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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission file number: 001-16133
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Delcath Systems, Inc.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 06-1245881
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1100 Summer Street, 3rd Floor, Stamford, CT 06905
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(Address of Principal Executive Offices)
(203) 323-8668
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(Issuer's Telephone Number, Including Area Code)
If this form relates to the If this form relates to the
registration of a class of securities registration of a class of securities
pursuant to Section 12(b) of the pursuant to Section 12(g) of the
Exchange Act and is effective Exchange Act and is effective
pursuant to General Instruction pursuant to General Instruction
A.(c), please check the following A.(d), please check the following
box. [X] box. [X]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered each class to be registered
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Common Stock Purchase Right Boston Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on
to be so registered each class to be registered
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Common Stock Purchase Right Nasdaq Small Cap Market
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On October 30, 2001, Delcath Systems, Inc. (the "Company") entered
into a Rights Agreement with American Stock Transfer & Trust Company (the
"Rights Agreement") in connection with the implementation of the Company's
stockholder rights plan (the "Rights Plan"). A copy of the Rights Agreement is
attached hereto as Exhibit 4.7. The purpose of the Rights Plan is to deter, and
protect the Company's stockholders from, certain coercive and otherwise unfair
takeover tactics and enable the Board of Directors to represent effectively the
interests of stockholders in the event of a takeover attempt. The Rights Plan
does not deter negotiated mergers or business combinations that the Board of
Directors determines to be in the best interests of the Company and its
stockholders.
To implement the Rights Plan the Board of Directors declared a
dividend of one common stock purchase right (a "Right") for each share of Common
Stock of the Company, par value $0.01 per share (the "Common Stock") outstanding
at the close of business on November 14, 2001 (the "Record Date") or issued by
the Company on or after such date and prior to the earlier of the Distribution
Date, the Redemption Date or the Final Expiration Date (as such terms are
defined in the Rights Agreement). The dividend is payable on November 14, 2001
to stockholders of record on the Record Date. Each Right entitles the registered
holder to purchase from the Company one share of Common Stock, at a price of
$5.00 per share, subject to adjustment (the "Purchase Price"). The description
and terms of the Rights are set forth in the Rights Agreement.
RIGHTS ATTACHED TO COMMON STOCK INITIALLY
Common Stock certificates will evidence the Rights. A notation on
the certificates will incorporate the Rights Plan and advise the certificate
holder of the existence of the Rights. Until triggered, the Rights are
transferred only with the Common Stock certificates. Common Stock certificates
issued after November 14, 2001 will contain a legend referencing the existence
of a stockholder rights plan. The surrender for transfer of outstanding Common
Stock certificates will also constitute the transfer of the Rights associated
with the Common Stock.
DISTRIBUTION OF RIGHTS
The Company will mail separate certificates evidencing the Rights
to holders of record of the Common Stock on the Distribution Date. The
Distribution Date will be the date the Rights separate from the Common Stock,
and will be the earlier to occur of the following two events:
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- the close of business on the first day of a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 15% or more of the outstanding
Common Stock; or
- 10 business days following the commencement of, or announcement
of an intention to make, a tender or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of
such outstanding Common Stock.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights. The Rights are
not exercisable until the Distribution Date. The Rights will expire on October
30, 2011, unless earlier redeemed or extended by the Board.
RIGHT TO PURCHASE COMPANY STOCK
In the event a person becomes the owner of 15% or more of the
outstanding shares of Common Stock and thus becomes an Acquiring Person (a
"Flip-In Event"), the Rights not held by the Acquiring Person "flip-in" and,
instead of continuing as rights to buy one share of Common Stock, become rights
to buy from the Company shares of Common Stock having a value equal to two times
the Purchase Price of the Right. In other words, a Rights holder (other than the
Acquiring Person) may purchase Common Stock at a 50% discount from the then
current fair market value.
In the event there is insufficient Common Stock to permit exercise
in full of the Rights, the Company must issue cash, property or other securities
of the Company with an aggregate value equal to twice the Purchase Price.
Upon the occurrence of any such Flip-In Event, any Rights owned by
an Acquiring Person, its affiliates and associates and certain transferees
thereof, shall become null and void.
RIGHT TO PURCHASE ACQUIRING PERSON STOCK
In the event that a person becomes an Acquiring Person, the
Company is then merged, and the Common Stock is exchanged or converted in the
merger, then each Right (other than those formerly held by the Acquiring Person,
which became void) would "flip-over" and be exercisable for a number of shares
of Common Stock of the acquiring company having a market value of two times the
Purchase Price of the Right. In other words, a Rights holder may purchase the
acquiring company's common stock at a 50% discount from the then current fair
market value.
EXCHANGE OF RIGHTS FOR COMMON STOCK
After a Flip-In Event but before a "flip-over" event (as described
above) occurs and before an Acquiring Person becomes the owner of 50% or more of
the Common Stock, the Board may cause the Rights (either in whole or in part) to
be exchanged for shares of Common
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Stock (or equivalent securities, of equal value) at a one-to-one exchange ratio
or pursuant to an equivalent cashless exercise method. Rights held by the
Acquiring Person, however, which became void upon the Flip-In Event, would not
be entitled to participate in such exchange.
REDEMPTION
The Rights may be redeemed by the Board at a redemption price of
$0.01 per Right at any time prior to the earlier of:
- the time that a person or a group becomes an Acquiring Person, or
- October 30, 2011, the expiration date of the Rights Agreement.
Immediately upon redemption and without further action and without any notice,
the right to exercise the Rights will terminate and the only right of the
holders will be to receive the redemption price.
EXPIRATION OF RIGHTS
The Rights will expire on October 30, 2011, unless the expiration
date is extended by amendment or unless the Rights are earlier redeemed or
exchanged by the Company as described above.
AMENDMENTS OR SUPPLEMENTS
For so long as the Rights are redeemable, the terms of the Rights
may be amended or supplemented by the Board of Directors at any time and from
time to time without the consent of the holders of the Rights. At any time when
the Rights are not redeemable, the Board of Directors may amend or supplement
the terms of the Rights, provided that such amendment does not adversely affect
the interests of the holders of the Rights.
NO RIGHTS AS STOCKHOLDERS
Until a Right is exercised, the holder thereof will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
MISCELLANEOUS
In order to prevent dilution, the Purchase Price, the number of
Common Stock or other securities or property purchasable upon exercise of each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in the Rights Agreement.
The Company is not required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights (except as may be
provided for in the Rights Agreement). In lieu of such fractional Rights, the
Company will pay to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount of cash
equal to the same fraction of the current market value of a whole Right.
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ITEM 2. EXHIBITS.
4.7 Rights Agreement, dated as of October 30, 2001, by and between
Delcath Systems, Inc. and American Stock Transfer & Trust Company, as Rights
Agent.
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the undersigned, thereto
duly authorized.
DELCATH SYSTEMS INC.
Date: November 12, 2001 By: /s/ M.S. Koly
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M.S. Koly
President and Chief Executive Officer
EXHIBIT INDEX
4.7 Rights Agreement, dated as of October 30, 2001, by and between
Delcath Systems Inc. and American Stock Transfer & Trust Company, as Rights
Agent.
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EXHIBIT 4.7
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DELCATH SYSTEMS, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as RIGHTS AGENT
RIGHTS AGREEMENT
Dated as of October 30, 2001
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TABLE OF CONTENTS
Section Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 4
Section 3. Issuance of Rights Certificates 5
Section 4. Form of Rights Certificates 6
Section 5. Countersignature and Registration 7
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights 8
Section 8. Cancellation and Destruction of Rights Certificates 9
Section 9. Reservation and Availability of Common Stock 9
Section 10. Common Stock Record Date 10
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
and Number of Rights 11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares 17
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power 17
Section 14. Fractional Rights and Fractional Shares 19
Section 15. Rights of Action 20
Section 16. Agreement of Rights Holders 20
Section 17. Rights Certificate Holder Not Deemed a Stockholder 21
Section 18. Concerning the Rights Agent 21
Section 19. Merger or Consolidation or Change of Name of Rights Agent 21
Section 20. Duties of Rights Agent 22
Section 21. Change of Rights Agent 24
Section 22. Issuance of New Rights Certificates 24
Section 23. Redemption and Termination 25
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Section 24. Exchange 25
Section 25. Notice of Certain Events 26
Section 26. Notices 27
Section 27. Supplements and Amendments 27
Section 28. Successors 28
Section 29. Determinations and Actions by the Board of Directors 28
Section 30. Benefits of This Agreement 28
Section 31. Severability 28
Section 32. Governing Law 29
Section 33. Counterparts 29
Section 34. Descriptive Headings 29
EXHIBITS
Exhibit A - Form of Rights Certificate
Exhibit B - Summary of Rights to Purchase Shares of Common Stock
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RIGHTS AGREEMENT
RIGHTS AGREEMENT (the "AGREEMENT"), dated as of October 30, 2001,
between Delcath Systems, Inc., a Delaware corporation (the "COMPANY"), and
American Stock Transfer & Trust Company, a New York corporation (the "RIGHTS
AGENT").
The Board of Directors of the Company has authorized and declared a
dividend of one right (each, a "Right") for each share of Common Stock (as
hereinafter defined) of the Company outstanding as of the Close of Business (as
hereinafter defined) on November 14, 2001 (the "Record Date"), each Right
representing the right to purchase one share (subject to adjustment) of Common
Stock, upon the terms and subject to the conditions herein set forth, and
further authorized and directed the issuance of one Right (subject to adjustment
as provided herein) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with respect to shares of
Common Stock that shall become outstanding after the Distribution Date and prior
to the Expiration Date in accordance with Section 22.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
"ACQUIRING PERSON" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the shares of Common Stock
of the Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan.
(i) no Person or Group (as such term is herein defined)
shall be deemed to be an "ACQUIRING PERSON" because as of the Commencement Date
(as such term is herein defined) such Person or Group beneficially owns 15% or
more of the Common Stock of the Company then outstanding; provided, however,
that if any such Person or Group shall, after the Commencement Date, become the
Beneficial Owner of an additional 1% or more of the Common Stock of the Company
(other than pursuant to a dividend or distribution paid or made by the Company
on the outstanding Common Stock or pursuant to a split or subdivision of the
outstanding Common Stock, and excluding any Common Stock over which such Person
obtains beneficial ownership, after the Commencement Date, as a result of any
transfer from any other member of the same Group), then such Person or Group
shall be deemed to be an "ACQUIRING PERSON." If any Person or Group transfers
beneficial ownership of any Common Stock of the Company held by such Person or
Group to another Person or Persons which, in turn, (i) are beneficially owned
entirely by such transferor or, if the transferor is a Group, are beneficially
owned entirely by Persons who are members of such Group, or (ii) beneficially
own all of such transferor or, if the transferor is a Group, beneficially own
all of one or more of the Persons who are members of such Group, the transferee
shall, for purposes of the definition of "ACQUIRING PERSON" in this Agreement,
be deemed to have held all such transferred shares of Common Stock since the
date the shares were originally acquired by the transferor. All shares of Common
Stock of the Company beneficially owned by a Person who is a member of a Group
or by the estate or any beneficiaries of the estate of a Person who is a member
of a Group shall be deemed to be shares beneficially owned by such Group.
(ii) no Person shall become an "ACQUIRING PERSON" as the
result of an acquisition of shares of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more of the
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shares of Common Stock of the Company then outstanding; provided, however, that
if a Person shall become the Beneficial Owner of 15% or more of the shares of
Common Stock of the Company then outstanding, by reason of share purchases by
the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional shares of Common Stock of the Company (other
than pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Stock or pursuant to a split or subdivision of the
outstanding Common Stock), then such Person shall be deemed to be an "ACQUIRING
PERSON" hereunder; and
(iii) if the Board of Directors of the Company determines
in good faith that a Person who would otherwise be an "ACQUIRING PERSON" became
such inadvertently (including, without limitation, because (A) such Person was
unaware that it beneficially owned a percentage of Common Stock that would
otherwise cause such Person to be an "Acquiring Person" or (B) such Person was
aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, then such Person shall not be deemed to be or to have become an
"Acquiring Person" for any purposes of this Agreement unless and until such
Person shall have failed to divest itself, as soon as practicable (as
determined, in good faith, by the Board of Directors of the Company), of
Beneficial Ownership of a sufficient number of shares of Common Stock so that
such Person would no longer otherwise qualify as an "Acquiring Person."
"ADJUSTMENT SHARES" has the meaning set forth in Section 11(a)(ii).
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act (as such term is hereinafter defined).
A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Rule 13d-3 thereunder (or any comparable or
successor law or regulation); 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)
pursuant to any agreement, arrangement or understanding (whether or not in
writing, other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; provided
further, however, that a Person shall not be deemed the "BENEFICIAL OWNER" of,
or to "BENEFICIALLY OWN," any security under this subparagraph (ii) as a result
of an agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (x) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the Exchange Act and
the Exchange Act Regulations (as such terms are herein defined); and (y) is not
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing, other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to
subparagraph (ii) of this paragraph) or disposing of any securities of the
Company;
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provided, however, that in no case shall an officer or director of the Company
be deemed (A) the Beneficial Owner of any securities beneficially owned by
another officer or director of the Company solely by reason of actions
undertaken by such persons in their capacity as officers or directors of the
Company or (B) the Beneficial Owner of securities held of record by the trustee
of any employee benefit plan of the Company or any Subsidiary of the Company for
the benefit of any employee of the Company or any Subsidiary of the Company,
other than the officer or director, by reason of any influence that such officer
or director may have over the voting of the securities held in the plan.
Notwithstanding anything in this definition of "BENEFICIAL OWNER" and
"BENEFICIALLY OWN" to the contrary, the phrase "THEN OUTSTANDING," when used
with reference to a Person who is the Beneficial Owner 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 beneficially own hereunder.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions in the State of Delaware or the state in
which the principal office of the Rights Agent is located are authorized or
obligated by law or executive order to close.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M., Delaware
Time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Delaware Time, on the next succeeding Business Day.
"COMMENCEMENT DATE" shall mean the earlier of the date hereof or the
first public announcement of the adoption of this Agreement.
"COMMON STOCK" when used with reference to the Company shall mean the
shares of common stock, par value $0.01 per share, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall mean
the capital stock (or other equity interest) with the greatest voting power of
such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
"COMPANY" shall have the meaning set forth in the recitals to this
Agreement.
"CURRENT PER SHARE MARKET PRICE" shall have the meaning set forth in
Section 11(d)(i) hereof.
"CURRENT VALUE" shall have the meaning set forth in Section
11(a)(iii) hereof.
"DISTRIBUTION DATE" shall have the meaning set forth in Section 3(a)
hereof.
"EQUIVALENT COMMON STOCK" shall have the meaning set forth in Section
11(b) hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE ACT REGULATIONS" shall mean the General Rules and
Regulations under the Exchange Act.
"EXPIRATION DATE" shall have the meaning set forth in Section 7(a)
hereof.
"FINAL EXPIRATION DATE" shall have the meaning set forth in Section
7(a) hereof.
"GROUP" shall have the meaning ascribed to it in Rule 13d-5(b) of the
Exchange Act Regulations, as in effect on the date of this Agreement; provided,
however, a Group shall consist only of the members of the Group as of the
Commencement Date and such other Person as shall be deemed an Acquiring Person.
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"NASDAQ" shall have the meaning set forth in Section 11(d) hereof.
"PERSON" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"PRINCIPAL PARTY" shall have the meaning set forth in Section 13(b)
hereof.
"PURCHASE PRICE" shall have the meaning set forth in Section 7(b)
hereof.
"RECORD DATE" shall have the meaning set forth in the recitals to
this Agreement.
"REDEMPTION DATE" shall have the meaning set forth in Section 7(a)
hereof.
"REDEMPTION PRICE" shall have the meaning set forth in Section 23(a)
hereof.
"RIGHT" shall have the meaning set forth in the recitals to this
Agreement.
"RIGHTS AGENT" shall have the meaning set forth in the recitals to
this Agreement.
"RIGHTS CERTIFICATE" shall have the meaning set forth in Section 3(a)
hereof.
"SECTION 11(A)(II) EVENT" shall mean any event described in Section
11(a)(ii)(A), (B) or (C) hereof.
"SECTION 11(A)(II) TRIGGER DATE" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"SECTION 13 EVENT" shall mean any event described in clause (x), (y)
or (z) of Section 13(a) hereof.
"SECTION 24(A) EXCHANGE RATIO" has the meaning set forth in Section
24(a) hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARES ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such, or such
earlier date as a majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.
"SPREAD" shall have the meaning set forth in Section 11(a)(iii)
hereof.
"SUBSIDIARY" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
"SUMMARY OF RIGHTS" shall have the meaning set forth in Section 3(b)
hereof.
"TRADING DAY" shall have the meaning set forth in Section 11(d)(i)
hereof.
"TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
be the holders of Common Stock) 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) Until the earlier of (i) the Close of Business on the Shares
Acquisition Date and (ii) the Close of Business on the tenth Business Day (or
such later date as may be determined by action of the Company's Board of
Directors prior to such time as any Person becomes an Acquiring Person and of
which the Company will give the Rights Agent prompt written notice) after the
date that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any
successor rule or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Company Common
Stock then outstanding (the earlier of (i) and (ii) above being the
"DISTRIBUTION DATE"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for shares of Common
Stock registered in the names of the holders thereof (which certificates shall
also be deemed to be Rights Certificates) and not by separate Rights
Certificates, and (y) the right to receive Rights Certificates will be
transferable only in connection with the transfer of shares of Common Stock. As
soon as practicable after the Distribution Date, the Company will notify the
Rights Agent thereof and 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 and at the expense of the Company, send) by
first-class, insured, postage-prepaid mail, to each record holder of shares of
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Rights
Certificate, in substantially the form of Exhibit A hereto (a "RIGHTS
CERTIFICATE"), evidencing one Right for each share of Common Stock so held. As
of the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Shares of Common
Stock, in substantially the form of Exhibit B hereto (the "SUMMARY OF RIGHTS"),
by first-class, postage-prepaid mail, to each record holder of shares of Common
Stock as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to certificates for
shares of Common Stock outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates registered in the names
of the holders thereof together with a copy of the Summary of Rights. Until the
Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any certificate for shares of Common Stock outstanding on the Record
Date, with or without a copy of the Summary of Rights attached thereto, shall
also constitute the transfer of the Rights associated with the shares of Common
Stock represented thereby.
(c) Rights shall be issued in respect of all shares of Common Stock
issued or disposed of (including, without limitation, upon disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the earlier
of the Distribution Date and the Expiration Date, or in certain circumstances
provided in Section 22 hereof, after the Distribution Date. Certificates issued
for Common Stock (including, without limitation, upon transfer of outstanding
Common Stock, disposition of Common Stock out of treasury stock or issuance or
reissuance of Common Stock out of authorized but unissued shares) after the
Record Date but prior to the earlier of the Distribution Date and the Expiration
Date, or in certain circumstances provided in Section 22 hereof, after the
Distribution Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement
between Delcath
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Systems, Inc. (the "Company") and American Stock Transfer &
Trust Company, as Rights Agent, dated as of October 30,
2001 and as amended from time to time (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances, as set forth
in the Rights Agreement, Rights owned by or transferred to
any Person who is or becomes an Acquiring Person (as
defined in the Rights Agreement) and certain transferees
thereof will become null and void and will no longer be
transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Stock which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall
not affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or transaction reporting system on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates shall entitle the holders thereof to purchase one share of Common
Stock at the price per share set forth therein, but the number of shares of
Common Stock shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e) hereof shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person, as such
6
terms are defined in the Rights Agreement between Delcath
Systems, Inc. and American Stock Transfer & Trust Company,
as Rights Agent, dated as of October 30, 2001 (the "Rights
Agreement"). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights
Agreement.
Notwithstanding this paragraph 4(b), the omission of a legend shall
not affect the enforceability of any part of this Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board or its President, either manually or by
facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual 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 office designated for such purpose, 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 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 4(b), 7(e) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate or
Rights Certificates may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase a like number of shares of Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Rights Certificates to be transferred, split up, combined
or exchanged at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 4(b), 7(e) and 14 hereof, 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 tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
7
(b) Subject to the provisions of this Agreement, at any time after
the Distribution Date and prior to the Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and, at the Company's request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if mutilated, the
Company will make and deliver a new Rights Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Except as provided in Sections 7(e) and 23(c), the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each share of
Common Stock (or other securities, cash or other assets, as the case may be) as
to which the Rights are exercised, at or prior to the earliest of (i) the Close
of Business on October 30, 2011 (the "FINAL EXPIRATION DATE"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the "REDEMPTION
DATE"), or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof (the earlier of (i), (ii) and (iii) being the "EXPIRATION
DATE").
(b) The Purchase Price for each share of Common Stock pursuant to the
exercise of a Right shall initially be $5.00, shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in accordance with paragraph (c)
below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the number of shares of Common Stock (or other
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder of
such Rights Certificate in accordance with Section 9 hereof in cash, or by
certified check or cashier's check payable to the order of the Company, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the Common Stock (or make available, if
the Rights Agent is the transfer agent for the Common Stock) a certificate or
certificates for the number of shares of Common Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the total number of
shares of Common Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent a depositary receipt or
depositary receipts representing such number of shares of Common Stock as are to
be purchased (in which case certificates for the shares of Common Stock
represented by such receipt or receipts shall be deposited by the transfer agent
with the depositary agent) and the Company hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and (iv) when appropriate, after receipt
thereof, deliver such cash to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing a number of Rights equivalent to the number of Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Rights Certificate or to such registered holder's duly authorized assigns,
subject to the provisions of Section 14 hereof.
8
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Triggering Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such,
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e) or
(iv) any subsequent transferee shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or to any other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or any of such Acquiring Person's Affiliates, Associates or
transferees hereunder.
(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 contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF 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 cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON STOCK.
(a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available out of and to the extent of
its authorized and unissued shares of Common Stock or any shares of Common Stock
held in its treasury, not reserved for another purpose, that will be sufficient
to permit the exercise in full of all outstanding Rights. Upon the occurrence of
any events resulting in an increase in the aggregate number of shares of Common
Stock (or other equity securities of the Company) issuable upon exercise of all
outstanding Rights above the number then reserved, the Company shall make
appropriate increases in the number of shares so reserved.
(b) If the shares of Common Stock to be issued and delivered upon the
exercise of the Rights are at any time listed on a national securities exchange
or included for quotation on any transaction reporting system, the Company shall
during the period from the Distribution Date to the Expiration Date use its best
efforts to cause 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.
9
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities 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 requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the Expiration Date. The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the 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, or an exemption therefrom shall be available and until a
registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock (and,
following the occurrence of a Triggering Event, any other securities that may be
delivered upon exercise of Rights) shall, at the time of delivery of the
certificates for such shares of Common Stock or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
or of any shares of Common Stock 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 Rights Certificates to a person other
than, or the issuance or delivery of certificates or depositary receipts for
shares of Common Stock in a name other than that of, the registered holder of
the Rights Certificate evidencing Rights surrendered for exercise or to issue or
to deliver any certificates or depositary receipts for shares of Common Stock
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
SECTION 10. COMMON STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Common Stock (or, following the occurrence of a
Triggering Event, other securities) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the shares of
Common Stock (or, following the occurrence of a Triggering Event, other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Common Stock (or, following the occurrence of a
Triggering Event, other securities) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Common Stock transfer books of the Company are open; provided further,
however, that if delivery of shares of Common Stock is delayed pursuant to
Section 9(c), such Persons shall be deemed to have become the record holders of
such shares of Common Stock only when such shares of Common Stock first become
deliverable. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a stockholder of
the Company with respect to securities 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. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a holder
of a share of Common Stock 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.
10
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
AND NUMBER OF RIGHTS. The Purchase Price, the number and kinds of securities
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Stock payable in shares of
Common Stock, (B) subdivide the outstanding shares of Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares of Common Stock or
(D) issue any shares of its capital stock in a reclassification of the Common
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 Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Rights exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Rights had been exercised immediately prior to such date and at a time when the
Common Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), 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 (A)
any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at
any time after the date of this Agreement, directly or indirectly, shall (1)
merge into the Company or otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of such merger or combination
and shares of Company Common Stock shall remain outstanding and unchanged, (2)
in one transaction or a series of transactions, transfer any assets to the
Company or any of its Subsidiaries in exchange (in whole or in part) for shares
of Company Common Stock, for other equity securities of the Company or any such
Subsidiary, or for securities exercisable for or convertible into shares of
equity securities of the Company or any of its Subsidiaries (whether shares of
Company Common Stock or otherwise) or otherwise obtain from the Company or any
of its Subsidiaries, with or without consideration, any additional shares of
such equity securities or securities exercisable for or convertible into such
equity securities other than pursuant to a pro rata distribution to all holders
of shares of Company Common Stock, (3) sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the Company or any of
its Subsidiaries or any employee benefit plan maintained by the Company or any
of its Subsidiaries or any trustee or fiduciary with respect to such plan acting
in such capacity, assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary or plan than those that could have
been obtained in arm's-length negotiations with an unaffiliated third party,
other than pursuant to a transaction set forth in Section 13(a) hereof, (4)
sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise acquire
or dispose of, in one transaction or a series of transactions, to, from or with
the Company or any of its Subsidiaries or any employee benefit plan maintained
by the Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such plan acting in such capacity (other than transactions, if any,
consistent with those engaged in, as of the date hereof, by the Company and such
Acquiring Person or such Associate or Affiliate), assets (including securities
or intangible assets) having an aggregate fair market value of more than
$250,000, other than pursuant to a transaction set forth in Section 13(a)
hereof, (5) receive, or any designee, agent or representative of such Acquiring
Person or any Affiliate or Associate of such Acquiring Person shall receive, any
compensation from the Company or any of its Subsidiaries other than compensation
for full-time employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (6) receive the benefit,
directly or indirectly (except proportionately as a holder of shares of Company
Common Stock or as required by law or governmental regulation), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax
11
advantages provided by the Company or any of its Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries or any trustee
or fiduciary with respect to such plan acting in such capacity; or (B) any
Person shall become an Acquiring Person, unless the event causing the Person to
become an Acquiring Person is a transaction set forth in Section 13(a); or (C)
during such time as there is an Acquiring Person, there shall be any
reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the Company
with any of its Subsidiaries or any other transaction or series of transactions
involving the Company or any of its Subsidiaries, other than a transaction or
transactions to which the provisions of Section 13(a) apply (whether or not with
or into or otherwise involving an Acquiring Person), which has the effect,
directly or indirectly, of increasing by more than 1% the proportionate share of
the outstanding shares of any class of equity securities of the Company or any
of its Subsidiaries that is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any Acquiring Person;
then promptly following the occurrence of an event described in Section
11(a)(ii)(A), (B) or (C) (a "SECTION 11(A)(II) EVENT"), proper provision shall
be made so that (I) the Purchase Price shall be adjusted to be the Purchase
Price in effect immediately prior to the Section 11(a)(ii) Event multiplied by
the number of shares of Common Stock for which a Right was exercisable
immediately prior to such Section 11(a)(ii) Event, whether or not such Right was
then exercisable, and (II) each holder of a Right, (except as set forth in
paragraph 7(e) above), shall thereafter have the right to receive, upon exercise
thereof at a price equal to the Purchase Price (as so adjusted), in accordance
with the terms this Agreement and in lieu of shares of Common Stock, such number
of shares of Common Stock as shall equal the result obtained by dividing the
Purchase Price (as so adjusted) by 50% of the current per share market price
(determined pursuant to Section 11(d) hereof) for shares of Common Stock on the
date of such Triggering Event, subject to further adjustment as provided herein
(such number of shares of Common Stock being hereinafter referred to as the
"ADJUSTMENT SHARES").
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's 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, or if any necessary
regulatory or other approval for such issuance has not been obtained by the
Company, the Company shall, in lieu of issuing shares of Common Stock in
accordance with Section 11(a)(ii) hereof: (A) determine the excess (the
"SPREAD") of (1) the value of the shares of Common Stock issuable upon the
exercise of a Right (the "CURRENT VALUE") over (2) the Purchase Price (as
adjusted in accordance with the foregoing subparagraph (ii)) and (B) with
respect to each Right (other than the Rights which have become void pursuant to
paragraph 7(e) above), make adequate provision to substitute for such shares of
Common Stock, upon exercise of the Rights, (1) cash, (2) a reduction in the
Purchase Price, (3) other equity securities of the Company (including, without
limitation, shares or units of shares of any series of capital stock which the
Board of Directors of the Company has deemed to have the same value as the
shares of Common Stock (such shares or units of capital stock are herein called
"COMMON STOCK EQUIVALENTS")), except to the extent that the Company has not
obtained any necessary regulatory approval for such issuance, (4) debt
securities of the Company, except to the extent that the Company has not
obtained any necessary regulatory approval for such issuance, (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 based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors of the Company;
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
later of (x) occurrence of a Section 11(a)(ii) Event, and (y) the date on which
the Company's right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "SECTION 11(A)(II) TRIGGER
DATE"), then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price, shares
of Common Stock (to the extent available), except to the extent that the Company
has not obtained any necessary regulatory or other approval for such issuance,
and then, if necessary cash, which shares and/or cash have an aggregate value
equal to the Spread. If, upon the occurrence of the Section 11(a)(ii) Trigger
Date the Board of Directors shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then, if the Board of
12
Directors so elects, the thirty (30) day period set forth above may be extended
to the extent necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval
for the authorization of such additional shares (such thirty (30) day period, as
it may be extended, is herein called the "SUBSTITUTION PERIOD"). To the extent
that the Company determines that some action needs to be taken pursuant to the
second and/or third sentence of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 11(a)(ii) hereof and the last sentence of this
Section 11(a)(iii) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such second sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the shares of
Common Stock shall be the current per share market price (as determined pursuant
to Section 11(d)) on the Section 11(a)(ii) Trigger Date and the per share or
fractional value of any common stock equivalent shall be deemed to equal the
current per share market price of the Common Stock. The Board of Directors of
the Company may, but shall not be required to, establish procedures to allocate
the right to receive shares of Common Stock upon the exercise of the Rights
among holders of Rights pursuant to this Section 11(a)(iii).
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of shares of Common Stock
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase shares of Common Stock (or shares having the
same rights, privileges and preferences as the Common Stock ("EQUIVALENT COMMON
STOCK")) or securities convertible into shares of Common Stock or equivalent
common stock at a price per share of Common Stock or equivalent common stock (or
having a conversion price per share, if a security convertible into shares of
Common Stock or equivalent common stock) less than the then current per share
market price of a share of Common Stock (as determined pursuant to Section
11(d)) on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock and/or equivalent common stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock and/or
equivalent common stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Shares of
Common 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 Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of shares of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend) assets (other than a dividend payable in shares
of Common Stock but including any dividend payable in equity securities other
than Common Stock) or subscription rights or warrants (excluding those referred
to in Section 11(d) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price (as determined pursuant to
Section 11(d)) of the Common Stock on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall
13
be described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holder of rights) of the cash, assets or evidences of
indebtedness to be distributed or of such subscription rights or warrants
distributable in respect of a share of Common Stock and the denominator of which
shall be such current per share market price (as determined pursuant to Section
11(d)) of a share of Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the "CURRENT PER
SHARE MARKET PRICE" of any security (a "SECURITY" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the "CURRENT PER SHARE MARKET
PRICE" of the Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares, or (B) any subdivision, combination or reclassification of such Security
and prior to the expiration of thirty (30) Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "CURRENT PER
SHARE MARKET PRICE" shall be appropriately adjusted to reflect the current
market price per share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the Nasdaq
SmallCap Market System ("NASDAQ") or, if the Security is not listed or admitted
to trading on the NASDAQ, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
NASDAQ or such other system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. If on any such date
no market maker is making a market in the Security, the "CURRENT PER SHARE
MARKET PRICE" of such Security on such date as determined in good faith by the
Board of Directors of the Company as provided for above shall be used. The term
"TRADING DAY" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "CURRENT PER
SHARE MARKET PRICE" of the Common Stock shall be determined in accordance with
the method set forth in Section 11(d)(i). If the "CURRENT PER SHARE MARKET
PRICE" of the Common Stock cannot be determined in the manner provided above or
if the Common Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the "CURRENT PER SHARE MARKET
PRICE" of the Common Stock shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest one-hundredth of a share of Common Stock.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the Expiration Date.
14
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) hereof, the holder of any Rights thereafter exercised shall become
entitled to receive any shares of capital stock of the Company or another entity
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Rights and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained in Section 11(a), (b),
(c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Common Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares of Common Stock
(calculated to the nearest one-hundredth of a share of Common Stock) obtained by
dividing (i) the product obtained by multiplying (x) the number of shares of
Common Stock covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price by, (ii) the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Common 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 shares of Common 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 one-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be at least
ten 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(i), 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 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
to be so distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Common Stock issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share or other measure and the number of shares
of Common Stock or other securities which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of shares of Common
Stock of any other shares of capital stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable number of shares of Common Stock or such other
shares of capital stock at such adjusted Purchase Price.
15
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Rights exercised after such record date
of that number of shares of Common Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the shares of
Common Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) upon the occurrence
of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Common Stock, (ii)
issuance wholly for cash of any shares of Common Stock at less than the current
market price, (iii) issuance wholly for cash of Common Stock or securities which
by their terms are convertible into or exchangeable for Common Stock, (iv)
dividends on Common Stock payable in Common Stock or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of shares of Common Stock shall not be taxable to such
stockholders.
(n) The Company shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if (x)
at the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
Person which constitutes, or would constitute the "Principal Party" for purposes
of Section 13(a) shall have distributed or otherwise transferred to its
stockholders or other persons holding an equity interest in such Person Rights
previously owned by such Person or any of its Affiliates and Associates;
provided, however, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 26, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) 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 outstanding shares of Common Stock payable in shares of Common Stock
or (ii) effect a subdivision, combination or consolidation of the Common Stock
(by reclassification or otherwise than by payment of dividends in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in
any such case the number of Rights associated with each share of Common Stock
then outstanding, or issuable or deliverable thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each such share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction, the numerator of
which is the total number of shares of Common Stock outstanding immediately
before such
16
event and the denominator of which is the total number of shares of Common Stock
outstanding immediately after such event. The adjustments provided for in this
Section 11(p) shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the shares of
Common 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 hereof.
Notwithstanding the foregoing sentence, the failure by 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. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment
contained therein and shall not be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) Except as provided in Section 13(b) hereof, in the event that,
following a Shares Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
and the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)) shall consolidate with the
Company, 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 shares of
Common Stock shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer) to any Person or Persons (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), in one or more transactions,
directly or indirectly, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole),
(any such event being a "SECTION 13 EVENT"), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e), shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price, and in accordance with the terms
hereof, such number of validly authorized and issued, fully paid, non-assessable
and freely tradeable shares of Common Stock of the Principal Party (as such term
is hereinafter defined), which shares shall not be subject to any liens,
encumbrances, rights of first refusal, transfer restrictions or other adverse
claims, as shall be equal to the result obtained by dividing the then current
Purchase Price (which, following the direct occurrence of a Section 13 Event,
shall be the "PURCHASE PRICE" for all purposes of this Agreement) by 50% of the
current per share market price (determined pursuant to Section 11(d)) of the
shares of Common Stock of such Principal Party on the date of consummation of
such Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "COMPANY"
shall, for all purposes of this Agreement, thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; (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 connection with the consummation of any such transaction as may
be necessary to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; (v) the provisions of Section 11(a)(ii) shall be of no
further effect following the first occurrence of any Section 13 Event; (vi) the
Purchase Price (as theretofore adjusted) and number of shares of Common Stock of
such Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with paragraph 11(f) hereof to
reflect any changes occurring in respect of the Common Stock of such Principal
Party after the occurrence of such Section 13 Event; and (vii) upon any
subsequent occurrence of any consolidation, merger, sale or transfer of assets
or other extraordinary
18
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Purchase Price as provided in this Section 13(a), such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had such holder, at the time of such transaction, owned the Common Stock
of the Principal Party receivable upon the exercise of a Right pursuant to this
Section 13(a) and such Principal Party shall take all steps as may be necessary
to permit the subsequent exercise of the Rights in accordance with the terms
hereof for such cash, shares, rights and other property.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of any
securities into which shares of Company Common Stock are converted in such
merger or consolidation, or, if there is more than one such issuer, the issuer
of shares of Common Stock that has the highest aggregate current market price
(determined pursuant to Section 11(d)) and (B) if no securities are so issued,
the Person that is the other party to such merger or consolidation, or, if there
is more than one such Person, the Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to Section 11(d));
and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
largest 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 transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the Common Stock of which has the highest aggregate
current market price (determined pursuant to Section 11(d)); provided, however,
that in any such case, (1) if the Common Stock of such Person is not at such
time and has not been continuously over the preceding twelve-month period
registered under Section 12 of the Exchange Act ("REGISTERED COMMON STOCK"), or
such Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock outstanding,
"Principal Party" shall refer to such other Person; (2) if the Common Stock of
such Person is not Registered Common Stock or such Person is not a corporation,
and such Person is a direct or indirect Subsidiary of another Person but is not
a direct or indirect Subsidiary of another Person which has Registered Common
Stock outstanding, "PRINCIPAL PARTY" shall refer to the ultimate parent entity
of such first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Stock outstanding, "PRINCIPAL PARTY"
shall refer to whichever of such other Persons is the issuer of the Registered
Common Stock having the highest aggregate current per share market price
(determined pursuant to Section 11(d)); and (4) if the Common Stock of such
Person is not Registered Common Stock or such Person is not a corporation, and
such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons has Registered Common Stock outstanding, "PRINCIPAL
PARTY" shall refer to whichever ultimate parent entity is the corporation having
the greatest stockholders' equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable following
the execution of such agreement, a registration statement under the Securities
Act with respect to the shares of Common Stock that may be acquired upon
exercise of the Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the
18
Expiration Date, and (C) as soon as practicable following the execution of such
agreement take such action as may be required to ensure that any acquisition of
such shares of Common Stock upon the exercise of the Rights complies with any
applicable state securities or "blue sky" laws;
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all respects
with the requirements for registration on Form 10 under the Exchange Act;
(iii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the New York Stock Exchange or
on another national securities exchange, to list or admit to trading (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on the New York Stock Exchange or such securities exchange, or, if
the Common Stock of the Principal Party shall not be listed or admitted to
trading on the New York Stock Exchange or a national securities exchange, to
cause the Rights and the securities receivable upon exercise of the Rights to be
authorized for quotation on NASDAQ or on such other system then in use; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock or other securities of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or Bylaws 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 current
market price per share (determined pursuant to Section 11(d)) or securities
exercisable for, or convertible into, shares of Common Stock of such Principal
Party at less than such then current marker price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the shares 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 cancelled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
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. In lieu of
such fractional Rights, there shall be paid to the registered holders 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 current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NASDAQ or, if the Rights are
not listed or admitted to trading on the NASDAQ, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted
19
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Directors. If on any
such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board of Directors
of the Company shall be used.
(b) The Company shall not be required to issue fractions of Common
Stock upon exercise of the Rights or to distribute certificates which evidence
fractional Common Stock. Fractions of shares of Common Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, however, that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of Common Stock represented by such
depositary receipts. In lieu of fractional shares of Common Stock, the Company
shall pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Common Stock as determined
pursuant to Section 11(d).
(c) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Common Stock); and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, a certificate
representing shares of 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 a certificate representing shares of Common Stock), may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of shares of the Company's 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) subject to Sections 6(a) and 7(f) hereof, 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
20
(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
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
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 the shares of Common Stock
or any other securities of the Company which may at any time be issuable upon
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. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, or willful misconduct on the part of the Rights Agent, for any
action taken, suffered or omitted by the Rights Agent in connection with the
execution, acceptance and administration of this Agreement and the exercise and
performance hereunder of its duties, including the costs and expenses of
defending against and appealing any claim of liability in the premises. The
indemnity provided herein shall survive the termination of this Agreement and
the expiration of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company.
The Rights Agent may conclusively rely upon and shall be protected
and shall incur no liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this Agreement and the
exercise and performance of its duties hereunder in reliance upon any Rights
Certificate or certificate for shares of Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof. Notwithstanding anything in this Agreement to the contrary,
in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage and regardless of the form of the action.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer or corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt
21
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 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 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; and 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; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel of its choice (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.
(b) Whenever in the administration, exercise and performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive Officer, the
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken, suffered or omitted in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the 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 liability or
responsibility in respect of the legality, validity or enforceability of this
Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the legality, validity or enforceability
or the execution of any Rights Certificate (except its countersignature thereof
and has actual knowledge of such change or adjustment); nor shall it be liable
or responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after receipt
of the certificate described in Section 12 hereof or has actual knowledge of
such change or adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
shares of Common Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Common Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable.
22
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the administration, exercise and performance of its
duties hereunder from any one of the Chairman of the Board, the Chief Executive
Officer, the President, the Secretary or the Treasurer of the Company, and to
apply to such officers for advice or instructions in connection with its duties,
and it shall not be responsible or liable for any action taken, suffered or
omitted by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or such omission shall be effective. The
Rights Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall not be less
than five (5) Business Days after the date any officer of the Company actually
received such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
the Rights Agent in good faith believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, the
certification on the form of assignment or form of election to purchase, as the
case may be, that the Rights evidenced by the Rights Certificate are not owned
by an Acquiring Person, or an Affiliate or Associate thereof, has either not
been completed or in any manner indicates any other response thereto, the Rights
Agent shall not take any further action with respect to such requested exercise,
transfer, split up, combination or exchange, without first consulting with the
Company.
(l) The Rights Agent shall not be required to take notice or be
deemed to have any notice of any fact, event or determination (including,
without limitation, any dates or events defined in this Agreement or the
designation of any Person as an Acquiring Person, Affiliate or Associate) under
this Agreement unless and until the Rights Agent shall be specifically notified
in writing by the Company of such fact, event or determination.
23
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the Common Stock (as
to which the Rights Agent has received prior written notice) by registered or
certified mail, and the Company shall mail notice thereof to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock (as to which the Rights Agent has received
prior written notice) by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, authorized under such laws to exercise corporate trust
or stock transfer powers, and subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock 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.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this 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 Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the Expiration Date,
the Company (a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee benefit plan or
arrangement or upon the exercise, conversion or exchange of securities of the
Company currently outstanding or issued at any time in the future by the Company
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued and this sentence
shall be null and void if, and to the extent that, such issuance or this
sentence would create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued or would create a significant risk of or result in such options' or
employee plans' or arrangements' failing to qualify for otherwise available
special tax treatment and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
24
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Company may, at its option, upon approval by the Board of
Directors of the Company, at any time prior to the earlier of (i) the Shares
Acquisition Date or (ii) the Final Expiration Date redeem all but not less than
all of the then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"), and the Company may, at its
option, pay the Redemption Price either in cash, shares of Common Stock (based
on the current per share market price thereof (as determined pursuant to Section
11(d) hereof) at the time of redemption), or any other form of consideration
deemed appropriate by the Board of Directors. The redemption of the Rights by
the Board of Directors of the Company may be made effective at such time on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and shall mail a notice of redemption to all the holders of
the then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of shares of Common Stock prior to the Distribution Date.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable pursuant to Section 7(a) at any
time when the Rights are redeemable hereunder.
SECTION 24. EXCHANGE.
(a) The Company, at its option, upon approval by the Board of
Directors of the Company, at any time after any Person becomes an Acquiring
Person, may exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for shares of Common Stock at an exchange ratio equal to
one Share of Common Stock per Right (subject to adjustment to reflect stock
splits, stock dividends and similar transactions occurring after the date
hereof), at the election and in the sole discretion of the Board of Directors or
the Company, either (i) that number obtained by dividing the Purchase Price by
the then current per share market price per share of Common Stock on the earlier
of (A) the date on which any Person becomes an Acquiring Person or (B) the date
on which a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity) is first published or sent or given within the meaning
of Rule 14d-4(a) of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding or (ii) one share of Common Stock
per Right (such exchange ratio being hereinafter referred to as the "Section
24(a) Exchange Ratio"). Notwithstanding the foregoing, the Company may not
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the Company
or any of its Subsidiaries, or any trustee or fiduciary with respect to such
plan acting in such capacity), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the shares of Common
Stock then outstanding.
25
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Section 24(a)
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of shares of Common Stock for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Common Stock which are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 24, the Company shall take all such action as may be necessary
to authorize additional shares of Common Stock for issuance upon exchange of the
Rights or make adequate provision to substitute (1) cash, (2) other equity
securities of the Company, (3) debt securities of the Company, (4) other assets,
or (5) any combination of the foregoing, having an aggregate value equal to the
Adjustment Spread, where such aggregate value has been determined by the Board
of Directors of the Company. To the extent that the Company determines that some
action need be taken pursuant to subsection (a) of this Section 24, the Board of
Directors may temporarily suspend the exercisability of the Rights for a period
of up to sixty (60) days following the date on which the event described in
Section 24(a) shall have occurred, in order to seek any authorization of
additional shares of Common Stock or other securities 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.
(d) The Company shall not be required to issue fractions smaller than
or to distribute certificates which evidence fractions smaller than one share of
Common Stock. In lieu thereof, the Company shall pay to the registered holders
of the Rights Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value (as determined pursuant to Section 11(d)(i) hereof) of one
share of Common Stock.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock (other than a regular quarterly
cash dividend), (ii) to offer to the holders of its Common Stock rights or
warrants to subscribe for or to purchase any additional shares of Common Stock
or shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding Common Stock),
(iv) to effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)), or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Stock payable in shares of Common Stock or to effect
a subdivision, combination or consolidation of the shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock), then, in each such case, the Company shall give to each holder of a
Rights Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
26
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common 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 ten (10) days prior to the record
date for determining holders of the shares of Common Stock for purposes of such
action, and in the case of any such other action, at least ten (10) days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Common Stock, whichever shall be the
earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a 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. In the event any Person becomes an Acquiring Person, the Company will
promptly notify the Rights Agent thereof.
SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or made
by the Rights Agent or by the holder of any 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:
Delcath Systems, Inc.
1100 Summer Street
Stamford, Connecticut 06905
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sent by registered or
certified mail and shall be deemed given upon receipt and addressed (until
another address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date, the Company may supplement or amend
this Agreement in any respect, without the approval of any holders of Rights, by
action of its Board of Directors, and the Rights Agent shall, if the Company so
directs and at the expense of the Company, execute such supplement or amendment.
From and after the Distribution Date, the Company may from time to time
supplement or amend this Agreement without the approval of any holders of
Rights, by action of its Board of Directors, in order (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, (iii) to shorten or
lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person), including, without limitation, to change the Purchase
Price, the Redemption Price, any time periods herein specified, and any other
term hereof, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent; provided, however, that from and
after such time as any
27
Person becomes an Acquiring Person, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights. Upon
receipt of a certificate from an appropriate officer of the Company that the
proposed supplement or amendment is consistent with this Section 27 and, after
such time as any Person has become an Acquiring Person, that the proposed
supplement or amendment does not adversely affect the interests of the holders
of Rights, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything in this Agreement to the contrary, no supplement or
amendment that changes the rights and duties of the Rights Agent under this
Agreement will be effective against the Rights Agent without the execution of
such supplement or amendment by the Rights Agent.
SECTION 28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors, or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing), which are done or made by the
Board of Directors in good faith, shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights Certificates and all
other parties and (y) not subject the Board of Directors to any liability to the
holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, shares of
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, shares of Common Stock).
SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the tenth Business Day following the date of such
determination by the Board of Directors of the Company.
28
SECTION 32. GOVERNING LAW.
This 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 in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several sections of this Agreement are
inserted or convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
DELCATH SYSTEMS, INC. AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Rights Agent
By: By:
----------------------------- ----------------------------
Its: Its:
----------------------------- ----------------------------
29
Exhibit A
Form of Rights Certificate
Certificate No. R ___
_____ Rights
NOT EXERCISABLE AFTER OCTOBER 30, 2011 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION
OF THE COMPANY AT $0.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN SUBSEQUENT HOLDERS OF
SUCH RIGHTS WILL BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY HAVE BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SUCH AGREEMENT.]1
Rights Certificate
DELCATH SYSTEMS, 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 October 30, 2001, as the same may amended from time to
time in accordance with its terms (the "RIGHTS AGREEMENT"), between Delcath
Systems, Inc., a Delaware corporation (the "COMPANY"), and American Stock
Transfer & Trust Company, a New York banking corporation, as Rights Agent (the
"RIGHTS AGENT"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.,
Delaware time, on October 30, 2011 at the office or agency of the Rights Agent
designated for such purpose, or at the office of its successor as Rights Agent,
one fully paid non-assessable share of Common Stock, par value $0.01 per share
(the "COMMON STOCK") of the Company, at a purchase price of $5.00 per share of
Common Stock (the "PURCHASE PRICE"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of shares
of Common Stock which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
November 14, 2001 based on the Common Stock as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of shares of
Common 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.
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned office or agency of the Rights Agent. The
Company will mail to the holder of the Rights Certificates a copy of the Rights
Agreement, without charge, after receipt of a written request therefor.
- --------
1 The portion of the legend in bracket shall be inserted only if applicable and
shall replace the preceding sentence.
1
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Common 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 $0.01 per Right or (ii) may be exchanged in whole or in part for shares
of the Company's Common Stock, $0.01 par value per share, or other securities,
debt instruments or assets of the Company.
No fractional shares of Common Stock will be issued upon the exercise
of any Rights or Rights evidenced hereby, but in lieu thereof a cash payment
will 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 shares of
the Common Stock or of any other securities of the Company which may at any time
be issuable on the exercise or exchange hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights or Rights evidenced by this Rights
Certificate shall have been exercised or exchanged for shares of stock having
such rights 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 signature of the proper officers of the Company and its
corporate seal. Dated as of _______________, _____.
DELCATH SYSTEMS, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
ATTEST:
- -------------------------------
Name:
Title:
Countersigned:
, as Rights Agent
- -------------------------------
By:
-------------------------------------
Authorized Signatory
2
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 Certificate.)
FOR VALUE RECEIVED, _________________________ hereby sells, assigns
and transfers unto ___________________________________________________ (Please
print name and address of transferee) _____________ Rights represented by this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________________ as
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:__________________,
________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in a Securities
Transfer Association Inc. recognized signature guarantee medallion program.
CERTIFICATION
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________
Signature
NOTICE
The signature in the foregoing Form of Assignment must conform to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and such Assignment will not be honored.
1
FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE - CONTINUED
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate.)
To DELCATH SYSTEMS, INC.:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Rights Certificate to purchase the shares of Common Stock
(or other securities or property) issuable upon the exercise of such Rights and
requests that certificates for such Common Stock (or other securities) be issued
in the name of:
- --------------------------------------------------
(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 print name and address)
Dated: ___________________ , _____
Signature _______________________
Signature Guaranteed:
Signatures must be guaranteed by a participant in a Securities
Transfer Association Inc. recognized signature guarantee medallion program.
CERTIFICATION
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
_____________________________
Signature
NOTICE
The signature in the foregoing Form of Election to Purchase must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Election to Purchase, as the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights evidenced by this
Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Election to Purchase will
not be honored.
2
Exhibit B
DELCATH SYSTEMS, INC.
SUMMARY OF RIGHTS TO PURCHASE SHARES OF COMMON STOCK
On October 30, 2001, the Board of Directors of Delcath Systems, Inc.
(the "COMPANY") declared a dividend of one common stock purchase right (a
"RIGHT") for each outstanding share of Common Stock (the "COMMON STOCK"), par
value $0.01 per share, of the Company. The dividend is payable on November 14,
2001 (the "RECORD DATE") to the stockholders of record on that date. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of October 30, 2001, as the same may be amended from time to time (the "RIGHTS
AGREEMENT"), between the Company and American Stock Transfer & Trust Company, as
Rights Agent (the "RIGHTS AGENT"). Set forth below is a summary of the Rights
and the Rights Agreement.
Each Right entitles the registered holder to purchase from the
Company one share of Common Stock, par value $0.01 per share of the Company at a
price of $5.00 per share of Common Stock (the "PURCHASE PRICE"), subject to
adjustment (or other securities or property of the Company, as described
herein).
Until the earlier to occur of (i) the close of business on the first
date of a public announcement that a person or group of affiliated or associated
persons (an "ACQUIRING PERSON") has acquired beneficial ownership of 15% or more
of the outstanding Common Stock or (ii) 10 business days (or such later date as
may be determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Common Stock (the earlier of such dates
being called the "DISTRIBUTION DATE"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate with a copy of the Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued upon transfer or new issuance of Common Stock
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock, even without such
notation or a copy of this Summary of Rights being attached thereto, will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("RIGHTS
CERTIFICATES") will be mailed to holders of record of the Common Stock as of the
Close of Business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on October 30, 2011 (the "FINAL
EXPIRATION DATE"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company, in each case as
described below.
The Purchase Price payable, and the number of shares of Common 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
Common Stock, (ii) upon the grant to holders of the shares of Common Stock of
certain rights or warrants to subscribe for or purchase shares of Common Stock
at a price, or securities convertible into shares of Common Stock with a
conversion price, less than the then current market price of the Common Stock or
(iii) upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Common Stock) or of
subscription rights or warrants (other than those referred to above).
1
The number of outstanding Rights and the number of shares of Common
Stock issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in Common Stock or subdivisions, consolidations or combinations of
the Common Stock occurring, in any such case, prior to the Distribution Date.
In the event that, after the Rights become exercisable, the Company
is acquired in a merger or other business combination transaction with an
Acquiring Person or an affiliate thereof, or 50% or more of its consolidated
assets or earning power are sold to an Acquiring Person or an affiliate thereof,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon exercise thereof at the then current exercise
price of the Rights, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the exercise price of the Rights.
In the event that any person or group of affiliated or associated
persons becomes the beneficial owner of 15% or more of the outstanding shares of
Common Stock, proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of Common Stock (or cash, other securities or property)
having a market value of two times the exercise price of the Rights.
At any time after the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 15% or more of the outstanding
shares of Common Stock and prior to the acquisition by such person or group of
50% or more of the outstanding Common Stock, the Board of Directors of the
Company may exchange all or part of the Rights (other than Rights owned by such
person or group, which have become void) for shares of Common Stock (or other
securities, assets or property) at an exchange ratio (subject to adjustment)
which shall equal, subject to adjustment to reflect stock splits, stock
dividends and similar transactions occurring after the date hereof, either (A)
that number obtained by dividing the Purchase Price by the then current per
share market price per share of Common Stock on the earlier of (i) the date on
which any Person becomes an Acquiring Person or (ii) the date on which a tender
or exchange offer is announced by any Person, if upon consummation thereof such
Person would be the Beneficial Owner of 15% or more of the shares of Company
Common Stock then outstanding or (B) one share of Common Stock per Right, as
determined by the Board of Directors in its sole discretion.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Common Stock will be issued and, in
lieu thereof, an adjustment in cash will be made based on the market price of
the Common Stock on the last trading day prior to the date of exercise.
At any time prior to the date that a person or group of affiliated or
associated persons acquire beneficial ownership of 15% or more of the
outstanding Common Stock, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right (the "Redemption
Price"). The redemption of the rights may be made effective at such time on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price. The Rights are also redeemable under
other circumstances as specified in the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights except that from
and after a Distribution Date no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends or other distributions.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors because the Rights may be redeemed by the Company at the
Redemption Price prior to the occurrence of a Distribution Date.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A, and
also as an Exhibit to a Current Report on Form 8-K. A copy of the Rights
Agreement is available free of charge from the Company. This summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is hereby incorporated herein by
reference.
2