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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): February 3, 1999
ZYMETX, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-23145 73-1444040
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
800 RESEARCH PARKWAY, SUITE 100
OKLAHOMA CITY, OKLAHOMA 73104
(Address of Principal Executive Offices) (Zip Code)
(405) 271-1314
(Registrant's telephone number, including area code)
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Item 5. Other Events
On February 3, 1999, the Board of Directors of ZymeTx, Inc. (the
"Company") declared a dividend distribution of one right (a "Right") for each
outstanding share of Common Stock, par value $.001 per share (the "Common
Stock"), of the Company. Each Right entitles the registered holder to purchase
from the Company one one-thousandth of a share of Series A Junior Preferred
Stock, par value $.001 per share (the "Preferred Stock") at a price of $47.50
per one one-thousandth of a share (the "Exercise Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding and no separate Rights Certificate will be
distributed. The Rights will separate from the Common Stock and a "Distribution
Date" will occur upon the day which is the earlier of (i) the tenth day
following a public announcement that a person or group of affiliated or
associated persons, with certain exceptions set forth below, has acquired
beneficial ownership of 20% or more of any class of the outstanding voting stock
of the Company (an "Acquiring Person") and (ii) the tenth business day after the
date of the commencement or announcement of a person's or group's intention to
commence a tender or exchange offer the consummation of which would result in
the ownership of 20% or more of any class of the Company's outstanding voting
stock (even if no shares are actually purchased pursuant to such offer), or such
later date as may be determined by a majority of the Board of Directors and the
Continuing Directors (as defined below).
An Acquiring Person does not include the Company, any subsidiary of the
Company, any employee benefit plan or employee stock plan of the Company or any
person or group whose ownership of 20% or more of the shares of any class of
voting stock of the Company then outstanding results solely from (i) any action
or transaction or transactions approved by a majority of the Board of Directors
and the Continuing Directors before such person or group became an Acquiring
Person or (ii) a reduction in the number of shares of issued and outstanding
voting stock of the Company pursuant to a transaction or transactions approved
by a majority of the Board of Directors and the Continuing Directors.
The term Continuing Director means any member of the Board of Directors
of the Company who was a member of the Board prior to the adoption of the Rights
Plan and any person who is subsequently elected to the Board if such person is
recommended or approved by a majority of the continuing Directors, but does not
include an Acquiring Person, or an affiliate or associate of an Acquiring
Person, or any representative of the foregoing entities.
In the event that, without the approval of the Board of Directors (and
the Continuing Directors), an Acquiring Person becomes the beneficial owner of
20% or more of the then outstanding shares of Common Stock (unless such
acquisition is made pursuant to a tender offer for all outstanding shares of the
Company, at a price determined by a majority of the Continuing Directors of the
Company to be fair and otherwise in the best interest of the Company and its
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stockholders), each holder of a Right will thereafter have the right to receive,
upon exercise, Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times the Exercise
Price. Notwithstanding any of the foregoing, following the occurrence of any of
the events set forth in this paragraph (the "Flip-In Events"), all Rights that
are or (under certain circumstances specified in the Rights Agreement) were
beneficially owned by any Acquiring Person will be null and void.
In the event that following the Stock Acquisition Date, without the
approval of the Board of Directors (and the Continuing Directors), (i) the
Company engages in a merger or business combination transaction in which the
Company is not the surviving corporation (other than a merger that follows a
tender offer determined to be fair to the stockholders of the Company, as
described in the preceding paragraph); (ii) the Company engages in a merger or
business combination transaction in which the Company is the surviving
corporation and the Common Stock is changed or exchanged; or (iii) 50% or more
of the Company's assets or earning power is sold or transferred, each holder of
a Right (except Rights which have previously been voided as set forth above)
shall thereafter have the right to receive, upon exercise of the Right, common
stock of the acquiring company having a value equal to two times the Exercise
Price.
The Exercise Price and the number of units of Preferred Stock or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of units of Preferred
Stock issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Stock or a dividend on the Common Stock
payable in Common Stock or subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to the Distribution Date.
Fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share) may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares which are not integral multiples of one one-thousandth
of a share.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on February 3, 2009, unless earlier
redeemed or exchanged by the Company, in each case as described below.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common
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Stock certificates issued after February 3, 1999 will contain a legend
incorporating the Rights Agreement by reference. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such separate
certificates alone will evidence the Rights from and after the Distribution
Date.
The Company may redeem the Rights in whole, but not in part, any time
on or prior to the close of business on the earlier of (i) the tenth day after
the time that a person (or group of affiliated or associated persons) has become
an Acquiring Person (or such later date as a majority of the Board of Directors
and the Continuing Directors may determine) or (ii) February 3, 2009, at a price
of $.001 per Right (the "Redemption Price"), with the approval of the Continuing
Directors. Immediately upon the effective time of the action of the Board of
Directors of the Company authorizing redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Company may amend
the Rights in any manner, including an amendment to extend the time period in
which the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement require the approval of a majority of the
Continuing Directors.
The Company may exchange, in whole or in part, the Rights (other than
Rights owned by an Acquiring Person) at any time after a person (or group of
affiliated or associated persons) becomes an Acquiring Person and prior to the
acquisition by any such person or group of 50% or more of any class of
outstanding voting stock of the Company, at an exchange ratio of one share of
Common Stock (or a fraction of a share of Preferred Stock or other consideration
having equivalent market value) per Right (subject to adjustment).
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibit 99.1. Form of Rights Agreement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this Report to
be signed on its behalf by the undersigned hereunto duly authorized.
ZymeTx, Inc.
By: /s/ Peter G. Livingston
Name: Peter G. Livingston
Title: President and Chief Executive Officer
Dated: February 5, 1999
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RIGHTS AGREEMENT
Between
ZYMETX, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
February 3, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
1. Certain Definitions.................................................1
2. Appointment of Rights Agent.........................................8
3. Issuance of Rights Certificates.....................................9
4. Form of Rights Certificates.........................................11
5. Countersignature and Registration...................................12
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates............13
7. Exercise of Rights; Exercise Price; Expiration Date of Rights.......14
8. Cancellation and Destruction of Rights Certificates.................18
9. Reservation and Availability of Shares of Preferred Stock...........18
10. Preferred Stock Record Date.........................................21
11. Adjustment of Exercise Price, Number and Kind of Shares or Number
of Rights...........................................................21
12. Certification of adjusted Exercise Price or Number of Shares........33
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power...............................................................33
14. Fractional Rights and Fractional Shares.............................39
15. Rights of Action....................................................40
16. Agreement of Right Holders..........................................41
17. Rights Certificate Holder Not Deemed a Stockholder..................42
18. Concerning the Rights Agent.........................................42
19. Merger or Consolidation of, or Change in Name of, the Rights Agent..43
</TABLE>
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<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
20. Duties of Rights Agent..............................................44
21. Change of Rights Agent..............................................47
22. Issuance of New Rights Certificates.................................49
23. Redemption..........................................................49
24. Exchange............................................................50
25. Notice of Proposed Actions..........................................53
26. Notices.............................................................55
27. Supplements and Amendments..........................................55
28. Successors..........................................................56
29. Benefits of this Rights Agreement...................................56
30. Determinations and Actions by the Board; etc........................57
31. Delaware Contract...................................................57
32. Counterparts........................................................58
33. Descriptive Headings................................................58
34. Severability........................................................58
</TABLE>
Exhibit A -- Form of Certificate of Designations of Series A
Junior Preferred Stock
Exhibit B -- Summary of Rights
Exhibit C -- Form of Rights Certificate
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RIGHTS AGREEMENT
Agreement, dated as of February 3, 1999, by and between ZymeTx, Inc., a
Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on February 3, 1999, the Board of Directors of the Company
authorized the issuance, and declared a dividend, of one right (a "Right") for
each share of Common Stock, $.001 par value per share, of the Company
outstanding as of the close of business on February 3, 1999 (the "Record Date"),
each such Right representing the right to purchase one one-thousandth of a share
of Series A Junior Preferred Stock of the Company ("Preferred Stock") having the
rights and preferences set forth in the form of Certificate of Designations
attached hereto as Exhibit A authorized by the Board of Directors on February 3,
1999, upon the terms and subject to the conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Redemption Date or the Final Expiration Date (as such terms are
hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
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(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
20% or more of the shares of any class of Voting Stock (as such term is
hereinafter defined) of the Company then outstanding; provided that, an
Acquiring Person shall not include (i) an Exempt Person (as such term
is hereinafter defined) or (ii) any Person, together with all
Affiliates and Associates of such Person, who or which would be an
Acquiring Person solely by reason of (x) being the Beneficial Owner of
shares of Voting Stock of the Company, the Beneficial ownership of
which was acquired by such Person pursuant to any action or transaction
or series of related actions or transactions approved by the Board of
Directors before such Person otherwise became an Acquiring Person or
(y) a reduction in the number of issued and outstanding shares of
Voting Stock of the Company pursuant to a transaction or a series of
related transactions approved by the Board of Directors of the Company
(upon approval, in the case of subclauses (x) and (y), by a majority of
the Continuing Directors (as such term is hereinafter defined));
provided, further, in the event such Person described in this clause
(ii) does not become an Acquiring Person by reason of subclause (x) or
(y) of this clause (ii) or such Person set forth in this clause (ii)
nonetheless shall become an Acquiring Person in the event such Person
thereafter acquires Beneficial ownership of any additional shares of
the Voting Stock of the Company, unless the acquisition of such
additional Voting Stock would not result in such Person becoming an
Acquiring Person by reason of subclause (x) or (y) of this clause (ii).
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in
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good faith (upon approval by a majority of the Continuing Directors)
that a Person who would otherwise be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this paragraph (a) has become
such inadvertently, and such Person divests as promptly as practicable
a sufficient number of shares of Common Stock so that such Person would
no longer be an "Acquiring Person" as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed
an "Acquiring Person" for any purposes of this Rights Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended
("Exchange Act"), as in effect on the date of this Rights Agreement.
(c) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have
correlative meanings);
(i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, "beneficially owns" (as
determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act); or
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has (A) the right to
acquire (whether such right is exercisable immediately or only
after the passage of time or the fulfillment of a condition or
both) pursuant to any agreement, arrangement or understanding,
or upon the exercise of conversion rights, exchange rights,
other rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall
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not be deemed the "Beneficial Owner" of, or to "Beneficially
Own", securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange or (B) the right to vote, alone or in
concert with others, pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or
to "Beneficially Own", any securities if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to a
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the
Exchange Act and (2) is not at the time reportable by such
Person on a Schedule 13D report under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except as described in
clause (B) of subparagraph (ii) of this paragraph (c)) or
disposing of any securities of the Company.
Notwithstanding anything in this paragraph (c) to the contrary,
if a Person, who together with any other stockholders of the Company holds, in
the aggregate, greater than 50% of the Voting Stock of the Company, approves any
action of the stockholders by written consent in lieu of a stockholders meeting,
such Person shall be deemed to be the "Beneficial Owner" of all of
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the Voting Stock that is voted pursuant to such written consent. Further,
notwithstanding anything in this paragraph (c) to the contrary, a Person engaged
in the business of underwriting securities shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," any securities acquired in good faith in a
firm commitment underwriting until the expiration of forty days after the date
of such acquisition. Notwithstanding anything in this paragraph (c) to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to the Company shall
mean the Common Stock (presently $.001 par value) of the Company. "Common Stock"
when used with reference to any Person other than the Company which shall be
organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units
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of beneficial interest which shall represent the right to participate in
profits, losses, deductions and credits of such Person and which shall be
entitled to exercise the greatest voting power per unit of such Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first mentioned Person.
(g) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board of Directors on the date
of this Agreement or (ii) subsequently became a member of the Board of
Directors, and whose nomination for election or election to the Board of
Directors was recommended or approved by a majority of the Continuing Directors
then on the Board of Directors.
(h) "Distribution Date", shall have the meaning set forth in
Section 3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(j) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company or (iii) any employee benefit plan or employee stock
plan of the Company or any Subsidiary of the Company, or any trust or other
entity organized, appointed, established or holding Common Stock for or pursuant
to the terms of any such plan.
(k) "Exercise Price" shall have the meaning set forth in Section
4 and 7(b) hereof.
(1) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with Section 11(d)
hereof.
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(m) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(n) "Person" shall mean any individual, firm, corporation or
other entity and shall include any successor (by merger or otherwise) of such
entity.
(o) "Preferred Stock" shall mean shares of Series A Junior
Preferred Stock, $.001 par value, of the Company and, to the extent that there
is not a sufficient number of shares of Series A Junior Preferred Stock
authorized to permit the full exercise of the Rights, any other series of
Preferred Stock, $.001 par value, of the Company designated for such purpose
containing terms substantially similar to the terms of the Series A Junior
Preferred Stock.
(p) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(q) "Record Date" shall have the meaning set forth in the
recital.
(r) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(t) "Rights Certificate" shall have the meaning set forth in
Section 3(d) hereof.
(u) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(v) "Stock Acquisition Date," shall mean the first date on which
there shall be
a public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) or such earlier date as a majority of the Continuing Directors shall become
aware of the existence of an Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having voting power
sufficient to elect a majority of the
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board of directors or other persons performing similar functions are
beneficially owned, directly or indirectly, by such Person or by any corporation
or other entity that is otherwise controlled by such Person.
(x) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
(y) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(z) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or regulatory
authority in respect of any transfer of any security, instrument or right,
including Rights, shares of Common Stock and Shares of Preferred Stock.
(aa) "Triggering Event" shall mean any event described in
Section 11(a)(ii) or Section 13(a).
(bb) "Voting Stock" shall mean (i) the Common Stock of the
Company and (ii) any other shares of capital stock of the Company entitled to
vote generally in the election of directors or entitled to vote together with
the Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or winding
up.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
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Section 3. Issuance of Rights Certificates.
(a) On the Record Date (or as soon as practicable thereafter),
the Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Record Date, at the address of such holder
shown on the records of the Company.
(b) Until the Close of Business on the day (or such later date
as may be determined by action of the Board of Directors, upon approval by a
majority of the Continuing Directors) which is the earlier of (i) the tenth day
after the Stock Acquisition Date or (ii) the tenth Business Day after the date
of the commencement by any person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the
Beneficial owner of 20% or more of any class of the then outstanding shares of
Voting Stock of the Company (irrespective of whether any shares are actually
purchased pursuant to any such offer) (the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together with, in the case of certificates for Common Stock
outstanding as of the Record Date, the Summary of Rights) and not by separate
Rights Certificates and the record holders of such certificates for Common Stock
shall be the record holders of the Rights represented thereby and (y) each Right
shall be transferable only simultaneously and together with the transfer of a
share of Common Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Redemption
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Date or Final Expiration Date), the surrender for transfer of any certificate
for Common Stock shall constitute the surrender for transfer of the Right or
Rights associated with the Common Stock evidenced thereby, whether or not
accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common
Stock that become outstanding after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect of
shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock issued (including, without limitation,
certificates issued upon original issuance, disposition from the Company's
treasury or transfer or exchange of Common Stock) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date, or the
Final Expiration Date (or, in certain circumstances as provided in Section 22
hereof, after the Distribution Date) shall have impressed, printed, written or
stamped thereon or otherwise affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof
to the same number of Rights (subject to adjustment) as the
number of shares of Common Stock represented by this
certificate, such Rights being on the terms provided under the
Rights Agreement between ZymeTx, Inc., and American Stock
Transfer & Trust Company (the "Rights Agent"), dated as of
February 3, 1999, as it may be amended from time to time (the
"Rights Agreement"), the terms of which are incorporated
herein by reference and a copy of which is on file at the
principal executive offices of ZymeTx, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights shall be evidenced by separate certificates and shall
no longer be evidenced by this certificate. ZymeTx, Inc. shall
mail to the registered holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances as provided in
Section 7(e) of the Rights Agreement, Rights issued to or
Beneficially Owned by Acquiring Persons or their Affiliates or
Associates (as such terms are defined in the Rights Agreement)
or any subsequent holder of such Rights shall be null and void
and may not be transferred to any Person.
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(d) As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send), by first class mail, postage prepaid, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, as shown by the
records of the Company, at the address of such holder shown on such records, a
certificate in the form provided by Section 4 hereof (a "Rights Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. As of and after the Distribution Date, the rights shall
be evidenced solely by Rights Certificates and may be transferred by the
transfer of the Rights Certificate as permitted hereby, separately and apart
from any transfer of one or more shares of Common Stock.
Section 4. Form of Rights Certificates. The Rights Certificates (and
the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially
in the form set forth in Exhibit C hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Stock or the Rights may from time to time be listed
or as the Company may deem appropriate to conform to usage or otherwise and as
are not inconsistent with the provisions of this Rights Agreement. Subject to
the provisions of Section 22 hereof, Rights Certificates evidencing Rights
whenever issued (i) shall be dated as of the date of issuance of the Rights they
represent and (ii) subject to adjustment from time to time as provided herein,
on their face shall entitle the holders thereof to purchase such number of
shares (including fractional shares which are integral multiples of one
one-thousandth
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<PAGE> 15
of a share) of Preferred Stock as shall be set forth therein at the price
payable upon exercise of a Right provided by Section 7(b) hereof as the same may
from time to time be adjusted as provided herein (the "Exercise Price").
Section 5. Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Company by its President, any Vice President or its Treasurer, either manually
or by facsimile signature. Each Rights Certificate shall be countersigned by the
Rights Agent manually and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
Rights Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Rights Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company. Any Rights Certificate may be signed
on behalf of the Company by any person who, on the date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or one or more offices designated
as the appropriate place for surrender of Rights Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number
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<PAGE> 16
of Rights evidenced on its face by each of the Rights Certificates and the date
of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f), 14 and 24
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Rights Certificate may be (i) transferred or (ii)
split up, combined or exchanged for one or more other Rights Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock as the Rights Certificate or Rights Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer any Rights
Certificate shall surrender the Rights Certificate at the office of the Rights
Agent designated for the surrender of Rights Certificates with the form of
certificate and assignment on the reverse side thereof duly endorsed (or
enclosed with such Rights Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate to be
split up, combined or exchanged at the office of the Rights Agent designated
therefor. Thereupon, the Rights Agent shall countersign and deliver to the
person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any Transfer Tax that may be imposed in connection with any transfer,
split up, combination or exchange of any Rights Certificates.
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<PAGE> 17
(b) Subject to the provisions of Sections 7(e), 7(f), 14 and 24
hereof, upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company shall issue and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e), 23(b) and 24 hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in New York City, New York, together with payment of the
Exercise Price for each Right exercised, subject to adjustment as hereinafter
provided, at or prior to the Close of Business on the earliest of (i) February
3, 2009 (the "Final Expiration Date"), (ii) the date on which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"), (iii) the
date on which such Rights are exchanged as provided in Section 24 hereof or (iv)
the time at which the Rights expire pursuant to Section 13(e) hereof.
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<PAGE> 18
(b) The Exercise Price shall initially be $47.50 for each one
one-thousandth (1/1000) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United States
of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a
Rights Certificate representing exercisable Rights with the form of election to
purchase and the certificate contained therein duly executed, accompanied by
payment by certified check, cashier's check, bank draft or money order payable
to the Company of the Exercise Price for the shares to be purchased and an
amount equal to any applicable Transfer Tax required to be paid by the holder of
the Rights Certificate in accordance with Section 9(e) hereof, the Rights Agent
shall thereupon promptly (i) requisition from any transfer agent of the
Preferred Stock of the Company one or more certificates representing the number
of shares of Preferred Stock to be so purchased, and the Company hereby
authorizes such transfer agent to comply with all such requests, (ii) as
provided in Section 14(b), at the election of the Company, cause depositary
receipts to be issued in lieu of fractional shares of Preferred Stock, (iii) if
the election provided for in the immediately preceding clause (ii) has not been
made, requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates and, if applicable,
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and (v) when appropriate, after receipt,
promptly deliver such cash
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<PAGE> 19
to or upon the order of the registered holder of such Rights Certificate;
provided, however, that in the case of a purchase of securities, other than
Preferred Stock, pursuant to Section 13 hereof, the Rights Agent shall promptly
take the appropriate actions corresponding in such case to that referred to in
the foregoing clauses (i) through (v) of this Section 7(c). Notwithstanding the
foregoing provisions of this Section 7(c), the Company may suspend the
exercisability of the Rights for a period not in excess of ninety (90) days,
during which the Company seeks to register under the Securities Act of 1933, as
amended (the "Act"), and any applicable securities law of any other
jurisdiction, the shares of Preferred Stock to be issued pursuant to the Rights.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or his assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to
the contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, any Rights that are beneficially owned by (x)
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person),
(y) a transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the invalidation time pursuant to either (i) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose
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<PAGE> 20
or effect of avoiding the provisions of this Section 7(e) (upon approval by a
majority of the Continuing Directors) and subsequent transferees of such Persons
referred to in clause (y) and (z) above, shall be void without any further
action and any holder of such Rights shall thereafter have no rights whatsoever
with respect to such Rights under any provision of this Rights Agreement. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) are complied with, but shall have no liability to any holder of
Rights Certificates or any other Person as a result of its failure to make any
determination with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. No Rights Certificate shall be issued pursuant to
Section 3 hereof that represents Rights beneficially owned by an Acquiring
Person whose Rights would be void pursuant to the provisions of this Section
7(e) or any Associate or Affiliate hereof; no Rights 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 provisions of this Section 7(e) or any Associate
or Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Rights Certificate delivered to the Rights Agent for transfer
to an Acquiring Person whose Rights would be void pursuant to the provisions of
this Section 7(e) shall be canceled.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or
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<PAGE> 21
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall cancel
and retire, any Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of its authorized and issued shares of Preferred Stock
held in its treasury, such number of shares of Preferred Stock as will from time
to time be sufficient to permit the exercise in full of all outstanding Rights
and, after the occurrence of a Triggering Event, shall, to the extent reasonably
practicable, so reserve and keep available a sufficient number of shares of
Common Stock (and/or other securities) which may be required to permit the
exercise in full of all outstanding Rights.
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<PAGE> 22
(b) If the Preferred Stock (or, following the occurrence of a
Triggering Event, the Common Stock and/or other securities) is at any time
listed on a national securities exchange or included for quotation on any
transaction reporting system, then so long as the Preferred Stock (and,
following the occurrence of any such Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on such exchange or included for quotation on any such transaction reporting
system, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable (but only to the extent that it is
reasonably likely that the Rights will be exercised), all shares reserved for
such issuance to be listed on such exchange or included for quotation on any
such transaction reporting system upon official notice of issuance upon such
exercise.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon the exercise of Rights (or, following the occurrence of a
Triggering Event, shares of Common Stock and/or other securities) shall, at the
time of delivery of the certificates for such shares or other securities
(subject to payment of the Exercise Price in respect thereof), be duly and
validly authorized and issued and fully paid and nonassessable.
(d) The Company shall use its best efforts to (i) file, as soon
as practicable following the occurrence of an event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
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<PAGE> 23
requirements of the Act) until the earlier of (x) the date as of which the
Rights are no longer exercisable for such securities, and (y) the date of the
expiration of the Rights. The Company may temporarily suspend, for a period of
time not to exceed ninety (90) days, the exercisability of the Rights in order
to prepare and file a registration statement under the Act and permit it to
become effective. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
under the Act (if required) shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due
and payable any and all U.S. federal and state Transfer Taxes which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issued or delivered upon the
exercise of Rights. The Company shall not, however, be required to pay any
Transfer Tax which may be payable in respect of any transfer or delivery of a
Rights Certificate to a Person other than, or the issuance or delivery of
certificates for Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) upon exercise of Rights in a name
other than that of, the registered holder of the Rights Certificate, and the
Company shall not be required to issue or deliver a Rights Certificate or
certificate for Preferred Stock (or, following the occurrence of a Triggering
Event, Common Stock and/or other securities) to a Person other than such
registered holder until any such Transfer Tax shall have been paid (any such
Transfer Tax
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<PAGE> 24
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such
Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the securities
represented thereby on, and such certificate shall be dated as of, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable Transfer Taxes) was made;
provided, however, that, if the date of such surrender and payment is a date
upon which the Preferred Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated as of, the next succeeding Business Day on which the applicable
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of shares which may be
purchased upon exercise of a Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
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<PAGE> 25
(a) (i) In the event the Company shall at any time after the
date of this Agreement (w) declare a dividend on the Preferred Stock payable in
Preferred Stock, (x) subdivide the outstanding Preferred Stock, (y) combine the
outstanding Preferred Stock into a smaller number of shares of Preferred Stock
or (z) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Exercise
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event
that any Person (other than an Exempt Person), alone or together with its
Affiliates and Associates, shall become an Acquiring Person, unless the event
causing such Person to become an Acquiring Person is an
22
<PAGE> 26
acquisition of shares of Common Stock pursuant to a cash tender offer made
pursuant to Section 14(d) of the Exchange Act for all outstanding shares of
Common Stock (other than shares of Voting Stock beneficially owned by the Person
making the offer or by its Affiliates or Associates) at a price and on terms
determined by at least a majority of the Continuing Directors to be (a) at a
price which is fair to stockholders (taking into account all factors which such
members of the Board deem relevant, including, without limitation, prices which
could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise in the best
interests of the Company and its stockholders, then, except as otherwise
provided in this Section 11, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive, upon exercise
of such Right at a price equal to the then current Exercise Price multiplied by
the number of one one-thousandths of a share of Preferred Stock for which a
Right is then exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current Exercise
Price by the number of one one-thousandths of a share of Preferred Stock for
which a Right is then exercisable and dividing that product by (y) 50% of the
Fair Market Value of the Company's Common Stock (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event; provided, however,
that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13 hereof, then only the
provisions of Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In lieu of issuing Common Stock in accordance with
Section 11(a)(ii) hereof, the Company may, if the Board of Directors of the
Company, upon approval by a majority
23
<PAGE> 27
of the Continuing Directors, determines that such action is necessary or
appropriate and not contrary to the interest of holders of Rights (and, in the
event that the number of shares of Common Stock which are authorized by the
Company's Amended and Restated Certificate of Incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights, the Company shall):
(A) determine the excess of (1) the value of the Common Stock issuable upon the
exercise of a Right (the "Current Value") over (2) the Exercise Price (such
excess being referred to as the "Spread") and (B) with respect to each Right,
make adequate provision to substitute for such Common Stock, upon exercise of
the Rights, (1) cash, (2) a reduction in the Exercise Price, (3) other equity
securities of the Company (including, without limitation, shares or units of
shares of any series of preferred stock which the Board of Directors of the
Company, upon approval by a majority of the Continuing Directors, has deemed to
have the same value as Common Stock (such shares or units of shares of preferred
stock are herein called "common stock equivalents")), (4) debt securities of the
Company, (5) other assets or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company, upon approval by a majority
of the Continuing Directors; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the occurrence of an event described in Section
11(a)(ii), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Exercise Price,
Common Stock (to the extent available), and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If the Board of
Directors, upon approval by a majority of the Continuing Directors, shall
determine in good faith
24
<PAGE> 28
that it is likely that sufficient additional Common Stock could be authorized
for issuance upon exercise in full of the Rights, the thirty (30) day period set
forth above may be extended to the extent necessary, but not more than ninety
(90) days after the occurrence of an event described in Section 11(a)(ii), in
order that the Company may seek stockholder approval for the authorization of
such additional shares. To the extent that the Company determines that some
action need be taken pursuant to the preceding sentences of this Section
11(a)(iii), the Company may suspend the exercisability of the Rights until the
expiration of any such period, as extended, in order to seek any authorization
of additional shares and/or to decide the appropriate form of distribution to be
made pursuant to this Section 11(a)(iii) and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect and shall promptly notify the Rights Agent of such suspension. For
purposes of this Section 11(a)(iii), the value of the Common Stock shall be the
Fair Market Value (as determined pursuant to Section 11(d) hereof) per share of
the Common Stock at the Close of Business on the date of the occurrence of one
of the events described in Section 11(a)(ii) and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common stock on such
date.
(b) In the event that the Company shall, after the Record
Date, fix a record date for the issuance of rights, options or warrants to all
holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred
Stock (or shares having the same rights, privileges and preferences as the
Preferred Stock ("equivalent preferred stock")) or securities convertible into
Preferred Stock or equivalent preferred
25
<PAGE> 29
stock at a price per share of Preferred Stock or equivalent preferred stock (or
having a conversion price per share, if a security convertible into Preferred
Stock or equivalent preferred stock) less than the Fair Market Value per share
of the Preferred Stock (as defined in Section 11(d)) on such record date, the
Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or the equivalent preferred stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Fair Market Value and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of additional shares of Preferred Stock and/or equivalent
preferred stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a
26
<PAGE> 30
consolidation or merger in which the Company is the continuing or surviving
corporation) or evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Fair Market Value
per share of the Preferred Stock on such record date, less the Fair Market Value
of the portion of the assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants applicable to one share of Preferred
Stock and the denominator of which shall be the Fair Market Value per share of
the Preferred Stock; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of this Rights Agreement, the "Fair Market
Value" of any share of Preferred Stock, Common Stock or any other stock or any
Rights or other security or any other property on any date shall be determined
as provided in this Section 11(d). In the case of a publicly-traded stock or
other security, the Fair Market Value on any date shall be deemed to be the
average of the daily closing prices per share of such stock or per unit of such
other security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Fair Market Value per share of any security is
27
<PAGE> 31
determined during a period which includes any date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or distribution on such
security payable in shares of such security or securities convertible into
shares of such security, or (ii) the effective date of any subdivision, split,
combination, consolidation, reverse stock split or reclassification of such
security, then, and in each such case, the Fair Market Value shall be
appropriately adjusted by the Board of Directors of the Company to take into
account ex-dividend or post-effective date trading. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way
(in either case, as reported in the applicable transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange), or, if the securities are not listed or admitted to trading on the
New York Stock Exchange, as reported in the applicable transaction reporting
system with respect to securities listed on the principal national securities
exchange on which such security is listed or admitted to trading; or, if not
listed or admitted to trading on any national securities exchange, the last
quoted price (or, if not so quoted, the average of the high bid and low asked
prices) in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use; or, if no bids for such security are quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security selected by the Board
of Directors of the Company (upon approval by a majority of the Continuing
Directors). The term "Trading Day" shall mean a day on which the principal
national securities exchange on which such security is listed or admitted to
trading is open for the transaction of business or, if such security is not
listed or admitted to trading on any national securities exchange, a Business
Day. If a security is not
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publicly held or not so listed or traded, "Fair Market Value" shall mean the
fair value per share of stock or per other unit of such other security, as
determined in good faith by the Board of Directors of the Company (upon approval
by a majority of the Continuing Directors); provided, however, that, if the
Preferred Stock is not publicly traded, the Fair Market Value of a share of
Preferred Stock shall be conclusively deemed to be the Fair Market Value of a
share of Common Stock (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof), multiplied by
one thousand. In the case of property other than securities, the "Fair Market
Value" thereof shall be determined in good faith by the Board of Directors of
the Company (upon approval by a majority of the Continuing Directors). Any such
determination of Fair Market Value shall be described in a statement filed with
the Rights Agent and shall be binding upon the Rights Agent and the holders of
the Rights.
(e) All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one-thousandth of a share, as the case
may be. No adjustment in the Exercise Price shall be required unless adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. Notwithstanding the preceding sentence, any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates the adjustment or (ii) the
date of the expiration of the right to exercise the Rights.
(f) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of
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<PAGE> 33
shares to be issued upon exercise of the Rights as in the initial Rights
Certificates issued hereunder but, nevertheless, shall represent the Rights as
so adjusted.
(g) Before taking any action that would cause an adjustment
reducing the purchase price per whole share of Preferred Stock upon exercise of
the Rights below the then par value, if any, of the shares of Preferred Stock,
the Company shall use its best efforts to take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Preferred
Stock at such adjusted purchase price per share.
(h) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (f), (g), (i), (j) and (k), and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the Preferred Stock shall apply on like terms to any
such other shares.
(i) Unless the Company shall have exercised its election as
provided in Section 11(j), upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
one one-thousandth of a share of Preferred Stock (calculated to the nearest one
one-millionth of a share) obtained by (i) multiplying (x) the number of one
one-thousandths of a share covered by a Right
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<PAGE> 34
immediately prior to this adjustment by (y) the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price and (ii) dividing the
product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
(j) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-thousandths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Exercise Price in effect immediately prior to adjustment of the Exercise Price
by the Exercise Price in effect immediately after adjustment of the Exercise
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Exercise Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(j), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights
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Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(k) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it, in its sole discretion, shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.
(l) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock) into
a greater or lesser number of shares of Common Stock, then in any such case (A)
the number of one one-thousandths of a share of Preferred Stock purchasable
after such event upon proper exercise of each Right shall be determined by
multiplying the number of one one-thousandths of
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<PAGE> 36
a share of Preferred Stock so purchasable immediately prior to such event by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately before such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event, and
(B) each share of Common Stock outstanding immediately after such event shall
have issued with respect to it that number of Rights which each share of Common
Stock outstanding immediately prior to such event had issued with respect to it.
The adjustments provided for in this Section 11(l) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
Section 12. Certification of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment. Any adjustment to be made
pursuant to Section 11 or Section 13 of this Rights Agreement shall be effective
as of the date of the event giving rise to such adjustment. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
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(a) Except for any transaction approved by the Board of
Directors (upon approval by a majority of the Continuing Directors), in the
event that, at any time on or after the Distribution Date, (x) the Company
shall, directly or indirectly, consolidate with, or merge with and into, any
other Person or Persons and the Company shall not be the surviving or continuing
corporation of such consolidation or merger, or (y) any Person or Persons shall,
directly or indirectly, consolidate with, or merge with and into, the Company,
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or of the Company or
cash or any other property, or (z) the Company or one or more of its
Subsidiaries shall, directly or indirectly, sell or otherwise transfer to any
other Person or any Affiliate or Associate of such Person, in one or more
transactions, or the Company or one or more of its Subsidiaries shall sell or
otherwise transfer to any Persons in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event (except as may be contemplated by Section 13(e)
hereof), proper provision shall be made so that (i) each holder of record of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof and payment of the Exercise Price in
accordance with the terms of this Rights Agreement, such number of shares of
validly issued, fully paid, nonassessable and freely tradeable Common Stock of
the Principal Party (as defined herein), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall, based on the Fair
Market Value of the Common Stock of the Principal Party on the date of the
consummation of such
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consolidation, merger, sale or transfer, equal twice the Exercise Price; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant to this Rights Agreement; (iii) the term "Company" for
all purposes of this Rights Agreement shall thereafter be deemed to refer to
such Principal Party; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock in accordance with the provisions of Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the occurrence of any event described in clause (x),
(y) or (z) above of this Section 13(a). The provisions of this Section 13 shall
similarly apply to successive mergers or consolidations or sales or other
transfers.
(b) "Principal Party" shall mean in the case of any
transaction described in (x) or (y) of the first sentence of Section 13(a)
hereof: (A) the Person that is the issuer of the securities into which shares of
Common Stock of the Company are changed or otherwise exchanged or converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer of the Common Stock of which has the greatest market value or (B) if no
securities are so issued, (x) the Person that is the other party to the merger
or consolidation and that survives such merger or consolidation, or, if there is
more than one such Person, the Person the Common Stock of which has the greatest
market value or (y) if the Person that is the other party to the merger or
consolidation does not survive the merger or consolidation, the Person that does
survive the merger or consolidation (including the Company if its survives); and
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(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest market value of shares
outstanding; provided, however, that in any such case, if the Common Stock of
such Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "Principal Party" shall refer to such
other Person, or if such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market value of shares
outstanding.
(c) The Company shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section 13(a)
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Rights Agreement in
accordance with Section 13(a) hereof and that all rights of first refusal
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<PAGE> 40
or preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger or sale or transfer of assets or earning power
referred to in Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and use
its best efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act) until the date of
expiration of the Rights, and similarly comply with applicable state securities
laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act. In the event that any of the transactions described in Section
13(a) hereof shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have not theretofore
been exercised shall, subject to the provisions of Section 7(e) hereof,
thereafter be exercisable in the manner described in Section 13(a).
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(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has provision in any of its
authorized securities or in its Amended and Restated Certificate of
Incorporation or By-laws or other instrument governing its corporate affairs,
which provision would have the effect of (i) causing such Principal Party to
issue, in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock of such
Principal Party at less than the then Fair Market Value per share (determined
pursuant to Section 11(b) hereof) or securities exercisable for, or convertible
into, Common Stock of such Principal Party at less than such then Fair Market
Value (other than to holders of Rights pursuant to this Section 13) or (ii)
providing for any special tax or similar payment in connection with the issuance
to any holder of a Right of Common Stock of such Principal Party pursuant to the
provisions of this Section 13, then, in such event, the Company shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect on the benefits intended to be afforded by the Rights in
connection with, or as a consequence of, the consummation of the proposed
transaction.
(e) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons (or a wholly-owned subsidiary of any such
Person or Persons) who acquired shares of Common Stock pursuant to a cash tender
offer for all outstanding shares of Common Stock which complies with the
provisions of Section 11(a)(ii)
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hereof relating to fair price determination by a majority of the Continuing
Directors, (ii) the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
Common Stock whose shares were purchased pursuant to such cash tender offer and
(iii) the form of consideration being offered to the remaining holders of shares
of Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such cash tender offer. Upon consummation of any
such transaction contemplated by this Section 13(e), all Rights hereunder shall
expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-thousandth of a share of Preferred
Stock). If the Company shall determine not to issue such fractional Rights,
then, in lieu of such fractional Rights, there shall be paid to the holders of
record of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one-thousandth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-thousandth of a share). In lieu of issuing fractions
of shares of Preferred Stock, the Company may, at its election, issue depositary
receipts evidencing fractions of shares pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have
all of the rights, privileges and preferences to which they would be entitled as
owners of the
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Preferred Stock. With respect to fractional shares that are not integral
multiples of one one-thousandth of a share, if the Company does not issue such
fractional shares or depositary receipts in lieu thereof, there shall be paid to
the holders of record of Rights Certificates at the time such Rights
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his 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 Rights Certificate in
the manner provided in such Rights Certificate and in this 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 will
be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any Person
subject to this Rights Agreement.
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Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for Common Stock registered in the name of the
holders of Common Stock (together, as applicable, with the Summary of Rights),
which certificates for Common Stock shall also constitute certificates for
Rights, and not by separate Rights Certificates, and each Right shall be
transferable only simultaneously and together with the transfer of shares of
Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent
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jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done by the Rights Agent in connection
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with the acceptance and administration of this Rights Agreement, including the
cost and expenses of defending against any claim of liability relating to the
Rights or this Rights Agreement.
(b) The Rights Agent shall be protected against, 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
upon any Rights Certificate or certificate for Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons.
Section 19. Merger or Consolidation of, or Change in Name of, the
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 corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement any of the
Rights 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 Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been
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countersigned, any successor Rights Agent may countersign such Rights
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 Rights Certificates
shall have the full force provided in the Rights 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 Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; in case
at that time any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Rights
Agreement.
Section 20. 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 Rights
Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
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evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
President, any Vice President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent. Any 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 hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Rights Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a certificate describing any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock to be issued pursuant to this
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Rights Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the President or any Vice President or the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with 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 herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
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<PAGE> 50
such act, default, neglect or misconduct, provided reasonable care was exercised
in the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate following the form of
election to purchase set forth on the reverse side of such Rights Certificate
has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take further action with respect to
the requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon 30 days, notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and the Preferred Stock by registered or certified
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.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or the holder of
record of any Rights Certificate
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<PAGE> 51
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing business under the
laws of the United States or of any state thereof, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination in the conduct of its corporate
trust or stock transfer business by federal or state authorities and which has
at the time of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000 or (b) an Affiliate controlled by a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed, but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Company shall have the authority to act
as the Rights Agent until a successor Rights Agent shall have assumed the duties
of the Rights Agent hereunder.
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<PAGE> 52
Section 22. Issuance of New Rights 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 Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Exercise Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors (upon approval by a majority of the
Continuing Directors), redeem all but not less than all of the then outstanding
Rights, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Stock Acquisition Date, provided, however, that, during
the time period relating to when the Rights may be redeemed, the Board of
Directors of the Company (upon approval of a majority of the Continuing
Directors) may extend the time during which the Rights may be redeemed to be at
any time as may be determined by the Board of Directors of the Company and the
Continuing Directors or (ii) the Final Expiration Date, at a redemption price of
$.00l per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction after the date hereof (the "Redemption Price").
(b) Without any further action and without any notice, the
right to exercise the Rights will terminate at the effective time of the action
of the Board of Directors and the Continuing Directors ordering the redemption
of the Rights and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within 10 days after the effective time of the
action of the Board of Directors and the Continuing Directors ordering the
redemption of the
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<PAGE> 53
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. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Each notice of redemption will state the method by
which the payment of the Redemption Price will be made. At the option of the
Board of Directors, the Redemption Price may be paid in cash to each Rights
holder or by the issuance of shares (and, at the Company's election pursuant to
Section 14(b) hereof, cash or depositary receipts in lieu of fractions of shares
other than fractions which are integral multiples of one one-thousandth (1/1000)
of a share) of Preferred Stock having a Fair Market Value equal to such cash
payment.
Section 24. Exchange.
(a) By the vote of a majority of the Board of Directors (upon
approval by a majority of the Continuing Directors), the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights which have become void pursuant to Section 7(e) hereof) for shares of
Common Stock at an exchange rate of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
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<PAGE> 54
together with all Affiliates and Associates of such Person, becomes the
Beneficial owner of 50% or more of any class of voting stock of the Company then
outstanding.
(b) Without any further action and without any notice, the
right to exercise the Rights to be so exchanged will terminate at the effective
time of the action of the Board of Directors and the Continuing Directors
ordering the exchange and the only right thereafter of each holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give notice of the exchange to the holders of such Rights
then outstanding 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. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such exchange. Each such notice shall state the method by which the
exchange for rights will be effected and, in the event of a partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute shares of Preferred Stock for shares of Common
Stock exchangeable for the Rights, at the initial rate of one one-thousandth of
a share of Preferred Stock for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
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<PAGE> 55
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall either take such action as may be necessary
to authorize additional Common Stock or Preferred Stock for issuance upon
exchange of the Rights or, alternatively, by the vote of a majority of the Board
of Directors (upon approval by a majority of the Continuing Directors with
respect to each Right, (i) pay cash in an amount equal to the Exercise Price, in
lieu of issuing Common Stock or Preferred Stock in exchange therefor, or (ii)
issue debt or equity securities, or a combination thereof, having a value equal
to the Current Value (as hereinafter defined) of the Common Stock or Preferred
Stock exchangeable for each such Right, where the value of such securities shall
be determined in good faith by the Board of Directors (upon approval by a
majority of the Continuing Directors), or (iii) deliver any combination of cash,
property, Common Stock, Preferred Stock and/or other securities having a value
equal to the Current Value in exchange for each Right. The term "Current Value,"
for purposes of this Section 24, shall mean the product of the per share market
price of the Common Stock (determined pursuant to Section 11(d) on the date of
the occurrence of the event described above in subparagraph (a)), multiplied by
the number of shares of Common Stock for which the Right otherwise would be
exchangeable if there were sufficient shares available. To the extent that the
Company determines that some action need be taken pursuant to clauses (i), (ii)
or (iii) of this Section 24(d), the Board of Directors (upon approval by a
majority of the Continuing Directors) may temporarily suspend the exercisability
of the Rights for a period of up to sixty (60)
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<PAGE> 56
days following the date on which the event described in Section 24(a) shall have
occurred, in order to seek any authorization of additional Common Stock or
Preferred Stock and/or to decide the appropriate form of distribution to be made
pursuant to the above provision and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to each registered holder of a Rights Certificate with regard
to which a fractional share of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the fair market value of a whole
share of Common Stock. For the purposes of this paragraph (e), the fair market
value of a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred stock), (iv) to effect any consolidation or merger with or
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<PAGE> 57
into, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of record of a Rights
Certificate, in accordance with Section 26, notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend or
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale or transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of record
of Common Stock or Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of
record of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Common Stock or Preferred Stock, whichever shall be the earlier. The failure to
give notice required by this Section 25 or any defect therein shall not affect
the legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any event described in Section 11(a)(ii) hereof
shall occur, then the Company shall, as soon as practicable thereafter, give to
each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
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<PAGE> 58
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Rights Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
ZymeTx, Inc.
800 Research Parkway
Suite 100
Oklahoma City, Oklahoma 73104
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Rights Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the company) as
follows:
American Stock Transfer & Trust Company
40 Wall Street
46th Floor
New York, New York 00012
Attention: Joe Wolfe
Notices or demand authorized by this Rights Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Rights Certificate or
Right shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. For as long as the Rights are
then redeemable and except as provided in the last sentence of this Section 27,
the Company may in its sole and absolute discretion, and the Rights Agent shall
if the Company so directs, supplement or amend any provision of this Agreement
without the approval of any holders of the Rights. At any time
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<PAGE> 59
when the Rights are not then redeemable and except as provided in the last
sentence of this Section 27, the Company may, and the Rights Agent shall if the
Company so directs, supplement or amend this Rights Agreement without the
approval of any holders of Rights Certificates (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein or (iii) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable, provided that no such supplement or amendment pursuant
to this clause (iii) shall materially adversely affect the interest of the
holders of Rights Certificates. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Rights Agreement to the contrary, supplements or amendments may be made
only upon approval by a majority of the Continuing Directors.
Section 28. Successors. All of 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
hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the holders of Common Stock in their
capacity as holders of the Rights) any legal or equitable right, remedy or claim
under this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the holders of record of
the Rights Certificates (and,
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<PAGE> 60
prior to the Distribution Date, the holders of Common Stock in their capacity as
holders of the Rights).
Section 30. Determinations and Actions by the Board; etc. The Board of
Directors (upon approval by a majority of the Continuing Directors) shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board, or to the Company, or
as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement. All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board of Directors in good faith (and with the approval of a
majority of the Continuing Directors then in office) in accordance with the
preceding sentence, shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights and all other parties and (y) not
subject any director to any liability to the holders of the Rights.
Notwithstanding anything contained in this Agreement to the contrary, whenever
any action, calculation, interpretation or determination made pursuant to this
Agreement requires the approval of a majority of the Continuing Directors, and
no Continuing Directors are then in office, such action, calculation,
interpretation or determination may not be made.
Section 31. Delaware Contract. This Rights Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
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<PAGE> 61
Section 32. Counterparts. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. 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
hereof.
Section 34. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
ZYMETX, INC.
Attest: By:
------------------------------- ------------------------------
G. Carl Gibson Peter G. Livingston
Secretary President
AMERICAN STOCK TRANSFER
& TRUST COMPANY
Attest: By:
------------------------------- ------------------------------
Name: Name:
------------------------- -----------------------
Title: Assistant Secretary Title:
----------------------
58
<PAGE> 62
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PREFERRED STOCK
of
ZYMETX, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
--------------------------------------
<PAGE> 63
ZymeTx, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Corporation"),
DOES HEREBY CERTIFY that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation of the Corporation and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors on February 3, 1999 adopted a
resolution providing for the authorization of a series of Preferred Stock, as
follows:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Restated
Certificate of Incorporation, the Board of Directors hereby creates a series of
Preferred Stock, par value $.001 per share (the "Preferred Stock"), of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Preferred Stock" (the "Series A Junior Preferred
Stock") and the number of shares constituting the Series A Junior Preferred
Stock shall be twenty thousand. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Junior Preferred Stock to a number
less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Junior Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Junior Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Preferred Stock, in
preference to the holders of Common Stock, par value $.001 per share
(the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of January, April,
July and October in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (x)
$0.50 or (y) subject to the provision for adjustment hereinafter set
forth, 1000 times the aggregate per share amount of all cash dividends,
and 1000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since
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<PAGE> 64
the first issuance of any share or fraction of a share of Series A
Junior Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into
a greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series A Junior Preferred
Stock were entitled immediately prior to such event under clause (y) of
the preceding sentence shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Junior Preferred Stock as provided in paragraph (A) of
this Section immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $0.50 per share on the Series A
Junior Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of
such shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable
on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors
may fix a record date for the determination of holders of shares of
Series A Junior Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Preferred Stock shall have the following voting rights:
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<PAGE> 65
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Preferred Stock shall entitle the
holder thereof to 1000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series A Junior Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Junior
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 on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Junior Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on
shares of Series A Junior Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Preferred Stock, except
dividends paid ratably on the Series A Junior Preferred Stock
and all such parity stock on which
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<PAGE> 66
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Junior Preferred Stock, provided 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 (as to
dividends and upon dissolution, liquidation and winding up) to
the Series A Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Preferred Stock,
or any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Junior Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Restated Certificate of Incorporation, or in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A Junior
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Preferred Stock shall have received the higher of (i) $50.00 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, or (ii) an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1000 times the aggregate amount to be distributed per share to holders of shares
of Common
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<PAGE> 67
Stock; nor shall any distribution be made (2) to the holders of shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Preferred Stock, except distributions made
ratably on the Series A Junior Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Junior Preferred Stock
were entitled immediately prior to such event under the proviso in clause (1) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the 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 each share of
Series A Junior Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Preferred Stock
shall not be redeemable.
Section 9. Rank. The Series A Junior Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least a majority of the outstanding shares of Series A Junior
Preferred Stock, voting together as a single class.
14
<PAGE> 68
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chief Executive Officer and President and
attested by its Secretary this 3rd day of February, 1999.
ZymeTx, Inc.
By: /s/ PETER G. LIVINGSTON
----------------------------------
Name: Peter G. Livingston
Title: President and Chief Executive Officer
Attest:
By: /s/ G. CARL GIBSON
------------------------------
Name: G. Carl Gibson
Title: Secretary
15
<PAGE> 69
EXHIBIT 3
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS
AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED TO OR
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID
AND MAY NOT BE TRANSFERRED TO ANY PERSON.
ZymeTx, Inc.
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On February 3, 1999, the Board of Directors of ZymeTx, Inc. (the
"Company") declared a dividend distribution of one right (a "Right") for each
outstanding share of Common Stock, par value $.001 per share (the "Common
Stock"), of the Company. The distribution is payable as of February 3, 1999 to
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-thousandth (1/1000) of a share of preferred
stock of the Company, designated as Series A Junior Preferred Stock (the
"Preferred Stock") at a price of $47.50 per one one-thousandth (1/1000) of a
share ("Exercise Price"), subject to adjustment. The description and terms of
the Rights are set forth in a Rights Agreement dated as of February 3, 1999 (the
"Rights Agreement") between ZymeTx, Inc. and American Stock Transfer & Trust
Company (the "Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.
The Rights become exercisable upon the close of business on the day
(the "Distribution Date") which is the earlier of (i) the tenth day following a
public announcement that a person or group of affiliated or associated persons,
with certain exceptions set forth below, has acquired beneficial ownership of
20% or more of any class of the outstanding voting stock of the Company (an
"Acquiring Person") and (ii) the tenth business day after the date of the
commencement or announcement of a person's or group's intention to commence a
tender or exchange offer the consummation of which would result in the ownership
of 20% or more of any class of the Company's outstanding voting stock (even if
no shares are actually purchased pursuant to such offer), or such later date as
may be determined by a majority of the Board of Directors and the Continuing
Directors (as defined in the Rights Agreement); prior thereto, the Rights will
not be exercisable, will not be represented by a separate certificate, and will
not be transferable apart from the Company's Common Stock, but will instead be
evidenced, with respect to any of the Common
16
<PAGE> 70
Stock certificates outstanding as of February 3, 1999, by such Common Stock
certificate with a copy of this Summary of Rights attached thereto. An Acquiring
Person does not include (A) the Company, (B) any subsidiary of the Company, (C)
any employee benefit plan or employee stock plan of the Company or of any
subsidiary of the Company, or any trust or other entity organized, appointed,
established or holding Common Stock for or pursuant to the terms of any such
plan or (D) any person or group whose ownership of 20% or more of the shares of
any class of voting stock of the Company then outstanding results solely from
(i) any action or transaction or transactions approved by a majority of the
Board of Directors and the Continuing Directors before such person or group
became an Acquiring Person or (ii) a reduction in the number of issued and
outstanding shares of voting stock of the Company pursuant to a transaction or
transactions approved by a majority of the Board of Directors and the Continuing
Directors (provided that, in the event any person or group set forth in clause
(D) does not become an Acquiring Person by reason of clause (i) or (ii) above,
such persons set forth in clause (D) shall nonetheless become an Acquiring
Person upon acquisition of any additional shares of the Company's voting stock
unless such acquisition of additional voting stock will not result in such
person or group becoming an Acquiring Person by reason of such clause (i) or
(ii)).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after February 3, 1999 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as of
February 3, 1999, with or without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate certificates alone
will evidence the Rights from and after the Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on February 3, 2009, unless earlier
redeemed or exchanged by the Company, in each case as described below.
The Preferred Stock is nonredeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of the Company's preferred stock. Each share of
Preferred Stock will be entitled to a minimum quarterly dividend payment of
$0.50 per share but will be entitled to an aggregate dividend of 1000 times the
dividend declared on the Company's Common Stock. In the event of the liquidation
of the Company, the holders of Preferred Stock will be entitled to receive a
payment of the greater of (i) $50.00 per share plus accrued and unpaid dividends
or (ii) 1000 times the aggregate amount to be distributed per share to holders
of Common Stock. Each share of Preferred Stock will have 1000 votes, voting
together with the Common Stock. In the event of any merger, consolidation or
other transaction in which Common Stock is exchanged, each share of Preferred
Stock will be entitled to receive 1000 times the amount received per share of
Common Stock. The rights of Preferred Stock as to dividends, liquidation and
voting are protected by anti-dilution provisions.
17
<PAGE> 71
The Exercise Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date. Unless the transaction is approved by a majority
of the Board of Directors and the Continuing Directors, in the event that, after
the time the Rights become exercisable, the Company were to be acquired in a
merger or other business combination (in which any shares of Common Stock are
changed into or exchanged for other securities or assets) (other than a merger
that follows a cash tender offer for all outstanding shares of the Company, at a
price determined by a majority of the Continuing Directors to be fair and
otherwise in the best interests of the Company and its stockholders) or more
than 50% of the assets or earning power of the Company and its subsidiaries
(taken as a whole) were to be sold or transferred in one or a series of related
transactions, the Rights Agreement provides that proper provision will be made
so that each holder of record of a Right, will from and after such date, have
the right to receive, upon payment of the Exercise Price, that number of shares
of common stock of the acquiring company having a market value at the time of
such transaction equal to two times the Exercise Price. In addition, in the
event that a person or group of affiliated or associated persons becomes an
Acquiring Person (unless such acquisition is made pursuant to a cash tender
offer determined to be fair to the stockholders of the Company, as described in
the preceding sentence), the Rights Agreement provides that proper provision
will be made so that each holder of record of a Right, other than the Acquiring
Person (whose Rights will thereupon become null and void), will thereafter have
the right to receive, upon payment of the Exercise Price, that number of shares
of the Common Stock (or cash, other securities or property) having a market
value at the time of the transaction equal to two times the Exercise Price (such
market value to be determined with reference to the market value of the
Company's Common Stock as provided in the Rights Agreement).
Fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share) may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares which are not integral multiples of one one-thousandth
of a share.
At any time on or prior to the close of business on the earlier of (i)
the tenth day after the time that a person (or group of affiliated or associated
persons) has become an Acquiring Person (or such later date as a majority of the
Board of Directors and the Continuing Directors may determine) or
18
<PAGE> 72
(ii) February 3, 2009, the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (the "Redemption Price"), with the approval
of the Continuing Directors. Immediately upon the effective time of the action
of the Board of Directors of the Company authorizing redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Company may amend
the Rights in any manner, including an amendment to extend the time period in
which the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
Amendments to the Rights Agreement require the approval of the Continuing
Directors.
At any time after a person (or group of affiliated or associated
persons) becomes an Acquiring Person and prior to the acquisition by any such
person or group of 50% or more of any class of outstanding voting stock of the
Company, the Board of Directors of the Company (with the approval of the
Continuing Directors) may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock (or a fraction of a share of Preferred Stock
or other consideration having equivalent market value) per Right (subject to
adjustment).
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Form 8-K dated February 5, 1999. A copy
of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement which is
incorporated herein by reference.
19
<PAGE> 73
[Form of Rights Certificate]
Certificate No. R- Rights
---------
NOT EXERCISABLE AFTER FEBRUARY 3, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY AT
$.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO
BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE
TRANSFERRED TO ANY PERSON.
Rights Certificate
ZymeTx, Inc.
This certifies that , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of February 3, 1999 (the "Rights Agreement") between ZymeTx,
Inc., a Delaware corporation (the "Company"), and American Stock Transfer &
Trust Company (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York time) on February 3, 2009 at the office of the
Rights Agent designated in the Rights Agreement for such purpose, or its
successor as Rights Agent, one one-thousandth (1/1000) of a fully paid
nonassessable share of Series A Junior Preferred Stock (the "Preferred Stock")
of the Company at a purchase price of $47.50, as the same may from time to time
be adjusted in accordance with the Rights Agreement (the "Exercise Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Rights
Certificate, as provided in the Rights Agreement.
<PAGE> 74
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of Rights Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated in the Rights
Agreement for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights entitling the
holder of record to purchase a like aggregate number of shares of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof, another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.001 per Right, subject to adjustment or (ii) may be exchanged in whole or in
part for shares of the Company's Common Stock, par value $.001 per share, shares
of Preferred Stock or substantially equivalent rights or other consideration as
determined by the Company.
No fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth (1/1000) of a share) are required to be
issued upon the exercise of any Right or Rights evidenced hereby, and in lieu
thereof the Company may cause depositary receipts to be issued and/or a cash
payment may be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at a meeting
thereof, or to give or withhold consent to any corporate action or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Rights Certificate shall
have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of February 3, 1999.
21
<PAGE> 75
ZymeTx, Inc.
By:
-------------------------------
Name:
Title:
Countersigned:
American Stock Transfer & Trust Company
By:
-------------------------------
Name:
Title:
22
<PAGE> 76
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificates.)
FOR VALUE RECEIVED ___________________________________________________
hereby sells, assigns and transfers unto_______________________________________
- ------------------------------------------------------------------------------
(Please print name and address of transferee)
Rights evidenced by this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint _________
Attorney to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
------------------- ---------------------------------------------
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Rights Certificate)
Signature Guaranteed:
23
<PAGE> 77
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Dated:
------------------- ---------------------------------------------
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Rights Certificate)
24
<PAGE> 78
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Rights Certificate.)
TO ZymeTx, Inc.:
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock (or other securities) issuable upon the exercise of such Rights
and requests that certificates for such share(s) be issued in the following
name:
Please insert social security
or other identifying number:
---------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance 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 must conform in all respects to
name of holder as specified on the face of
this Rights Certificate)
Signature Guaranteed:
25
<PAGE> 79
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being exercised by or on
behalf of a Person who is or was an Acquiring Person or an Associate or an
Affiliate thereof (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Dated:
------------------- ---------------------------------------------
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Rights Certificate)
26
