AMENDED AND RESTATED RIGHTS AGREEMENT by and between COLUMBIA LABORATORIES, INC. and AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as Rights Agent Dated as of November 29, 2010 TABLE OF CONTENTS

 

 

by and between

 

COLUMBIA LABORATORIES, INC.

 

and

 

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as Rights Agent

 

 

Dated as of

 

November 29, 2010

 

 

 

Section                                   < /font>                                           & #160;                     Page

 

Section 1.

Certain Definitions

1

 

Section 2.

Appointment of Rights Agent

7

 

Section 3.

Issuance of Right Certificates

7

 

Section 4.

Form of Right Certificates

9

 

Section 5.

Countersignature and Registration

9

 

Section 6.

Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates

10

 

Section 7.

Exercise of Rights; Exercise Price; Expiration Date of Rights; Invalidation of Certain Rights

11

 

Section 8.

Cancellation and Destruction of Right Certificates

13

 

Section 9.

Reservation and Availability of Shares of Preferred Stock

13

 

Section 10.

Preferred Stock Record Date

14

 

Section 11.

Adjustment of Exercise Price or Number of Shares

15

 

Section 12.

Certification of Adjusted Exercise Price or Number of Shares

21

 

Section 13.

Consolidation, Merger or Sale or Transfer of Assets or Earning Power

21

 

Section 14.

Fractional Rights and Fractional Shares

25

 

Section 15.

Rights of Action

26

 

Section 16.

Agreement of Right Holders

26

 

Section 17.

Right Certificate Holder Not Deemed a Stockholder

27

 

Section 18.

Concerning the Rights Agent

27

 

Section 19.

Merger or Consolidation of, or Change in Name of, the Rights Agent

27

 

Section 20.

Duties of Rights Agent

28

 

Section 21.

Change of Rights Agent

30

 

Section 22.

Issuance of New Right Certificates

31

 

 

Section                                                                                                    Page

 

 

Section 23.

Redemption

31

 

Section 24.

Notice of Proposed Actions

32

 

Section 25.

Notices

33

 

Section 26.

Supplements and Amendments

34

 

Section 27.

Exchange

34

 

Section 28.

Successors

35

 

Section 29.

Benefits of this Agreement

36

 

Section 30.

Delaware Contract

36

 

Section 31.

Counterparts

36

 

Section 32.

Descriptive Headings

36

 

Section 33.

Severability

36

 

Section 34.

Determinations and Actions by the Board of Directors

36

 

Section 35.

Process to Seek Exemption

40

 

Section 36.

Expiration of NOLs

41

 

Exhibit A                  -      Summary of Rights

 

Exhibit B                  -      Form of Right Certificate

 

AMENDED AND RESTATED RIGHTS AGREEMENT

 

Amended and Restated Rights Agreement (this “Agreement”), dated as of November 29, 2010 (the “Effective Date”), by and between Columbia Laboratories, Inc., a Delaware corporation (the “Corporation”), and American Stock Transfer & Trust Company, LLC (the “Rights Agent”).

 

W I T N E S S E T H:

 

WHEREAS, on March 12, 2002, the Board of Directors of the Corporation adopted a Rights Agreement, dated as of March 13, 2002, by and between the Corporation and First Union National Bank, as Rights Agent (as amended by that certain Agreement and Amendment, dated as of the Effective Date, the “Prior Agreement”), and authorized the issuance of, and declared, a dividend payable in one right (a “Right”) for each share of common stock, $.01 par value per share (“Common Stock”), of the Corporation outstanding as of close of business on March 22, 2002 (the “Record Date”), each such Right representing the right to purchase one one-thousandth of a share of Series D Junior Participating Preferred Stock of the Corporation (the “Pre ferred Stock”) having the rights and preferences set forth in the form of Certificate of Designations attached hereto as Exhibit C duly adopted by the Board of Directors of the Corporation on March 12, 2002, upon the terms and subject to the conditions hereinafter set forth;

WHEREAS, on such date, the Board of Directors of the Corporation further authorized the issuance of one Right (subject to adjustment) with respect to each share of Common Stock which may be issued between the Record Date and the earliest to occur of the Distribution Date, the Expiration Date or the Final Expiration Date (as such terms are hereinafter defined); provided, however, that Rights may be issued with respect to shares of Common Stock that shall become outstanding after the Distribution Date and prior to the Expiration Date in accordance with Section 22 hereof;

WHEREAS, American Stock Transfer & Trust Company, LLC has become the successor Rights Agent pursuant to Section 19 of the Agreement;

WHEREAS, if the Corporation experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended, its ability to utilize its NOLs (as such term is hereinafter defined) for income tax purposes could be substantially limited or lost altogether;

WHEREAS, the Corporation views its NOLs as a valuable asset of the Corporation, which is likely to inure to the benefit of the Corporation and its stockholders, and the Corporation believes that it is in the best interests of the Corporation and its stockholders that the Corporation provide for the protection of the NOLs on the terms and conditions set forth herein;

WHEREAS, in order to prevent the unintentional loss of the NOLs or a limitation on the usage of the NOLs during any period, the Corporation desires to amend and restate the Prior Agreement pursuant to Section 26 thereof; and

WHEREAS, as of the date hereof, the Corporation has satisfied all requirements to effect an amendment and restatement of the Prior Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

 

Section 1. Certain Definitions.  For purposes of this Agreement, the following terms shall have the meanings provided by this Section 1, any capitalized term defined in this Section 1 and used in the following definitions having the meaning provided by this Section 1:

 

(a) “Acquiring Person” shall mean any Person (other than any Exempt Person) that has become, itself or, together with all Affiliates and Associates of such Person, the Beneficial Owner of 4.99% or more of the shares of Voting Stock then outstanding; provided, however, that any Person who would otherwise qualify as an Acquiring Person as of the Close of Business on the Effective Date wi ll not be deemed to be an Acquiring Person for any purpose of this Agreement on and after such date unless and until such time as such Person, together with all Affiliates and Associates of such Person, acquires Beneficial Ownership of one or more additional shares of Voting Stock, unless, upon becoming the Beneficial Owner of such additional shares of Voting Stock, such Person, together with all Affiliates and Associates of such Person, is not then the Beneficial Owner of 4.99% or more of the shares of Voting Stock then outstanding; provided, further, that a Person will not be deemed to have become an Acquiring Person solely as a result of (i) a reduction in the number of shares of Voting Stock outstanding, (ii) the exercise of any options, warrants, rights or similar interests (including upon the initial grant or vesting of restricted stock) granted by the Corporation to its dir ectors, officers and employees, (iii) any unilateral issuance or grant of any security by the Corporation, or (iv) an Exempt Transaction, unless and until such time as such Person, together with all Affiliates and Associates of such Person, acquires the Beneficial Ownership of one or more additional share(s) of Voting Stock.  Notwithstanding the foregoing, if the Board of Directors of the Corporation 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, and such Person divests as promptly as practicable a sufficient number of shares of Voting 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.  For all purposes of this Agreement, (a) the determination of the percentage of the Voting Stock of the Corporation that a Person is deemed to Beneficially Own shall be made on the basis of the value of the Voting Stock as provided in Section 382(k)(6)(C) of the Code and the Treasury Regulations thereunder, and (b) unless specifically provided otherwise in this Agreement, any calculation as to the Voting Stock outstanding, or Benefically Owned by a Person, at any particular time for purposes of determining percentage ownership shall be made pursuant to, and in accordance with, Section 382 of the Code and the Treasury Regulations thereunder.

 

(b) “Affiliate” shall have the respective meanings ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date hereof, and to the extent not included within the foregoing clause of this Section 1(b), shall also include, with respect to any Person, any other Person (whether or not an Exempt Person) whose shares of Voting Stock would be deemed constructively owned by such first Person, deemed owned by a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with shares of Voting Stock owned by such first Person pursuant to the provisions of the Code and the Treasury Regulations thereunder, provided, however, that a Person shall not be deemed to be the Affiliate of another Person solely because either or both Persons are or were directors of the Corporation.

 

(c) “Associate” of a Person shall mean (i) with respect to a corporation, any officer or director thereof or any Associate of any Subsidiary thereof, or any Beneficial Owner of 10% or more of any class of equity security thereof, (ii) with respect to an association, any officer or director thereof or any Associate of a Subsidiary thereof, (iii) with respect to a partnership, any general partner thereof or any limited partner thereof who is, directly or indirectly, the Beneficial Owner of a 10% or greater ownership interest therein, and any Associate of any Subsidiary thereof, (iv) with respect to a limited liability company, any manager or managing member thereof a nd any Beneficial Owner of 10% or more or any class of membership interest therein or other equity security thereof, and any Associate of any Subsidiary thereof, (v) with respect to a business trust, any officer or trustee thereof or any Associate of any Subsidiary thereof, (vi) with respect to any other trust or an estate, any trustee, executor or similar fiduciary and any Person who has a 15% or greater interest as a beneficiary in the income from or principal of such trust or estate, (vii) with respect to a natural person, the parents and children thereof and any spouse or relative thereof, or any relative of such spouse, who has the same home as such person, and (viii) any Affiliate of such Person, and to the extent not included within the foregoing clause of this Section 1(c), shall also include, with respect to any Person, any other Person (whether or not an Exempt Person) whose shares of Voting Stock would be deemed constructively owned by such first Person, deemed owned by a single “entity ” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with shares of Voting Stock owned by such first Person pursuant to the provisions of the Code and the Treasury Regulations thereunder; provided, however, that a Person shall not be deemed to be the Associate of another Person solely because either or both Persons are or were directors of the Corporation.

 

(d) A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “Beneficially Own” or have “Beneficial Ownership” of any securities:

 

(i) which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the Right to Acquire (other than upon exercise or exchange of the Rights); provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “Beneficially Own” (w) securities (including rights, options or warrants) acquired after the Effective Date which are convertible into or exercisable or exchangeable for Voting Stock until such time as such securities are converted into or exercised or exchanged for Voting Stock except to the extent such rights, options or warrants would be treated as exercised on the date of its acquisition or transfer under Section 1.382-4(d) of the Treasury Re gulations, (x) securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (y) securities which such Person has a Right to Acquire upon the exercise of Rights at any time prior to the time that any Person becomes an Acquiring Person; or (z) securities issuable upon the exercise of Rights from and after the time that any Person becomes an Acquiring Person if such Rights were acquired by such Person prior to the Distribution Date or pursuant to Section 3 or Section 22 (“Original Rights”) or pursuant to Section 11(f) or Section 11(j) with respect to an adjustment to Original Rights;

 

(ii) which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has or shares the right to vote or dispose of, or has “beneficial ownership” of (as defined under Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including, with respect to any Person, any other Person (whether or not an Exempt Person) whose shares of Voting Stock would be deemed constructively owned by such first Person, deemed owned by a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with shares of Voting Stock owned by such first Person pursuant to the provisions of the Code and the Treasury Regulations thereunder; provide d, however, that securities described in this Section 1(d)(ii) shall not include securities expressly addressed in the proviso to Section 1(d)(i); or

 

(iii) of which any other Person is the Beneficial Owner, if such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) with such other Person (or any of such other Person’s Affiliates or Associates) with respect to acquiring, holding, voting or disposing of any securities of the Corporation, including, with respect to any Person, any other Person (whether or not an Exempt Person) whose shares of Voting Stock would be deemed constructively owned by such first Person, deemed owned by a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with shares of Voting Stock owned by such fir st Person pursuant to the provisions of the Code and the Treasury Regulations thereunder; provided, however, that securities described in this Section 1(d)(iii) shall not include securities expressly addressed in the proviso to Section 1(d)(i);

 

provided, however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, any security (A) if such Person has the right to vote such security pursuant to an agreement, arrangement or understanding (whether or not in writing) which (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 or Schedule 13G under the Exchange Act (or any comparable or successor report), or (B) if such Beneficial Ownership arises solely as a result of such Person’s status as a “clearing agency,” as defined in Section 3(a)(23) of the Exchange Act; provided, further, that nothing in this Section 1(d) shall cau se a Person engaged in business as an underwriter of securities or member of a selling group to be the Beneficial Owner of, or to Beneficially Own, any securities acquired through such Person’s participation in good faith in an underwriting syndicate until the expiration of 40 calendar days after the date of such acquisition, or such later date as the Board of Directors of the Corporation may determine in any specific case. Notwithstanding anything herein to the contrary, to the extent not within the foregoing provisions of this Section 1(d), a Person shall be deemed the Beneficial Owner of, and shall be deemed to Beneficially Own or have Beneficial Ownership of, securities which such Person would be deemed to beneficially own, constructively own or which would be aggregated with shares owned by such Person pursuant to Section 382 of the Code and the Treasury Regulations thereunder, including with respect to any Person, any other Person (whether or not an Exempt Person) whose shares of Voting Stock wou ld be deemed constructively owned by such first Person, deemed owned by a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with shares of Voting Stock owned by such first Person pursuant to the provisions of the Code and the Treasury Regulations thereunder.

 

(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 or the state in which the principal office of the Rights Agent are authorized or obligated by law or executive order to close.

 

(f) “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.

 

(g) “Code” shall mean the Internal Revenue Code of 1986, as amended.  References to specific sections of the Code are to the Sections as in effect on the Effective Date, and any successor or replacement sections.

 

(h) “Common Stock” when used with reference to the Corporation shall collectively mean the Common Stock of the Corporation as defined in the first recital hereof and any other common stock of the Corporation into or for which it is changed, converted or exchanged.  “Common Stock” when used with reference to any Person other than the Corporation which shall be organized in corporate form shall mean the capital shares or other equity security having of all classes of capital shares or equity securities of such corporation the greatest aggregate voting power in the election of directors. 0; “Common Stock” when used with reference to any Person which shall not be organized in corporate form shall mean units of beneficial interest in the profits or losses of such Person or other equity security of such Person having of all classes of equity securities of such Person the greatest aggregate voting power in the election of the directors, trustees, managers or other Persons performing like governance functions for such Person.

 

(i) “Corporation” shall have the meaning provided at the beginning hereof; provided, however, that “Corporation” shall also include any successors to the Corporation as provided by Section 28 hereof and shall mean a Principal Party as provided by Section 13(a) and 13(b)hereof.

 

(j) “Distribution Date” shall have the meaning set forth in Section 3(b) hereof.

 

(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(l) “Exchange Consideration” shall have the meaning set forth in Section 27 hereof.

 

(m) “Excess Exchange Shares” shall have the meaning set forth in Section 27 hereof.

 

(n) “Exempt Person”  shall mean (i) the Corporation, any Subsidiary of the Corporation, in each case including, without limitation, the officers and members of the boards of directors thereof acting in their capacities as such, or any employee benefit plan or stock ownership plan of the Corporation or of any Subsidiary of the Corporation or any entity or trustee holding shares of capital stock of the Corporation for or pursuant to the terms of any such plan, or for the purpose of funding other employee benefits for employees of the Corporation or any Subsidiary of the Corporation, and (ii) any Person deemed to be an “Exempt Person” in accordan ce with Section 35.

 

(o) “Exemption Request” shall have the meaning set forth in Section 35 hereof.

 

(p) “Exempt Transaction” shall mean any transaction or series of related transactions pursuant to which any Person would become an Acquiring Person that the Board of Directors of the Corporation determines prior to such Person becoming an Acquiring Person, in its sole discretion, is exempt from this Agreement, which determination shall be irrevocable.

 

(q) “Exercise Price” shall have the meaning set forth in Section 4 hereof.

 

(r) “Existing Holder” shall mean any Person who, immediately prior to the Effective Date is the Beneficial Owner of 4.99% or more of the Common Stock then outstanding.

 

(s) “Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

 

(t) “Fair Market Value” of any property shall mean the fair market value of such property as determined in accordance with Section 11(b) hereof.

 

(u) “Final Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

 

(v) “NASDAQ” shall have the meaning set forth in Section 11(b) hereof.

 

(w) “NOLs” shall mean the Corporation’s net operating loss carryforwards that are available for U.S. federal and/or state tax purposes.

 

(x) “Original Right” shall have the meaning set forth in Section 1(d)(i) hereof.

 

(y) “Person” shall mean any individual, company, firm, corporation, partnership (general or limited), limited liability company, unincorporated association, trust, joint venture or other entity.

 

(z) “Principal Party” shall have the meaning set forth in Section 13(b) hereof.

 

(aa) “Redemption Price” shall have the meaning set forth in Section 23(a) hereof.

 

(bb) “Requesting Person” shall have the meaning set forth in Section 35 hereof.

 

(cc) “Right Certificate” shall have the meaning set forth in Section 3(d) hereof.

 

(dd) "Right to Acquire" shall mean a legal, equitable or contractual right to acquire (whether directly or indirectly and whether exercisable immediately, or only after the passage of time, compliance with regulatory requirements, fulfillment of a condition or otherwise), pursuant to any agreement, arrangement or understanding (including any purchase orders for shares of Voting Stock initiated prior to the Effective Date), whether or not in writing (excluding customary agreements entered into in good faith with and between an underwriter and selling group members in connection with a firm commitment underwriting registered under the Securities Act), or upon the exercise of any option, warrant or right, through conversion of a security, pursuant to the power to revoke a trust, discretionary account or similar arrangement, pursuant to the power to terminate a repurchase or similar so-called "stock borrowing" agreement or arrangement, or pursuant to the automatic termination of a trust, discretionary account or similar arrangement.

 

(ee) “Securities Act” shall mean the Securities Act of 1933, as amended.

 

(ff)  “Stock Acquisition Date” shall mean the first date on which there shall be a public announcement by the Corporation or an Acquiring Person that an Acquiring Person has become such (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Exchange Act) or such earlier date as a majority of the Board of Directors of the Corporation shall become aware of the existence of an Acquiring Person as confirmed by action of the Board of Directors of the Corporation taken by the affirmative vote of a majority of the Board of Directors of the Corporation.

 

(gg) “Subsidiary” of a Person shall mean any corporation or other entity of which securities or other ownership interests having ordinary voting power sufficient to elect a majority of the board of directors of such corporation or other entity or other persons performing similar functions are beneficially owned, directly or indirectly, by such Person or by any corporation or other entity that is otherwise controlled by such Person.

 

(hh) “Summary of Rights” shall have the meaning set forth in Section 3(a) hereof.

 

(ii) “Trading Day” shall have the meaning set forth in Section 11(b) hereof.

 

(jj) “Transfer Tax” shall mean any tax or charge, including any documentary stamp tax, imposed or collected by any governmental or regulatory authority in respect of any transfer of any security, instrument or right, including the Rights, shares of the Common Stock and shares of the Preferred Stock.

 

(kk) “Treasury Regulations” shall mean final, temporary and proposed income tax regulations promulgated under the Code, including any amendments thereto.  References to specific Treasury Regulations are to the Treasury Regulations in effect on the Effective Date, and to any successor or replacement regulations.

 

(ll) “Trust” shall have the meaning set forth in Section 27(a) hereof.

 

(mm) “Trust Agreement” shall have the meaning set forth in Section 27(a) hereof.

 

(nn) “Voting Stock” shall mean (i) the Common Stock of the Corporation, (ii) any other shares of capital stock of the Corporation entitled to vote generally in the election of directors or entitled generally to vote together with the Common Stock in respect of a merger, consolidation, sale of all or substantially all of the Corporation’s assets, liquidation, dissolution or winding up, and (iii) any other shares of capital stock of the Corporation that are included in the definition of “stock” under Section 382(k)(6)(A) of the Code and the Treasury Regulations thereunder.

 

Any determination required to be made by the Board of Directors of the Corporation for purposes of applying the definitions contained in this Section 1 shall be made by a majority of the Board of Directors of the Corporation in its good faith judgment, which determination shall be binding on the Rights Agent and the holders of the Rights.

 

Section 2. Appointment of Rights Agent.  The Corporation hereby appoints the Rights Agent to act as agent for the Corporation and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date be the holders of Common Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment.  The Corporation may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable, upon ten (10) days prior written notice to the Rights Agent.  The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omiss ions of any such Co-Rights Agent.

 

Section 3. Issuance of Right Certificates.

 

(a) On the Record Date (or as soon as practicable thereafter), the Corporation or the Rights Agent shall send a copy of a Summary of Rights, in substantially the form attached hereto as Exhibit A (the “Summary of Rights”), by first class mail, postage prepaid, to each record holder of the Common Stock as of the Record Date, at the address of such holder shown on the records of the Corporation.

 

(b) Until the Close of Business on the day which is the earlier of (i) the tenth day after the Stock Acquisition Date or (ii) the tenth Business Day (or such later date as may be determined by action of the Board of Directors of the Corporation prior to such time as any Person becomes an Acquiring Person) after the date of the commencement by any Person (other than an Exempt Person) of a tender or exchange offer upon the successful consummation of which such Person, or any Affiliate or Associate of such Person, would be an Acquiring Person (including any such date which is after the date of this Agreement and prior to the issuance of the Rights; the earlier of such dates being herein referred to as the “Distribution Date”), (x) the Rights shall be evidenced by the certificates for Common Stock (or in the case of uncertificated shares of Common Stock, by the book-entry account that evidences record ownership for such shares) registered in the names of the holders of Common Stock (together with, in the case of certificates for Common Stock outstanding as of the Record Date, the Summary of Rights) and not by separate Right certificates and the record holders of such certificates (or such book-entry accounts) for Common Stock shall be the record holders of the Rights represented thereby and (y) each Right shall be transferable only simultaneously and together with the transfer of a share of Common Stock (subject to adjustment as hereinafter provided).  Until the Distribution Date (or, if earlier, the Expiration Date or Final Expiration Date), the surrender for transfer of any certificate for Common Stock (or the effectuation of a book-entry transfer of shares of C ommon Stock) shall constitute the surrender for transfer of the Right or Rights associated with the Common Stock evidenced thereby, whether or not accompanied by a copy of the Summary of Rights.

 

(c) Rights shall be issued in respect of all shares of Common Stock that become outstanding after the Record Date but prior to the earliest of the Distribution Date, the Expiration Date or the Final Expiration Date.  Certificates for Common Stock (including, without limitation, certificates issued upon original issuance, disposition from the Corporation’s treasury or transfer or exchange of Common Stock) after the Record Date but prior to the earliest of the Distribution Date, the Expiration Date, or the Final Expiration Date shall have impressed, printed, written or stamped thereon or otherwise affixed thereto the following legend:

 

This certificate also evidences and entitles the holder hereof to the same number of Rights (subject to adjustment) as the number of shares of Common Stock represented by this certificate, such Rights being on the terms provided under the Rights Agreement by and between Columbia Laboratories, Inc. and First Union National Bank (the “Rights Agent”), dated as of March 13, 2002, as it may be amended from time to time (the “Agreement”), the terms of which are incorporated herein by reference and a copy of which is on file at the principal executive offices of Columbia Laboratories, Inc.  Under certain circumstances, as set forth in the Agreement, such Rights shall be evidenced by separate certificates and shall no longer be evidenced by this certificate.  Columbia Laboratories, Inc. shall mail to the registered holder of this certificate a copy of the Agreement without charge within five days after receipt of a written request therefor.  As provided in Section 7(e) of the Agreement, Rights issued to or Beneficially Owned by Acquiring Persons or their Affiliates or Associates (as such terms are defined in the Agreement) or any subsequent holder of such Rights shall be null and void and may not be exercised by or transferred to any Person.

 

With respect to such certificates containing the foregoing legend, until the Distribution Date the Rights associated with the Common Stock represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate, except as otherwise provided herein, shall also constitute the transfer of the Rights associated with the Common Stock represented thereby.  In the event that the Corporation purchases or otherwise acquires any Common Stock after the Record Date but prior to the Distribution Date, any Rights associated with such Common Stock shall be deemed canceled and retired so that the Corporation shall not be entitled to exercise any Rights associated with the Common Stock which are no longer outstanding.  Notwithstanding this paragraph (c), the omission of a l egend shall not affect the enforceability of any part of this Agreement or the rights of any holder of the Rights.

 

(d) As soon as practicable after the Distribution Date, the Corporation will prepare and execute, the Rights Agent will countersign, and the Corporation will send or cause to be sent (and the Rights Agent will, if requested, send), by first class mail, postage prepaid, to each record holder of the Common Stock as of the Close of Business on the Distribution Date, as shown by the records of the Corporation, at the address of such holder shown on such records, a certificate in the form provided by Section 4 hereof (a “Right Certificate”), evidencing one Right (subject to adjustment as provided herein) for each share of Common Stock so held.  As of and after t he Distribution Date, the Rights shall be evidenced solely by Right Certificates and may be transferred by the transfer of the Right Certificate as permitted hereby, separately and apart from any transfer of one or more shares of Common Stock.

 

Section 4. Form of Right Certificates.  The Right Certificates (and the forms of election to purchase shares, certificate and assignment to be printed on the reverse thereof), when, as and if issued, shall be substantially in the form set forth in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Common Stock or the Rights may from time to time be listed or as the Corporation may deem appropriate to conform to usage or otherwise and as are not inconsistent with the provisions of this Agreement.  Subject to the provisions of Section 22 hereof, Right Certificates evidencing Rights whenever issued, (i) shall be dated as of the date of issuance of the Rights they represent and (ii) subject to adjustment from time to time as provided herein, on their face shall entitle the holders thereof to purchase such number of one one-thousandths of a share (including fractional shares which are integral multiples of one-thousandth of a share) of Preferred Stock as shall be set forth thereon at the price per one one-thousandth of a share of Preferred Stock payable upon exercise of a Right provided by Section 7(b) hereof, as the same may from time to time be adjusted as provided herein (the “Exercise Price”).

 

Section 5. Countersignature and Registration.

 

(a) Each Right Certificate shall be executed on behalf of the Corporation by its Chairman of the Board, President or any Vice President, either manually or by facsimile signature, and have affixed thereto the Corporation’s seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Corporation, either manually or by facsimile signature.  Each Right Certificate shall be countersigned by the Rights Agent either manually or by facsimile signature and shall not be valid for any purpose unless so countersigned.  In case any officer of the Corporation who shall have signed any Right Certificate shall cease to be such officer of the Corporation before countersignature by th e Rights Agent and issuance and delivery of the certificate by the Corporation, such Right Certificate, nevertheless, may be countersigned by the Rights Agent and issued and delivered with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Corporation.  Any Right Certificate may be signed on behalf of the Corporation by any person who, on the date of the execution of such Right Certificate, shall be a proper officer of the Corporation to sign such Right Certificate, although at the date of the execution of this Agreement any such person was not such an officer.

 

(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office or one or more offices designated as the appropriate place for surrender of Right Certificates upon exercise or transfer, and in such other locations as may be required by law, books for registration and transfer of the Right Certificates issued hereunder.  Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates.

 

Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.

 

(a) Subject to the provisions of Sections 7(e), 7(f) 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 earlier of the Expiration Date or the Final Expiration Date, any Right Certificate, may be (i) transferred or (ii) split up, combined or exchanged for one or more other Right Certificates, entitling the registered holder to purchase a like number of one one-thousandths of a share of Preferred Stock as the Right Certificate or Rights Certificates surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate shall surrender the Right Certificate at the office of the Rights Agent designated for the surrender of Right Certificates with the form of certificate and assignment on the reverse side thereof duly endorsed (or enclose with such Right Certificate a written instrument of transfer in form satisfactory to the Corporation and the Rights Agent), duly executed by the registered holder thereof or his attorney duly authorized in writing, and with such signature duly guaranteed.  Any registered holder desiring to split up, combine or exchange any Right Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate to be split up, combined or exchanged at the office of the Rights Agent designated therefor.  Thereupon, the Rights Agent shall countersign and deliver to the person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested.  The Corporation may require payment of a sum sufficient to cover any Transfer Tax that may be imposed in connect ion with any transfer, split up, combination or exchange of any Right Certificates.

 

(b) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof, at any time after the Distribution Date and prior to the Expiration Date, upon receipt by the Corporation 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 Corporation, reimbursement to the Corporation and the Rights Agent of all reasonable expenses incidental thereto, or upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Corporation shall cause a new Right Certificate of like tenor to be issued and delivered to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

 

Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights; Invalidation of Certain Rights.

 

(a) The Rights shall not be exercisable until, and shall become exercisable on, the Distribution Date (unless otherwise provided herein, including, without limitation, the restrictions on exercisability set forth in Section 7(e), 23(a) and 27(b) hereof).  Except as otherwise provided herein, the Rights may be exercised, in whole or in part, at any time commencing with the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase and certificate on the reverse side thereof duly executed (with signatures duly guaranteed), to the Rights Agent at the designated office of the Rights Agent in New York, together with payment of the Exercise Price for each Right exercised (as the same may have been adjusted as hereinafter provided), at or prior to the Close of Business on the earlier of (i) March 12, 2012 (the “Final Expiration Date”) or (ii) the date on which the Rights are redeemed as provided in Section 23 hereof or the date on which the Rights are exchanged as provided in Section 27 hereof (such earlier date being herein referred to as the “Expiration Date”).

 

(b) The Exercise Price shall initially be $30 for each one one-thousandth (1/1000) of a share of Preferred Stock issued pursuant to the exercise of a Right.  The Exercise Price and the number of one one-thousandths of a share of Preferred Stock or other securities or property to be acquired upon exercise of a Right shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof.  The Exercise Price shall be payable in lawful money of the United States of America, in accordance with paragraph (c) below.

 

(c) Except as otherwise provided herein, upon receipt of a Right Certificate representing exercisable Rights with the form of election to purchase and certificate duly executed, accompanied by payment by certified check, cashier’s check, bank draft or money order payable to the Corporation or the Rights Agent of the Exercise Price for the shares of Preferred Stock to be purchased and an amount equal to any applicable Transfer Tax required to be paid by the holder of the Right Certificate in accordance with Section 9(e) hereof, the Rights Agent shall thereupon promptly (i) requisition from any transfer agent of the Preferred Stock of the Corporation one or more certificates representing the number of shares of Preferre d Stock to be so purchased, and the Corporation hereby authorizes and directs such transfer agent to comply with all such requests, (ii) as provided in Section 14(b) hereof, at the election of the Corporation, cause depositary receipts to be issued in lieu of fractional shares of Preferred Stock, (iii) if the election provided for in the immediately preceding clause (ii) has not been made, requisition from the Corporation the amount of cash to be paid in lieu of the issuance of fractional shares (other than fractions that are integral multiples of one one-thousandth of a share) in accordance with Section 14(b) hereof, (iv) after receipt of such Preferred Stock certificates and, if applicable, depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (v) when appropriate, after receipt, promptly deliver such cash to or upon the order of the registered holder of such Right Certificate; provided, however, that in the case of a purchase of securities other than Preferred Stock, pursuant to Section 13 hereof, the Rights Agent shall promptly take the appropriate actions corresponding in such case to that referred to in the foregoing clauses (i) through (v) of this Section 7(c).  Notwithstanding the foregoing provisions of this Section 7(c), the Corporation may suspend the issuance of shares of Preferred Stock and other securities upon exercise of a Right for a reasonable period, not in excess of 90 days, during which the Corporation seeks to register under the Securities Act, and any applicable securities law of any other jurisdiction, the shares of Preferred Stock or other securities to be issued pursuant to the Rights; provided, however, that nothing contained in this Section 7(c) shall relieve the Corporation of its obligations under Section 9(d) hereof.  Upon any such suspension, the Corporation 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.

 

(d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or his assign, subject to the provisions of Section 14(b) hereof.

 

(e) Notwithstanding any provision of this Agreement to the contrary, from and after the time (the “invalidation time”) when any Person first becomes an Acquiring Person, any Rights that are Beneficially Owned by (x) such Acquiring Person (or any Associate or Affiliate of such Acquiring Person), (y) a transferee of such Acquiring Person (or any such Associate or Affiliate) who becomes a transferee after the invalidation time or (z) a transferee of such Acquiring Person (or any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the invalidation time pursuant to either (I) a transfer from the Acquiring Person (or any such Associate or Af filiate) to holders of its equity securities or to any Person with whom it has any continuing agreement, arrangement or understanding regarding the transferred Rights or (II) a transfer which the Board of Directors of the Corporation has determined is part of a plan, arrangement or understanding which has the purpose or effect of avoiding the provisions of this Section 7(e), and subsequent transferees of such Persons referred to in clause (y) and (z) above, shall be null and void without any further action and any holder of such Rights shall thereafter have no rights whatsoever with respect to such Rights under any provision of this Agreement.  No Right Certificate shall be issued pursuant to Section 3 hereof that represents Rights beneficially owned by an Acquiring Person or any Affiliate or Associate thereof whose Rights would be null and void pursuant to the provisions of this Section 7(e); no Right Certificate shall be issued at any time upon the transfer of any Rights to an Acquiring Pers on (or an Affiliate or Associate of such Acquiring Person) whose Rights would be null and void pursuant to the provisions of this Section 7(e) or any Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to the Rights Agent for transfer to an Acquiring Person (or an Associate or Affiliate of such Acquiring Person) whose Rights would be void pursuant to the provisions of this Section 7(e) shall be cancelled.  The Corporation shall use all reasonable efforts to ensure that the provisions of this Section 7(e) are complied with, but it 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 its Affiliates, Associates or transferees hereunder.

 

(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Corporation shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate following the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof and such other information as the Corporation or the Rights Agent 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 Corporation or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement.  The Corporation shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall cancel and retire, any Right Certificat e purchased or acquired by the Corporation otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled Right Certificates to the Corporation, or shall, at the written request of the Corporation, destroy such cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Corporation.

 

Section 9. Reservation and Availability of Shares of Preferred Stock.

 

(a) The Corporation covenants and agrees that it will cause to be reserved and kept available out of the authorized and unissued shares of Preferred Stock or out of authorized and issued shares of Preferred Stock held in its treasury, such number of shares of Preferred Stock as will from time to time be sufficient to permit the exercise in full of all outstanding Rights.

 

(b) The Corporation shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares of Preferred Stock issued or reserved for issuance in accordance with this Agreement to be listed, upon official notice of issuance, upon the principal national securities exchange, if any, upon which the Common Stock is listed or, if the principal market for the Common Stock is not on any national securities exchange, to be eligible for quotation in the National Association of Securities Dealers’ Automated Quotation System or any successor thereto or other comparable quotation system.

 

(c) The Corporation covenants and agrees that it will take all such action as may be necessary to ensure that all shares of Preferred Stock delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Exercise Price in respect thereof), be duly and validly authorized and issued and fully paid and nonassessable shares.

 

(d) The Corporation shall use its best efforts to (i) file, as soon as practicable following the occurrence of the event described in Section 11(a)(ii), or as soon as is required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act, with respect to the shares of Preferred Stock purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (a) the date as of which the Rights are no longer exercisable for Prefer red Stock and (b) the earlier of the Expiration Date and the Final Expiration Date.  The Corporation may temporarily suspend, for a period of time not to exceed ninety days, the issuance of shares of Preferred Stock upon exercise of a Right in order to prepare and file a registration statement under the Securities Act and permit it to become effective.  The Corporation will also take such action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various states in connection with the exercisability of the Rights.  Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained and until a registration statement under the Securities Act (if required) shall have been declared effective.

 

(e) The Corporation covenants and agrees that it will pay when due and payable any and all United States federal and state Transfer Taxes which may be payable in respect of the issuance or delivery of the Right Certificates or of any shares of Preferred Stock issued or delivered upon the exercise of Rights.  The Corporation shall not, however, be required to pay any Transfer Tax which may be payable in respect of any transfer or delivery of a Right Certificate to a Person other than, or the issuance or delivery of certificates for Preferred Stock upon exercise of Rights in a name other than that of, the registered holder of the Right Certificate, and the Corporation shall not be required to issue or deliver a Right Certific ate or certificate for Preferred Stock to a Person other than such registered holder until any such Transfer Tax shall have been paid (any such Transfer Tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Corporation’s satisfaction that no such Transfer Tax is due.

 

(f) The requirements of this Section 9 shall apply to shares of Common Stock of the Corporation if the Corporation has elected in accordance with Section 11(a)(iii) hereof to substitute shares of Common Stock for shares of Preferred Stock that otherwise may be purchased upon the exercise of Rights.

 

Section 10. Preferred Stock Record Date.  Each Person in whose name any certificate for shares of Preferred Stock is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Stock represented thereby on, and such certificate shall be dated as of, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Exercise Price (and any applicable Transfer Taxes) was made; provided, however, that, if the date of such surrender and pa yment is a date upon which the Preferred Stock transfer books of the Corporation are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated as of, the next succeeding Business Day on which the Preferred Stock transfer books of the Corporation are open.

 

Section 11. Adjustment of Exercise Price or Number of Shares.  The Exercise Price and the number of shares of Preferred Stock which may be purchased upon exercise of a Right are subject to adjustment from time to time as provided in this Section 11.

 

(a) (i)  In the event the Corporation shall at any time after the date of this Agreement (A) declare or pay any dividend on Common Stock payable in shares of Common Stock, (B) subdivide or split the outstanding shares of Common Stock into a greater number of shares or (C) combine or consolidate the outstanding shares of Common Stock into a smaller number of shares or effect a reverse split of the outstanding shares of Common Stock, then and in each such event the number of one one-thousandths of a share of Preferred Stock issuable upon the exercise of a Right after the record date for such event (if one shall have been established or, if not, after the date of such event) shall be the number of one one-thousandth s of a share of Preferred Stock issuable immediately prior to such event multiplied by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which is the number of shares of Common Stock outstanding immediately after such event, and the Exercise Price to be in effect after the record date for such event (if one shall have been established or, if not, after the date of such event) shall be determined by multiplying the Exercise Price in effect immediately prior to such event by such fraction.  If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).

 

(ii) Subject to Section 27 hereof, in the event that any Person shall become an Acquiring Person, then, subject to the last sentence of Section 23(a) hereof and except as otherwise provided in this Section 11, each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive upon exercise of such Right in accordance with the terms of this Agreement and payment of the Exercise Price, such number of one one-thousandths of a share of Preferred Stock as shall equal the result obtained by (1) multiplying the then current Exercise Price by the number of one one-thousandths of a share of Preferred Stock for which a Right would, absent adjustment pursuant to this Section 11(a)(ii), be then e xercisable and dividing the product by (2) 50% of the proportionate Fair Market Value of one one-thousandth of a share of the Preferred Stock (determined pursuant to Section 11(b) hereof) on the Stock Acquisition Date in respect of such event; provided, however, if the transaction that would otherwise give rise to the foregoing adjustment is also subject to the provisions of Section 13 hereof, then only the provisions of Section 13 hereof shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii).

 

(iii) In the event that the Corporation does not have available sufficient authorized but unissued Preferred Stock to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii), the Corporation shall take all such action as may be necessary to authorize and reserve for issuance such number of additional shares of Preferred Stock as may from time to time be required to be issued upon the exercise in full of all Rights from time to time outstanding and, if necessary, shall use its best efforts to obtain stockholder approval thereof.  In lieu of issuing shares of Preferred Stock in accordance with the foregoing subparagraph (ii), the Corporation may, if the Board of Directors of the Corporat ion determines that such action is necessary or appropriate, elect to issue or pay, upon the exercise of the Rights, cash, property, shares of Preferred Stock or Common Stock, or any combination thereof, having an aggregate Fair Market Value equal to the Fair Market Value of the shares of Preferred Stock which otherwise would have been issuable pursuant to Section 11(a)(ii) hereof as of the date the Board of Directors of the Corporation makes such election (which Fair Market Value shall be determined as provided by Section 11(b) hereof).  Subject to Section 23 hereof, any such election by the Board of Directors of the Corporation must be made and publicly announced within thirty (30) days after the date on which the event described in Section 11(a)(ii) occurs and shall be applicable with respect to all Rights exercised after such public announcement.  Notice of such election shall promptly be given to the Rights Agent.

 

(b) For the purpose of this Agreement, the “Fair Market Value” of any share of Preferred Stock, Common Stock or any other stock or any Right or other security or any other property on any date shall be determined as provided in this Section 11(b).  In the case of a publicly traded (as such term is hereinafter defined) stock or other security, the Fair Market Value thereof on any date shall be deemed to be the average of the daily closing prices per share of such stock or per unit of such other security for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to but not including such date; provided, however, that in the event that the Fair Market Value of any share of Common Stock is to be determined as of a date that is within 30 Trading Days after (i) the ex-dividend date for a dividend or distribution on the Common Stock payable in shares of Common Stock or securities convertible into shares of Common Stock or (ii) the effective date of any subdivision, split, combination, consolidation, reverse stock split or reclassification of the Common Stock, then, and in each such case, the Fair Market Value shall be appropriately adjusted by the Board of Directors of the Corporation to take into account such dividend, distribution, subdivision, split, combination, consolidation, reverse stock split or reclassification.  The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regula r way (in either case, as reported in the applicable transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange), or, if the securities are not listed or admitted to trading on the New York Stock Exchange, as reported in the applicable transaction reporting system with respect to securities listed on the principal national securities exchange (which, if approved by the Board of Directors of the Corporation, may be a securities exchange of a country other than the United States of America) on which such security is listed or admitted to trading; or, if not listed or admitted to trading on any such 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 quotation report ing system then in use in the United States of America; or, if no bids for such security are so quoted, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such security selected by the Board of Directors of the Corporation.  The term “Trading Day” shall mean a day on which the principal national securities exchange on which such security is listed or admitted to trading is open for the transaction of business or, if such security is not listed or admitted to trading on any national securities exchange, a Business Day.  For purposes of this Section 11(b), a stock or other security shall be considered “publicly traded” only (i) if registered under Section 12 of the Exchange Act or exempt from such registration pursuant to Section 12(g)(2) (B), (C) or (G) of the Exchange Act or (ii) if traded on a national securities exchange of a country other than the United States of America approved by the Board of Directors of the Corporation or (iii) if, in the judgment of the Board of Directors of the Corporation, there is sufficient active trading in such stock or other security that reported trading transactions therein fairly reflect the fair market value thereof.  If a security is not publicly traded, “Fair Market Value” shall mean the fair value per share of stock or per other unit of such other security, as determined by an independent investment banking firm experienced in the valuation of securities selected in good faith by the Board of Directors of the Corporation, or, if no such investment banking firm is, in the good faith judgment of the Board of Directors of the Corporation, available to make such determination, as determined in good faith by the Board of Directors of the Corporation; provided, however, that for purposes of making the adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value of a share of Preferred Stock, unless the Preferred Stock shall at the time be publicly traded (in which case its Fair Market Value shall be determined pursuant to the foregoing provisions of this Section 11(b)), shall be 100% of the product of the Fair Market Value of a share of Common Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple applicable to the Preferred Stock (as defined in the certificate of designations of the Corporation relating to the Preferred Stock); provided, however, that the Board of Directors of the Corporation may, by resolution, determine that the Fair Market Value of a share of Preferred Stock shall b e more than such amount but not more than 110% of the product of the then Fair Market Value of a share of Common Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple applicable to the Preferred Stock.  In the case of property other than securities, the “Fair Market Value” thereof shall be determined in good faith by the Board of Directors of the Corporation based upon such appraisals or valuation reports of such independent experts as the Board of Directors of the Corporation shall in good faith determine to be appropriate in accordance with good business practices and fair to the interests of the holders of Rights.  Any determination made by the Board of Directors of the Corporation as provided for by this Section 11(b) shall be described in a statement filed by the Corporation with the Rights Agent, shall be effective thereupon and only thereupon and shall be binding upon the Rights Agent and, as provided by Section 34 hereof, all holders of Rights.< /font>

 

(c) In case the Corporation shall fix a record date for the issuance of rights, options or warrants to all holders of Common Stock entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Common Stock or securities convertible into Common Stock at a price per share (or having a conversion price per share, if a security convertible into Common Stock) less than the then current per share Fair Market Value of the Common Stock on such record date, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current Fair Market Value and the denominator of which shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible).  In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Corporation, whose determination shall be described in a statement filed with the Rights Agent.  Shares of Common Stock owned by or held for the account of the Corpora tion shall not be deemed outstanding for the purpose of any such computation.  Such adjustment shall be made successively whenever such a record date is fixed and in the event that such rights, options or warrants are not so issued, the Exercise Price shall be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

 

(d) In case the Corporation shall fix a record date for the making of a distribution to all holders of the Common Stock (including any such distribution made in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation) of evidences of indebtedness of the Corporation or any of its Subsidiaries, cash (other than a regular quarterly cash dividend not in excess of 150% of the previous regular quarterly cash dividend), other assets (other than a dividend payable in shares of Common Stock) or options, rights or warrants to subscribe for shares of the Corporation or any Subsidiary (excluding those referred to in Section 11(c) hereof), the Exercise Price to be in effect after such record d ate shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair Market Value of the shares of Common Stock on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Corporation, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the assets or evidences of indebtedness or options, rights or warrants so to be distributed in respect of one share of Common Stock, and the denominator of which shall be such current Fair Market Value of the shares of Common Stock.  Such adjustment shall be made successively whenever such a record date is fixed, and, in the event that such distribution is not so made notwithstanding the setting of a record date therefor, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

 

(e) Unless the Corporation shall have exercised its election as provided in Section 11(f), upon each adjustment of the Exercise Price as a result of the calculations made in Section 11(c) or (d), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of one one-thousandths of a share of Preferred Stock obtained by (i) multiplying (x) the number of one one-thousandths of a share of Preferred Stock that could be purchased upon exercise of a Right immediately prior to the adjustment pursuant to this Section 11(e) by (y) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing th e product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price.

 

(f) The Corporation may elect, on or after the date of any adjustment of the Exercise Price pursuant to Section 11(c) or 11(d), to adjust the number of Rights in substitution for any adjustment pursuant to Section 11(e) in the number of one one-thousandths of a share of Preferred Stock purchasable upon the exercise of a Right.  Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights obtained by dividing the Exercise Price in e ffect immediately prior to adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price.  The Corporation shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made.  This record date may be the date on which the Exercise Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement.  If the Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(f), the Corporation 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, if any, to which such holders shall be entitled as a result of such adju stment, or, at the option of the Corporation, 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 Corporation, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment.  Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.

 

(g) All calculations under this Section 11 shall be made to the nearest cent or to the nearest one one-thousandth of a share, as the case may be.

 

(h) Irrespective of any adjustment or change in the Exercise Price or the number of shares of Preferred Stock issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Exercise Price and the number of shares to be issued upon exercise of the Rights as in the initial Right Certificates issued hereunder but, nevertheless, shall represent the Rights as so adjusted.

 

(i) Before taking any action that would cause an adjustment reducing the purchase price per whole share of Preferred Stock upon exercise of the Rights below the then par value, if any, of the shares of Preferred Stock, the Corporation shall use its best efforts to take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of such Preferred Stock at such adjusted purchase price per share.

 

(j) Anything in this Section 11 to the contrary notwithstanding, in the event of any reclassification of stock of the Corporation or any recapitalization, reorganization or partial liquidation of the Corporation or similar transaction, the Corporation shall be entitled to make such further adjustments in the number of shares of Preferred Stock which may be acquired upon exercise of the Rights, and such adjustments in the Exercise Price therefor, in addition to those adjustments expressly required by the other paragraphs of this Section 11, as the Board of Directors of the Corporation shall determine to be necessary or appropriate in order for the holders of the Rights in such event to be treated equitably and in accordance with the p urpose and intent of this Agreement or in order that any such event shall not, but for such adjustment, in the opinion of counsel to the Corporation, result in the stockholders of the Corporation being subject to any United States federal income tax liability by reason thereof.

 

(k) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Corporation other than the Preferred Stock, thereafter the Exercise Price and the number of such other shares so receivable upon exercise of a Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Sections 11(a), 11(c), 11(d), 11(e), 11(f) and 11(j) hereof, as applicable, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares.< /div>