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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 28, 1997
Date of earliest
event reported: February 14, 1997
Alexion Pharmaceuticals, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-27756 13-3648318
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(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
25 Science Park, New Haven, Connecticut 06511
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(Address of principal executive offices) (Zip Code)
(203) 776-1790
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On February 14, 1997 the Board of Directors of the Registrant declared
a dividend of one preferred stock purchase right (a "Right") for each
outstanding share of Common Stock, par value $.0001 per share (the "Common
Stock") of the Registrant. The Rights will be issued to the stockholders of
record on March 6, 1997 and will expire in ten years, subject to earlier
redemption. Under certain circumstances, each Right entitles the registered
holder to purchase from the Registrant one one-hundredth of a share of Junior
Participating Cumulative Preferred Stock, par value $1.00 per share ("Preferred
Stock"), of the Registrant or, in certain circumstances, either Common Stock or
common stock of an acquiring company at one-half the market price of such Common
Stock or common stock, as the case may be. The Rights are designed to make it
more likely that all the Registrant's stockholders receive fair and equal
treatment in the event of any proposed takeover of the Registrant and to guard
against the use of partial tender offers or other coercive tactics to gain
control of the Registrant. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Registrant and
Continental Stock Transfer & Trust Company, as Rights Agent (the "Rights
Agent").
Exercise Price
When exercisable, except as set forth below, each Right entitles the
registered holder to purchase from the Registrant one one-hundredth of a share
of Preferred Stock, at a price of $75.00 per one one-hundredth of a share (the
"Purchase Price"), subject to adjustment in certain circumstances.
Transfer and Detachment
Until the "Distribution Date", which is the earlier to occur of (i)
ten business days following the time (the "Stock Acquisition Date") of a public
announcement or notice to the Registrant that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial
ownership (as defined in the Rights Agreement) of 20% or more of the outstanding
shares of Common Stock of the Registrant (such 20% beneficial owner, an
"Acquiring Person"), or (ii) ten business days, or such later date as may be
determined by the Board of Directors of the Registrant, after the date of the
commencement or announcement by a person of an intention to make a tender offer
or exchange offer for an amount of Common Stock which, together with the shares
of such stock already owned by such person, constitutes 20% or more of the
outstanding shares of such Common Stock, the Rights will be evidenced, with
respect to any of the Registrant's Common Stock certificates outstanding as of
March 6, 1997, 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
Registrant's Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
new Common Stock certificates issued after March 6, 1997, upon the transfer or
issuance of new shares 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 the transfer of any
of the Registrant's Common Stock certificates outstanding as of March 6, 1997,
even without a copy of the Summary of Rights attached thereto, will also
constitute the transfer of the Rights associated with the shares of Common Stock
represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
Exercisability
The Rights are not exercisable until the Distribution Date. The Rights
will expire on March 6, 2003 unless earlier redeemed by the Registrant.
Right to Acquire Stock at Half Price
In the event that after the Stock Acquisition Date, the Registrant is
acquired in a merger or other business combination transaction or 50% or more of
the Registrant's assets, cash flow or earning power are sold or otherwise
transferred, the Rights Agreement provides that proper provision shall be made
so that each holder of a Right, upon the exercise thereof at the then current
exercise price of the Right, shall be entitled to receive that number of shares
of common stock of the acquiring company having a market value (as defined in
the Rights Agreement) of two times the exercise price of the Right. In the event
that the Registrant is the surviving corporation of a merger and its Common
Stock is changed or exchanged, proper provision shall be made so that each
holder of a Right will thereafter have the right to receive upon exercise that
number of shares of common stock of the other party to the transaction having a
market value of two times the exercise price of the Right.
In the event that a person or group becomes an Acquiring Person
(otherwise than pursuant to a tender offer or exchange offer for all outstanding
shares of Common Stock at a price and on terms which are determined to be fair
and in the best interests of the Registrant and its stockholders by a majority
of the members of the Board of Directors of the Registrant who are not Acquiring
Persons or representatives or nominees of or affiliated or associated with an
Acquiring Person), proper provision shall be made so that each holder of a
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Right, other than the Acquiring Person, whose Rights will thereafter be void,
will thereafter have the right to receive upon exercise that number of shares of
Common Stock having a market value (as defined in the Rights Agreement) of two
times the exercise price of the Right. A person or group will not be deemed to
be an Acquiring Person if the Board of Directors of the Registrant determines
that such person or group became an Acquiring Person inadvertently and such
person or group promptly divests itself of a sufficient number of shares of
Common Stock so that such person or group is no longer an Acquiring Person.
Adjustments
The Purchase Price payable and the number of shares of Preferred Stock
or other securities or property issuable upon the 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
shares of Preferred Stock, (ii) upon the fixing of a record date for the
issuance to holders of Preferred Stock of certain rights, options or warrants to
subscribe for shares of Preferred Stock or convertible securities at less than
the current market price of shares of Preferred Stock or (iii) upon the fixing
of a record date for the making of a distribution to holders of shares of
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends not exceeding 125% of the last regular periodic cash
dividend or dividends payable in shares of Preferred Stock) or of subscription
rights or warrants (other than those referred to above). The number of Rights
and the number of shares of Preferred Stock issuable upon exercise of each Right
are also subject to adjustment in the case of a stock split, combination or
stock dividend on the shares of Common Stock prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the 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 value of
shares of Common Stock on the last trading date prior to the date of exercise.
Redemption or Exchange
At any time prior to the earlier of (i) ten business days after the
Stock Acquisition Date and (ii) March 6, 2003, the Registrant, by resolution of
its Board of Directors, may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). If such resolution is adopted
following the Stock Acquisition Date, it will be effective only with the
concurrence of a majority of the members (the "Continuing Directors") of the
Board of Directors of the
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Registrant who are not Acquiring Persons or representatives or nominees of or
affiliated or associated with an Acquiring Person and who either were members of
such Board of Directors prior to the Stock Acquisition Date or subsequently
became a member and whose election thereto was approved by a majority of the
directors who were not Acquiring Persons or representatives or nominees of or
affiliated or associated with an Acquiring Person. The Board of Directors of the
Registrant may extend the time within which the Rights may be redeemed at any
time prior to the Stock Acquisition Date. Immediately upon the action of the
Board of Directors of the Registrant electing to redeem the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person of 50% or more of the outstanding Common Stock of
the Registrant, the Board of Directors of the Registrant, with the concurrence
of a majority of the Continuing Directors, may exchange the Rights (other than
Rights beneficially owned by such person which have become void), in whole or in
part, for Common Stock of the Registrant at an exchange ratio of one share of
Common Stock per Right (subject to adjustment).
Preferred Stock
The shares of Preferred Stock purchasable upon exercise of the Rights
will be nonredeemable and junior to any other series of preferred stock the
Registrant may issue (unless otherwise provided in the terms of such preferred
stock or in the Registrant's Certificate of Incorporation). Each share of
Preferred Stock will be entitled to receive, in the aggregate, a dividend in an
amount equal to 100 times the dividend per share of Common Stock, or, if
greater, $10.00 per year. In the event of liquidation, the holders of shares of
Preferred Stock will be entitled to receive a minimum liquidation payment equal
to the greater of $100.00 per share or an amount equal to 100 times the amount
to be paid in liquidation per share of Common Stock. Each share of Preferred
Stock will have 100 votes, voting together with the shares of Common Stock. In
addition, if dividends on the Preferred Stock are in arrears for four
consecutive quarterly payment periods, the holders of the shares of Preferred
Stock will have the right, voting as a class, to elect two members to the Board
of Directors of the Registrant. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 100 times the amount and type of
consideration received per share of Common Stock. The rights of the shares of
Preferred Stock as to dividends and liquidation, and in the event of mergers and
consolidations, are protected by antidilution provisions.
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Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Registrant, including, without limitation, the
right to vote or to receive dividends.
Amendment
The Rights and the Rights Agreement can be amended by the Board of
Directors of the Registrant in any respect (including, without limitation, any
extension of the period in which the Rights may be redeemed) at any time prior
to the Stock Acquisition Date. From and after such time, without the approval of
the stockholders of the Registrant or the holders of the Rights, the Board of
Directors may only supplement or amend the Rights Agreement in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained in the
Rights Agreement which may be defective or inconsistent with any other provision
in the Rights Agreement, (iii) to shorten or lengthen any time period under the
Rights Agreement or (iv) to make any changes or supplements which the Registrant
and the Rights Agent may deem necessary or desirable which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an affiliate or associate thereof). The Registrant may, at
any time prior to the Stock Acquisition Date, amend the Rights Agreement to
lower the threshold of Common Stock beneficial ownership at which a person will
become an Acquiring Person to not less than the greater of (i) a percentage
larger than the largest percentage of Common Stock then known by the Registrant
to be beneficially owned by a person and (ii) 10%.
Issuance of Rights
Each outstanding share of Common Stock on March 6, 1997 will receive
one Right. As long as the Rights are attached to the shares of Common Stock, the
Registrant will issue one Right with each share of Common Stock it issues, so
that all such shares have attached Rights. 120,000 shares of Preferred Stock
have been reserved for issuance upon exercise of the Rights.
A copy of the Rights Agreement, which includes as Exhibit B the form
of Right Certificate, is attached hereto as Exhibit 1 and is incorporated herein
by reference. The foregoing description of the Rights is qualified in its
entirety by reference to such Exhibit.
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ITEM 7. EXHIBITS
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(1) Rights Agreement between the Registrant and Continental Stock
Transfer & Trust Company, Rights Agent, dated as of February
14, 1997, which includes as Exhibit B the form of Right
Certificate.
(2) Form of a letter to the Registrant's stockholders.
(3) Press Release, dated February 18, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
ALEXION PHARMACEUTICALS, INC.
(Registrant)
By: /s/ Leonard O. Bell
---------------------------
Leonard O. Bell
President
DATE: February 18, 1997
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EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
- ----------- ----------- ----------
(1) Rights Agreement between the
Registrant and Continental Stock
Transfer & Trust Company, Rights
Agent, dated as of February 14,
1997, which includes as Exhibit B
the form of Right Certificate.
(2) Form of a letter to the
Registrant's stockholders.
(3) Press Release, dated February 18,
1997.
Exhibit 1
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ALEXION PHARMACEUTICALS, INC.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Rights Agent
------------------------
RIGHTS AGREEMENT
Dated as of February 14, 1997
================================================================================
TABLE OF CONTENTS
Section Page
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1. Certain Definitions............................................. 1
2. Appointment of Rights Agent..................................... 10
4. Form of Right Certificates...................................... 14
5. Countersignature and Registration............................... 16
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed Lost or Stolen Right
Certificates.................................................... 17
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.......................................................... 19
8. Cancellation and Destruction of Right Certificates.............. 23
9. Reservation and Availability of Capital Stock.................. 24
10. Preferred Stock Record Date..................................... 27
11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights............................................. 28
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power................................................... 47
14. Fractional Rights and Fractional Shares......................... 53
15. Rights of Action................................................ 56
16. Agreement of Right Holders...................................... 57
17. Right Certificate Holder Not Deemed a Shareholder............... 58
18. Concerning the Rights Agent..................................... 59
19. Merger or Consolidation or Change of Name of Rights
Agent........................................................... 60
20. Duties of Rights Agent.......................................... 61
21. Change of Rights Agent.......................................... 66
22. Issuance of New Right Certificates.............................. 68
23. Redemption...................................................... 69
i
23A. Exchange........................................................ 71
24. Notice of Certain Events........................................ 73
25. Notices......................................................... 75
26. Supplements and Amendments...................................... 76
27. Successors...................................................... 78
28. Determinations and Actions by the Board of Directors,
etc............................................................. 78
29. Benefits of this Agreement...................................... 80
30. Severability.................................................... 80
31. Governing Law................................................... 81
32. Counterparts.................................................... 81
33. Descriptive Headings............................................ 81
ii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 14, 1997 (the "Agreement"),
between Alexion Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
and Continental Stock Transfer & Trust Company, a New York corporation (the
"Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred stock purchase right ("Right") for each
share of Common Stock, par value $.0001 per share, of the Company outstanding at
the Close of Business on March 6, 1997 (the "Record Date"), each Right
representing the right to purchase one one-hundredth (1/100th) of a share of
Junior Participating Cumulative Preferred Stock, par value $1.00 per share, of
the Company having the rights and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A, and has further
authorized the issuance of one Right with respect to each share of Common Stock
of the Company that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Expiration Date and the Final Expiration
Date (as such terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 20% or more of the Common Stock of the Company then outstanding, but shall
not include (i) any employee benefit plan of the Company or any Subsidiary of
the Company or any Person organized, appointed or established by the Company or
such Subsidiary as a fiduciary for or pursuant to the terms of any such employee
benefit plan or (ii) any Person or Persons who are the Beneficial Owners of 20%
or more of the Common Stock of the Company then outstanding by virtue of
ownership of Common Stock of the Company by such Person's Affiliates and/or
Associates, which Affiliates and/or Associates are deemed to be Affiliates
and/or Associates solely by reason of each of them being members of either the
Board of Directors of the Company or of a slate of directors, proposed by
management, standing for election to such Board. Notwithstanding the foregoing,
(x) no Person shall become an "Acquiring Person" as a result of an acquisition
of Common Stock by the Company which, by reducing the number of shares of Common
Stock outstanding, increases the proportionate number of shares Beneficially
Owned by such Person to 20% or more of the Common Stock of the Company then
outstanding, provided, however, that if a Person shall become the Beneficial
Owner of 20% or more of the Common Stock of the Company by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Stock of the Company other
than as a direct or indirect result of any corporate
2
action taken by the Company, then such Person shall be deemed to be an
"Acquiring Person", and (y) if the Board of Directors of the Company determines
in good faith that a Person who would otherwise be an "Acquiring Person", as
defined pursuant to the foregoing provisions of this Section 1(a), has become
such inadvertently (including, without limitation, because (i) such Person was
unaware that it Beneficially Owned 20% or more of the Common Stock of the
Company or (ii) such Person was aware of the extent of such Beneficial Ownership
but such Person acquired Beneficial Ownership of such shares of Common Stock
without the intention to change or influence the control of the Company and
without actual knowledge of the consequences of such Beneficial Ownership under
this Rights Agreement), and such Person divests itself as promptly as
practicable of a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person", as defined pursuant to the foregoing
provisions of this Section 1(a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement. All questions as to
whether a Person who would otherwise be a Acquiring Person has become such
inadvertently shall be determined in good faith by the Board of Directors of the
Company, which determination shall be conclusive.
(b) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii).
(c) "Affiliate" and "Associate", when used with reference to any
Person, shall have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and
3
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the Record Date.
(d) 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, directly or indirectly, has the right to vote
or dispose of, including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report);
(ii) which such Person or any of such Person's Affiliates or
Associates has 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), or upon the exercise
of conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise, provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, (A) 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
4
Associates until such tendered securities are accepted for purchase or exchange,
or (B) securities issuable upon exercise of Rights at any time prior to the
occurrence of either a Section 11(a)(ii) Event or a Section 13 Event, or (C)
securities issuable upon exercise of Rights from and after the occurrence of
either a Section 11(a)(ii) Event or a Section 13 Event, which Rights were
acquired by such Person or any of such Person's Affiliates or Associates prior
to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights; 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) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in subparagraph (i) of
this paragraph (d) or disposing of any securities of the Company in a manner
that relates or is reasonably likely potentially to relate to influencing the
control or management of the Company; provided, however, that nothing in this
paragraph (d) shall cause a person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to beneficially own, any securities
acquired through such person's participation in good faith in a
5
firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(e) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(f) "Certificate of Designation" shall mean the Certificate of
Designation of Junior Participating Cumulative Preferred Stock setting forth the
powers, preferences, rights, qualifications, limitations and restrictions of
such series of preferred stock of the Company, a form of which is attached
hereto as Exhibit A.
(g) "Close of Business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(h) "Common Stock" when used with reference to the Company shall
mean the Common Stock, par value $.0001 per share, of the Company. "Common
Stock" when used with reference to any Person other than the Company which is
organized in corporate form shall mean the capital stock with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person, or, if such Person is a
Subsidiary of another Person, the capital stock with the greatest voting power
of the Person which ultimately controls such first-mentioned Person. "Common
Stock" when used with reference to
6
any Person which is not organized in corporate form shall mean units of
beneficial interest which (i) shall represent the right to participate generally
in the profits and losses of such Person (including, without limitation, any
flow-through tax benefits resulting from an ownership interest in such Person)
and which (ii) shall be entitled to exercise the greatest voting power of such
Person or, in the case of a limited partnership, shall have the power to remove
the general partner or partners.
(i) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii).
(j) "Company" shall have the meaning set forth in the first
paragraph of this Agreement.
(k) "Continuing Director" shall mean any member of the Board of
Directors of the Company (while such person is a member of such Board of
Directors) who is not an Acquiring Person, an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an Acquiring Person or of
any such Affiliate or Associate, and who either (i) was a member of such Board
of Directors prior to the Stock Acquisition Date or (ii) subsequently became a
member of such Board of Directors, and whose nomination for election or election
thereto was recommended or approved by a majority of the Continuing Directors
then on such Board of Directors.
(l) "Current Market Price" shall have the meaning set forth in
Section 11(d).
7
(m) "Current Value" shall have the meaning set forth in Section
11(a)(iii).
(n) "Distribution Date" shall have the meaning specified in Section
3(a).
(o) "Equivalent Preference Stock" shall have the meaning set forth
in Section 11(b).
(p) "Expiration Date" shall have the meaning specified in Section
7(a).
(q) "Final Expiration Date" shall have the meaning specified in
Section 7(a).
(r) "NASDAQ" shall have the meaning set forth in Section 11(d).
(s) "Outside Directors" shall have the meaning set forth in Section
11(a)(ii).
(t) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity, and shall include any successor (by merger
or otherwise) of such entity.
(u) "Preferred Stock" shall mean shares of Junior Participating
Cumulative Preferred Stock, par value $1.00 per share, of the Company, having
the rights, preferences and limitations set forth in the form of Certificate of
Designation attached to this Agreement as Exhibit A, and, to the extent there
are not a sufficient number of shares of Junior Participating Cumulative
Preferred Stock authorized to permit the full exercise of the then outstanding
Rights, any other series of preferred stock of the Company designated for such
purpose by the Board of
8
Directors of the Company containing terms substantially similar to the terms of
the Junior Participating Cumulative Preferred Stock.
(v) "Principal Party" shall have the meaning set forth in Section
13(b).
(w) "Purchase Price" shall have the meaning set forth in Section
4(a).
(x) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(y) "Redemption Price" shall have the meaning set forth in Section
23(a).
(z) "Right" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(aa) "Right Certificate" shall have the meaning set forth in Section
3(a).
(ab) "Rights Agent" shall have the meaning set forth in the first
paragraph of this Agreement.
(ac) "Section 11(a)(ii) Event" shall have the meaning set forth in
Section 11(a)(ii).
(ad) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii).
(ae) "Section 13 Event" shall have the meaning set forth in Section
13(a).
(af) "Spread" shall have the meaning set forth in Section
11(a)(iii).
(ag) "Stock Acquisition Date" shall mean the time of occurrence of
whichever of the following first occurs: (i) the
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first public announcement by the Company or an Acquiring Person that the
Acquiring Person has become such, or (ii) the communication to the Company
"including, without limitation, to the directors of the Company) of any notice
(including, without limitation, any written consent or notice related thereto)
from an Acquiring Person indicating or reflecting that the Acquiring Person has
become such.
(ah) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions are at the time beneficially owned, directly or indirectly, by such
Person or otherwise controlled by such Person.
(ai) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii).
(aj) "Summary of Rights" shall have the meaning set forth in Section
3(b).
(ak) "Trading Day" shall have the meaning set forth in Section
11(d).
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Stock of the Company) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
10
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable. Any actions which may be taken by the Rights
Agent pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent.
Section 3. Issue of Right Certificates.
(a) Until the earlier of the Close of Business on (i) the tenth
Business Day after the Stock Acquisition Date, or (ii) the tenth Business Day,
or such specified or unspecified later date as may be determined by action of
the Board of Directors of the Company, after the date of the commencement of (as
determined by reference to Rule 14d-2 (a), as now in effect under the Exchange
Act), or first public announcement of the intent 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 Person organized, appointed or
established by the Company or such Subsidiary as a fiduciary pursuant to the
terms of any such employee benefit plan) to commence (which intention to
commence remains in effect for five Business Days after such announcement), a
tender or exchange offer for an amount of Common Stock of the Company which,
together with the shares of such stock already owned by such Person, constitutes
20% or more of the outstanding Common Stock of the Company (including any such
date which is after the date of this Agreement and prior to the issuance of the
Rights) (the earlier of such dates described in clauses (i) and (ii) above being
herein referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions
11
of paragraph (b) of this Section 3) by the certificates for shares of Common
Stock registered in the names of the holders of Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for Rights) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of the underlying
Common Stock. As soon as practicable after the Distribution Date, the Rights
Agent will send, by first class, insured, postage-prepaid mail, to each record
holder 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 Right
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein and to the provisions of Section 14(a).
As of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for Common Stock
outstanding as of the Record Date, until the earlier of the Distribution Date or
the Expiration Date, the Rights will be evidenced by such certificates for
Common Stock
12
registered in the names of the holders of Common Stock with a copy of the
Summary of Rights attached thereto. Until the earliest of the Distribution Date,
the Expiration Date and the Final Expiration Date, the surrender for transfer of
any of the certificates for Common Stock outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
(c) Certificates for Common Stock issued (or delivered from the
Company's treasury) after the Record Date but prior to the earliest of the
Distribution Date, the Expiration Date and the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Alexion Pharmaceuticals, Inc. (the "Corporation") and
Continental Stock Transfer & Trust Company, dated as of
February 14, 1997 (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
Corporation. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement,
Rights issued to an Acquiring Person or any Associate
13
or Affiliate thereof (as such terms are defined in the Rights
Agreement) may be null and void. The Rights shall not be
exercisable, and shall be void so long as held, by a holder in
any jurisdiction where the requisite qualification for the
issuance to such holder, or the exercise by such holder of the
Rights in such jurisdiction, shall not have been obtained or
be obtainable.
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 of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
shares, certificate and assignment to be printed on the reverse thereof) shall
be substantially in the form set forth in Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Right Certificates, whenever
distributed, which are distributed in respect of shares of Common
14
Stock which were issued and outstanding as of the Record Date, shall be dated as
of the Record Date, and all Right Certificates which are distributed in respect
of other shares of Common Stock shall be dated as of the respective dates of
issuance of such Common Stock, and in each such case on their face shall entitle
the holders thereof to purchase such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein at the price per one one hundredth
of a share of Preferred Stock set forth therein (the "Purchase Price"), but the
number and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided in this
Agreement.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 hereof 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 the Acquiring Person has any
continuing agree meet, arrangement or understanding regarding the transferred
Rights or (B) a transfer
15
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding (whether or not in writing) which has as a primary
purpose or effect the avoidance of the provisions of Section 7(e), Section
11(a)(ii) or of Section 13 with respect to the limitation of the Rights
beneficially owned by an Acquiring Person (or any Associate or Affiliate
thereof), and any Right Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend modified as necessary to apply to such Person:
The Rights represented by this Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement). Accordingly, this Certificate and the Rights
represented hereby may become null and void in the circumstances
specified in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company manually or by facsimile signature by the Chairman of the Board, the
President or any Vice President and have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or any Assistant
Secretary, either manually or by facsimile signature. The Right Certificates
shall be countersigned by the Rights Agent manually and shall not be valid for
any purpose unless so countersigned. In case any
16
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office in New York, New York, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date and certificate number of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed Lost or Stolen Right Certificates. (a)
Subject to the provisions of Sections 4(b) 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
17
earlier of the Expiration Date and the Final Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of shares of Preferred Stock (or
other securities, cash, and/or assets, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged, with the form
of assignment and certificate appropriately executed, at the principal office of
the Rights Agent in New York, New York. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Right Certificate or Right Certificates until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate or Right
Certificates and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall countersign and deliver to the Person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or
18
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of any Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will execute and deliver a new
Right Certificate of like tenor to the Rights Agent for counter-signature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office of the Rights Agent in New York, New York, together with
payment of the Purchase Price for each one one-hundredth of a share of Preferred
Stock as to which the Rights are exercised, at or prior to the earliest of (i)
the
19
Close of Business on March 6, 2003 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23, (iii) the time at
which the Rights are exchanged as provided in Section 23A, or (iv) the time at
which the Rights expire pursuant to Section 13(d) (such earliest time being
herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock issued pursuant to the exercise of a Right shall initially be
$75.00, 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 Right Certificate representing exercisable
Rights, with the form of election to purchase and certificate duly executed,
accompanied by payment (in cash, or by certified check or bank draft payable to
the order of the Company) of the Purchase Price for the Preferred Stock (or
other shares, 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 the Rights pursuant hereto in cash, or by certified check or
bank draft 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 Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased (and the Company hereby
20
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
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary
agent, requisition from the depositary agent depositary receipts representing
such number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in accordance
with Section 14, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt, promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate. In the event that the Company is obligated to issue 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 Right Certificate shall
exercise less than all the Rights evidenced
21
thereby, a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of any such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after such Acquiring Person
becomes such, or (iii) a transferee of any such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
such Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from such 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 the avoidance of this Section 7(e),
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
22
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 Right Certificates or any
other Person as a result of its failure to make any determination with respect
to an Acquiring Person or any of its respective 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 of any Right Certificate upon the
occurrence of any purported transfer or exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate following the form of assignment or election to purchase set forth
on the reverse side of the Right Certificate surrendered for such assignment or
exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights
23
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right Certificates
to the Company, or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock or any
authorized and issued shares of Preferred Stock held in its treasury (and will
use its best efforts, following the occurrence of a Section 11(a)(ii) Event, to
cause to be reserved and kept available out of its authorized and unissued
shares of Common Stock and/or other securities or out of its authorized and
issued shares of Common Stock and/or other securities held in its treasury), the
number of shares of Preferred Stock (and, following the occurrence of a Section
11(a)(ii) Event, Common Stock and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) 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 on which the consideration to be delivered by the Company upon
exercise of the
24
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 of 1933, as amended (the
"Act"), with respect to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the date
of the expiration of the Rights. 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.
The Company may, acting by resolution of its Board of Directors, temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(b), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be
25
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-hundredths of a share of
Preferred Stock (and, following the occurrence of a Section 11(a)(ii) Event,
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any shares of Preferred Stock (or shares of Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a person other
than, or the issuance or delivery of certificates or depositary receipts for a
number of one one-hundredths of a share of Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be), in a name other than that
of, the registered holder of the Right Certificate evidencing Rights surrendered
for exercise or to issue or deliver any certificates for shares of Preferred
Stock (or Common Stock and/or other securities, as the case may be) or
depositary receipts
26
for Preferred 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 Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name
any certificate for a number of one one-hundredths of a share of Preferred Stock
(or shares of Common Stock and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of shares of Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
shares of Common Stock and/or other securities, as the case may be) transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares (fractional and otherwise) on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
(or shares of Common Stock and/or other securities, as the case may be) transfer
books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate, as such, shall not be entitled to
any rights of a
27
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any meetings or other proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of shares, or
fractions thereof, covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock into a greater
number of shares, (C) combine or consolidate the outstanding Preferred Stock
into a smaller number of shares, or (D) issue any shares of its capital stock in
a reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in Section
7(e) and 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 Preferred
Stock or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder
28
of any Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification.
If an event occurs which would require an adjustment under both
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) In the event (a "Section 11(a)(ii) Event") that any Person,
alone or together with its Affiliates and Associates, shall become an Acquiring
Person, unless the event causing such Person to become an Acquiring Person is a
Section 13 Event or is an acquisition of Common Stock of the Company pursuant to
a tender or exchange offer for all outstanding Common Stock of the Company at a
price and on terms determined by at least a majority of the members of the Board
of Directors of the Company who are not Acquiring Persons or representatives,
nominees, Affiliates or Associates of an Acquiring Person (the "Outside
Directors"), after receiving advice from one or more investment banking firms,
to be (A) at a price which is fair to stockholders (taking into account all
factors which such Outside Directors deem
29
relevant, including, without limitation, prices which could reasonably be
achieved if the Company or its assets were to be sold on an orderly basis
designed to realize maximum value) and (B) otherwise in the best interests of
the Company and its stockholders, then proper provision shall be made so that
each holder of a Right (except as provided below and in Section 7(e) hereof),
shall thereafter have the right to receive, upon exercise thereof following the
Distribution Date at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one-hundredths of a share of
Preferred Stock, such number of shares of Common Stock of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of such Section
11(a)(ii) Event, whether or not such Right was then exercisable, and (y)
dividing that product (which, following such first occurrence, shall thereafter
be referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by 50% of the Current Market Price per share of the Common Stock
of the Company (determined pursuant to Section 11(d)) on the date of the
occurrence of such Section 11(a)(ii) Event (such number of shares being
hereinafter referred to as the "Adjustment Shares"). The Company shall notify
the Rights Agent as to any Persons who are deemed by the Company to be Acquiring
Persons or Associates, Affiliates or transferees (as
30
described in subparagraphs (ii) and (iii) of Section 7(e)) of such Persons and
shall identify any Rights pertaining thereto.
(iii) In lieu of issuing shares of Common Stock of the Company in
accordance with Section 11(a)(ii) hereof, the Company, acting by resolution of
its Board of Directors, may (and, 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 in accordance with Section 11(a)(ii), the Company, acting by resolution
of its Board of Directors, shall): (A) determine the excess of (1) the value of
the Adjustment Shares issuable upon the exercise of a Right (the "Current
Value"), over (2) the Purchase Price attributable to each Right (such excess,
the "Spread") and (B) with respect to each Right (subject to Section 7(e)), make
adequate provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as shares of Common
Stock of the Company (such shares or units of preferred stock hereinafter called
"Common Stock Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing having an aggregate value equal
to the Current Value, where such aggregate value has been determined by
31
action of 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 which has theretofore performed no services for the Company or
any Subsidiary of the Company in the past five years; 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) the first
occurrence of a Section 11(a)(ii) Event and (y) the first date that the right to
redeem the Rights pursuant to Section 23 hereof, as such date may be amended
pursuant to Section 26 hereof, shall expire (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 of the
Company (to the extent available) and then, if necessary, cash, securities
and/or assets, that in the aggregate have a value equal to the Spread. If, after
the occurrence of a Section 11(a)(ii) Event, the number of shares of Common
Stock that 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 exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof and the Company, acting by resolution
of its 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, the thirty (30) day period set
32
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 period as it may be extended, the "Substitution Period"). To the extent
that the Company determines that some action is to be taken pursuant to the
terms of this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e), 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 such stockholder approval for the
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to the first sentence of this Section
11(a)(iii) and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the Current
Market Price per share of Common Stock (as determined pursuant to Section 11(d))
on the date of the first occurrence of the Section 11(a)(ii) Event, and the per
share or per unit value of any Common Stock Equivalents shall be deemed to equal
the Current Market Price per share of the Common Stock of the Company on such
date.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all
33
holders of shares of Preferred Stock entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe for or purchase
Preferred Stock (or shares having the same rights, privileges and preferences as
the shares of Preferred Stock ("Equivalent Preference Stock")) or securities
convertible into shares of Preferred Stock or Equivalent Preference Stock at a
price per share of Preferred Stock or Equivalent Preference Stock (or having a
conversion price per share, if a security convertible into shares of Preferred
Stock or Equivalent Preference Stock) less than the Current Market Price per
share of the Preferred Stock (as defined in 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 Preferred
Stock outstanding on such record date plus the number of additional shares of
Preferred Stock and/or Equivalent Preference Stock which the aggregate offering
price of the total number of such shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date plus the
number of additional shares of Preferred Stock and/or Equivalent Preference
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
34
of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent. Preferred 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 the making of a
distribution to all holders of Preferred 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 or assets
(other than a regular periodic cash dividend at a rate not in excess of 125% of
the rate of the last regular periodic cash dividend theretofore paid or a
dividend payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), 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 Current Market Price per share of Preferred
Stock (as defined in Section 11(d)) on such record date, less the fair market
value (as determined in good faith by the
35
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preferred Stock, and the denominator of which shall
be such Current Market Price per share of Preferred 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
Market Price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the Current Market Price
per share of Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (a) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into such Common Stock or (b) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, as the case may be, then, and in each such
36
case, the "Current Market Price" shall be appropriately adjusted to take into
account the ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use, or, if
on any such date the shares of Common Stock 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 shares of Common Stock selected by
the Company, acting by resolution of the Board of Directors of the Company. If
on any such date no market maker is making a market in shares of Common Stock,
the fair value of such shares on such date as determined in good faith by the
Company, acting by resolution of the Board of
37
Directors of the Company, shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of New York are not authorized
or obligated by law or executive order to close. 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 not so listed or traded, "Current
Market Price" per share of Common Stock shall mean the fair value per share as
determined in good faith by the Company, acting by resolution of the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "Current
Market Price" per share of Preferred Stock shall be determined in the same
manner as set forth for the Common Stock in Section 11(d)(i) hereof (other than
the last sentence thereof). If the Current Market Price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in Section
11(d)(i) hereof, the "Current Market Price" per share of Preferred Stock shall
be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such
38
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock occurring after the date of this Agreement) multiplied by the
Current Market Price per share of the Common Stock. If neither the Common Stock
nor the Preferred Stock is publicly held or so listed or traded, the "Current
Market Price" per share of Preferred Stock shall mean the fair value per share
as determined in good faith by the Company, acting by resolution of its Board of
Directors, whose determination shall be described in a statement filed with
Rights Agent and shall be conclusive for all purposes. For all purposes of this
Agreement, the "Current Market Price" of one one-hundredth of a share of
Preferred Stock shall be equal to the "Current Market Price" of one share of
Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or other share or the
nearest one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such
39
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of any Right and the number of Rights
outstanding shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j),
(k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Stock shall apply on like terms to any such other shares;
provided, however, that the Company shall not be liable for its inability or
failure to reserve and keep available for issuance upon exercise of the Rights
pursuant to Section 11(a)(ii) a number of shares of Common Stock greater than
the number then authorized by the Certificate of Incorporation of the Company
but not outstanding or reserved for any other purpose.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
40
(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 Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth of a share of
Preferred Stock) obtained by (i) multiplying (A) the number of one
one-hundredths of a share covered by a Right immediately prior to such
adjustment of the Purchase Price by (B) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the
41
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
42
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of shares of Preferred Stock, or fraction thereof, issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of shares which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the one one-hundredths
of a share of Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Stock, or a fraction thereof, and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the Preferred 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
43
or other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company, acting by resolution of its Board of Directors, shall be entitled to
make such reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Stock, any issuance wholly for cash of any
Preferred Stock at less than the current market price, any issuance wholly for
cash of Preferred Stock or securities which by their terms are convertible into
or exchangeable for Preferred Stock, any stock dividends or any issuance of
rights, options or warrants referred to herein above in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that it 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 that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or in a series of related
44
transactions, assets, cash flow or earning power aggregating more than 50% of
the assets, cash flow 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) hereof), 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 that 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 stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26 hereof, 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 eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare or pay any dividend on the Common
Stock of the Company payable in such Common Stock or (ii) subdivide the
outstanding
45
Common Stock of the Company into a greater number of shares (by reclassification
or otherwise than by payment of dividends in such Common Stock) or (iii) combine
or consolidate the outstanding Common Stock of the Company into a smaller number
of shares, then in any such case, (x) the number of one one-hundredths of a
share of Preferred Stock purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one one-hundredths
of a share of Preferred Stock so purchasable immediately prior to such event by
a fraction, the numerator of which is the number of shares of Common Stock of
the Company outstanding immediately before such event and the denominator of
which is the number of shares of such Common Stock outstanding immediately after
such event and (y) action shall be taken such that each share of Common Stock of
the Company outstanding immediately after such event shall have issued with
respect to it that number of Rights which each share of such Common Stock
outstanding immediately prior to such event had issued with respect to it. 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. If an event occurs which would require an
adjustment under Section 11(a)(ii) and this Section 11(p), the adjustments
provided for in this Section 11(p) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as
46
provided in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Common Stock and Preferred Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate (or if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 25
of this Agreement. Notwithstanding the foregoing sentence, the failure of the
Company to make such certificates or give such notice shall not affect the
validity 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 therein contained. Any adjustment to be made pursuant to Sections
11 and 13 shall be effective as of the date of the event giving rise to such
adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event (a "Section 13 Event") that, following the Stock
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 surviving or continuing corporation of such merger,
consolidation or combination, (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
47
and into the Company, and the Company shall be the surviving or continuing
corporation of such merger or consolidation and, in connection therewith, all or
part of the Common Stock shall be changed into or exchanged for stock or other
securities of any 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), in one or more transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole and calculated on the basis of
the Company's most recent regularly prepared financial statement) to any other
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o)), then, and
in each such case (except as provided in Section 13(d)), proper provision shall
be made so that (i) each holder of a Right (except as otherwise provided in
Section 7(e)) shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradable shares of Common Stock of the Principal Party
(as hereinafter defined), not subject to any liens, encumbrances, rights of
call, rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (a) multiplying the then current Purchase Price by the number
of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a
48
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of one
one-hundredths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence), and
dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (B) 50% of the Current Market Price per share of
Common Stock of such Principal Party "determined pursuant to Section 11(d)) on
the date of consummation of such merger, consolidation, sale or transfer; (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 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 accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be possible, in
relation to its Common Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be
49
of no effect following the first occurrence of any Section 13 Event. The Company
shall not consummate any such merger, consolidation, sale or transfer unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement containing the provisions required by
this Section 13.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a) hereof, the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; 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
greatest portion of the assets, cash flow or earning power transferred pursuant
to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at any time and has not been continuously over the preceding twelve month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such other Person; and
(2) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stock of two or
50
more of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of shares of authorized 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 issuer shall have executed and delivered to the
Rights Agent a supplemental agreement containing the provisions set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any such Section 13 Event, the Principal Party
will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(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.
51
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).
(d) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired Common Stock of the Company pursuant to a tender
offer or exchange offer for all outstanding Common Stock of the Company which
complies with the provisions of Section 11(a)(ii) (or a wholly owned Subsidiary
of any such Person or Persons), (ii) the price per share of Common Stock of the
Company offered in such transaction is not less than the price per share of
Common Stock of the Company paid to all holders of Common Stock of the Company
whose shares were purchased pursuant to such tender offer or exchange offer and
(iii) the form of consideration being offered to the remaining holders of Common
Stock of the Company pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
(e) The Company covenants and agrees that it will not, after the
Stock Acquisition Date, engage in any Section 13
52
Event if at the time of or after such event there are any charter or by-law
provisions or any rights, warrants or other instruments outstanding or any other
action taken which would diminish or otherwise eliminate the benefits intended
to be afforded by the Rights.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractions of 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 of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on
53
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights (selected by the
Company, acting by resolution of its Board of 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 Company, acting by resolution of
its Board of Directors, shall be used.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-hundredths of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares (other than fractions
which are integral multiples of one one-hundredths of a share of Preferred
Stock). Fractions of Preferred Stock in integral multiples of one one-hundredths
of a share of Preferred 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 that such agreement shall provide that
the holders of depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as
54
beneficial owners of the Preferred Stock. In lieu of fractional shares which are
not integral multiples of one one-hundredths of a share of Preferred Stock, the
Company may pay to the registered holders of Right Certificates at the time such
Right Certificates are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one share of Preferred Stock.
For purposes of this Section 14(b), the current market value of a share of
Preferred Stock shall be the closing price of a share of Preferred Stock (as
determined pursuant to the second sentence of Section 11(d)(ii)) for the Trading
Day immediately prior to the date of such exercise .
(c) Following the occurrence of a Section 11(a)(ii) Event or a
Section 13 Event, the Company shall not be required to issue fractions of shares
of its Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of its Common Stock. In lieu of fractional
shares of its Common Stock, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
share of its Common Stock. For purposes of this Section 14(c), the current
market value of one share of Common Stock of the Company shall be the closing
price of one share of Common Stock of the Company (as determined pursuant to
Section 11(d)(i)) for the Trading Day immediately prior to the date of such
exercise.
55
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, except the rights of action vested in the Rights Agent pursuant
to Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of Common Stock), without the consent of the Rights Agent
or of any holder of any other Right Certificate (or, prior to the Distribution
Date, of Common Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
56
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting such Right consents and agrees with the Company and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for shares of Common Stock registered in the name of the
holders of such shares (which certificates for shares of Common Stock
shall also constitute certificates for Rights) and each Right will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer and with the appropriate forms and
certificates duly completed and fully executed;
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither
57
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree or ruling issued by a court
of competent 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. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right or Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of one one-hundredth
of a share of Preferred Stock or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right or Right Certificate, as such, any of the
rights of a stockholder of the
58
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 24), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or certificate for
59
Preferred On Common Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 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
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. The purchase of all or substantially all of the Rights Agent's
assets employed in the performance of transfer agent activities shall be deemed
a merger or consolidation for purposes of this Section 19. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so
60
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
61
any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of an Acquiring Person
and the determination of the Current Market Price per share of Preferred
Stock and Common Stock) be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice President,
the Treasurer or the Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and
62
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any adjustment
required under the provisions of Sections 11 or 13 or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
actual notice of any such adjustment), nor shall it be responsible for any
determination by the Board of Directors of the Company of the Current
Market Price of the Rights or Preferred Stock or Common Stock, 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 or
Preferred Stock or other securities to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of
Preferred Stock or Common Stock
63
or other securities will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any 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
64
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, except it may not act for an Acquiring Person in an investment
banking capacity, or otherwise assist an Acquiring Person in ways hostile
to the Company, without the consent of the Company.
(i) The Rights Agent may execute and exercise any of the rights and
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, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
or to holders of the Rights resulting from any such act, omission,
default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
65
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be,
has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock and Preferred Stock by registered, certified
or express mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock by registered, certified or express mail, and to the holders of
the Right Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
66
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of any state of the United States, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 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 Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or
67
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by resolution of its Board of Directors, to reflect
any adjustment or change in the Purchase Price and the number or kind or class
of shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Stock following the
Distribution Date and prior to the redemption or expiration of the Rights, 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 plan or
arrangement, or upon the exercise, conversion or exchange of securities, notes
or debentures hereinafter issued by the Company, and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors of the Company,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such Right
Certificates shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificates would be issued, and (ii) no such Right Certificates
68
shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption. (a) The Company may, by resolution of its
Board of Directors (which resolution shall, if adopted following the Stock
Acquisition Date, be effective only with the concurrence of a majority of the
Continuing Directors and only if the Continuing Directors constitute a majority
of the number of directors then in office), at its option, at any time prior to
the earlier of (x) the Close of Business on the tenth Business Day following the
Stock Acquisition Date or (y) the Close of Business on the Final Expiration
Date, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event
until such time as the Company's right of redemption under this Section 23(a)
has expired. The Board of Directors of the Company may, in its discretion, at
any time prior to the Stock Acquisition Date, extend the time within which to
redeem the then outstanding Rights prior to their exercise. The redemption of
the Rights by the Board of Directors may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish. The company may, at its option, pay the
69
Redemption Price in cash, Common Stock (based on the Current Market Price of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors of the Company.
(b) Immediately upon the action of the Board of Directors of the
Company (with, if required, the concurrence of a majority of the Continuing
Directors) ordering the redemption of the Rights (or at such time subsequent to
such action as the Board of Directors, with the concurrence of a majority of the
Continuing Directors, may determine), evidence of which shall have been filed
with the Rights Agent, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. Within 10 days
after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. 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 any Rights at any time in any manner other than that
specifically set forth in
70
this Section 23, and other than in connection with the repurchase of Common
Stock of the Company prior to the Distribution Date.
Section 23A. Exchange. (a) The Board of Directors of the Company
(with the concurrence of a majority of the Continuing Directors and only if the
Continuing Directors constitute a majority of the number of Directors then in
office) may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 7(e)) for Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any wholly owned
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock as a fiduciary for or pursuant to
the terms of any such employee benefit plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights
71
pursuant to paragraph (a) of this Section 23A, evidence of which shall have been
filed with the Rights Agent, 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 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
shall promptly mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e)) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 23A, the
Company shall take all such
72
action as may be necessary to authorize additional Common Stock for issuance
upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of Common
Stock or to distribute certificates which evidence fractional Common Stock. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Right 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 of a whole share of Common Stock. For the purposes of this
paragraph (d), the current market value of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as determined pursuant to the
second sentence of Section 11(d)) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 23A.
Section 24. 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 Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly dividend out of earnings on
retained earnings of the Company at a rate not in excess of 125% of the rate of
the last regular quarterly cash dividend theretofore paid), or (ii) to offer to
the holders of Preferred Stock options, rights or warrants to subscribe for or
to purchase any additional Preferred Stock or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any reclassification
of the Preferred Stock (other than a reclassification involving only the
73
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
merger, consolidation or other combination into or with, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries (taken as
a whole) to, any other Person, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 25 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, merger, consolidation, combination, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of Common Stock and/or Preferred Stock, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty days prior to the
record date for determining holders of Preferred Stock for purposes of such
action, and in the case of any such other action, at least twenty days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of Common Stock and/or Preferred Stock, whichever shall
be the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
74
(b) In case any of the events set forth in Section 11(a)(ii) or
Section 13(a) of this Agreement shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate, to the extent feasible and in accordance with Section 25, a notice
of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13(a), and (ii) all references in Section 24(a) hereof to Preferred
Stock shall be deemed thereafter to refer also to Common Stock or other
securities issuable in respect of the Rights.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Alexion Pharmaceuticals, Inc.
25 Science Park
New Haven, Connecticut 06511
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
75
Continental Stock Transfer & Trust Company
2 Broadway, 19th Floor
New York, NY 10004
Attention: Compliance 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 Right Certificate (or if prior
to the Distribution Date to each holder of a certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such Right holder (or if prior to the Distribution
Date to such holder of Common Stock) at the address of such holder as shown on
the registry books of the Company.
Section 26. Supplements and Amendments. The Company may, by
resolution of its Board of Directors, and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement in any respect
whatsoever (including without limitation any extension of the period in which
the Rights may be redeemed) at any time prior to the Stock Acquisition Date,
without the approval of any holders of certificates representing shares of
Common Stock or, after the Distribution Date, of Right Certificates. From and
after the Stock Acquisition Date, the Company may, by resolution of its Board of
Directors (which resolution shall be effective only with the concurrence of a
majority of the Continuing Directors, and only if the Continuing Directors
constitute a majority of the number of directors then in office), and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the
76
approval of any holders of certificates representing shares of Common Stock or
of Right Certificates 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 or make any other provisions in regard
to matters or questions arising hereunder which the Company and the Rights Agent
may deem necessary or desirable, which shall not adversely affect the interests
of the holders of Right Certificates (other than an Acquiring Person or an
Affiliate or Associate thereof); provided, however, that this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed or to
modify the ability (or inability) of the Board of Directors of the Company
(with, where required, the concurrence of a majority of the Continuing
Directors) to redeem the Rights, in either case at such time as the Rights are
not then redeemable or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of or the benefits
to the holders of Rights (other than an Acquiring Person or an Affiliate or
Associate of any such Person). Without limiting the foregoing, the Company may
at any time prior to the Stock Acquisition Date amend this Agreement to lower
the thresholds set forth in Sections l(a) and 3(a) hereof to not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding Common Stock then known by
77
the Company to be beneficially owned by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company or any Person organized, appointed or established by
the Company or such Subsidiary as a fiduciary for or pursuant to the terms of
any such employee benefit plan) and (ii) 10%. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or amendment. Prior to the Stock
Acquisition Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 27. 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 28. Determinations and Actions by the Board of Directors,
etc. 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 General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors or
the Outside
78
Directors) shall have the exclusive power, authority and discretion to
administer this Agreement and to exercise all rights and powers specifically
granted to such Board of Directors (with, where specifically provided for
herein, the concurrence of the Continuing Directors or the Outside Directors) or
to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, but not limited to, a determination to redeem or not redeem the
Rights, to amend the Agreement or to find or to announce publicly that any
Person has become an Acquiring Person). All such actions, calculations,
interpretations and determinations (including, for purposes of clauses (i) and
(iii) below, all omissions with respect to the foregoing) which are done or made
by the Board of Directors of the Company (with, where specifically provided for
herein, the concurrence of the Continuing Directors or the Outside Directors),
the Outside Directors or the Company (i) shall be within the discretion of the
Board of Directors (with, where specifically provided for herein, the
concurrence of the Continuing Directors or the Outside Directors), (ii) shall be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Right Certificates and all other parties, and (iii) shall not subject the
Board of Directors of the Company, the Continuing Directors or the Outside
Directors to any liability to the holders of the Rights and Right Certificates.
79
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 30. 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 Close of Business on the
tenth Business Day following the date of such determination by the Board of
Directors. Without limiting the foregoing, if any provision of this Agreement
requiring that a
80
determination be made by the Board of Directors with the concurrence of a
majority of the Continuing Directors or the Outside Directors or by the Outside
Directors is held by a court of competent jurisdiction or other authority to be
invalid, void, or unenforceable, such determination shall then be made by the
Board of Directors in accordance with applicable law and the Company's
certificate of incorporation and by-laws.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes 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 32. 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 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: ALEXION PHARMACEUTICALS, INC.
By /s/ David Keiser By /s/ Leonard Bell
-------------------------------- ---------------------------------
Title: Executive Vice President Title: President and Chief
Executive Officer
Attest: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By /s/ Thomas Jennings By /s/ William F. Seegraber
-------------------------------- ---------------------------------
Title: Assistant Secretary Title: Vice President
82
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION OF JUNIOR
PARTICIPATING CUMULATIVE PREFERRED STOCK
Par Value $1.00 Per Share
of
Alexion Pharmaceuticals, Inc.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
We, Leonard O. Bell, President, and David Keiser, Assistant
Secretary, of Alexion Pharmaceuticals, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the said Corporation, the said Board of
Directors on February 14, 1997 by the affirmative vote of a majority of the
members of the Board of Directors, adopted the following resolution creating a
series of one hundred and twenty thousand (120,000) shares of Preferred Stock,
par value $1.00 per share:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be,
and it hereby is, created, and that the designation and amount thereof and the
voting powers, preferences and relative participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
Section 1. Designation and Amount.
The shares of such series shall be designated as Junior
Participating Cumulative Preferred Stock, par value $1.00 per share (the "Junior
Preferred Stock"), and the number of shares constituting such series shall be
120,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Junior Preferred Stock to a number less than the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Junior Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of preferred stock (or any similar stock) ranking prior and superior to
the Junior Preferred Stock with respect to dividends, the holders of
shares of Junior Preferred Stock, in preference to the holders of Common
Stock, and of any other junior stock which may be outstanding, shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of January, April, July and October in
each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Junior Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $2.50 per share ($10.00 per annum), or
(b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Junior Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares
2
of Junior Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock I other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $2.50 per share ($10.00 per annum) on the Junior Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Junior Preferred Stock,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Junior
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall accumulate but shall not
bear interest. Dividends paid on the shares of Junior Preferred Stock in
an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares
of Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
3
Section 3. Voting Rights.
The holders of shares of Junior Preferred Stock shall have the
following voting rights.
(A) Subject to the provisions for adjustment as hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder
thereof to 100 votes (and each one one-hundredth of a share of Junior
Preferred Stock shall entitle the holder thereof to one vote) on all
matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
classification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or less number of shares of Common Stock,
then in each such case the number of votes per share to which holders of
shares of Junior Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, in any other certificate of designation creating a series
of preferred stock or any similar stock, or by law, the holders of shares
of Junior Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) If at any time the Corporation shall not have declared and paid
all accrued and unpaid dividends on the Junior Preferred Stock as provided
in Section 2 hereof for four consecutive Quarterly Dividend Payment Dates,
then, in addition to any voting rights provided for in paragraphs (A) and
(B), the holders of the Junior Preferred Stock shall have the exclusive
right, voting separately as class, to elect two directors on the Board of
Directors of the Corporation (such directors, the "Preferred Directors").
The right of the holders of the Junior Preferred Stock to elect the
Preferred Directors shall continue until all such accrued and unpaid
dividends shall have been paid. At such time, the terms of any of the
Preferred Directors shall terminate. At any time when the holders of the
Junior Preferred Stock
4
shall have thus become entitled to elect Preferred Directors, a special
meeting of shareholders shall be called for the purpose of electing such
Preferred Directors, to be held within 30 days after the right of the
holders of the Junior Preferred Stock to elect such Preferred Directors
shall arise, upon notice given in the manner provided by law or the
by-laws of the Corporation for giving notice of a special meeting of
shareholders (provided, however, that such a special meeting shall not be
called if the annual meeting of shareholders is to convene within said 30
days). At any such special meeting or at any annual meeting at which the
holders of the Junior Preferred Stock shall be entitled to elect Preferred
Directors, the holders of a majority of the then outstanding Junior
Preferred Stock present in person or by proxy shall be sufficient to
constitute a quorum for the election of such directors. The persons
elected by the holders of the Junior Preferred Stock at any meeting in
accordance with the terms of the preceding sentence shall become directors
on the date of such election.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends or, make any other distributions
on any shares or stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding-up) to the Junior Preferred
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding-up) with
the Junior Preferred Stock except dividends paid ratably on the
Junior Preferred Stock, and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are than entitled:
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding-up) with the
5
Junior Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding-up) to the Junior Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding-up) with the Junior Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of
the respective annual dividend rates and other relative rights and
preferences of the respective series or classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares.
Any shares of Junior Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever, shall be retired and canceled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of preferred stock, without
designation as to series, and may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set fourth
herein, in the Certificate of Incorporation, in any other certificate of
designation creating a series of preferred stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding-Up.
Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, no distribution shall be made (A) to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or
6
winding-up) to the Junior Preferred Stock unless prior thereto, the holders of
shares of Junior Preferred Stock shall have received the higher of (i) $100.00
per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(ii) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of Common Stock; nor shall any distribution be made (B) to
the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding-up. In the
event the Corporation shall at any time declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Junior Preferred Stock are
entitled immediately prior to such event under the provision in clause (A) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, or otherwise changed, then in any such case each share of Junior
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Junior
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the
7
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption.
The shares of Junior Preferred Stock shall not be redeemable.
Section 9. Rank.
Unless otherwise provided in the Certificate of Incorporation of the
Corporation or a certificate of designation relating to a subsequent series of
preferred stock of the Corporation, the Junior Preferred Stock shall rank junior
to all other series of the Corporation's preferred stock as to the payment of
dividends and the distribution of assets on liquidation, dissolution or
winding-up, and senior to the Common Stock of the Corporation.
Section 10. Amendment.
The Certificate of Incorporation of the Corporation, as amended,
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Junior Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Junior Preferred Stock, voting together
as a single series.
Section 11. Fractional Shares.
Junior Preferred Stock may be issued in fractions of a share (in one
one-hundredths (1/100) of a share and integral multiples thereof) which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Junior Preferred Stock.
8
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its President and attested by its Assistant
Secretary this 14th day of February, 1997.
-----------------------------------------
President
ATTEST:
- -------------------------------
Assistant Secretary
9
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- __________________ Rights
NOT EXERCISABLE AFTER MARCH 6, 2003 OR EARLIER
IF NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS
REPRESENTED BY THIS CERTIFICATE WERE ISSUED TO
A PERSON WHO WAS AN ACQUIRING PERSON OR AN
ASSOCIATE OR AFFILIATE THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID AS PROVIDED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Right Certificate
ALEXION PHARMACEUTICALS, INC.
This certifies that , or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of February 14, 1997 (the "Rights Agreement") between Alexion
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Continental
Stock Transfer & Trust Company, a New York corporation (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (New York City time)
- --------
* The portion of the legend in brackets shall be inserted only if
applicable.
on March 6, 2003, at the principal office of the Rights Agent, or its successors
as Rights Agent, in New York, New York, one one-hundredth of a share of Junior
Participating Cumulative Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), of the Company, at a purchase price of $75.00 per share the
"Purchase Price") in cash, or by certified bank check or money order payable to
the order of the Company, upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of March 6, 1997
based on the shares of Preferred Stock of the Company as constituted at such
date.
As provided in the Rights Agreement, the Purchase Price and the
number of one one-hundredths of a share of Preferred Stock or other securities
which may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right
2
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of Alexion Pharmaceuticals, Inc. and the above-mentioned
office of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
one one-hundredths of a share of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the company at its option at a
redemption price of $.01 per Right. Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Rights Certificate may be exchanged by
the Company in whole or in part for Common Stock of the Company under certain
circumstances.
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
3
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Stock or of
any other securities of the Company which may at the time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED _________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint__________________________________
Attorney, to transfer the within Right Certificate on the books of the within
named Company, with full power of substitution.
Dated: ______________________, ____
__________________________________
Signature
Signature Guaranteed:
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
__________________________________
Signature
5
NOTICE
The signature to the foregoing Assignment must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
6
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To Alexion Pharmaceuticals, Inc.:
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
Dated: _________________, ____
7
[Form of Election to Purchase -- continued]
__________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate.)
Signature Guaranteed:
________________________________________________________________________________
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
__________________________________
Signature
________________________________________________________________________________
NOTICE
In the event the certification set forth above in the Forms of
Assignment and Election is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and, in the case of an Assignment, will affix a legend to that effect on any
Right Certificates issued in exchange for this Rights Certificate.
8
EXHIBIT C
ALEXION PHARMACEUTICALS, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On February 14, 1997, the Board of Directors of Alexion
Pharmaceuticals, Inc. (the "Company") declared a dividend distribution of one
preferred stock purchase right (a "Right") for each outstanding share of Common
Stock, par value $.0001 per share (the "Common Stock"), of the Company. The
distribution is payable on March 6, 1997 to the stockholders of record on March
6, 1997. Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Junior Participating Cumulative Preferred Stock,
par value $1.00 per share ("Preferred Stock") at a price of $75.00 per one
one-hundredth of a share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Continental Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten business days following the
time (the "Stock Acquisition Date") of a public announcement or notice to the
Company that a person or group of affiliated or associated persons has acquired
beneficial ownership (as defined in the Rights Agreement) of 20% or more of the
outstanding shares of Common Stock of the Company (such 20% beneficial owner, an
"Acquiring Person"), or (ii) ten business days, or such later date as may be
determined by the Board of Directors of the Company, after the date of the
commencement or announcement by a person of an intention to make a tender offer
or exchange offer for an amount of Common Stock which, together with the shares
of such stock already owned by such person, constitutes 20% or more of the
outstanding shares of such Common Stock (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with respect to any of
the Company's Common Stock certificates outstanding as of March 6, 1997, by such
Common Stock certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the Rights will
be transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after March 6, 1997, upon transfer or new
issuance of the Company's 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 of
the Company's Common Stock certificates outstanding as of March 6, 1997, even
without a copy of this Summary of Rights attached thereto, will also
constitute the transfer of the Rights associated with the shares of Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Company's 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 March 6, 2002, unless earlier redeemed by the Company as
described below.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the fixing of a record date for the issuance to
holders of Preferred Stock of certain rights, options or warrants to subscribe
for shares of Preferred Stock or convertible securities at less than the current
market price of shares of Preferred Stock or (iii) upon the fixing of a record
date for the making of a distribution to holders of shares of Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
not exceeding 125% of the last regular periodic cash dividend or dividends
payable in shares of Preferred Stock) or of subscription rights or warrants
(other than those referred to above). The number of Rights and number of shares
of Preferred Stock issuable upon the exercise of each Right are also subject to
adjustment in the event of a stock split, combination or stock dividend on the
Common Stock prior to the Distribution Date.
In the event that after the Stock Acquisition Date the Company is
acquired in a merger or other business combination transaction or 50% or more of
its assets, cash flow or earning power are sold or otherwise transferred, proper
provision shall be made so that each holder of a Right shall thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction would have a market value (as defined in
the Rights Agreement) of two times the exercise price of the Right. In the event
that the Company were the surviving corporation of a merger and its Common Stock
were changed or exchanged, proper provision shall be made so that each holder of
a Right will thereafter have the right to receive upon exercise that number of
shares of common stock of the other party to the transaction having a market
value of two times the exercise price of the Right.
In the event that a person or group becomes an Acquiring Person
(otherwise than pursuant to a tender offer or exchange offer for all outstanding
shares of Common Stock at a
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price and on terms which are determined to be fair and in the best interests of
the Company and its stockholders by a majority of the members of the Board of
Directors of the Company who are not Acquiring Persons or representatives or
nominees of or affiliated or associated with an Acquiring Person), proper
provision shall be made so that each holder of a Right, other than Rights that
were 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 having a market value (as defined in the Rights Agreement) of two
times the exercise price of the Right. A person or group will not be deemed to
be an Acquiring Person if the Board of Directors of the Company determines that
such person or group became an Acquiring Person inadvertently and such person or
group promptly divests itself of a sufficient number of shares of Common Stock
so that such person or group is no longer an Acquiring Person.
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 value of
shares of Common Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier of (i) ten business days after the
Stock Acquisition Date and (ii) March 6, 2002, the Company, by resolution of its
Board of Directors, may redeem the Rights in whole, but not in part, at a price
of $0.01 per Right (the "Redemption Price"). If such resolution is adopted
following the Stock Acquisition Date, it will be effective only with the
concurrence of a majority of the members (the "Continuing Directors") of the
Board of Directors of the Company who are not Acquiring Persons or
representatives or nominees of or affiliated or associated with an Acquiring
Person and who either were members of such Board of Directors prior to the Stock
Acquisition Date or subsequently became a member and whose election thereto was
approved by a majority of the directors who were not Acquiring Persons or
representatives or nominees of or affiliated or associated with an Acquiring
Person. The Company may, at any time prior to the Stock Acquisition Date, extend
the time in which the Rights may be redeemed. Immediately upon the action of the
Board of Directors of the Company electing to redeem the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person of 50% or more of the outstanding Common Stock of
the Company, the Board of Directors of the Company, with the concurrence of a
majority of the Continuing Directors, may exchange the Rights (other than Rights
beneficially owned by such person which have become void), in whole
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or in part, for Common Stock of the Company at an exchange ratio of one share of
Common Stock per Right (subject to adjustment).
Each share of Preferred Stock purchasable upon exercise of the
Rights will have a minimum preferential dividend of $10.00 per year, but will be
entitled to receive, in the aggregate, a dividend of 100 times the dividend
declared on a share of Common Stock. In the event of liquidation, the holders of
the shares of Preferred Stock will be entitled to receive a minimum liquidation
payment of $100.00 per share, but will be entitled to receive an aggregate
liquidation payment equal to 100 times the payment to be made per share of
Common Stock. Each share of Preferred Stock will have 100 votes, voting together
with the shares of Common Stock. In addition, if dividends on the Preferred
Stock are in arrears for four consecutive quarterly payment periods, the holders
of the Preferred Stock will have the right, voting as a class, to elect two
members of the Board of Directors. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitle to receive 100 times the amount and type of
consideration received per share of Common Stock. The rights of the shares of
Preferred Stock as to dividends and liquidation and in the event of mergers and
consolidations, are protected by antidilution provisions.
Until a Right is exercised, the holder thereof as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights and the Rights Agreement can be amended by the Board of
Directors of the Company in any respect (including, without limitation, any
extension of the period in which the Rights may be redeemed) at any time prior
to the Stock Acquisition Date. From and after such a time, without the approval
of the stockholders of the Company or the holders of the Rights, the Board of
Directors may only supplement or amend the Rights Agreement in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained in the
Rights Agreement which may be defective or inconsistent with any other provision
in the Rights Agreement, (iii) to shorten or lengthen any time period under the
Rights Agreement, or (iv) to make any changes or supplements which the Company
and the Rights Agent may deem necessary or desirable which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an affiliate or associate thereof). The Company may, at any
time prior to the Stock Acquisition Date, amend the Rights Agreement to lower
the threshold of Common Stock beneficial ownership at which a person will become
an Acquiring Person to not less than the greater of (i) a percentage larger than
the largest percentage of Common Stock then known by the Company to be
beneficially owned by a person and (ii) 10%.
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A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated February 21, 1997. A copy of the Rights Agreement is available free charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
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February 28, 1997
Dear Stockholder:
Your directors have voted to adopt a Stock Purchase Rights Plan, intended
to encourage any potential acquirer of Alexion to negotiate directly with the
Board of Directors. The rights plan should help to protect you against possible
coercive or unfair unilateral takeover tactics, such as the acquisition of
controlling stock positions without offering fair value to all stockholders.
To implement the rights plan, your directors have declared a dividend of
one preferred stock purchase Right for each share of Alexion's outstanding
Common Stock. The dividend is payable on March 6, 1997, to stockholders of
record on that date. If a person or group acquires 20% or more of Alexion common
stock, other than pursuant to a tender offer on terms determined by your Board
to be fair and in the best interests of the Company and its stockholders, each
holder of a Right, other than the 20% holder, will thereafter have the right to
purchase common stock of Alexion with a market value of twice the exercise price
of the Right. Rights held by the 20% holder will be void.
A summary of the Rights is enclosed with this letter. We encourage you to
read that summary carefully.
Adoption of the rights plan neither weakens the financial strength of the
Company nor interferes with its business plans. The issuance of the Rights has
no dilutive effect, will not affect reported earnings per share, is not
presently taxable to you or to the Company and will not change the way in which
you presently trade in the Company's shares. No certificates representing the
Rights will be distributed to you unless the Rights become exercisable, which
would only happen upon certain triggering events described in the enclosed
summary.
Your Board and management are confident in the long-term potential of the
Company. We feel deeply our responsibility to serve the best interests of all
stockholders. You can be certain that we will continue to implement and pursue
business strategies and programs that are consistent with this responsibility.
Sincerely,
Leonard Bell, M.D.
President and CEO
Contact: Leonard Bell, M.D. Rhonda Chiger
President & CEO Dewe Rogerson, Inc.
Alexion Pharmaceuticals 212/688-6840
203/776-1790
ALEXION PHARMACEUTICALS ADOPTS SHAREHOLDER RIGHTS PLAN
New Haven, CT, February 19, 1997 -- The Board of Directors of Alexion
Pharmaceuticals, Inc. (Nasdaq: ALXN) today announced that it has approved a
Shareholder Rights Plan. Under this plan, each shareholder will receive a
dividend distribution of one Preferred Share Purchase Right on each outstanding
share of the Company's common stock.
Leonard Bell, M.D., President and Chief Executive Officer of Alexion stated,
"The Rights are designed to assure that all of Alexion's stockholders receive
fair and equal treatment in the event of any proposed takeover of the Company
and to guard against partial tender offers, open market accumulations and other
abusive tactics to gain control of the Company without paying all stockholders
a control premium. The adoption of the plan is not in response to any specific
takeover threat or proposal."
The Rights will be exercisable only if a person or group acquires 20% or more
of Alexion's common stock or announces a tender offer the consummation of which
would result in ownership by a person or group of 20% or more of the common
stock. Each Right will entitle stockholders to buy one one-hundredth of a share
of a new series of junior participating preferred stock at an exercise price of
$75.
If Alexion is acquired in a merger or other business combination transaction
after a person has acquired 20% or more of the Company's outstanding common
stock, each Right will entitle its holder to purchase, at the Right's
then-current exercise price, a number of the acquiring company's common shares
having a market value of twice such price. In addition, if a person or group
acquires 20% or more of Alexion's outstanding common stock, each Right will
entitle its holder (other than such person or member of such group) to
purchase, at the Right's then-current exercise price, a number of Alexion's
common shares having a market value of twice such price.
Following the acquisition by a person or group of beneficial ownership of 20%
or more of the Company's common stock and prior to an acquisition of 50% or
more of the common stock, the Board of Directors may exchange the Rights (other
than Rights owned by such person or group), in whole or in part, at an exchange
ratio of one share of common stock (or one one-hundredth of a share of the new
series of junior participating preferred stock) per Right. Prior to the
acquisition by a person or group of beneficial ownership of 20% or more of the
Company's common stock, the Rights are redeemable for one cent per Right at the
option of the Board of Directors.
The Rights are intended to enable all Alexion stockholders to realize the
long-term value of their investment in the Company. They will not prevent a
takeover but should encourage anyone seeking to acquire the Company to
negotiate with the Board prior to attempting a takeover.
The dividend distribution of preferred share purchase rights will be made on
March 6, 1997, payable to stockholders of record on that date. The Rights will
expire on March 6, 2007. The Rights distribution is not taxable to
stockholders.
Alexion Pharmaceuticals, Inc. was founded in 1992 and is engaged in the
development of selective immunotherapeutic drugs that are generally designed to
inhibit the disease-causing segments of the immune system while preserving the
disease-preventing aspects of the immune system. The Company is developing
three technology platforms: C5 Complement Inhibitors and Apogen T-Cell
Therapeutics which together target severe cardiovascular and autoimmune
disorders; and xenografts for organ transplantation.
This news release contains forward looking statements. Such statements are
subject to certain factors which may cause Alexion's plans to differ or results
to vary from those expected including unexpected preclinical or clinical
results, delays in manufacturing, access to capital, development of commercial
relationships and a variety of risks set forth from time to time in Alexion's
filings with the Securities and Exchange Commission, including but not limited
to Alexion's Annual Report and 10-K for the year ended July 31, 1996. Alexion
undertakes no obligation to publicly release results of any of these
forward-looking statements which may be made to reflect the occurrence of
unanticipated events.
# # #
February 28, 1997 Draft 3.0