.
In case the corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the then outstanding shares of Series A
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share equal to the Formula Number then in effect 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
exchanged or changed. In the event both this Section 4.3.6 and Section 4.3.2
appear to apply to a transaction, this Section 4.3.6 will control.
PAGE C-5
<PAGE> 39
4.3.7 NO REDEMPTION; NO SINKING FUND
(a) The shares of Series A Preferred Stock shall not be
subject to redemption by the corporation or at the option of any holder of
Series A Preferred Stock; provided, however, that the corporation may purchase
or otherwise acquire outstanding shares of Series A Preferred Stock in the open
market or by offer to any holder or holders of shares of Series A Preferred
Stock.
(b) The shares of Series A Preferred Stock shall not be
subject to or entitled to the operation of a retirement or sinking fund.
4.3.8 RANKING
The Series A Preferred Stock shall rank junior to all other series of
Preferred Stock of the corporation, unless the corporation's Board of Directors
shall specifically determine otherwise in fixing the powers, preferences and
relative, participating, optional and other special rights of the shares of such
series and the qualifications, limitations and restrictions thereof.
4.3.9 FRACTIONAL SHARES
The Series A Preferred Stock shall be issuable upon exercise of the
Rights issued pursuant to the Rights Agreement in whole shares or in any
fractional share that is one one-hundredth (1/100th) of a share or any integral
multiple of such fraction, and shall entitle the holder, in proportion to such
holder's fractional shares, to receive dividends, exercise voting rights,
participate in distributions and have the benefit of all other rights of holders
of Series A Preferred Stock. In lieu of fractional shares, the corporation,
prior to the first issuance of a share or a fractional share of Series A
Preferred Stock, may elect to (a) make a cash payment as provided in the Rights
Agreement for a fractional share other than one one-hundredth (1/100th) of a
share or any integral multiple thereof or (b) issue depository receipts
evidencing such authorized fractional share of Series A Preferred Stock pursuant
to an appropriate agreement between the corporation and a depository selected by
the corporation; provided, however, that such agreement shall provide that the
holders of such depository receipts shall have all the rights, privileges and
preferences to which they are entitled as holders of the Series A Preferred
Stock.
4.3.10 REACQUIRED SHARES
Any shares of Series A Preferred Stock purchased or otherwise acquired
by the corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock, without
designation as to series until such shares are once more designated as part of a
particular series by the corporation's
PAGE C-6
<PAGE> 40
Board of Directors pursuant to the provisions of Article 4 of the Restated
Articles of Incorporation.
4.3.11 AMENDMENT
None of the powers, preferences and relative, participating, optional
and other special rights of the Series A Preferred Stock as provided in this
Designation or in the Restated Articles of Incorporation shall be amended in any
manner that would alter or change the powers, preferences, rights or privileges
of the holders of Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Series A Preferred Stock, voting as a separate class.
PAGE C-7
<PAGE> 41
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. [R] -
___________ Rights
NOT EXERCISABLE AFTER OCTOBER 18, 2006, OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
RIGHT CERTIFICATE
TARGETED GENETICS CORPORATION
This certifies that , or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement dated as
of October 17, 1996 (the "Rights Agreement"), between Targeted Genetics
Corporation, a Washington corporation (the "Company"), and ChaseMellon
Shareholder Services, as Rights Agent (the "Rights Agent"), unless the Rights
evidenced hereby shall have been previously redeemed by the Company, to purchase
from the Company at any time after the Distribution Date (as defined in the
Rights Agreement) and prior to 5 p.m., New York City time, on October 18, 2006,
at the principal office of the Rights Agent, or its successors as Rights Agent
(in Seattle, Washington), one one-hundredth (1/100) of a fully paid,
nonassessable share of Series A Participating Cumulative Preferred Stock, par
value $.01 per share, of the Company (the "Preferred Shares"), at a purchase
price per one one-hundredth (1/100) of a share equal to $40 (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed.
<PAGE> 42
The Purchase Price and the number and kind of shares that may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares that
may be so purchased as of October 18, 1996. As provided in the Rights Agreement,
the Purchase Price and the number and kind of shares that may be purchased upon
the exercise of each Right evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated in this Right Certificate 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 under this Right Certificate of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights Agreement are on file at
the above-mentioned office of the Rights Agent and are also available from the
Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number and kind of shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate may be (i) redeemed by the Company at its option at a
redemption price (in cash or shares of Common Stock or other securities of the
Company deemed by the Company's Board of Directors to be at least equivalent in
value) of $.01 per Right (which amount shall be subject to adjustment as
provided in the Rights Agreement) or (ii) exchanged in whole or in part for
shares of Common Stock or other securities of the Company.
<PAGE> 43
The Company may, but shall not be required to, issue fractions of
Preferred Shares or distribute certificates that evidence fractions of Preferred
Shares upon the exercise of any Right or Rights evidenced hereby. In lieu of
issuing fractional shares, the Company may elect to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one
one-hundredth (1/100) of a share or any integral multiple thereof or to issue
certificates or utilize a depository arrangement as provided in the terms of the
Rights Agreement and the Preferred Shares.
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 that may at any time be
issuable on the exercise of the Right or Rights evidenced by this Right
Certificate, nor shall anything contained in the Rights Agreement or in this
Right Certificate be construed to confer upon the holder hereof, as such, any of
the rights of a shareholder of the Company, including, without limitation, any
right to vote for the election of directors or on any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders except as provided in the Rights Agreement, or to receive dividends
or other distributions or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
<PAGE> 44
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of:
------------------
TARGETED GENETICS CORPORATION
By:
-----------------------------------
Name:
Its:
Attest:
- ------------------------------
Name:
Countersigned:
CHASE MELLON SHAREHOLDER SERVICES
By:
--------------------------
Name:
Its:
<PAGE> 45
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
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
-------------------------------------
Signature
<PAGE> 46
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such
holder desires to exercise Rights
represented by the Right Certificate.)
To: TARGETED GENETICS CORPORATION
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:
--------------------------
Signature
---------------------------
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE> 47
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
------------------------------------
Signature
<PAGE> 48
EXHIBIT C
TARGETED GENETICS CORPORATION
SHAREHOLDER RIGHTS PLAN
SUMMARY OF RIGHTS
Distribution and Transfer On October 17, 1996, the Board of Directors (the
of Rights; Rights "Board of Directors") of Targeted Genetics
Certificate: Corporation (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. Prior to the
Distribution Date referred to below, if
any, the Rights will be evidenced by and
trade with the certificates for the Common
Stock. After the Distribution Date, if
any, the Company will mail Right
certificates to the Company's shareholders
and the Rights will become transferable
apart from the Common Stock.
Distribution Date: The Rights will separate from the Common Stock and
become exercisable following the earlier of (i) the
close of business on the tenth business day after a
public announcement that a person or group
(including any affiliate or associate of such
person or group) has acquired beneficial ownership
of 15% or more of the outstanding Common Shares
(such person or group being an "Acquiring Person")
and (ii) such date, if any, as may be designated by
the Board of Directors following the commencement
of, or first public disclosure of an intent to
commence, a tender or exchange offer for outstanding
Common Shares which could result in the offeror
becoming the beneficial owner of 15% or more of
the outstanding Common Shares (the earlier of such
dates being the "Distribution Date").
Preferred Stock After the Distribution Date, each Right will entitle
Purchasable upon Exercise the holder to purchase, for $40 (the "Purchase
of Rights: Price"), one one-hundredth (1/100) of a share of
preferred stock of Company stock with economic terms
similar to that of one share of the Company's
Common Stock.
Flip-In: In the event a person becomes an Acquiring
Person, the Rights will entitle each
holder of a Right (other than an Acquiring
Person (or any affiliate or associate of
such Acquiring Person)) to purchase, for
the Purchase Price, that number of Common
Shares equivalent to the number of
<PAGE> 49
Common Shares which at the time of the
transaction would have a market value of
twice the Purchase Price. Any Rights that
are at any time beneficially owned by an
Acquiring Person (or any affiliate or
associate of an Acquiring Person) will be
null and void and nontransferable and any
holder of any such Right (including any
purported transferee or subsequent holder)
will be unable to exercise or transfer any
such Right.
Flip-Over: If the Company is acquired in a merger or other
business combination with another entity, or if 50%
or more of its assets or assets accounting for 50%
or more of its net income or revenues are
transferred (in one or more transactions), each
Right will entitle its holder to purchase, for the
Purchase Price, that number of shares of common
stock of the person engaging in the transaction
having a then current market value of twice the
Purchase Price.
Exchange Provisions: After there is an Acquiring Person, the Board of
Directors may elect to exchange each Right (other
than Rights that have become null and void and
nontransferable as described above) for
consideration per Right consisting of one-half of
the number of Common Shares that would be issuable
at such time upon the exercise of one Right and
without payment of the Purchase Price.
Redemption of Rights: At any time prior to any person or group becoming an
Acquiring Person, the Board of Directors may redeem
the Rights in whole, but not in part, at a price of
$.01 per Right, subject to adjustment as provided in
the Rights Agreement (the "Redemption Price").
Expiration of Rights: The Rights are not exercisable until the
Distribution Date and will expire on October 18,
2006, unless earlier redeemed or exchanged by the
Company.
Amendment of Terms of The terms of the Rights and the Rights Agreement
Rights: may be amended in any respect, without the approval
of any holder of the Rights, at any time prior to
the Distribution Date.
Voting Rights: Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the
Company, including, without limitation, the right
to vote or receive dividends.
Antidilution Provisions: In order to preserve the actual or potential
economic value of the Rights, the number of
Preferred Shares or other securities
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<PAGE> 50
issuable upon exercise of the Right, the
Purchase Price, the Redemption Price and
the number of Rights associated with each
outstanding Common Share are all subject
to adjustment by the Board of Directors
pursuant to certain customary antidilution
provisions
Taxes: The Rights distribution should not be taxable for
federal income tax purposes. Following an event that
renders the Rights exercisable or upon redemption of
the Rights, shareholders may recognize taxable
income.
The foregoing is a summary of certain principal terms of the
Shareholder Rights Plan and is qualified in its entirety by reference to the
detailed terms of the Rights Agreement. A copy of the Rights Agreement has been
filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form 8-A dated October 22, 1996 and is available free
of charge from the Company.
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